Archive for April, 2009
New at Cato
New articles, videos and Podcasts today:
- In the Chicago Tribune, David Boaz questions whether Arlen Specter’s party change will take the Senate further to the left.
- Appearing on News Channel 8 in Washington, Boaz comments on Obama’s record as president.
- Watch Brandon Arnold discuss Obama’s first 100 days in office on BNN Canada.
- For more on Obama’s first 100 days, watch Gene Healy’s interview on AP TV.
- Join Cato on Capitol Hill tomorrow to see Chris Preble and Paul J. Saunders discuss Preble’s new book, The Power Problem: How American Military Dominance Makes Us Less Safe, Less Prosperous, and Less Free.
- Chris Preble will be on Capitol Hill again on May 11 with Jim Harper to explain why overreaction and misdirection play into the strategy of terrorism.
- In Thursday’s Cato Daily Podcast, legal scholar Ilya Shapiro discusses how a Supreme Court decision could change racial preference hiring laws in the United States.
Mixed Messages on Swine Flu
The government has taken the sensible step of creating a website to disseminate information on the Swine Flu. There’s even a “Swine Flu & You” section.
Unfortunately, someone forgot to tell Vice President Biden.
On the Today Show, Biden lauded the government’s focus on identified vectors and not on a wholesale closing of the border with Mexico or shutting down commercial airline traffic. Then he contradicted this rational message by saying he “wouldn’t go anywhere in confined places now” and discourages travel by plane, subway, or automobile.
No word on whether this will impact administration plans to use “high-speed rail” to revolutionize transportation in America.
In Ensuring Credit Card Holders’ ‘Rights,’ Congress May Actually Take Away Their Credit
With a vote expected today on the so-called Credit Card Holders’ Bill of Rights, the U.S. House is poised to follow up on President Obama’s finger-wagging rhetoric about fees and other perceived sins of the credit industry.
But Congress should keep in mind that credit cards have been a significant source of consumer liquidity during this downturn. Now is the worst time to push measures that would curtail the availability of consumer credit, and that is exactly what the Credit Card Holders’ Bill of Rights will do.
While few of us want to have to cover our basic living expenses on our credit card, that option is certainly better than going without those basic needs. The wide availability of credit cards has helped to significantly maintain some level of consumer purchasing during this downturn.
It was the massive under-pricing of risk, often at the urging of Washington, that brought on our current financial market crisis. To now pressure credit card companies not to raise their fees or more accurately price credit risk, will only reduce the availability of credit while undermining the financial viability of the companies, ultimately prolonging the recession and potentially increasing the cost of bank bailouts to the taxpayer.
The Federal Reserve recently issued regulations targeting practices in the credit card industry. While this regulation was itself overkill, it should be given an opportunity to work, and be modified if it results in significant contraction of credit. It is far easier to go back and change harmful regulations than legislation.
Arne Comes Through…in a Bad Way
Yesterday, I had an op-ed go up on Townhall.com summarizing what I think of President Obama’s first 100 days when it comes to education. Long story short: Lots of nice-sounding rhetoric, but the opposite of real reform.
Today, U.S. Secretary of Education Arne Duncan — who has embodied the administration’s all-talk, awful-action approach to education — did me a real solid by penning an op-ed for CNN.com beautifully illustrating exactly what I wrote. Whether it’s his effusive praise of his boss for shoveling tons of federal dough into already obese schools, or his empty, jargon-soaked rhetoric about change – “These discretionary funds are a carrot for educators who will break the mold, scale up successful programs and transform whole school systems” — Duncan really drives home my point.
And so, thanks for coming through for me, Arne! Now, about those DC voucher kids…
Chrysler: Everybody Relax, This Is Exactly What Should Have Happened
A small group of Chrysler debt holders rejected the Obama administration’s restructuring plan last night, leaving Chapter 11 bankruptcy as the most salient option for the company.
The Obama administration accused the investors who walked away of “failure to act…in the national interest.” But it’s not difficult to understand why these secured creditors rejected the government’s offer of essentially 29 cents on their investment dollar. If that is how the Obama administration treats capital markets, how exactly do they expect to spur private investment in American companies, as the White House claims it wants to do?
Bankruptcy reorganization will probably yield a better deal for investors than the government’s plan. It also will imbue the process with more financial sanity than anything the Obama administration cooked up. For instance: the historically overindulged United Auto Workers might be forced to make more “sacrifices” than being handed a 55 percent stake in the company—essentially what the core of the administration’s plan would have accomplished—or reducing their CBA-mandated breaks from 16 minutes to 13 minutes.
Bankruptcy has been the best option all along. That was clear the moment it was determined that new private capital or adequate sales revenues would not be available to fund operations. But once the Bush administration circumvented Congress to throw Chrysler (and GM) a lifeline, and the Obama administration followed suit with implicit backing, uncertainty prevailed and the problem persisted. The bankruptcy process will produce a less politically driven solution.
Filed under: Cato Publications; Finance, Banking & Monetary Policy; Trade and Immigration
Private Schools Save Children Rejected by the System
There were many compelling speakers in South Carolina last week making the case for school choice. This man, Colonel Nathaniel Green, was one of the best. In about two 1/2 minutes, he explains better than I ever could why a top-down system doesn’t work for many children. I liked it so much, I’ve also transcribed most of it below.
“Failing schools” are not failing schools, they’re failing students. Failing students is failing America.
I started out working in the system. The system is broken. I was frustrated. I started a program . . . The young men that are standing behind me, they represent kids that the system kicked out who are now achieving.
The gentleman in the black shirt, he came from Brentwood Middle School. His parents couldn’t afford [our school]. Contrary to popular opinion [of those who keep saying that private schools are only for the rich], he came for free for six years because we were concerned about him. We sacrificed for him. Get that straight.
When he came to our school, he tested below the fourth and fifth grade level in the sixth grade. When he graduated from Eagle [Military Academy] six years later, he had a 1300 on the SAT, it’s documented. He got a Life Scholarship through the state of South Carolina, and he carriers a 3.4 average in college right now at Trident University.
I can repeat this story over and over again [for other students]. By the way, I went to the public schools to show them my program. They weren’t interested. I went to Dr. Rex [, South Carolina’s state Superintendent of Education]. He wouldn’t call me.
I went to the people to try to get them to work with me to help our young men because we’re losing our young men in our state. And I think it’s time to put aside our partisan politics, it’s time to stop playing games, and it’s time to start helping our young people in this state. Vote for this [school choice bill].
DoJ Fails to Report Electronic Surveillance Activities
Unlike with wiretaps, law enforcement agents are not required by federal statutes to obtain search warrants before employing pen registers or trap and trace devices. These devices record non-content information regarding telephone calls and Internet communications. (Of course, “non-content information” has quite a bit of content – who is talking to whom, how often, and for how long.)
The Electronic Privacy Information Center points out in a letter to Senate Judiciary Committee Chairman Patrick Leahy (D-VT) that the Department of Justice has consistently failed to report on the use of pen registers and trap and trace devices as required by law:
The Electronic Communications Privacy Act requires the Attorney General to “annually report to Congress on the number of pen register orders and orders for trap and trace devices applied for by law enforcement agencies of the Department of Justice.” However, between 1999 and 2003, the Department of Justice failed to comply with this requirement. Instead, 1999-2003 data was provided to Congress in a single “document dump,” which submitted five years of reports in November 2004. In addition, when the 1999-2003 reports were finally provided to Congress, the documents failed to include all of the information that the Pen Register Act requires to be shared with lawmakers. The documents do not detail the offenses for which the pen register and trap and trace orders were obtained, as required by 18 U.S.C. § 3126(2). Furthermore, the documents do not identify the district or branch office of the agencies that submitted the pen register requests, information required by 18 U.S.C. § 3126(8).
EPIC has found no evidence that the Department of Justice provided annual pen register reports to Congress for 2004, 2005, 2006, 2007, or 2008. “This failure would demonstrate ongoing, repeated breaches of the DOJ’s statutory obligations to inform the public and the Congress about the use of electronic surveillance authority,” they say.
It’s a good bet, when government powers are used without oversight, that they will be abused. Kudos to EPIC for pressing this issue. Senator Leahy’s Judiciary Committee should ensure that DoJ completes reporting on past years and that it reports regularly, in full, from here forward.
Filed under: Law and Civil Liberties; Telecom, Internet & Information Policy
Don’t Turn America into France
Veronique de Rugy of the Mercatus Center (and formerly with Cato) narrates a new video warning that it would be a mistake to turn America into a European-style welfare state, which is the fate of her native country.
The video is a joint production of the Center for Freedom and Prosperity and Reason TV. Enjoy.
Congressional Priorities and the FY2010 Budget Resolution
Yesterday the House and Senate passed a bloated $3.5 trillion budget blueprint for fiscal year 2010. According to House Speaker Nancy Pelosi (D-CA), “What is important to us as a nation is reflected in this budget. It’s a very happy day for our country.”
Included in the blueprint is language that calls for an equal pay raise between military employees and civilian federal employees. President Obama had originally proposed slightly higher pay for members of the armed services. The exact pay raise for bureaucrats will be determined in the appropriations process, but it’s likely to be a hike of anywhere from 2.9% to 3.9%. This would come on top of last year’s 3.9% raise.
Omitted from the blueprint was language included in the Senate version by Sen. Tom Coburn (R-OK) that would have “required agency managers to report to Congress within 90 days of the bill’s passage on any programs that are ‘duplicative, inefficient or failing, with recommendations for eliminating and consolidating these programs.’” A simple report to be issued by the agencies themselves. That’s it. There would be no guarantee that anything would actually be cut or consolidated.
Is it really a happy day for our country when Congress passes a blueprint to add another $1 trillion plus to the skyrocketing national debt? Is it really good for the struggling economy that the parasitic bureaucrats already living comfortably at the expense of the productive members of society are going to get another fat pay raise? Is it really “important to us as a nation” to make sure federal agencies are not instructed to pick out the particularly woeful programs under their watch?
It may be a happy day for politicians and bureaucrats, but it’s another kick in the teeth for taxpayers.
Rally for School Choice in the District
Congress and the Obama administration issued a death sentence for the District’s Opportunity Scholarship Program. That means more than 1,700 students could be forced out of good schools into the dangerous, failing, and expensive DC public school system.
Everyone who cares about these children and school choice should head to Freedom Plaza this coming Wednesday, May 6th from 1:00 – 2:00 pm for a rally to demonstrate support for these children and educational freedom. Hundreds of parents and children are coming to stand up and be heard, and they need all the support we can provide . . .
Adam Smith Goes to Somalia: “Competition Keeps Prices Low”
Many people would agree that modern-day Somalia represents a Hobbesian state of nature. But could anarchy strengthen Somalia’s private sector? This article is certainly very old, but I came across it yesterday and thought the argument would be of interest to political theorists and classical liberals:
…local businesspeople find it easier to do business in a country where there is no government. “There is no need to obtain licences and, in contrast with many other parts of Africa, there is no state-run monopoly that prevents new competitors setting up. Keeping price low is helped by the absence of any need to pay taxes.”
Of course, the absence of a stable and legitimate political and judicial system, compounded by unyielding internecine violence, means individual and private property rights can never be fully protected and we aren’t likely to see foreign businesses flocking to this chaotic country in the foreseeable future. Generally speaking, the proper role of government is to protect individual rights. But the proper role of our government — abroad — should be limited to instances when our national sovereignty or territorial integrity is at risk. As exemplified in Somalia, America’s attempts to stabilize failed states or pacify foreign populations usually fail, exacerbate already disastrous situations, and are, in principle, gratuitous abuses of American power [See: the calamitous U.S.-backed Ethiopian invasion of Somalia].
Filed under: Foreign Policy and National Security; International Economics and Development; Political Philosophy
How Protectionism Crashed the World Economy…and How to Stop It This Time Around
A coalition of more than 70 groups around the world, from Canada to Brazil to Kyrgyzstan to Germany to China to Japan to Kenya, has joined together to stop the dangerous stirrings of protectionism. The FreedomToTrade.org coalition (coordinated internationally by the Atlas Economic Research Foundation and the International Policy Network) has circulated a petition (signed by over 1,000 economists and thousands of others) and is now producing documentaries to alert the public to the dangers posed by protectionism. This one is on the role the Smoot-Hawley Tariff played in turning a serious recession into the Great Depression.
The mini-documentary is also being made available in 12 other languages. The Spanish version will be available on Cato’s Spanish-language project, ElCato.org. Others are available on YouTube.
This information is important and needs to be widely shared. Pass it on…
Filed under: International Economics and Development; Trade and Immigration
Truth at Last on Capitol Hill
Truth may be a rare commodity in the halls of Congress, but at least now there’s a statue of the abolitionist and feminist Sojourner Truth.
Will Specter Turn Left?
I offer some evidence in today’s Chicago Tribune:
Last week, Pennsylvania Sen. Arlen Specter was one of the most liberal Republicans in the Senate. Today, he’s the most conservative Democrat….
But party-switchers often change their votes as well as their labels.
The day after Republicans won control of the Senate in 1994, Sen. Richard Shelby of Alabama switched to the Republican Party. He had been a relatively conservative Democrat and had high-profile conflicts with President Bill Clinton, so the switch wasn’t a great surprise. But observers might be surprised to look back at what happened to Shelby’s voting record. According to the American Conservative Union, for eight years Shelby’s conservative voting percentage had ranged between 43 and 76. Even in 1994, as Shelby often found himself opposing the Clinton administration, the ACU gave him only a 55. But from 1995 to 2000, his ACU rating only once dipped below 90, and he scored a perfectly conservative 100 in 2000 and 2001….
In 2001, Sen. Jim Jeffords of Vermont left the Republican Party and became an independent. Conservatives said he was actually voting like a liberal Democrat. But that wasn’t quite right. Since he entered the Senate in 1989, his average ACU rating had been 27 — definitely the most liberal Republican, but not Ted Kennedy country. His ADA average was 58 — liberal for a Republican, but a long way from Vermont Democrat Pat Leahy. After the switch, Jeffords’ ACU rating started falling like GOP approval ratings: from 40 in 1999 to 29 in the year of the switch to 6, 10, 4, 8 and 4 during the rest of his tenure.
Specter says he won’t become a party-line Democrat, any more than he’s been a reliable Republican vote. But the evidence from previous party-switchers is that his votes will end up much more in line with his new party.
Love the Cards, Hate the Card Issuers
God hates the sin but loves the sinner, we are told. Americans have a similar attitude towards credit cards. They love the cards but hate the card issuers.
Naturally, President Barack Obama has picked up on this sentiment and wants the credit card companies to be “fair.” Reports the Washington Post:
The Obama administration yesterday called for an end to unfair credit card industry practices such as retroactive interest rate increases for any reason, late-fee traps that penalize borrowers with weekend or middle-of-the-day deadlines and teaser rates that last less than six months.
In a written statement released by the Treasury Department, the administration outlined practices it would like Congress to reform as it considers two bills that would crack down on the industry. One proposal would force card companies to apply payments above the minimum amount to the highest interest rate debt. To crack down on over-limit fees, the administration would also like Congress to require card companies to get customers’ permission to set up accounts so transactions over the limit can still be processed.
There are lots of reasons to criticize the practices of credit card companies, but many of the rules are simply mechanisms to charge riskier borrowers more. If you pay off your bill every month, you don’t pay the extra fees and interest. If you are more disorganized, short on cash, or both, you pay more.
Higher charges make it possible to provide more credit to more people. Of course, politicians believe in the latter but not the former. Banks should provide credit cards, make loans, and issue mortgages to everyone, irrespective of credit standing, at rates akin to those charged Bill Gates. Anything more is viewed as a variant of “predatory” lending deserving condemnation.
Maybe it would be best for some people not to buy so much on credit, but that isn’t — at least so far — the government’s decision. However, it would be more honest if government branded people with the Scarlet C and banned them from borrowing than prohibiting companies from charging higher rates and fees to reflect higher credit risks.
The credit card debate is stranger than most in Washington. Listening to critics you’d think that the card companies were dragooning people off the streets, forcing them at gunpoint to sign up for cards, and demanding that they spend money else their children will be kidnapped and sold into slavery. Precisely who was forced to accept and use these terrible cards with their terrible terms? No one.
Instead of posturing as defenders of the body politic, crusading politicians should, as my friend Don Boudreaux of George Mason University suggested, give up their day jobs and start credit card companies. These entrepreneurs then could offer consumers better cards with less onerous terms, making everyone better off.
Any takers?
Filed under: Finance, Banking & Monetary Policy; Government and Politics; Regulatory Studies
New at Cato
New articles, videos and Podcasts today:
- Ilya Shapiro asks the Supreme Court to review a medical law case with First Amendment issues in a new legal brief.
- Doug Bandow argues against economic retreat in East Asia.
- At National Review online, Edward Crane discusses Obama’s 100-day record.
- Also at National Review online, James Tooley tells the story of black-market schools in impoverished countries.
- Appearing on Fox Business Network, Gerald P. O’Driscoll Jr. discusses the Federal Reserve’s current meeting.
- In Wednesday’s Cato Daily Podast, Aaron Yelowitz discusses the problems with employer health care mandates.
Not Everyone Needs to Go to College
William F. Buckley famously said that he’d ”rather entrust the government of the United States to the first 400 people listed in the Boston telephone directory than to the faculty of Harvard University.” That was, of course, a swipe at the practical wisdom of those people who spend their lives teaching in ivory towers, and a deserved one. But score one for the egg heads when it comes to identifying the practical reality of modern higher education.
According to a new report from Public Agenda, while college presidents blather on about their impoverished schools and what a tremendous public good higher education is, the professors (at least those that Public Agenda interviewed) are pretty darn realistic about the real problems in academia. This quote, echoed in professorial statements throughout the report, captures exactly what a lot of us libertarian types have been saying for years:
I think a big problem facing higher education is the idea that everybody should get into college. I don’t think everybody is designed to go to college. Not everybody needs to go to college. I know that’s shooting ourselves in the foot, because that’s where our jobs are. The more people show up at our schools, the more jobs we get. Not everybody needs to go to college. Not everybody should. Not everybody’s prepared.
Public Agenda doesn’t identify who the speakers are in its report, but whoever said the bit above – or any of the similar statements about too many people going to college or being pushed to go to college — actually deserves to get tenure.
The Stimulus Feeding Frenzy
Billions and billions of dollars! Get yours today!
I’ve written before about the massive lobbying game in Washington to get your own special interests written into the stimulus and budget bills. And about the efforts to pressure governments into spending that money NOW.
Today a friend sent me a new piece of the incredible expanding stimulus economy. A publishing company has created a new newsletter on how to keep up with “ever-changing opportunities and the complex requirements to apply for them” — The Money for Main Street Monitor. Yes, for only $229 a year, with this special offer, you can keep up with the lucrative and ever-changing “new stimulus funding opportunities.”
I’m omitting the specifics so as not to give this parasitical industry any more publicity, but here’s the text of the email advertisement:
Dear Nonprofit Professional,
Billions of dollars from the Obama stimulus plan are becoming available daily for funding thousands of new state, local and nonprofit programs!
And while it’s extremely time consuming and difficult to keep up with the ever-changing opportunities and the complex requirements to apply for them, we can help make that task easier than you’d imagine.
That’s why [the company] is proud to introduce our newest and much-needed online service: The Money for Main Street Monitor.
Just click on or cut and paste the following link into your Web browser to take advantage of a special one-week offer on this continuously updated service:
…
Continuous Stimulus Funding Updates
While we have diligently kept our readers up to date on the billions of dollars in funding coming from the Obama stimulus package, many tell us they need much more coverage!
Consequently, we have assigned a team of experienced Washington, DC-based editors to focus exclusively on new stimulus funding opportunities for health care, family services, education, mental health, disabilities and substance abuse programs, housing and community development!<
Through continuously updated articles, subscribers to this new online service will be kept up to date on the latest funding opportunities as soon as they emerge. And with our online format, subscribers will have access to our user-friendly search tools to instantly find the funding opportunities most suited for their organizations!
Plus, our updates — unlike those on government Web sites — are in plain English and easy to find. And, we’ve included a wealth of grant-writing tips designed to help your organization get its share of stimulus funding!
We know how important it is for every organization to watch their dollars closely these days, and we’re doing are best to help. That’s why we are offering you a specially reduced rate for this much-needed publication, The Money for Main Street Monitor.
Just click on or cut and paste the following link into your Web browser to find out more about this special one-week offer:
…
Or you can call in your order toll free at 1-800-[GET OTHER PEOPLE'S MONEY].
This isn’t the only company making such offers. Lobbyists, consultants, newsletter publishers, and others will be making money this year guiding their clients to the pot of gold at the end of the stimulus. But in economic terms, all this effort is deadweight loss. Instead of devoting time and talent and resources to the production of real economic value, these people are being lured into the parasite economy, jockeying for money extracted from productive workers and businesses and redistributed by a Washington bureaucracy and the lobbyists that revolve around it.
State Secrets Case Proceeds
A three-judge panel from the Court of Appeals for the Ninth Circuit ruled yesterday that the State Secrets Privilege, a doctrine barring the introduction of sensitive information as evidence, did not bar a suit by former CIA detainees. (H/T SCOTUSBlog)
The plaintiffs allege that the defendant, a contract airline associated with the extraordinary rendition program, knowingly flew them to countries where they would be tortured. The panel held that individual pieces of evidence may be subject to the Privilege, but a suit could not be entirely barred by a government assertion that sensitive information could be revealed.
This presents a split in federal circuit rulings on the State Secrets Privilege. The Fourth Circuit held that the Privilege could bar a civil suit entirely. This expansion of the State Secrets Privilege, started under Bush and continued under Obama, is a departure from the fact-specific evaluation described by the Supreme Court in U.S. v. Reynolds. “Judicial control over the evidence in a case cannot be abdicated to the caprice of executive officers.”
As my colleague Tim Lynch has written before, the State Secrets Privilege often has little to do with keeping secrets and a lot to do with avoiding liability. All that remains to be seen is whether the Obama administration will appeal the ruling, either to an en banc rehearing by the full Ninth Circuit or at the Supreme Court.
Filed under: Foreign Policy and National Security; Law and Civil Liberties
Bipartisan Support for Choice Grows Every Year
When the Florida Legislature passed its education tax credit program in 2001, only one Democrat supported the measure.
Last year, the legislature expanded the program with votes from one third of statehouse Democrats, half the black caucus and the entire Hispanic caucus.
Last week, nearly half of House Democrats —47 percent—voted to significantly expand the revenue base for the state’s business donation tax credit program. House Republicans voted 100 percent in favor.
And yesterday, nearly a third of Senate Democrats—31 percent—voted to expand the tax credit program. And 92 percent of their Republican colleagues voted for the bill.
In all, 43 percent of state Democratic legislators voted in favor of education tax credits. Governor Crist is expected to sign the bill shortly.
They are not alone.
In 2006, Democratic governors in Arizona, Iowa and Pennsylvania signed new or expanded tax-credit initiatives. That same year, a Democrat-controlled legislature in Rhode Island passed a donation tax credit. A Democratic governor and legislature in Iowa raised their tax credit dollar cap by 50 percent in 2007.
Partisanship on choice is fading away because many politicians have come to realize that school choice saves money and children. The truth is beginning to spread; school choice is the most proven and effective systemic reform available.
The future of education reform is looking bright in the Sunshine State and across the nation.
Cato on Facebook
Cato on Twitter
Cato on YouTube
Cato Tweets