Archive for March, 2009
Week in Review: A School Choice Victory, Earmark Reform, and Drug Violence in Mexico
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Obama Dips a Toe in the Educational Choice Pool
After Congress voted to let the Washington D.C. voucher program expire, stripping 1,700 low-income children of the opportunity to attend private schools, President Obama said he will keep the program afloat in subsequent legislation.
“It wouldn’t make sense to disrupt the education of those that are in that system,” said Robert Gibbs, the White House press secretary. “And I think we’ll work with Congress to ensure that a disruption like that doesn’t take place.”
Andrew J. Coulson, director of Cato’s Center for Educational Freedom, commented on Obama’s decision to continue to extend school choice benefits to underprivileged children in the nation’s capital:
This is a crucial milestone. There is finally a major national Democratic leader who is beginning to catch up to his state-level peers. Democrats all around the country have been supporting and signing small education tax credit programs because they realize that these programs are win-win: good for their constituents and good for their long-term political futures.
In an op-ed that ran the day Gibbs made the announcement, Coulson explained why those who oppose school choice will find themselves on the wrong side of history.
In 2006, Susan Aud and Leon Michos published a report on the fiscal impact of the D.C. voucher program, which documented the success of the District’s school choice pilot, the first federally funded voucher program in the United States.
Obama Signs Earmark-Heavy $410 Billion Omnibus Bill
After signing a bill that had nearly $8 billion in earmarks, President Obama declared that from then on, his administration would work toward earmark reform.
Sounds a bit like St. Augustine’s famous prayer, “Lord, make me chaste but not just yet,” said Daniel Griswold, director of Cato’s Center for Trade Policy Studies:
Recall that as a candidate, Obama said he and Democratic leaders in Congress would change the “business as usual” practice of stuffing spending bills with pet projects. Those earmarks, submitted by individual members to fund obscure projects in their own districts and states, typically become law without any debate or transparency.
Saying he would sign the “imperfect bill,” President Obama offered guidelines to curb earmarks … in the future. “The future demands that we operate in a different way than we have in the past,” he said. “So let there be no doubt: this piece of legislation must mark an end to the old way of doing business and the beginning of a new era of responsibility and accountability.”
Lord, make us fiscally responsible, but not just yet.
Meanwhile, Republican leaders are condemning the president’s expansion of the federal government. But do they have any standing to judge? Senior Fellow Michael D. Tanner said no:
The Bush administration’s brand of big-government conservatism was, at the very least, the greatest expansion of government from Lyndon Johnson to, well, Barack Obama.
For Cato’s policy recommendations on earmarked spending, see the “Corporate Welfare and Earmark Reform” chapter in the 2009 Cato Handbook for Policymakers.
Violence Spills into the U.S. from Mexico’s Drug War
With daily reports of increased violence coming from Mexico, Cato Vice President for Defense and Foreign Policy Studies Ted Galen Carpenter said the brutality is an indicator of power and arrogance, not desperation, and asserts that gun restrictions in the U.S. will not subdue violence:
The notion that the violence in Mexico would subside if the United States had more restrictive laws on firearms is devoid of logic and evidence. Mexican drug gangs would have little trouble obtaining all the guns they desire from black market sources in Mexico and elsewhere…
… Even assuming that the Mexican government’s estimate that 97 percent of the weapons used by the cartels come from stores and gun shows in the United States-and Mexican officials are not exactly objective sources for such statistics-the traffickers rely on those outlets simply because they are easier and more convenient, not because there are no other options.
Carpenter spoke at a Cato policy forum last month, and explained why the war on drugs sparks such intense levels of violence.
In a Policy Analysis published in early February, Carpenter warned of the need to change our policy on the Mexican drug conflict, so as to prevent the violence from spreading across the border.
Now He Tells Us!
President Barack Obama now says the economy isn’t as bad as we thought. Reports the New York Daily News:
President Obama said Thursday the nation’s economic woes are not as dire as they seem and said his economic policies will get the country back on track.
“I don’t think things are ever as good as they say, or ever as bad as they say,” Obama told CEOs at a meeting of the Business Roundtable in Washington.
“Things two years ago were not as good as we thought because there were a lot of underlying weaknesses in the economy,” he said. “They’re not as bad as we think they are now.”
Does this mean we can cancel the “stimulus” bill and reverse all those bail-outs that were promoted as necessary to save us from disaster?
Chuck Schumer Endorses Hoover Plan
On Meet the Press last Sunday, Sen. Chuck Schumer (D-NY) said
Those on the hard right say, “Cut government spending, let’s go back to the old Reagan days.” Well, the last president who did this when we were in this type of situation was Herbert Hoover. Herbert Hoover said the government should do nothing when we were in a recession, not a depression. We did nothing and it related [sic] to a depression.
Reality check: Did President Hoover cut federal spending during the recession that became a depression? Not by a long shot.
Source: OMB
Federal spending was $3.1 billion (those were the days!) in 1929, the year Hoover took office and the stock market crashed. It rose modestly for two years, then shot up in 1932. It dropped a bit in nominal terms in 1933, though deflation meant that the real budget increased. Then, presumably reflecting Roosevelt’s policies, it shot up again in 1934. In real terms, the federal budget was almost twice as high after Hoover’s four years as it was when he took office.
President Bush, President Obama, and Senator Schumer are all supporting Herbert Hoover’s failed policy of increasing spending to fight recession. Let’s hope they don’t have the same results and turn a recession into a Great Depression.
Cato adjunct scholar Ilya Somin dissects the “Herbert Hoover did nothing” fallacy at Volokh.com.
Sanford Rejects Faustian Bargain
Yesterday, as expected, South Carolina Gov. Mark Sanford became the first governor to reject some of his state’s share of stimulus funds, spurning $700 million (of the about $8 billion headed his way) that he said would harm his state’s residents in the long run. South Carolina’s General Assembly (controlled by Republicans who have long opposed Sanford’s attempts to cut spending, lower taxes, and generally reform government operations), using a provision of the stimulus bill inserted by Rep. James Clyburn (D-SC), nevertheless plans to seek the funds without the governor’s support. They cite section 1607 of the American Recovery and Reinvestment Act of 2009, which provides that, notwithstanding a requirement for gubernatorial certification of a request for funds:
If funds provided to any State in any division of this Act are not accepted for use by the Governor, then acceptance by the State legislature, by means of the adoption of a concurrent resolution, shall be sufficient to provide funding to such State.
The question arises, setting aside the relative merits of both sides’ positions, whether the governor (or someone else) could challenge this “alternative certification” provision on constitutional grounds. Here are some initial thoughts:
Thursday Podcast: ‘It’s Not High Speed Rail’
President Obama’s stimulus plan included about $8 billion for “high-speed rail” projects throughout the country.
But what Obama has in mind isn’t anything like the Japanese trains that have been clocked at over 300 miles per hour, says Cato Senior Fellow Randal O’Toole in Thursday’s Cato Daily Podcast. At best, it’s “moderate-speed rail,” and won’t include an interconnected network that will allow passenger transportation from coast to coast.
For more on American rail projects, check out O’Toole’s Policy Analysis, High-Speed Rail: The Wrong Road for America.
End Drug War and Save $77 Billion
Harvard Economist Jeff Miron tells CNN that the drug laws make no sense.
On March 17, Cato will be hosting an event about The Politics and Science of Medical Marijuana. One of our guest speakers, Rob Kampia of the Marijuana Policy Project, was recently interviewed by Glenn Beck.
For more Cato work on the drug war, go here.
Tax Credits, Courts, and Cabers
As Adam Schaeffer notes on this blog today, education tax credits have won in court, again. This time in Arizona.
I’ve long argued that their superior resistance to court challenge is one of many reasons to favor tax credits over other approaches to school choice. But there’s one court that even credits are likely to run into trouble with: the 9th Circuit Court of Appeals.
The 9th Circuit is the most statist appellate court in the nation, and it has been sitting on an education tax credit case, Winn v. Garriott, for more than a year. For the record, I expect it to rule against the program sometime in 2009. If it does, that ruling will be appealed and almost certainly overturned by the Supreme Court of the United States.
Supporters of educational freedom should both brace themselves for this setback and also put it in perspective. The 9th Circuit is overturned more often than a caber at the Highland games.
Education Tax Credits Upheld, Again
The decision by the Arizona court of Appeals today upholding the constitutionality of the business tax credit program should put to bed once and for all these frivolous lawsuits against tax credits. Opponents are wasting their money.
Education tax credits are taxpayer funds and therefore cannot run afoul of state constitutional provisions regarding the use of government funds. It really is just that simple.
Some school choice supporters have given up on vouchers because of recent disappointments and think that means the end for private school choice. They forget the most successful school choice policy in recent years is education tax credits.
Not only have tax credit programs been passed and expanded with regularity (GA just passed a $50 million, universal program last year), education tax credits have proven bullet-proof in court.
Education tax credits are the future for school choice, and it’s looking pretty bright.
The President Talks Too Much
At least Cato Vice President Gene Healy thinks so.
In an interview on Obama’s 50th day in office, Healy explained why the president should consider staying out of the spotlight:
The president wasn’t supposed to be a national guardian angel. He was supposed to be a limited constitutional officer whose main job was faithful execution of the laws. And I don’t see a lot of evidence that Barack Obama’s omnipresence is really helping him or the country.
Time to Think about the Gold Standard?
Back in 2007, presidential candidate Ron Paul generated a lot of talk, especially among libertarians, about monetary policy, the Federal Reserve, and the gold standard. As a longtime believer in sound money, I was surprised to discover how many smart young libertarians thought that talk of the gold standard was nutty. And perhaps more surprised to discover that they thought it was unnecessary now that the problem of central banking had been solved. As two of them wrote when I asked about their objections,
“The gold standard is the solution to no actual problem that is of concern to anyone. I think it’s a mistake to take a relatively professional and independent central bank for granted, but we have one. Inflation is low and predictable. The monetary climate is stable and amenable to savings and investment, etc.”
“What’s the beef with the Fed? By my estimation, it’s been one of the most effective, restrained government agencies over the last twenty five years. They’ve dramatically reduced the volatility of the business cycle while achieving low, reasonably constant inflation.”
Well. How’s that confidence in central banking looking now? I’m reminded of Murray Rothbard’s comment in 1975 about what the era of Vietnam, Watergate, and stagflation had done to trust in government:
Twenty years ago, the historian Cecelia Kenyon, writing of the Anti-Federalist opponents of the adoption of the U.S. Constitution, chided them for being “men of little faith” – little faith, that is, in a strong central government. It is hard to think of anyone having such unexamined faith in government today.
Partly in response to such criticisms of the gold standard, in February 2008 Cato published a paper by Professor Lawrence H. White, “Is the Gold Standard Still the Gold Standard among Monetary Systems?” White argued:
The gold standard is not a flawless monetary system. Neither is the fiat money alternative. In light of historical evidence about the comparative magnitude of these flaws, however, the gold standard is a policy option that deserves serious consideration.
In a study covering many decades in a large sample of countries, Federal Reserve Bank economists found that “money growth and inflation are higher” under fiat standards than under gold and silver standards.
A gold standard does not guarantee perfect steadiness in the growth of the money supply, but historical comparison shows that it has provided more moderate and steadier money growth in practice than the present-day alternative, politically empowering a central banking committee to determine growth in the stock of fiat money. From the perspective of limiting money growth appropriately, the gold standard is far from a crazy idea.
And he quoted a devastating line from an essay (p. 104) by Peter Bernholz:
A study of about 30 currencies shows that there has not been a single case of a currency freely manipulated by its government or central bank since 1700 which enjoyed price stability for at least 30 years running.
In February 2008 White’s study didn’t get much attention. Most people still thought the Greenspan-Bernanke Fed was doing a great job, so why talk about alternatives to fiat money? But now, after the crash of 2008 and the growing realization that Dow 14000 was the product of a cheap-money boom that led to the inevitable bust, maybe it’s time to think about the gold standard or other constraints on politicized money creation.
Who’s Blogging about Cato
Here’s a few bloggers who are writing, citing and linking to Cato research and commentary:
- Blogging from the 2009 International Conference on Climate Change, The Foundry‘s Nick Loris covers Patrick J. Michaels’s lecture on an EPA program that will “circumvent Congressional legislation to curb greenhouse gas emissions (GHGs) and regulate carbon dioxide.”
- Natch Greyes pens his thoughts on Thursday’s book forum featuring Patrick J. Michaels’s new book, Climate of Extremes: Global Warming Science They Don’t Want You to Know.
- Dan Kenitz cites an article by David Lampo on gun control.
- David Kirkpatrick links to Richard W. Rahn’s op-ed in The Washington Times about the increasing loss of liberty in the United Kingdom.
- Free-market energy blogger Robert Bradley, editor of Master Resource, cites Cato’s recognition of the women who launched the libertarian movement: Ayn Rand, Rose Wilder Lane and Isabel Paterson.
- Scott Horton 0f Anti-War Radio interviews Doug Bandow about relations between the US and China.
Let us know if you’re blogging about Cato by emailing cmoody@cato.org or drop us a line on Twitter @catoinstitute.
Obama First Dem President to Support Vouchers
Through his press secretary Robert Gibbs, president Obama has declared that he will reverse congressional Democrats’ phase-out of the DC Opportunity Scholarships program. The scholarships make private schooling affordable for 1,700 poor DC children, most of whom would be forced back into the District’s broken public school system if it were to end.
However — yes, there’s always a however — there’s every indication that president Obama will do the minimum necessary to keep the program going at its current size, and will not help to expand it.
This is nevertheless a crucial milestone. There is finally a major national Democratic leader who is beginning to catch up to his state-level peers. Democrats all around the country have been supporting and signing small education tax credit programs because they realize that these programs are win-win: good for their constituents and good for their long-term political futures.
The old guard of the Democratic party — typified by congressional leaders — still imagines that school choice is bad for them. They still think that they can roll back time to a period when the public school monopoly was inviolate. That time has passed. Real educational freedom is spreading — slowly — around the country. That is not going to stop.
The last Democrats to be found jamming their fingers into the dike, hoping to stop the flight to educational freedom, will find their political careers swept away when that dike finally crumbles.
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