Archive for April, 2010

‘Taking the Rest of His Life Away’

Posted by Tim Lynch

Upon sentencing a 24 year old to 27 years in federal prison on a drug charge, the Federal Judge Alan Bloch lamented, “I was basically taking the rest of his life away.”

Go here to read about that case, which is coming before the Supreme Court for review.  For related Cato scholarship on sentencing, go here and here (pdf).  For Cato work on the drug war, go here.

Arizona Turns Immigrant Workers into Criminals

Posted by Daniel Griswold

Lawmakers in Arizona must believe the state’s law enforcement officers have too much time on their hands.

A bill passed by the legislature yesterday will make it a misdemeanor to be in Arizona without proper immigration paperwork. It also directs Arizona police to question anyone about their immigration status if they have reason to suspect the person is in the country illegally. Failure to produce the proper documents could result in arrest, a $2,500 fine, and up to six months in jail.

Making and enforcing immigration law is a federal responsibility. State and local police should focus their resources on preventing crime and apprehending real criminals who pose a danger to public safety.

Police in Arizona seem to agree. According to an Associated Press report,

[The bill] is opposed by police chiefs, who worry that the law would be too costly, that it would distract them from dealing with more serious problems, and that it would sow such distrust among immigrants that they would not cooperate with officers investigating other crimes.

The right response to illegal immigration should be to change our laws to expand opportunities for legal immigration. As our numerous studies have shown, a comprehensive immigration reform bill in Congress that included a robust temporary worker program would reduce illegal immigration, make the U.S. border more secure, and boost our economy.

The Joy of Tax Serfdom

Posted by Daniel J. Mitchell

Like a good peasant, I have already filed an extension, so I am at least temporarily compliant with the friendly people at the IRS. But since it is tax day, perhaps a slight bit of criticism of the tax code is warranted. I have already posted my video on the flat tax and warned about the risks of adding a value-added tax on top of the income tax in another video. I also posted a very successful video narrated by a former Cato intern about the harsh compliance costs of the internal revenue code. So it is time to reach into the archives and post this classic video produced by Caleb Brown and Austin Bragg of the Cato Institute.

P.S. Not that I would ever want to put my thumb on the scale of any contest, but I am defending the flat tax in an online debate for U.S. News & World Report with someone who favors the current system. You can cast a vote if you have an opinion on the matter.

P.P.S. Caleb has independently produced a video on the meaning of free enterprise. With politicians acting as if the business community is an ATM machine to finance a bigger welfare state, Caleb’s video puts a human face on what it means to be a risk-taking entrepreneur.

More on Milwaukee Vouchers

Posted by Andrew J. Coulson

Joseph Lawler and Philip Klein of the American Spectator have some helpful comments on my earlier post about the misunderstanding and misrepresentation of a recent report on Milwaukee’s voucher program. I had stated that the city’s public schools cost taxpayers about 50% more than the voucher program, and Lawler and Klein note that it’s really more like 100%. They’re right. The approved FY2010 budget is $1.073 billion and enrollment is 82,444 — for a per pupil figure of just over $13,000/pupil. The voucher is worth only $6,607.

My mistake was to rely on my recollection of the MPS spending figure used in a 2009 fiscal impact analysis of the voucher program, which turns out not to have included all the district’s revenue sources.  

But while I’m following up on this, I’d like to re-emphasize the final point of my earlier post, to which the Spectator writers did not draw particular attention: the Milwaukee voucher program is not a test of free market education. As I noted earlier, its total enrollment is legislatively limited to about 20,000 students, and in the past that limit was much lower. Additionally, there is a rigid price control on voucher schools — the voucher must be accepted as full payment, even though it is worth only half as much as public schools spend per pupil.

Think carefully about this. What entrepreneur would enter an industry whose total customer base is confined to a few thousand families in a single U.S. city and which has a rigid price control set at half the spending level of a government protected monopoly operating in that same city?

That is not test of market forces.

(Un)Happy Tax Day

Posted by Tad DeHaven

Today is that unofficial American holiday where we mourn the loss of a year’s worth of productive private resources to our bloated federal government. And it’s not just the actual dollars paid to Uncle Sam – it’s also the economic loss due to all the time and money wasted trying to comply with an increasingly complex tax code:

For an increasing number of Americans, approximately 47 percent, it might be cause for celebration as they don’t effectively pay income taxes. In fact, for a lot of Americans April 15th has turned into a pay day. Thus, the burden of paying for a lot of the federal government’s activities is being foisted upon a shrinking base:

And those federal activities are growing:

But on this Tax Day we shouldn’t just mourn what we lost to Uncle Sam, nor should we celebrate what the federal government allowed us to gain from others. The federal budget is on an unsustainable trajectory that, if not reined in, will mean reduced living standards for future generations – whether they are effective taxpayers or not:

Now Is the Time to End the Mortgage Interest Deduction

Posted by Mark A. Calabria

If there is one, almost universal, point of agreement on drivers of the financial crisis, it is that our financial system simply had way too much leverage.  Much of that discussion has focused on financial institutions, leading many to suggest increased capital standards, so that banks have more equity and less debt.  Often lost in the mix is the excessive leverage on the part of home owners.

We know, for instance, that the number one predictor of mortgage default is whether the borrower has equity or not.  And while that should lead us to debate appropriate downpayment requirements, at least when the government backs the mortgage, we should not forget that our tax code encourages excessive leverage on the part of home buyers.  And there’s no bigger incentive to get a bigger mortgage than the mortgage interest deduction.

Some might say we can’t risk removing any props from the housing market.  My friends at the National Association of Realtors, for instance, have in the past argued that full removal would decrease home prices by up to 15 percent.  Such an estimate depends on the level of interest rates (the higher are mortgage rates, the higher the value of the deduction and the greater the impact on house prices).  With the current low level of mortgage rates, the negative price impact should be around 5 percent.

Given the already close to 30% national decline in prices, a further 5% would be less noticeable now than at a time when prices start to rise again.  In addition, a 5% decline would attract more buyers into the market.  Housing is just like any other good — when there’s too much, the best way to clear the market, perhaps the only way, is to drop prices.  Getting rid of the deduction would make housing all the more affordable.  And given current low mortgage rates,there would be far less distortions to do so now.  Of course, all of this should be done in a budget neutral manner, lowering marginal tax rates across the board, which would have its own benefits to the economy.

Behold the Astoundingly Amazing Brand-New Teacher-B-Gone Safety System® from Fordham Industries!

Posted by Adam Schaeffer

Voiceover: Are you tired of trying to use private school choice policy to remove mediocre, incompetent or just plain dangerous teachers from public schools? Just look at how clumsy that can be!

This poor school choice supporter is struggling just to get enough kids into private schools so that the public schools notice and start firing bad teachers! What a waste!!! Fordham Industries pitch-man extra-ordinaire Public-Mad Mike Petrilli has a better way!

Petrilli: “Rather than use choice to set in motion a chain reaction that ends with the removal of bad teachers from the classroom, why not go right at the bad teachers themselves?”!

Voiceover: Don’t waste your time with systemic reforms helping some kids today and all kids tomorrow! Just buy in to Teacher-B-Gone Safety System® and see your public school systems shine!!!*

*Fordham Industries makes no claims as to political feasibility, impact on educational freedom, immediate assistance to children in failing schools, parental rights, religious educational options, pedagogical diversity, educational innovation, public value conflicts, size of the tax burden, fairness to private school families, student achievement, or civic values. Offer not valid in any states.

Harkin: Education Too Important Not to Mortgage Our Future

Posted by Neal McCluskey

Yesterday, I wrote about a bill introduced by Sen. Tom Harkin (D-IA) that would allocate $23 billion to protect public schooling employment against the end of “stimulus” funding. I wrote that it appeared the stimulus would essentially set a new floor for education spending — as many had feared it would – not just be a one-time deal.  It also seemed an utterly irresponsible  expenditure given the nation’s almost unimaginable debt.

At a hearing on the measure yesterday, Harkin addressed the debt concern. Of course, he did it in the same way federal politicians have for years dealt with their spending the nation into oblivion. According to Inside Higher Ed, Harkin said the debt is a legitimate concern, but this particular issue is just too important to worry about it:

“We’re going to borrow from our kids and our grandkids to pay for this now? That shouldn’t be — we’re borrowing too much from our kids and grandkids,” Harkin said, channeling criticism he said he anticipated hearing. Harkin said he agreed with the overarching concern. But the fact that this money is targeted for education makes it different, he suggested. “How can you argue on the one hand that it’s okay for kids to borrow to go to college, but it’s not all right to borrow to make sure there’s a college for them to go to? That there are teachers in our high schools and grade schools to prepare these kids for the future? It seems to me if there’s one legitimate area where we can borrow from the future, it’s in education.”

Um, Senator, even if you think education is more important than utterly unsustainable debt, would you at least take a small moment to see if yet more spending and hiring would do any educational good? You know, if we’d get a positive return on our investment?

Oh wait — if you did that, you’d not only see that it is absurd to suggest that failing to furnish $23 billion would lead to the widespread demise of colleges and teachers (in 2008 we spent almost $1.1 trillion on education), you’d also see that decades of spending increases haven’t produced any meaningful improvements. K-12 test scores have been flat, literacy levels among college graduates dropping, and our international standing poor.

So Senator, feel free to think that a good education is more important than controlling profligate government spending.  But don’t try to tell us that spending more will actually provide that good education. That just isn’t true.

George Will on Judicial Activism

Posted by David Boaz

George Will offers conservatives a useful reminder about “judicial activism” and what the Supreme Court ought to be doing:

Conservatives spoiling for a fight should watch their language. The recent decision most dismaying to them was Kelo (2005), wherein the court upheld the constitutionality of a city government using its eminent domain power to seize property for the spurious “public use” of transferring it to wealthier interests who will pay higher taxes to the seizing government. Conservatives wish the court had been less deferential to elected local governments. (Stevens later expressed regret for his part in the Kelo ruling.)

The recent decision most pleasing to conservatives was this year’s Citizens United, wherein the court overturned part of the McCain-Feingold campaign finance law. The four liberal justices deplored the conservatives’ refusal to defer to Congress’s expertise in regulating political speech.

So conservatives should rethink their rhetoric about “judicial activism.” The proper question is: Will the nominee be actively enough engaged in protecting liberty from depredations perpetrated by popular sovereignty?

Poor Judgment All Around

Posted by Tim Lynch

When school administrators discovered nude photos of teenage girls in the cell phones of some boys at school, they decided to set an example and crack down on “sexting.”  The school officials took the matter to the local prosecutor.  The prosecutor, in turn, informed the parents of the girls that the youngsters would either have to attend a multi-session education and counseling class or face felony child pornography charges.

The letter to the parents explaining the “program” stated, “Participation in the program is voluntary. …  However, charges will be filed against those that do not participate.”  Hmmm.  This curious arrangement was challenged in a lawsuit and the court found the prosecutors’ actions illegal.  Go here (pdf) for the ruling.  Will the prosecutor be sanctioned for the illegal action?  Don’t count on it.

Failures in Ed. Policy Analysis—Misunderstanding Milwaukee

Posted by Andrew J. Coulson

To the extent education policy commentary actually affects policy, it has the potential to do great good or great harm. Several recent commentaries in this field fall into the latter camp, and it’s important to understand why — so that we can avoid similar mistakes in future.

The one I’ll discuss here is this blog post by Matthew Yglesias, in which he draws broad conclusions about the functioning of education markets from a recent study of a tiny school choice program in Milwaukee as well as from some older unspecified research [for the latter, Yglesias linked here, but the body of that page doesn't discuss school choice]. The Milwaukee study is part of a vast literature. Over the past quarter century at least sixty-five studies have compared outcomes in public and private schools around the world, reporting 156 separate statistical findings.

The evidence of this literature is starkly one-sided. The vast preponderance of findings show private schools outperforming public schools after all the normal controls. What’s more, when we focus on the research comparing truly market-like systems to state-run school monopolies, the market advantage is found to be even more dramatic (see Figure 2 in the paper linked above). To draw policy opinions from a small, selective handful of those studies while ignoring the rest is policy malpractice, and it is dangerous to children.

Even the recent Milwaukee result described by Yglesias as a failure shows voucher students in private schools performing as well as public school students who receive roughly 50% more government funding. How is a program that produces similar academic results to the status quo at a much lower cost to taxpayers a failure? And what of the research suggesting that students in the Milwaukee voucher program graduate at higher rates than those in public schools?

More importantly from a long term policy perspective, how is a program limited to 20,000 or so children in a single city, being served almost entirely by non-profit entities, a test of market education? Would Apple have spent hundreds of millions developing the iPhone or the iPad if its market were limited to the same customer base? Of course not. The dynamism, diversity and innovation we have come to expect from competitive markets in other fields relies on the prospect of ultimately scaling up to serve mass audiences. Without the prospect of a large-scale return on investment, there is no incentive to invest in the first place.

Wednesday Links

Posted by Chris Moody