Archive for December, 2008
Brady Campaign Suing to Block Concealed Carry in National Parks
As I noted before, the Department of the Interior recently announced that it will allow the concealed carry of handguns in national parks and wildlife refuges. New West reports that the Brady Campaign is now suing to block implementation of the rule. (H/T to David Hardy at Of Arms & the Law.) The Brady Campaign claims that the rule will allow concealed carry on the National Mall just in time for inauguration. Not true.
The full complaint is available here (pdf), where the claim about National Mall carry is repeated. Scroll down to pages 19-20, where one of the Brady plaintiffs alleges harm from the new rule because he lives in Maryland and visits the National Mall, where he may feel threatened by the prospect of concealed weapons.
Actually, the rule only allows carry “if, and only if, the individual is authorized to carry a concealed weapon under state law in the state in which the national park or refuge is located.” D.C. officials recently ramped up requirements for a gun permit, and a gun permit does not permit concealed carry outside the home. D.C. Police Chief Cathy Lanier made it explicitly clear that “[w]e have no plan to expand those laws to allow people to carry handguns in public.”
The Department of the Interior’s rulemaking came in the wake of the landmark case District of Columbia v. Heller, which overturned the District’s long-standing gun ban. The Heller case is detailed in Brian Doherty’s new book Gun Control on Trial: Inside the Supreme Court Battle over the Second Amendment. The Cato book forum is available in video and podcast formats here.
TARP
The Bush administration has blown through the first $350 billion of your money that Congress authorized it to spend under the Troubled Asset Relief Fund. Treasury Secretary Henry Paulson is now asking for the second $350 billion.
Will Congress approve the second $350 billion of TARP money? I have no special skill at political speculation, but since a reporter asked, here are five reasons I think that it won’t, thankfully.
- It is not clear that the first $350 billion of TARP money has aided the economy at all. I suspect that all the recent Treasury micromanagement through TARP has destabilized the economy and delayed the recovery, not helped it. But certainly TARP supporters cannot claim any big success
- Congress and the general public are unhappy with the lack of transparency and poor oversight of TARP spending. President-elect Obama campaigned on creating a more transparent government. TARP spending does not fit into that Obama vision.
- Democrats don’t like TARP anymore. Democrats are unhappy that TARP money has bailed out Wall Street and not Main Street, to use their nomenclature. They are resisting further bailouts of financial firms.
- Republicans don’t like TARP anymore. Republicans in Congress are unhappy that the Treasury bailed out the auto firms with TARP money after they explictly opposed an auto bailout. They don’t want to give the new Democratic administration a similar open-ended opportunity to spend.
- The U.S. economy will recover from the current recession, and the Obama administration will want to take credit for it. Renewing TARP will muddy the waters for that credit-taking. For Obama, it is politically important that he “do something” in his first few months to the economy so that when the recovery comes he can claim success. TARP is a Bush thing, Obama needs something fresh and new.
What Obama should do is a pass a large corporate tax rate cut, which would spur long-run growth. Alas, Obama appears to be an old-fashioned Keynesian, and his credit-taking vehicle is shaping up to be a gigantic “stimulus” spending plan. I think that’s crackpot, as I touched on here, and will address in future blog posts.
Filed under: Finance, Banking & Monetary Policy; Government and Politics; Tax and Budget Policy
The Bluegrass Porker
The following howler from Sen. Mitch McConnell (R-KY) in today’s Wall Street Journal is worth calling out:
Senate Minority Leader Mitch McConnell (R., Ky.) in a statement Monday supported the idea of using federal spending to boost the economy. But he warned that the price tag, which could approach $800 billion over two years, shouldn’t become an excuse for funding undeserving projects. “We should have a simple test: Will the yet-unwritten, reportedly trillion-dollar spending bill really create jobs and grow the economy — or will it simply create more government spending, more bureaucrats and deeper deficits?” Mr. McConnell said.
Didn’t the Republican Senator from Kentucky, along with his Republican congressional colleagues and Republican president, oversee the largest federal spending binge in decades?
If history is any guide, it’s a good bet that Sen. McConnell thinks “creating jobs” means funneling taxpayer pork to the state of Kentucky. Back in October, when he was struggling for reelection, the Washington Post reported that “McConnell boasts of the projects he has brought to Kentucky — a total of $500 million for the state last year, he said last week. He lists every project he has brought to every town he visits, and argues that Lunsford couldn’t do the same.”
Apparently it’s perfectly acceptable to “create more government spending, more bureaucrats and deeper deficits” when Sen. McConnell and his party are running the show.
(For a list of Sen. McConnell’s recent pork grabbing, which totals $195 million, check out the Citizens Against Government Waste’s 2008 Pig Book by clicking here and selecting his name from the pull-down menu.)
Filed under: Government and Politics; Tax and Budget Policy
Government “Stimulation” — Shouldn’t the Economy be Booming?
Prevailing wisdom among politicians, media talking heads, and a sizable number of economists is that a downpour of government money is needed to “stimulate” the economy into recovery. (To understand why this belief is bunk, please see Dan Mitchell’s helpful video here.)
But isn’t spending tons of money exactly what government at all levels has been doing in recent years? According to U.S. Bureau of Economic Analysis numbers, combined federal, state, and local expenditures in 2000 were an already unhealthy 30% of GDP. Eight years and two recessions later, government spending now sucks up 35% of the nation’s economy and is trending higher. During that time we have witnessed the first $2 trillion federal budget and the first $3 trillion dollar budget.
With all the money federal, state, and local governments have been spending shouldn’t we be experiencing a boom? It would seem to me that proponents of government spending as a cure for our economic cold have it backward.
‘First, Assume I’m Right’
In a Saturday New York Times op-ed, Matt Miller of the Center for American Progress writes: “Drive around Chicago, Detroit or most other big cities and you’ll see dilapidated schools staffed largely by rookie teachers. The districts spend, say, $10,000 a child.”
Perhaps my memory is corrupted by nostalgia, but wasn’t there an era when the Times op-ed page discouraged policy commentary based on made-up, make-believe numbers?
As Miller might have discovered if he had researched the issue, Detroit is spending roughly $13,000 per pupil this school year, while Chicago spent roughly $14,000 in 2007-08. These figures can be calculated by reviewing readily available budget documents, summing all applicable expenditures, and dividing by enrollment. In Detroit, for instance, we sum FY09 “General Fund” expenditures (funds # 11, 13, 14, 22) with those of the Bond Redemption Fund (#31), and relevant items of the Food Service Fund (#25). Total expenditures come to roughly $1.24 billion while the official enrollment estimate for the school year is 96,194. The quotient of the two is just under $13k. FY08 data for Chicago yield a figure just above $14k.
Miller goes on to assert that “If you compare most poor, urban areas to their nearby affluent suburbs, the suburbs typically spend thousands of dollars more per pupil.” Do they? Let’s go Miller one better and compare ALL poor urban districts to ALL wealthy suburban districts. The National Center for Education Statistics publishes a table with these numbers (Table 37-2, page 172) in its most recent edition of the Condition of Education. The relevant numbers are (for the 2004-05 school year, in 2006-07 dollars):
Current per pupil spending, highest poverty city districts: $9,901
Current per pupil spending, lowest poverty suburban districts: $9,455
Had Miller checked his numbers, he would have discovered his assumptions to be not only mistaken but exactly backwards, and his policy prescription thus entirely groundless.
Had the New York Times checked his numbers, or simply asked him to check them, it might have done a better job of disguising how low it has sunk in recent years. Or was it always this bad?
I’m Changing My Name to Bank Holding Company
It was a Merry Christmas for GMAC, which learned on Christmas Eve that the Federal Reserve had approved its application to become a bank holding company. That gives GMAC “access to new sources of funding, including a potential infusion of taxpayer dollars from the Treasury Department and loans from the Fed itself,” as the Washington Post explains. Of course, that’s on top of the $13 billion that General Motors itself has been granted as a short-term bailout until a bigger bailout can be arranged.
GMAC isn’t the only company that has suddenly become a “bank holding company” in order to cash in on the $700 billion financial bailout. Late one night in November, American Express was granted the same privilege. Not to mention Morgan Stanley, Goldman Sachs, CIT…
Maybe it’s time for a new version of Tom Paxton’s classic song “I’m Changing My Name to Chrysler,” sung here by Arlo Guthrie: “When they hand a million grand out, I’ll be standing with my hand out.” Of course, there’s already been a new version, “I’m Changing My Name to Fannie Mae,” sung here by Arlo and here by Paxton. Besides the name of the company, they had to make a few other changes in the lyrics, like “When they hand a trillion grand out, I’ll be standing with my hand out.”
So take it away, Tom and Arlo: I’m Changing My Name to Bank Holding Company.
Filed under: Finance, Banking & Monetary Policy; Government and Politics; Tax and Budget Policy
Downsizing the Federal Government
President-elect Obama has pledged to go through the federal budget “line by line” to root out waste. In this new video, Cato analysts Chris Edwards, Sallie James and Daniel Ikenson explain why the Department of Agriculture is a great place to start.
For more great videos from the Cato Institute, subscribe to our YouTube Channel.
Filed under: Foreign Policy and National Security; General; Trade and Immigration
Our New Quasi-Allies
On the way out the door, the Bush administration is extending something resembling security guarantees to Georgia and Ukraine.
Secretary of State Condoleezza Rice and Ukraine’s foreign minister signed a “Charter on Strategic Partnership” on December 19. According to the State Department, it will be the basis for the pact with Georgia, which will be signed within a week.
The deal with Ukraine is non-binding, meaning that it is legally meaningless. (Presumably, the same will be true of the Georgia-U.S. pact.) But its language can be read to commit the United States to defend Ukraine:
This Charter is based on core principles and beliefs shared by both sides:
1. Support for each other’s sovereignty, independence, territorial integrity and inviolability of borders constitutes the foundation of our bilateral relations.
True, this is no formal commitment to mutual defense, as in the NATO treaty’s Article 5. But leaders in Ukraine might believe that this obligates the United States to aid them in a fight with Russia. That is doubly true because the agreement also says that the United States will help Ukraine prepare for NATO membership. The confidence that seeming–U.S. protection provides may cause leaders in these countries to provoke Russia, possibly dragging the United States into a crisis. In Georgia’s case, this sort of moral hazard was already obvious last August.
Filed under: Foreign Policy and National Security
Fort Dix Five Convicted
In case you missed it, five foreign-born defendants have been convicted of conspiring to kill American soldiers at Fort Dix, NJ, a site often used to train up reservists for deployment to Iraq. These guys are essentially terrorist wannabes, but they did have some weapons training and may have perpetrated an attack if left to their own devices.
While the government made the effort to try some aspiring terrorists, it has bungled the prosecution of Ali al-Marri, an exchange student and alleged sleeper agent for Al Qaeda. The government moved him to military custody at the naval brig in Charleston, SC. Then the government asked the presiding judge to dismiss the charges against al-Marri with prejudice, meaning that they cannot be re-filed if he moves back to civilian custody. That was a very peculiar thing for the government to do and may end up wasting good police and intelligence work.
The Fourth Circuit held that he can be held as an enemy combatant, but the Supreme Court granted certiorari and is slated to hear arguments in March.
For more on the future of counterterrorism policy, check out Cato’s upcoming conference. This is part of a three-year project on counterterrorism and civil liberties.
Jindal’s Rx: the Most Coordinated System of Care that No One Can Access
Louisiana Gov. Bobby Jindal’s (R) proposed Medicaid reforms are getting a lot of press. Jindal proposes to expand eligibility for Medicaid, enroll Medicaid patients in private managed-care plans, and do other things to improve the quality of care. Writing in The American Spectator, Joseph Lawler says the approach is “market-based” and “could forestall universal health care.”
A friend asked my thoughts about Jindal’s proposal. Here’s what I emailed back:
Why is it that when politicians propose giving taxpayer dollars to private companies, people think that’s “market-based”?
Jindal’s plan is not market-based reform. As a general matter, market-based charity care is just that: private charity. So the only market-based Medicaid reforms are those that remove people from the Medicaid rolls — e.g., federal block grants, eligibility restrictions, etc.
Jindal wants to expand eligibility. For a welfare program. And we call that market-based?
Jindal may be able to improve the quality of care through greater coordination. Which looks good on paper. But if the quality of care in Medicaid improves, more people will enroll. Only 2/3 of those eligible actually sign up for the program. (Many of the 1/3 who don’t enroll actually have private coverage.) So improving Medicaid benefits could cause enrollment to increase 50 percent. And that’s before Jindal expands the eligibility rules.
With all the additional cost pressure, what’s going to happen to Medicaid payments and enrollees’ access to docs? (There are reasons why Medicaid pays so little.)
Louisiana’s Medicaid program could someday achieve the most coordinated system of care that no one can access. Should we pull people out of private health plans for that?
Expanding enrollment in a government-run health plan is supposed to forestall universal coverage? Discerning consumers of market-based ideas should keep shopping.
Filed under: Cato Publications; Health, Welfare & Entitlements
Don’t Let the Left Nationalize Health Insurance
With left-wing Democrats controlling Congress and the White House, and many special-interest groups clamoring for reform, people are starting to talk about comprehensive health care reform as if it were a done deal.
Yet comprehensive reform could easily crater — and it should crater if it includes any of the following:
- Government-run health care for the middle class
- Mandates
- Price controls
Those reforms would effectively nationalize health insurance, regardless of whether we continue to call it “private” insurance.
Republicans, moderate Democrats, and independents should kill any reforms that include any of those three items. Here’s why, and how.
The Good News about the Bailouts
They mean more money for Washington, D.C.:
The government’s bailout of the banking and automobile industries is likely to expand the federal bureaucracy, creating jobs that could fill vacancies in office buildings, according to the report by the Downtown D.C. Business Improvement District.
Filed under: Finance, Banking & Monetary Policy; Government and Politics
Great Moments in Local Government
This story probably has a deeper meaning for those concerned about a hyper-sensitive society. It also probably raises the hackles of those trying to protect 2nd Amendment rights. But my immediate reaction was that only government could do something as stupid as arrest a 10-year old boy for having a toy cap gun:
The latest case of zero-tolerance at the public schools has a 10-year-old student sadder and wiser, and facing expulsion and long-term juvenile detention. And it has his mother worried that his punishment has already been harsher than the offense demands. “I think I shouldn’t have brought a gun to school in the first place,” said the student, Alandis Ford, sitting at home Thursday night with his mother, Tosha Ford, at his side. Alandis’ gun was a “cap gun,” a toy cowboy six-shooter that his mother bought for him. “We got it from Wal-Mart for $5.96,” Tosha Ford said, “in the toy section right next to the cowboy hats. That’s what he wanted because it was just like the ones he was studying for the Civil War” in his fifth-grade class at Fairview Elementary School. …Tosha said that Wednesday afternoon, after school, “six police officers actually rushed into the door” of their home. “He [Alandis] opened the door because they’re police. And then they just kind of pushed him out of the way, and asked him, ‘Well where’s the gun, where’s the real gun?’ And they called him a liar… they booked him, and they fingerprinted him.” …Alandis was charged with possessing a weapon on school property and with terroristic acts and threats. …Sherri Viniard, the Director of Public Relations for the Newton County School System, emailed a statement to 11Alive News Thursday that reads, in part: “Student safety is our primary concern, and although this was a toy gun, it is still a very serious offense and it is a violation of school rules. We will not tolerate weapons of any kind on school property.” Alandis had his first hearing in juvenile court on Thursday. Tosha said the case worker assigned to Alandis will recommend a period of probation, rather than juvenile detention. The judge will make the final decision. Tosha said Alandis is not allowed back in school for now. She has a meeting scheduled with school administrators. She does not know if he will be expelled, and is hoping for no more than a ten-day suspension.
Filed under: Government and Politics; Law and Civil Liberties
‘Tis Better to Take
In a sign of how toweringly stacked government is against he who believes ’tis wrong to steal, my place of residence offers taxpayer-subsidized classes on how to maximize your taxpayer subsidy for college. That’s right: The government subsidizes classes on subsidy-grubbing.
“Strategies are revealed on how to reposition assets to minimize the amount the government determines you can afford to pay,” proudly declares the description of “Paying for College without Going Broke” in the winter 2009 adult education catalog from the Alexandria (VA) City Public Schools. Students will “find out how to use the IRS to fund college through ‘tax scholarship’. This seminar will give you the tools and knowledge to meet your goals.’”
That’s right: If your goals include maximizing the amount that other people have to pay for you or yours to go to college, Alexandria has a fantastic deal for you! And don’t worry, only saints refrain from stealing these days, and who wants to be one of them?
Obama’s Not-So-Centrist Cabinet
Journalists continue to insist that President-elect Obama has named a largely centrist Cabinet. But they’re clinging to a storyline that might have been true two weeks ago but no longer is. Obama’s national security team — Hillary Clinton, Robert Gates, and James L. Jones — and his economic team — Lawrence Summers, Tim Geithner, Christina Romer, and Bill Richardson — could be regarded as centrists, or at least as centrist Democrats.
But as the Cabinet selection process went on, Obama increasingly named left-wing activists to jobs in which they could carry out his ambitious plans to “transform our economy” and be the 21st-century Franklin Roosevelt. Tom Daschle at HHS wrote a book on how we need a Federal Health Board to manage and regulate every aspect of our health care. Hilda Solis at Labor is a sponsor of the bill to eliminate secret ballots in union authorization elections and of heavy regulatory burdens on business. She opposed the Central America Free Trade Agreement and generally opposes free trade. Shaun Donovan worked on affordable housing issues in the Department of Housing and Urban Development during the Clinton administration — just the policies that led to the mortgage crisis and then the general financial crisis. His reward for a job well done? He’s coming back as secretary of HUD.
White House science adviser John Holdren is an old-time “running-out-of-resources” Paul Ehrlich cohort who disdains economics and famously lost a bet with Julian Simon on whether the prices of natural resources would rise, reflecting growing scarcity. He and Steven Chu as Secretary of Energy; former New Jersey Department of Environmental Protection chief Lisa Jackson as the head of the Environmental Protection Agency; and Carol Browner, former administrator of the Environmental Protection Agency under President Bill Clinton, as the White House’s “energy/climate czar,” are all global-warming catastrophists who see an urgent need to impose crushing burdens on the economy in the name of influencing the climate a century from now.
The choice of Tom Vilsack to be secretary of agriculture is said by the Washington Post to be an example of Obama’s moderation and intention to balance competing interests. You see, he’s popular with “groups representing big agricultural interests, which praise him for his support of biotechnology and subsidies for corn-based ethanol.” But also with groups that want to shift Ag dollars to smaller farms. So the question to be decided is who gets the gravy, not whether the gravy will be ladled out by Washington. There doesn’t appear to be anyone in the Obama Cabinet who will speak for the taxpayers’ interest. Or who will argue that it would best for the whole country to let the market work and not have the government pick any winners or losers.
More Power to State
The New York Times reports on Hillary Clinton’s efforts to reassert the State Department’s power over US foreign policy. This is, in one sense, good news. A bloated budget and far flung combatant commanders have allowed the Pentagon to trample over Foggy Bottom in recent years. That is bad not because diplomats are inherently wiser than generals, but because the competition of relatively balanced bureaucratic powers is generally conducive to wise policy.
The trouble here is the idea, hinted at in the Times story, that increased State Department capacity will bring success in state-building missions. A peculiar hubris of Democratic foreign policy analysts is their confidence that they have discovered a science of nation-building by watching the Bush Administration screw up. They see errors on the road to chaos during the occupation of Iraq and assume causality. They read a little about counter-insurgency and the Small Wars Journal blog. Avoid the errors, apply the best practices, and you are gold, they say. So: more troops, better plans, more interagency coordination, more reconstruction, and so on — and, presto, you can “fix” failed states that you occupy, like Afghanistan, or even states you don’t occupy, like Pakistan.
As I wrote here and said last week, this would-be science provides leaders with confidence they should not have to undertake dumb wars or to establish excessive goals for sensible wars. Hopefully, I will be proved wrong in Afghanistan, where we are about to test this kind of thinking.
Filed under: Foreign Policy and National Security
David Spade versus the Mexican Cartels
News outlets are reporting that actor David Spade donated $100,000 to the Phoenix Police Department to purchase AR-15 rifles for patrol officers.
If the police officers in the Southwest are outgunned, it is likely because former Mexican soldiers have been recruited by the drug cartels. As the War on Drugs has ballooned north from Colombia to Mexico, military incursions on American soil are becoming more common, Mexican soldiers are being killed and beheaded, and police officers are being assassinated (warning: violent content).
This is one more way that the War on Drugs is nonsensical policy. For more on this topic, click here, here, or here.
Filed under: Foreign Policy and National Security; Law and Civil Liberties
Fallows on Security
On the Atlantic blog, James Fallows has a few thoughts about security.
In sharing them, he compliments Cato’s own “precocious” Ben Friedman, and endorses our January counterterrorism conference: “I hope that everyone who can possibly be in Washington on Jan 12-13, including [DHS Secretary-designee Janet] Napolitano, will attend this conference, at Cato, about rational and non-hysteric ways to keep America secure.”
You can learn more and register here.
Filed under: Foreign Policy and National Security; Law and Civil Liberties
No Medicaid Bailouts
Claiming hardship due to _________ (noun), state governors and legislators are demanding that Congress give them more money for their _________ (noun) programs. Of course, the states do this every time a _____________ (frequent, predictable occurrence) happens.
This time, the states want more money for their Medicaid programs. Again. The states claim their Medicaid rolls are swelling due to the economic downturn. Yet economic downturns are predictable — completely so, even if the timing isn’t predictable. The effect of an economic downturn on Medicaid enrollment is also predictable. Thus, bailing out the states right now would essentially reward them for not planning for the future.
Here’s how the AP reported my take:
Medicaid insures nearly 1 in 6 . . . people in the United States. The program typically covers the very poor and about half of enrollees are children. Spending came to $333 billion in the budget year ending Sept. 30, 2007. Washington picks up about 57 percent of that; the states cover the remainder.
Michael Cannon, director of health policy studies at the Cato Institute, a libertarian think tank, sympathizes with new families now relying on Medicaid. Still, he disagrees that the federal government should reward states that did not plan adequately for the bad times. Better planning would mean setting aside more money for rainy-day funds and not expanding the scope of Medicaid during the good economic times, he said.
“The states make these promises they know they can’t keep and then they run to Congress to bail them out,” Cannon said. “And Congress typically ends up bailing them out.”
Cannon said the net result is that the government gradually is becoming more responsible for paying for health insurance coverage.
As I wrote last year, the states play the same game with funding for the State Children’s Health Insurance Program:
States such as Georgia sometimes spend all of their allotted SCHIP funds before the end of the fiscal year. The CBO estimates that 11 states will do so in 2007. Typically, those states then petition the federal government for additional funding. So far, Congress has twice bailed out such states, effectively rewarding states that commit to spend more federal dollars than they have been allotted.
To stop this racket, we need Medicaid/SCHIP reform. A federal balanced budget amendment wouldn’t hurt, either.
Filed under: Cato Publications; General; Health, Welfare & Entitlements
Good Argument for Tax Havens, Part II
Hugo Chavez is one of the world’s most despicable politicians, and he recently solidified his low rating by confiscating a major mall being developed in Caracas. The rule of law has been shredded in Venezuela and the government now acts like a thief. Given these conditions, productive people have no choice but to escape – or to at least to move their money someplace where it can’t be stolen by the thugs that rule the nation. This is why tax havens are so critical, not just for economic liberty, but for personal protection from tyrants as well (for more information, see here, here, and here). The Associated Press has the sordid details about Chavez’s kleptocracy:
President Hugo Chavez ordered construction halted on a major shopping mall in Caracas on Sunday, saying the government will expropriate the unfinished building. The Venezuelan leader said it would be out of line with his government’s socialist vision to allow the new Sambil mall to take up precious urban real estate — and that unbridled consumerism isn’t his idea of progress either. … “We’re going to expropriate that and turn it into a hospital — I don’t know — a school, a university,” Chavez said to applause during his Sunday television and radio program, “Hello, President.” … The president also has urged Venezuelans to shed their materialism and their taste for designer clothes, sport utility vehicles, Scotch whisky and plastic surgery.
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