Archive for October, 2009
Recapping the Costs of the REAL ID Revival Bill
In late July, the Senate Homeland Security and Governmental Affairs Committee passed a new version of PASS ID, the REAL ID revival bill. I’ve posted about various dimensions of it: the national ID question, the politics of PASS ID, whether PASS ID protects privacy, a run-down of the Senate hearing on it, and the inexplicable support of the Center for Democracy and Technology for this national ID law.
Three months later, the committee still has not reported the bill, meaning that the public doesn’t get access to the version the committee passed. (A resolution in the House would require committees there to publish amendments to bills within 24 hours.) But the Congressional Budget Office scored the bill this week. That is often a signal that legislation is on the move.
So it’s a good time to look at costs again. The National Governors Association and the National Conference of State Legislatures both premised their support for PASS ID on the idea that it would reduce costs to states to just $2 billion.
But in July I examined the likely costs of PASS ID and NGA’s cost calculations. To save you a burdensome click, here are some highlights:
Bruce Bartlett’s VAT Delusions
I’ve known and liked Bruce Bartlett for more than 20 years, so you can imagine my dismay that he is now arguing for a value-added tax (VAT). I’m not sure whether his mind has been captured as part of a remake of Invasion of the Body Snatchers or if he’s just been hanging around Washington for too long, but his implication that it is possible to be a pro-market conservative while supporting a huge new tax to finance bigger government is absurd.
Conservatives (not counting the big spenders who call themselves “compassionate conservatives”) share the libertarian goal of smaller government. And trying to achieve smaller government by raising taxes is akin to treating alcoholics by giving them keys to a liquor store.
The VAT is a particularly bad idea because it would be a huge new source of revenue, as Bartlett acknowledges in an article for Forbes.com:
Based on the experience in other countries, I estimate that a U.S. VAT could realistically tax about a third of the gross domestic product (GDP), which would raise close to $50 billion per percentage point. If we adopted Europe’s average VAT rate of 20%, we could raise $1 trillion per year in 2009 dollars.
He makes the point that a VAT does not do as much damage, per dollar raised, as the personal or corporate income tax, but so what? That would only be a compelling argument if the VAT was used to eliminate other taxes. At the risk of pointing out the obvious, that’s not what he’s proposing.
Interestingly, even though his core argument is that we should adopt a VAT to give the government additional revenue, Bartlett tries to be all things to all people by mentioning that a VAT could replace other taxes:
Replacing the corporate tax with a VAT would unquestionably improve the competitiveness of all U.S. exporters.
Even here, though, his argument is misleading. A VAT would have no impact on U.S. exporters. All the benefits would occur only because the corporate income tax would disappear. Not that this matters since Bartlett is not advocating for that position.
Understanding the Consequences of Internet Regulation
In an effort to achieve “network neutrality” online, the FCC is starting to write new regulations for Internet providers. Reuters reports:
U.S. communications regulators voted unanimously Thursday to support an open Internet rule that would prevent telecom network operators from barring or blocking content based on the revenue it generates.
The proposed rule now goes to the public for comment until Jan. 14, after which the Federal Communications Commissions will review the feedback and possibly seek more comment. A final rule is not expected until the spring of next year.
Cato Director of Information Policy Studies Jim Harper appeared on Fox News this week to discuss the FCC decision. “This is governmental tinkering with a market place that is working really well and growing right now,” said Harper. “The last thing we need is to cut that off.”
There are ways to achieve net neutrality without regulation, says Timothy B. Lee:
An important reason for the Internet’s remarkable growth over the last quarter century is the “end-to-end” principle that networks should confine themselves to transmitting generic packets without worrying about their contents. Not only has this made deployment of internet infrastructure cheap and efficient, but it has created fertile ground for entrepreneurship. On a network that respects the end-to-end principle, prior approval from network owners is not needed to launch new applications, services, or content.
…Like these older regulatory regimes, network neutrality regulations are likely not to achieve their intended aims. Given the need for more competition in the broadband marketplace, policymakers should be especially wary of enacting regulations that could become a barrier to entry for new broadband firms.
More Dairy Shenanigans — and It’s Not Over Yet
Dairy farmers were allocated $350 million in extra assistance recently (as if the billions we artificially funnel to them every year are not enough) because of plummeting prices. The assistance will come mostly in the form of cash, although the federal government will also buy more dairy products for nutrition programs, and at increased prices. (Not to be outdone, hog farmers are asking for the same.) An article from Wednesday’s edition of the Wall Street Journal Online has the details.
In a rare fit of candor, one dairy farmer group admits that the emergency money, and the decades-old programs, are not enough:
The National Family Farm Coalition, a Washington-based farm-advocacy group, is asking for an overhaul of the milk-pricing system, which is based on a complex Depression-era regime administered by the federal government.
So far I’m with them, but then they lose me with this:
The coalition supports an idea that would keep prices stable by creating an oversight entity to manage the amount of milk a farmer can produce.
“While we appreciate this money, it won’t be enough though to keep farms from going broke,” the coalition said in a statement.
Ah, milk quotas. Good idea. And we can learn from the Europeans about how to pull that trick off.
Seriously? We need a new “oversight entity” to actually “manage the amount of milk a farmer can produce”? Talk about fatal conceit. That’s fatal insanity to think that a centralized agency can manage milk production on a farm-level basis.
The FY 2010 Defense Authorization
Yesterday Congress passed the $680 billion FY 2010Defense Authorization Bill, which authorizes the largest such budget since the end of World War II. If, as is all but certain, President Obama signs the legislation, he will have failed to halt the inexorable growth in military spending, and he will signal to American taxpayers that they should expect more of the same. What’s worse, most of this money is not geared to defending America. Rather, it encourages other countries to free-ride on the United States instead of taking prudent steps to defend themselves.
The defense bill represents only part of our military spending. The appropriations bill moving through Congress governing veterans affairs, military construction and other agencies totals $133 billion, while the massive Department of Homeland Security budget weighs in at $42.8 billion. This comprises the visible balance of what Americans spend on our national security, loosely defined. Then there is the approximately $16 billion tucked away in the Energy Department’s budget, money dedicated to the care and maintenance of the country’s huge nuclear arsenal.
All told, every man, woman and child in the United States will spend more than $2,700 on these programs and agencies next year. By way of comparison, the average Japanese spends less than $330; the average German about $520; China’s per capita spending is less than $100.
The massive imbalance between what Americans spend on our military, and what others spend, flows directly from our foreign policy. Several decades ago, Washington opted to be the world’s policeman, and has ever since discouraged other countries from spending more on their own defense. President Obama has tacitly questioned this approach in the past, and has called on other countries to step forward and do more. But his actions will drown out his words.
The president has defended his support for continued bloated military spending, with additional monies going especially to a larger conventional army, as a way to reduce the strains on our troops and their families. This is a noble impulse. But a far better way to relieve the burdens on our overstretched force is to rethink all of our global military commitments, and align our strategy to our means. A new grand strategy, predicated on self-reliance and restraint, would relieve the burdens from the backs of our troops and from taxpayers. That new strategy would compel other countries to finally assume their rightful responsibilities in defending themselves and their respective regions.
The governing class in Washington has consistently resisted such a change. It is enamored of its ability to manage not just the rest of the country, but indeed the rest of the world, and sees no reason to change. Neither, it would seem, does President Obama. By embracing a military budget explicitly geared toward sustaining the status quo, the president virtually ensures that other countries will not share in the costs of keeping the world relatively prosperous and at peace.
Executive Comp Restrictions Could End Up Costing the Taxpayer
The Obama administration’s announcement this week on cash compensation for those seven institutions receiving “extraordinary assistance” has generated the all-too-predictable responses. Either you think executives at the entities are bad and greedy and should be punished, or you believe this is just the first step in an all-out class war. Sadly the real victim in all these efforts has been, and continues to be, the taxpayer.
Now that the taxpayer is the most significant shareholder in these companies, the top priority for Washington, as representative of the taxpayer, should be to see these companies return to profitability. Quite simply, if these companies are not profitable, that loss will fall on the taxpayer, as shareholder.
And of course, without the ability to retain talent, it is all the more likely that these companies will not maintain profitability. I suspect the competitors of these seven are already eyeing their best talent. And let’s not kid ourselves, leaving these companies stocked with mediocre employees will not help taxpayers get their money back.
In trying to punish the bailed-out companies, we are also punishing ourselves. This is one of the very reasons we should never have bailed them out in the first place: once we are the owners, there fate and ours are linked.
Talking about Ayn Rand
Two new books about Ayn Rand are just hitting the bookstores: Ayn Rand and the World She Made, by Anne C. Heller, and Goddess of the Market: Ayn Rand and the American Right, by Jennifer Burns.
As Janet Maslin writes in the New York Times, reviewing the two books, the 1970s were “one Rand moment. This seems to be another.” Brian Doherty, historian of libertarianism, agrees. Sales of The Fountainhead are soaring in India. The chairman of BB&T was inspired by her work to renounce lending to eminent-domain projects and to spread her ideas in schools and colleges. She’s being blamed for the financial crisis on government TV, but the takeovers and bailouts have caused sales of Atlas Shrugged to soar.
Both the books are getting good reviews, though reviewers have varying perspectives on the subject of the bios. Rand has been denounced in the New Republic (yet again), and defended against TNR‘s criticisms by our own Will Wilkinson. Embattled governor Mark Sanford declares her prophetic in Newsweek. New York magazine calls her “Mrs. Logic,” not without irony. Caroline Baum of Bloomberg says Rand would tell us to stop blaming capitalism for problems caused by regulation and cronyism. Conor Friedersdorf can’t believe how wrong Hendrik Hertzberg gets her in the New Yorker.
Find out for yourself next Wednesday when Burns and Heller speak at a Cato Book Forum, “The Life and Impact of Ayn Rand.” If you can’t get to Washington, watch it on the web.
Attending to Business
In today’s Politico Arena, the editors ask:
Is Obama “dithering” on Afghanistan (Cheney) or fulfilling his “solemn responsibility” (Gibbs)?
My response:
President Obama got some adult criticism this week from Dick Cheney, none too soon. While the risk to American troops in Afghanistan grows, Obama dithers, unable to decide whether to get in or get out — whether to be the one thing the Constitution authorizes him to be, Commander in Chief. Yet he finds time to fly off to Copenhagen to promote Chicago for the Olympics, to insinuate himself in local political campaigns, to go on “Fox hunts,” yesterday excluding Fox News from the White House pool allowed to interview his executive pay czar, and now, we learn, to slash executive salaries at companies not only partially owned but simply regulated by the government. Are there no limits to the man’s hubris?
Even the Washington Post this morning, no bastion of free-market fervor, noted that this “represents a signal moment in the history of the American economic experiment,” moving us ever closer to the European model. But it was Arena contributor Allan Meltzer who yesterday hit the nail on the head: ”All the noise about pay and pay cuts is part of an effort to divert the public’s attention from the main cause of the mortgage fiasco — the role that Congressman Frank and others had in creating the mortgage crisis by refusing to limit the activities of Fannie Mae and Freddy Mac after 2003.” That these regulators will be able to calculate the salary that is appropriate to discourage excessive risk-taking is simply comical.
And so we have here a textbook example of modern government: Obama fails to do or do well what he is authorized to do, yet he strides into matter far beyond his authority — or competence. He seems not to understand the Constitution he once taught, and more recently promised to uphold.
Neoconservatism and Militarism
Matt Yglesias identifies a puzzle, comparing Cold War/Irving Kristol neoconservatism to today’s Weekly Standard Wilsonianism:
[E]ven though the high-level theoretical content of the realpolitiker 70s version of neoconservatism and the Wilsonian 2000s version of neoconservatism seem very different, the operational content is extremely similar. You have support for higher defense budgets, a tendency toward threat-inflation and hysteria, a belief in an aggressive military posture and extensive saber-rattling, hostility to negotiations, and hostility to international law both in theory and in practice. This was initially presented to the world as a “realistic” alternative to lefty critiques of US support for anti-communist dictators and more recently appeared as an “idealistic” critique of lefty reluctance to launch wars, but the continuity between the views is enormous.
What Matt doesn’t say is why the policy outcomes stayed largely the same despite shifting theoretical sands. I think this piece by Brian Schmidt and Michael Williams can help shed some light on the problem.
To Make Health Care Affordable, Don’t Add Regulations — Repeal Them
David Freddoso of the Washington Examiner reveals how the monopolies that states enjoy over licensing doctors, nurses, and other clinicians reduce access to care for low-income Americans:
Stan Brock just wants to help. The former co-star of “Wild Kingdom” wants to deliver free medical, dental and vision care to the poor. Whereas most politicians talk about “bending the cost curve” in health care, Brock simply wants to break it – to provide care free of charge, at the hands of unpaid volunteer doctors and dentists using donated equipment.
Brock’s group, Remote Area Medical, wants to bring its services to Washington, and soon. He wants his volunteer eye doctors to grind new glasses on the spot for those having trouble seeing.
He wants his dentists to pull rotten teeth and perform root canals in badly neglected mouths. He wants to give checkups and HIV tests to the uninsured and the underinsured. No questions asked.
The only question is whether the bureaucrats will let him do it.
That sounds like hyperbole. It’s not. Read the whole thing (it’s short) and you’ll learn how in-state clinicians shamelessly use monopolistic licensing laws to protect themselves from competition — even at the cost of denying medical care to poor people.
Yesterday, Cato released a study where I advocate breaking up the state’s licensing monopolies and making state-issued licenses portable. Such a law would completely solve Remote Area Medical’s problem.
This Cato study by economist Shirley Svorny reveals how clinician licensing laws do more harm than good.
(Cross-posted at Cato@Liberty Politico‘s Health Care Arena.)
More Supreme Court Review on the Road
As an update to an earlier post about my speaking schedule this fall, here are my remaining public events through Thanksgiving. All these events, other than the one on Nov. 3, are sponsored by the Federalist Society (and in some cases co-sponsored by other organizations) and all are open to the public. As always, if you decide to attend one of the presentations after learning of it from this blog post, please feel free to drop me a line beforehand, and do introduce yourself after the event.
Event info after the jump.
One Nation Under Double Jeopardy
The Senate is about to vote on Defense Department funding with an expanded federal “hate crimes” bill. This well-intentioned piece of legislation threatens to make violations of the fundamental right against Double Jeopardy a routine practice, as federal courts will now have the power to re-prosecute defendants for what are traditionally state crimes.
The House removed language that the Senate put in place to ensure that the “hate crimes” provisions did not stretch to encompass free speech, threatening to attach criminal liability to core rights of free expression.
This expansion of federal jurisdiction guarantees that high profile cases will be retried until a guilty verdict is obtained to satisfy political factions. This politicization of justice will only harm our courts and our freedoms. The Senate should vote down this threat to the fundamental rights of all Americans.
Now for some quick background reading:
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