Archive for April, 2010
A Disappointing Start in Piñera’s Chile
The presidential election in Chile that brought Sebastián Piñera to power last month was good news for Chile and the region. It confirmed once again that Chile is Latin America’s most modern country, one in which Chileans chose a center-right candidate to lead the country after 20 years of center-left governments that by and large stuck to the free-market model set in place in the 1970s and 1980s and that has made the country one of the most economically free in the world. In Chile, what’s at stake in presidential contests is not a radical change of the rules of the game, but rather policies that build on or depend on high growth. Chile’s mature democracy and economy serve as a model for Latin America.
But in just over a month of being in office, Piñera has made two decisions that disappointed his supporters both inside and outside of Chile who believed that he would reinvigorate the Chilean economy and stand firmly against the populist-authoritarian model that Hugo Chávez has exported to the region. Piñera backed the re-election of José Miguel Insulza to head the Organization of American States and has proposed a tax increase on large companies. Insulza and the OAS are widely and correctly viewed as having been silent, incompetent or complicit in the face of repeated violations of basic democratic and civil rights by populist governments in the region. Whatever the domestic political reasons for Piñera’s decision, countless Latin Americans who cherish their rights—not the least of whom are Venezuelans, Hondurans, Bolivians and Ecuadoreans—were disillusioned by the endorsement of Insulza.
On Friday, Piñera proposed to “temporarily” raise taxes on large companies from 17% to 20% (and to increase mining royalties and to permanently increase tobacco taxes) to finance Chile’s post-earthquake reconstruction needs. But a number of Chile’s leading economists are criticizing the tax increase and point to other sources of revenue that would be less damaging to growth. Hernán Büchi, a finance minister in the 1980s, and Luis Larraín, head of Chile’s free-market think tank, Libertad y Desarrollo, have both written op-eds in recent weeks pointing out that one of the country’s main problems has been the steady drop in productivity in recent years. Piñera was elected on a platform to increase productivity. A tax increase would aggravate the problem. According to Büchi, 20 years of center-left governments reduced Chile’s ability to eliminate poverty and followed a path that was politically easy and consistent with their ideology: “It would be a bad omen if the first measures of a government that should represent change in this regard, went down the same path.” Larraín adds that the tax decision will reveal Piñera’s governing approach, in which there is a real danger of avoiding necessary reforms and a president content with simply being a better administrator. We shall see.
Students Have the Right to Free Speech, Too
A northern Texas school district attempted to banish all religious expression from its schools by prohibiting virtually all non-verbal student speech in any school-related context. Officials used this broad policy to promote an anti-religious orthodoxy and root out any and all religious speech. The Supreme Court made clear, however, in its seminal school speech case, Tinker v. Des Moines Independent Community School District, that students enjoy First Amendment rights, and that core political and religious speech cannot be suppressed without showing that the speech will “materially and substantially disrupt” the educational process.
Here, the Fifth Circuit upheld all of the district’s regulations and found that Tinker did not supply the relevant legal standard. It instead applied the intermediate scrutiny “time, place, and manner” test of United States v. O’Brien. At issue is whether the school district’s speech policy should be evaluated under Tinker’s “substantial disruption” standard or under O’Brien’s intermediate scrutiny.
Cato, joined by three groups that promote religious liberty, filed a brief asking the Supreme Court to take up the case because the Fifth Circuit’s approach permits schools to enforce sweeping speech codes by which virtually all speech may be prohibited. Permitting a wholesale content- and viewpoint-neutral ban on all speech or a form of speech as an alternative to the Tinker standard will result in the erosion and eventual elimination of student speech rights.
The name of the case is Morgan v. Plano Independent School District; the Court will likely decide by the end of June whether to hear the case this fall.
Libertarians, Independents, and Tea Parties
David Kirby and I have an op-ed in today’s Politico on libertarians as the “leading edge” of the independent vote:
Who are these centrist, independent-minded voters who swung the elections in Virginia, New Jersey and Massachusetts to Republican candidates and are likely to be crucial in races this fall?…
Libertarians seem to be a leading indicator of this trend in centrist, independent-minded voters, based on an analysis of many years of polling data. We estimate that libertarians compose from 14 percent to 23 percent of voters nationally. They are among the few real swing voters in U.S. politics.
We note that libertarian voters started to swing against the Republicans in 2004, before most Republicans did. Then independents swung hard to the Democrats in 2006 and 2008. By 2008, though, libertarian voters had apparently recoiled against the prospect of an Obama-Pelosi-Reid government at a time of financial crisis. By November 2009 and January 2010, a majority of independents had followed the libertarians in turning against the Democrats’ big-government agenda. We go on to say:
So, if many of these centrist, independent voters are indeed libertarians, why aren’t libertarians better recognized?
First, the word “libertarian” is still unfamiliar — even to many who hold “fiscally conservative, socially liberal” views. Pollsters rarely use it….
Second, libertarian voters have traditionally been less likely to organize.
In the past three years, however, libertarians have become a more visible, organized force in politics — particularly as campaigns move online. Ron Paul’s campaign demonstrated that libertarians can organize and raise large sums of money on the Internet.
Meanwhile, tea party protests showed that libertarian-inspired anger can boil over into spontaneous, nationwide rallies. On Sept. 12, 2009, more than 100,000 people marched on Washington to protest federal spending and the growth of government — many carrying nerdy, libertarian-inspired signs such as “I Am John Galt,” referring to the protagonist of Ayn Rand’s “Atlas Shrugged.”
Libertarians are emerging as a force within U.S. politics. While political leaders such as Sarah Palin and Mike Huckabee and media stars like Glenn Beck and Rush Limbaugh are icons to a “conservative base,” it is not yet clear what political leaders might represent these libertarian voters.
But with candidates working to capitalize on voter angst in the 2010 midterms, there are sure to be many politicians angling to lead this libertarian vote.
Meanwhile, a new Politico/TargetPoint poll of people who attended the April 15 Tea Party in Washington found “two camps” there: “one that’s libertarian-minded and largely indifferent to hot-button values issues and another that’s culturally conservative and equally concerned about social and fiscal issues.” They also found a difference in intensity: “Asked to rate their level of anger about 22 issues on a scale of one (not angry at all) to five (extremely angry), the issue that drew the most anger: the growing national debt. The least: courts granting same-sex couples the right to marry. Twenty-four percent said they’re ‘not at all’ upset about gay marriage.”
A recent CBS/New York Times poll found “Tea Party supporters” more conservative than Americans in general on gay marriage. We may be seeing a difference between people who say they like the Tea Parties and those who actually turn out for Tea Party rallies, or possibly Tea Partiers in the Washington area are more socially liberal than they are in other regions.
In particular, the Politico/TargetPoint poll used some of the same questions, drawn from the Gallup Poll and other surveys, that Kirby and I have used to identify libertarians in our “libertarian vote” studies. Here’s the analysis from TargetPoint (emphases added):
IDEOLOGY
The Tea Party is, unsurprisingly, for small-government and cuts to taxes and spending; but there is a clear split when it comes to government promotion of moral values.
- Overwhelming majorities of 88% and 81% say government is trying to do too many things best left to individuals and businesses, and that government should cut taxes and spending, respectively. But in terms of values, Tea Party attendees are split right down the middle. A slim majority of 51% say “Government should not promote any particular set of values”, versus 46% that say “Government should promote traditional family values in our society.”
- We can compare these to Gallup data collected in September of 2009: nationally, 57% said government was doing too much (among Republicans it was 80%), while 53% said government should promote traditional values (among Republicans it was 67%). So the Tea Party is actually more conservative than national Republicans when it comes to the size and role of government, but less conservative than national Republicans in terms of government promotion of traditional values.
- Indeed, combining the responses to some of these questions is a revealing ideological exercise: 43% of attendees said government is doing too much AND that government should promote traditional values, a distinctly conservative view; 42% said government is doing too much AND that government should NOT promote any particular set of values, an ideological view used by the Cato Institute as an indicator of libertarianism (currently 23% of all Americans fit into this category).
- This split between a libertarian Tea Party and a socially conservative Tea Party is reinforced when we consider the combination of all three ideological questions we asked, questions on the size and role of government, the role of traditional values, and the dynamic between taxes and spending. If we count the number of times a respondent gave the “conservative” answer (government should do less, it should promote traditional values, and cut taxes and spending), 40% of Tea Party attendees gave the conservative answer all three times, and 42% gave the conservative answer only two times. Those that gave only two conservative responses were most likely to defect on the role of traditional values.
Anticipating criticisms, let me note that no survey is definitive, and few survey questions are definitive. It’s possible that some respondents would say “government should do more to solve our country’s problems” meaning that it should be cutting waste and reducing the national debt. And some people might understand “government should promote traditional values” to mean traditional values like self-reliance, thrift, and standing on your own too feet. But overall, I think these questions help us to separate broadly libertarian responses from conservatives and (social-democratic) liberals. And this poll suggests that Tea Partiers are not just conservative Republicans. At least some of them are more libertarian. Politicians trying to appeal to them should keep that in mind.
Is Rep. Luis Gutierrez Pro-National ID?
There are many interesting facets to this story in the Chicago Tribune—among them Rep. Luis Gutierrez’ signal that he might support having a U.S. national ID.
“We need to know who’s working in the United States, and we need to make it easy,” Gutierrez told the paper, referring to the push to create a national ID in immigration reform legislation Congress may consider this year.
The story also describes how a UPS worker nearly lost her job because the name she was using—her married name—doesn’t match up with Social Security Administration records. I discussed how electronic employment eligibility verification would plunge Americans into an identity-bureaucracy morass in my paper, “Franz Kafka’s Solution to Illegal Immigration.”
Expect much more Kafkaesque identity bureaucracy—and greater government control of your life—if a national ID is part of immigration reform. When you find out that your papers aren’t in order and that you’ve been denied access to work, housing, financial services, and health care, one of the Washington deal-makers you have to thank may be Luis Gutierrez.
The Latest ‘Intelligence Gap’
Stop me if you think you’ve heard this one before. The Washington Post reports that the National Security Agency has halted domestic collection of some type of communications metadata—the details are predictably fuzzy, though I’ve got a guess—in order to allay the concerns of the secret FISA Court that the NSA’s activity might not be technically permissible under the Foreign Intelligence Surveillance Act. Naturally, there’s the requisite quote from the anonymous concerned intel official:
“This is a basic tool we used to have, and it’s now gone,” said one intelligence official familiar with the impasse. “Every day, every week that goes by, there’s just one more week of information that we’re not collecting. You sit there and say, ‘This is unbelievable that we have this gap.’”
I want to take claims like these with due gravity, but I can’t anymore. Because we’ve heard them again and again over the past decade, and they’ve proven to be bogus every time. We were told that the civil liberties restrictions built into pre-9/11 surveillance law kept the FBI from searching “20th hijacker” Zacarias Moussaoui’s laptop—but a bipartisan Senate panel found it wasn’t true. We were told limits on National Security Letters were FBI delaying agents seeking vital records in their investigations—but the delay turned out to have been manufactured by the FBI itself. Most recently, we were warned that the FISA Court had somehow imposed a requirement that a warrant be obtained in order to intercept purely foreign telephone calls that were traveling through U.S. wires. Anyone who understood the FISA law realized that this couldn’t possibly be right—and as Justice Department officials finally admitted under pressure, that wasn’t true either. But this time there’s a really real for serious “intelligence gap” and we’ll all be blown up by scary terrorists any minute if it’s not fixed? Pull the other one.
That said, Republicans are claiming the problem requires a mere “technical fix” to FISA, so we should at least be able to get a rough sense of what the issue is, if Congress actually decides to act. Democrats, by contrast, appear to think NSA can “address the court’s concerns without resorting to legislation.” The word “resort” here seems depressingly apt: They’ll ask for a legislative tweak if there’s absolutely no way to shoehorn what they want to do into the statute through clever lawyering in an ex parte proceeding in front of a highly deferential court, but it’s a last resort.
As for what the problem might be, I can think of a couple of possibilities off the top of my head. A few years back, the FISA pen register provision was amended to effectively build into the legal order for a standard pen register, which records data about calls or e-mails made and received, language mirroring a legal demand for subscriber records known as a 2703(d) order in the criminal context. Law enforcement routinely uses that combination of a 2703(d) plus a pen register to get location tracking information for cell phones. But the evidentiary standard for getting a 2703(d) order is (very) slightly higher than the standard for a pen register alone, and federal law prohibits the use of a pen register alone to gather location data. So there might be a question about whether FISA pen registers alone can be used for cell phone location tracking purposes.
Alternatively, given that Internet communications aren’t just “metadata” and “content” but rather a whole series of layers containing different types of information, there could be a question about just how far down “metadata” goes. This might be especially tricky for protocols where quite a lot of information about the content of the communication—which is supposed to require a full probable cause warrant—can be gleaned from sophisticated analysis of the size and timing of packets in the stream.
These are, of course, blind guesses. What’s disturbing is how much blind guessing the FISA court itself may be doing. The new hiatus, the Post tells us via an anonymous source, came about when the FISA Court “got a little bit more of an understanding”of what the NSA was up to. Their enhanced understanding concerns data that NSA has been getting with the court’s approval for “several years,” according to the Post. And there you have the real “intelligence gap” in modern surveillance: We have a Court going through a pantomime of oversight over thousands of highly technologically sophisticated interception programs, but it may take a few years for them to really understand what they’ve been signing off on.
We’ll understand still less about the rationale for any “technical fix” to FISA that Congress might approve, if they deign to go that route. But we’ll be reassured that it’s very important, necessary to keep us safe from the terrorist hordes, and nothing worth bothering our pretty heads about.
Peterson (Finally) Changes His Tune
I’ve written before about Rep. Collin Peterson’s (D, MN) disdain for the World Trade Organization, and its rulings against U.S. farm programs. However, in launching his 2012 Farm Bill listening tour, the Brownfield blog reports that he sees that perhaps some changes might be necessary after all. And, lo and behold, he cites the WTO rulings as the reason:
One of the key issues [in the 2012 Farm Bill] will be what to do about the way that cotton farmers are subsidized. The committee’s chairman, Rep. Collin Peterson, D-Minn., said today that the cotton program will have to be overhauled in the wake of Brazil’s successful challenge to the subsidies at the World Trade Organization. The Obama administration agreed to change the program in a deal to avert retaliation against U.S. exports to Brazil. [link added]
Subsidies for cotton currently mirror those for corn, soybeans, wheat and other commodities, but there’s no reason why they have to be the same for each crop in the future, said Peterson. “In the past we’ve tried to have a one-size-fits-all approach, but maybe that’s not the case in the future. I’m willing to consider that,” he said. “If we don’t address it, we may be back in the soup again with potential retaliation issues.” [emphasis mine]
Finally, the penny drops.
Washington Rakes in the Money
The Washington Post launches a new weekly today, Capital Business, covering business in the Washington area. The cover of the first edition is striking:
As the cover line exults, “There’s a wave of government money headed our way — bringing opportunities in health care, green energy, cybersecurity and education.” Of course, it’s not actually “government money” — it’s money taxed or borrowed from those who produce it in the 50 states and then sprinkled liberally around the Washington area, which now contains 6 of the 10 richest counties in America.
If the Capital Business cover image had a few more arms, it would look like the logo for this year’s Cato University, “Confronting Grasping Government“:
The Postal Service’s Union Problem
Comments from members of the House Oversight and Government Reform Committee at a recent hearing on the U.S. Postal Service’s woes indicate they don’t appreciate the USPS’s union problem. Postmaster General John Potter went before the committee to make his case for restructuring the postal operation, including greater labor flexibility.
From GovExec.com:
“You have to find people meaningful work, or no matter how compassionate you are, you’re not doing them any favors,” said Rep. Darrell Issa, R-Calif., the ranking member of the House Oversight and Government Reform Committee, criticizing holding rooms where underemployed postal workers wait until there are tasks for them to perform. “How many billions of dollars would have been saved if you’d aggressively right-sized the force before you came to us and said you want to go from six days [of mail delivery] to five?”
Congressman Issa should be informed that it is union rules that prevent postal management from laying off underemployed postal workers and having to put them in holding rooms.
Issa told Potter during his opening statement that the Postal Service has “more or less a third more people than you need,” but he said it “is not really acceptable” to convert full-time jobs to part-time positions, unless applicants are looking specifically for part-time work or part-time positions that lead to full-time work. Rep. Diane Watson, D-Calif., said she was concerned that part-time workers might not be treated fairly or could be excluded from collective bargaining agreements.
Lawmakers insisted repeatedly that even as the Postal Service confronts harsh financial realities, the agency must take into consideration the jobs of postal workers. “I’m hopeful this committee will find a way to deal with it that preserves the good faith that the people who serve the U.S. Postal Service have a right to expect,” said Rep. Dennis Kucinich, D-Ohio.
These members might want to read the Government Accountability Office’s latest report on the USPS, which called the mail monopoly’s business model “not viable.” Union labor is part of the problem. The average postal employee earns $83,000 a year in total compensation and 85 percent of its workforce is covered by collective bargaining agreements. Labor accounts for 80 percent of the USPS’s cost structure.
The GAO cites the following as reasons why USPS labor costs are so high:
- The USPS covers a higher proportion of employee premiums for health care and life insurance than most other federal agencies, which is impressive because it’s hard to be more generous than federal agencies.
- USPS workers participate in the federal workers’ compensation program, which generally provides larger benefits than the private sector. And instead of retiring when eligible, USPS workers can stay on the “more generous” workers’ compensation rolls.
- Collective bargaining agreements limit the amount of part-time and contract workers the USPS can use to fit its workload needs, and they limit managers from assigning work to employees outside of their crafts. The latter explains why you get stuck waiting in line at the post office while other postal employees seemingly oblivious to customers’ needs go about doing less important tasks.
- Most postal employees are protected by “no-layoff” provisions, and the USPS must let go lower-cost part-time and temporary employees before it can lay off a full-time worker not covered by a no-layoff provision.
- If the collective bargaining process reaches binding arbitration, there is no statutory requirement for the USPS’s financial condition to be considered. This is like making the decision whether or not to go fishing, but not taking into consideration the fact that the boat has holes in its bottom.
The fact that Postmaster Potter has to go to Congress to plead for help to make business decisions points to a fundamental problem. Government-run businesses are necessarily hamstrung by the whims of politicians, who often only have a vague understanding of economics and business. If FedEx or UPS had to get congressional permission to manage its workforce, both would collapse. As mail volume falls, that’s where the USPS is headed unless we privatize it and deregulate postal markets.
Lehman’s Failure Taught Us Nothing
Several commentators have reacted to Senator McConnell’s floor statement regarding the Dodd bill as a defense of “doing nothing”. And accordingly argue that such a position would be, in the words of Simon Johnson, both dangerous and irresponsible. This familiar canard is based upon the oft repeated assertion that the failure of Lehman proved that we cannot simply let large financial companies enter bankruptcy.
The simple, but important, fact is that we have no idea what would have happened had we let AIG and Bear go into bankruptcy proceedings. Nor do we know what would have happened if Lehman had been saved. Macroeconomics does not have the luxury of running natural experiments to determine the impact of a corporate failure. Scholars have an obligation to accurately reflect the uncertainties in the debate. Those that assert Lehman proved anything, are being at best disingenuous, and at worst, dishonest.
Let us, however, put forth a few things we do know:
- We know none of Lehman’s counterparties failed as a result of Lehman’s failures. Just as we know none of AIG”s counterparties would have failed if they did not get 100 cents on the dollar from their CDS positions. So where exactly is the proof of contagion?
- We know we had a nasty housing bubble. We were going to lose millions of jobs in construction and real estate regardless of what we did. We knew financial institutions heavily invested in housing would suffer. How exactly would saving Lehman have prevented any of that?
The debate over ending bailouts and too-big-to-fail will not progress, we will not learn a thing, if we let simple, empty assertion pass as fact. Much of the public remains angry at Washington because those responsible, such as Bernanke and Geithner, have never laid out a believable or plausible narrative for the bailouts. It always comes back to “panic.” If we are ever to hope to return to being a country governed by the rule of law, rather than the whims of men, then we need a lot more of an explanation than “panic.”
The Court Looks at Freedom of Association
On Monday morning the Supreme Court will hear oral argument in a case that illustrates clearly how modern American anti-discrimination law can be used to undermine basic human rights. The case, Christian Legal Society v. Martinez, arose after the Hastings College of Law, a large public law school in San Francisco, denied CLS the same recognition and support it granted to some 60 other student organizations on the ground that CLS, contrary to the Hastings nondiscrimination policy, discriminates by requiring that its members and officers abide by certain key tenets of the Christian faith. In a word, in the name of anti-discrimination, Hastings, a government institution, is discriminating against CLS, which is simply exercising its speech, religious, and associational rights.
Cato filed an amicus brief in the case, written by Richard A. Epstein, professor of law at the University of Chicago. To barely summarize our argument, freedom is at the core of the American vision, including freedom of private association. But association has two sides: the right to associate with willing others; and the right not to associate with others, for whatever reason, which amounts to the right to discriminate. Public institutions, by contrast, belong to all of us, so they may discriminate only for reasons closely connected to their missions. Since individuals will associate only if they think themselves better off by doing so, social welfare is improved when government protects private rights of association while itself studiously avoiding discrimination.
Our history in this area has been uneven, of course. Although economic association was generally protected, slavery and Jim Crow were stark exceptions, along with certain other restrictions on personal association. As Progressive Era attacks on the distinction between private and public grew, however, freedom of association in the economic sphere came to be restricted, first by regulatory and later by anti-discrimination laws. Yet in time, courts began carving out exceptions for “personal” or “intimate” association — drawing lines not nearly as bright as that between private and public.
Those decisions today constitute a body of precedents that prohibit government from directly discriminating against parties who are exercising their rights of “expressive association.” But they also protect against indirect discrimination through the imposition of “unconstitutional conditions.” Thus, Hastings cannot tell CLS, “You’re free to go elsewhere to practice your religion, but if you enter our ‘limited public forum,’ which is open to others, you’ve got to give up one or more of your constitutionally protected rights.” In other words, although Hastings doesn’t have to recognize or support any student organizations, once it opens its doors to some, it must do so for all. To do otherwise is to engage in forbidden viewpoint discrimination. Read Cato’s brief for the full story.
Robert McCartney’s Love Affair with Government
Washington Post columnist Robert McCartney says he “differ[s] strenuously with the [Tea Party] protesters on about 95 percent of the issues.” Considering that the closest thing to an official center of the Tea Party movement, the Tea Party Patriots network, says that it seeks “public policy consistent with our three core values of Fiscal Responsibility, Constitutionally Limited Government and Free Markets,” that’s disappointing to hear.
McCartney does allow as how
I found that I agreed heartily with the tea partiers on what is perhaps their single biggest concern: that America’s swelling government debt seriously threatens our long-term prosperity.
But
I part ways with the tea party on how to solve the problem. They want only to slash government. I’d be willing to raise taxes as part of the deal.
“Willing”? Actually, raising taxes is sort of an idee fixe for McCartney. After 27 years shaping the local news coverage at the Post as a writer and editor, he became a columnist in June 2009. Since then, he’s written many times about the urgency of raising taxes: Converting Fairfax County into a city only makes sense ”if it’s used to raise taxes to get more money for roads.” (July 5) Democratic gubernatorial candidate Creigh Deeds should just be honest and “Propose to raise taxes to fix the roads. Yes, you read that correctly. Raise taxes” because “The public sector needs to expand.” (August 9) “Deeds is willing to raise taxes for transportation, while McDonnell isn’t, and some kind of tax increase is the only way to do the job.” (September 18) One observer of Gov. Robert McDonnell’s inaugural address (whattaya know, Deeds’s willingness to raise taxes yielded him a whopping 41 percent of the vote) “predicted that McDonnell would have to raise taxes to pay for transportation despite promises not to do so. ‘There is no other choice,’ Bhandari said.” (January 17) The region must come up with another $850 million a year in revenue for its costly, poorly run subway system. (January 21)
As I wrote in response to his August 9 column on the need for a larger public sector in Virginia:
Virginia’s state budget doubled between 1996 and 2006, from $17 billion to $34 billion. And the governor’s office estimated last December that the state would spend $37 billion in 2009 and $37.6 billion in 2010. Thanks to the recession, and to the state’s habit of spending during good years as if the party would never end, those numbers may drop slightly. But even with the current shortfalls, the budget’s gone up by $20 billion in the past 14 years, and they can’t find enough to fix the roads? What have they spent that extra $20 billion on?
Unfortunately, it is a constant frustration to McCartney and his Post colleagues that, as economist Gregory Clark bemoaned that same day in a Post guest column, “The United States was founded, essentially, on resistance to taxes, and to this day, an aversion to the grasping hand of the state seems fundamental to the American psyche.”
But their typically American resistance to tax increases isn’t the only thing that bothers McCartney about the Tea Partiers. He also notes, “Some participants had far-out views. I heard proposals to repeal the progressive income tax, abolish the Federal Reserve Board and privatize the U.S. Postal Service.” It seems like McCartney just never met a government agency he didn’t love. But his definition of “far-out” is open to challenge. Massachusetts, arguably the most liberal state in the union, narrowly defeated a proposal to repeal the state income tax in 2002, so maybe that idea is not so far-out once you get beyond the Beltway. And there are Nobel laureates who want to abolish the Fed. As for privatizing the postal service, well, he’s got a point there. If we privatized the postal service, as a few backwater countries like Germany and Japan have done, the next thing you know, people would want to privatize the phone company. And then where would we be?
(P.S.: McCartney also writes, “The tea party has been called an heir of Alabama’s segregationist governor George Wallace. It certainly shares his anti-government worldview, if not his aggressive racism.” This is just a smear. McCartney acknowledges that he didn’t find any racism at the Tea Party he attended. I doubt that most of the Tea Partiers even know who George Wallace was. And I’m not sure McCartney does, either, as Wallace was certainly not “anti-government” in any coherent way. He was a big-spending, “soak the rich” populist, both as governor and as presidential candidate.)
Awful Tax System Causing a Growing Number of Americans to “Go Galt”
Being an American citizen is an honor in many ways, but it is a huge millstone around the neck for highly successful investors and entrepreneurs because of an oppressive and complex tax system. This is particularly true for those based in and/or competing in global markets. Indeed, because the tax system (and regulatory system) is so onerous and because it is expected to get far worse in the future, a growing number of Americans are actually giving up citizenship and “voting with their feet.” The politicians view these people as “tax traitors” and are trying to erect higher barriers to hinder economic migration, particularly in the form of confiscatory “exit taxes” that are disturbingly reminiscent of the totalitarian practices of some of the world’s most unsavory regimes. The Wall Street Journal recently reported on this issue:
The number of American citizens and green-card holders severing their ties with the U.S. soared in the latter part of 2009, amid looming U.S. tax increases and a more aggressive posture by the Internal Revenue Service toward Americans living overseas. According to public records, just over 500 people world-wide renounced U.S. citizenship or permanent residency in the fourth quarter of 2009, the most recent period for which data are available. That is more people than have cut ties with the U.S. during all of 2007, and more than double the total expatriations in 2008. …Others are giving up their U.S. nationality to avoid tax increases in the U.S., as the government struggles under huge budget deficits. The top marginal tax rate is set to rise to 39.6% from 35% at the end of this year. A proposal to tax fund manager pay at ordinary income rates, instead of the 15% capital gains rate, is gaining currency in Congress. “Everybody sees the tax rates are going up. At a certain point, it gets beyond people’s pain threshold,” said Anthony Tong, a tax partner at accounting firm PricewaterhouseCoopers in Hong Kong. Unlike most jurisdictions, the U.S. taxes the income of citizens and green-card holders no matter where in the world it is earned.
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