Archive for October, 2011
Did Canada Steal Our Tenth Amendment?
Under the U.S. Constitution, the federal government was assigned specific limited powers, and most government functions were left to the states. To ensure that people understood the limits on federal power, the Framers added the Tenth Amendment: “The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people.” Those delegated powers are “few and defined,” noted James Madison.
But the Tenth Amendment has disappeared. No one has seen it in recent decades. But I’ve found some statistics that make me very suspicious that the Canadians stole the Tenth. Look at the pie charts below. The top pie shows that 71 percent of total government spending in the United States is federal, while 29 percent is state/local. (See BEA tables 3.1, 3.2, 3.3 for 2010 data).
Back when we still had the Tenth, that ratio was the other way around—like how the bottom chart looks for Canada today. In Canada, federal spending accounts for just 38 percent of total government spending, while provincial/local spending accounts for 62 percent. (See Canada Yearbook for 2010/11 data.)
Actually, the real culprit for the missing Tenth is not the Canadians, but the U.S. Congress. In recent decades, Congress has undertaken many activities that were traditionally reserved to state and local governments. A primary method has been through “grants-in-aid.” These are federal subsidies combined with regulatory controls that micromanage state and local affairs. In United States, federal grants are about 4.1 percent of GDP (in fiscal 2011), while in Canada they are about 3.3 percent of GDP.
Even more striking: while we’ve got a complex mess of more than 1,000 state grant programs, Canada seems to have just a handful, and they are simple block grants. As I understand it, Canada’s federal grants to lower governments mainly just include:
- A health care block grant
- A social services block grant
- An “equalization” block grant to help the poor provinces.
There is a smattering of other aid, but that’s just about it. There are no federal subsidies for K-12 education in Canada, for example. There are a few large block grants and not much else.
On October 27, I’m on an Urban/Brookings panel looking at “What Can the United States Learn from Canada.” Perhaps we can learn how to get our decentralized federation back. While we’re at it, we could get some tips on how to cut government spending, as the Canadians did in the 1990s.
EPA Backs Off Dust Standard
Are there enough data points yet to call it a trend? I think there are: the Environmental Protection Agency is now backing off a whole series of deeply unpopular Obama-era initiatives. This time it’s the idea of tightening the federal standard for coarse airborne particulates—better known as “dust”—from the current 150 micrograms per cubic meter to a figure somewhere between 65 and 85, depending on what assumptions are used. That change could have dealt a tough economic blow to businesses, notably farms and ranches, that kick up quantities of dirt in the ordinary course of operation. Unfortunately, the EPA—unable to resist the urge to lash out against its critics—is being less than candid about its latest turnabout.
The retreats have been coming steadily in recent months, since President Obama’s popularity ratings began to tank. In July, following protests from Sen. Olympia Snowe (R-ME) and other lawmakers, the administration dropped a proposal that would have required lead-dust lab testing as part of even relatively minor renovations to older homes. Last month it scuttled costly new smog regulations. A couple of weeks ago it relaxed its so-called Cross-State Air Pollution Rule, which was menacing the continued operation of power plants. And it remains under heavy pressure to scrap its ultra-expensive “Boiler MACT” rules, another utility nemesis.
EPA administrator Lisa Jackson has made it clear that she isn’t happy about some of these about-faces, and her staff spun the latest dust decision in remarkably graceless fashion, accusing critics of spreading “myths” and claiming the agency never had any intention of going after farm dust in the first place. Following the same line, Kate Sheppard at Mother Jones has now twice dismissed the issue as “the tea party-right’s favorite EPA conspiracy theory. Sadly, it’s not true.”
But the farmers and ranchers—and the many lawmakers who stepped up to their defense—weren’t imagining things, as this letter last July from 21 Senators (including a couple of Democrats), or this contemporaneous Reuters coverage, makes clear. Had the standard been lower, various metropolitan areas would have been knocked out of compliance, and although it’s conceivable states could have found a variety of ways to order curbs to dust-raising economic activity, farms and ranches are just too big a target to have been spared. And the issue caused direct political blowback to President Obama, who was irritably dismissive of a farmer’s concerns when asked about it at a “Town Hall” in the rural Midwest.
This, then, seems to be the new Obama administration compromise position on the EPA: they’ll hold off for now on saddling the economy with at least some potentially ruinous regulations—but they’ll make sure you know they’re not happy about having to take that stand.
This Month at Cato Unbound: A Little Foundational Theory
The October, 2011 issue of Cato Unbound tackles some of the foundational questions of political theory: how do we recognize justice? If it’s not utopia, is it still good enough to command our respect? Or allegiance? How do we know? Who are the members of the political community? How are they chosen? What counts as a “reason” for political action?
If all of this sounds abstract, rest assured that lead essayist Gerald Gaus is both lucid and engaging. He writes:
Liberalism’s founding insight was the recognition in the sixteenth and seventeenth centuries that controversial religious truths could not be the basis of coercive laws and public policies. The task is now to apply this insight to philosophizing about justice itself. This is an extraordinarily difficult lesson for many. Can it really be that I should not endeavor to ensure that my society conforms to my “knowledge” of justice? (Compare: can it really be that my “knowledge” of God’s will should not structure the social order?)
Gaus argues for a “range of justice”—a range of theories that, while perhaps not perfect by anyone’s standards, are still close enough to demand our respect, especially given the large benefits that come from freely engaged social cooperation.
Discussing with him this month are a panel of three other prominent social theorists. Richard Arneson argues that we tolerate one another not because we’re all pretty close to rational (clearly a lot of us aren’t!)—but because intolerance breeds atrocity. Eric Mack argues that classical liberalism is no mere contending sect; it is the right approach to politics, because it offers the greatest leeway for individuals to choose their own ends in life. And Peter J. Boettke argues that any social system that neglects private property will fail to produce a cooperative society in any sense; without market exchange, individuals will fall into strife over scarce resources.
Obviously I won’t be able to do justice to their arguments here, so please do check out Cato Unbound, where discussion will continue through the end of the month.
Rovner on the CIA and Afghanistan
Joshua Rovner has a thoughtful post up at The National Interest‘s The Skeptics today, and it reminded me to plug Josh’s book, and the event that we are hosting with him, Paul Pillar, and Mark Lowenthal on Monday, October 31st. It should be a terrific discussion. Details here.
Rovner’s blog post fits directly with the themes addressed in the book, but it also touches on something that I wrote about several months ago: would the appointment of David Petraeus as CIA Director subtly affect the agency’s assessment of progress—or lack thereof—in Afghanistan? Josh nicely summarizes the relevant concerns as Petraeus prepared to assume his new duties:
Petraeus was the public champion of the counterinsurgency doctrine that he claimed was necessary to defeat the Taliban and deliver stability to Afghanistan. How could he protect the objectivity of CIA analyses when he had such an obvious conflict of interest? Would he faithfully transmit analysts’ conclusions to policymakers, even if they implicitly criticized his approach to the war?
Petraeus addressed these concerns during his Senate confirmation hearings in June. “My goal has always been to ‘speak truth to power,’” he said, “and I will strive to do that as Director of the CIA.”
Rovner then explains what happened next, beginning last Thursday with Kim Dozier’s story for the AP that described a change in CIA analysis of Afghanistan that incorporated more information from military commanders on the ground. Citing a senior intelligence official, the story explained that ”Critics of the change say allowing the military more pushback will have a chilling effect on the analysts’ ability to give the war a failing grade.” Another “intelligence official expressed concern that this would institutionalize the former general’s habit when in Afghanistan of challenging the CIA’s unflattering conclusions.”
CIA officials denounced the report the following day, and Petraeus responded with a memorandum to all CIA employees on the AP story which, he said, “presents an inaccurate picture of my thoughts on the CIA’s Afghanistan analysis.” The change was made before Petraeus assumed duties as director, the memo explains, and it “will in no way undermine the objectivity of DI analysis on the war in Afghanistan. We will still ‘call it like we see it,’ but now with even better ground truth.”
The original story, and the CIA and Petraeus’s responses to it, have an air of “he said, she said” about them. Perhaps this was an honest attempt to improve the quality of intelligence from Afghanistan? Perhaps it was intended to shape the outcome in a more positive direction? Who knows? Rovner hones in on the essential question:
Take Petraeus at his word, accept his promises that he will not let vested interests affect his management decisions, and assume that the shift in the assessment process is not an attempt to manipulate intelligence. Is it still a good idea?
There is obvious value in incorporating military views into intelligence products. Field commanders can offer uniquely detailed views on the nature of the conflict. Continued fighting allows them to monitor enemy tactics as well as changes in the enemy’s level of effort. Their interaction with civilians also allows them to gauge public sentiment, at least at the local level. Done well, military assessments can paint a vivid portrait of the overall course of the war.
But assessments are not always done well. One reason is that they are inherently narrow. This is not to criticize: troops operating in a small area inevitably see the war through a soda straw. Nonetheless, they might conclude that trends in their own area are representative of larger trends throughout the country. Avoiding this problem requires methodical efforts to aggregate micro-level military perspectives into macro-level analyses while remaining cognizant of the serious analytical dangers involved.
Rovner concludes:
Accurate and timely intelligence will be critical as the Obama administration reconsiders what kinds of political outcomes are possible with a stripped-down force in Afghanistan. Integrating military views might lead to more comprehensive CIA assessments, but it might lead to more confusion if bad metrics are included for the sake of keeping estimates current. Hopefully the dust-up over the AP report will remind CIA officials to remain on guard against politicization, and to make sure that the changes in the assessment process do not lead to false optimism.
Tuesday Agriculture Links
Some interesting links on agriculture in the news today.
First, a terrific front-page article in the New York Times, about what my friend Vince Smith so accurately calls the “bait-and-switch” farmers are proposing in their offer to give up direct payments (subsidies that flow to farmers regardless of prices or production) in exchange for a new revenue insurance program. As Vince so rightly points out, because the new revenue targets will be based on today’s current record crop prices, “If farm prices move back towards what are widely viewed as more normal levels than their current levels, farmers will be compensated for going back to business as usual.” Vince blogs here about the proposed new revenue assurance program, and how it could end up costing us just as much as the current set of programs.
Farmers and their congressional sponsors are still blathering about “proportionality,” essentially saying that they should not have to contribute any more to budget cuts than any other area of the federal government. Here, for example, is a corn farmer, towing the party line:
“We are very much aware of the budgetary constraints of the federal government,” said Garry Niemeyer, an Illinois farmer who is president of the National Corn Growers Association. “We want to do our part as corn growers to help resolve those issues, but we only want to do our proportional part. We don’t want to have everything taken out on us.” [emphasis added]
This is wrong-headed. I’ve said it before, I’ll say it again: “proportionality” implies that everything the federal government currently does is equally valid. That is nonsense. Some programs are legitimate, some less so. Some—like farm subsidies—not at all. Spending cuts should be made on the basis of legitimacy, not by some abstract formula equally applied. We should be reshaping (in a downward direction) the federal government here, not trimming a topiary hedge.
Second, Bloomberg.com has a good overview on the current state of the negotiations between the Congressional agriculture committees and the deficit-reduction supercommittee regarding the cuts to farm programs. The leaders of the agriculture panels have written a letter to the supercommittee, saying that cuts to agriculture programs should be limited to $23 billion and those cuts ”should absolve the programs in our jurisdiction from any further reduction.” So there.
Finally, here are Senators Mark Kirk (R-Ill.) and Sen. Jeanne Shaheen (D-N.H.) on the wasteful and expensive sugar program.
The Biggest Budget in History
The Wall Street Journal notes today that the federal government spent more money in the just-concluded 2011 fiscal year than in any year in history, and no one noticed. What happened to all that austerity and all those spending cuts that we heard about all year? Well, some of us warned over the past year that they were all smoke and mirrors.
Now that the year’s over, you can see in this chart from the Journal that the federal government spent more and borrowed more in 2011 than in any previous year—$900 billion more than just four years ago, and $150 billion more than last year:
Herman Cain’s 9-9-9 Tax Plan: The Good, the Bad, and the Ugly
Actually, the title of this post should probably read, “The Good, Good, Good, Bad, and the Ugly.”
That’s because Herman Cain’s 9-9-9 tax plan has low tax rates, it eliminates double taxation, and it wipes out loopholes, and those are three very big and very good things.
The bad part, as I explain here, is that Cain would let politicians impose a national sales tax at the same time as an income tax.
And the ugly part is that he also would let them impose a value-added tax as well, as I discuss here.
I pontificate on all these issues in the latest Coffee and Markets podcast, which you can listen to by clicking here.
In closing, I will admit that it’s been very frustrating to deal with Cain’s plan. Supporters of Cain accuse me of being too critical and opponents of Cain accuse me of being too nice.
Normally, I don’t like being in the middle of the road, but that seems to be the only logical place to be since 9-9-9 has some really good features and some really bad features.
Obama-Reid ‘Jobs’ Bill Soaked in Greece
A stated aim of the Obama-Reid jobs bill is to preserve the “competitive edge” that our “world-class” education system purportedly gives us. In an attempt to do that it would throw tens of billions of extra taxpayer dollars at public school employees.
A few problems with that: we’re not educationally world-class; we don’t have a competitive edge in k-12 education; and this bill would actually push the U.S. economy closer to a Greek-style economic disaster.
First, the belief that increasing public school employment helps students learn is demonstrably false. Over the past forty years, public school employment has grown 10 times faster than enrollment. If more teachers union jobs were going to boost student achievement, we’d have seen it by now. We haven’t. Achievement at the end of high school has been flat in reading and math and has declined in science over this period. I documented these facts the last time Democrats decided to stimulate their teachers union base, just one year and $10 billion ago.
So what has our public school hiring binge done for us? Since 1980, it has raised the cost of sending a child from Kindergarten through the 12th grade by $75,000 — doubling it to around $150,000, in 2009 dollars.
And what would going back to the staff-to-student ratio of 1980 do? It would save taxpayers over $140 billion annually.
But don’t those school employees need jobs? Of course they do. But we can’t afford to keep paying for millions of phony-baloney state jobs that have no impact on student learning. We need these men and women working in the productive sector of the economy — the free enterprise sector — so that they contribute to economic growth instead of being a fiscal anchor that drags us ever closer to the bottom of the Aegean. Freeing up the $140 billion currently squandered by the state schools would provide the resources to create those productive private sector jobs.
Continuing to tax the American people to sustain or even expand the current bloat, as Obama and Reid want to do, cripples our economic growth prospects by warehousing millions of potentially productive workers in unproductive jobs. The longer we do that, the slimmer our chances of economic recovery become. This Obama-Reid bill is such an incredibly bad idea, so obviously bad, that it is hard to imagine any remotely well-informed policymaker supporting it… unless, of course, they think the short term good will of public school employee unions is more important than the long-term prosperity of the American people.
Whither Constitutional Authority Statements?
On its first day of business this past January, the Republican House majority adopted a new rule requiring every bill to include a so-called constitutional authority statement, listing the part(s) of the Constitution that give Congress the power to do what the bill says.
At the time, I analyzed the requirement, as did Cato’s chairman emeritus Bill Niskanen, and what effect it might have on congressional action. We noted that, while it was a good thing for people (and especially elected officials) to be paying attention to the Constitution, the practical effect may be negligible because legislators would overwhelmingly cite the General Welfare Clause, Commerce Clause, and Necessary and Proper Clause — all part of Article I, section 8. To minimize this result, Cato ran an ad in Politico and other publications explaining what these clauses could and could not justify. Here are the points we made:
- Contrary to modern readings, the General Welfare Clause does not grant Congress an independent power to tax and spend for the “general welfare.” If it did, there would be no need to enumerate any other powers. Rather, it authorizes Congress to enact the specified taxes for the specified purposes—headings more precisely defined by the 17 enumerated powers or ends that follow. And Congress’s power to tax for the “general welfare” precludes it from taxing to provide for special parties or interests.
- The Commerce Clause too does not authorize Congress to regulate anything and everything, which again would put an end to the idea of a government of enumerated and thus limited powers. Under the Articles of Confederation, states had erected tariffs and other protectionist measures that were impeding interstate commerce. To end that and ensure free interstate commerce, Congress was given the power to regulate, or “make regular,” such commerce—the main sense of “regulate” at the time. Were Congress thought to have the all but unbounded regulatory power it exercises today, the Constitution would never have been ratified.
- The Necessary and Proper grants Congress the means to execute its enumerated powers or ends and those of the other branches. It adds no new ends. And the means must be “necessary and proper.” That means they must respect the Constitution’s structure and spirit of limited government; they must respect federalism principles; and they must respect the rights retained by the people.
So, nine months later, what happened? The Republican Study Committee – essentially the GOP House Caucus’s conservative sub-caucus — has come up with the following analysis (analyzing 3042 bills through September 16, some of them counted more than once in the below statistics):
- 3 bills cite only the Preamble to the Constitution.
- 84 bills cite only Article 1, which creates the Legislative Branch.
- 58 bills cite only Article 1, Section 1, which grants all legislative powers to Congress.
- 470 bills cite only Article 1, Section 8, which is the list of specific powers of Congress, without citing any specific clause.
- 539 bills cite [the General Welfare Clause].
- 567 bills cite [the Commerce Clause].
- 247 bills cite [the Necessary and Proper Clause], without citing a “foregoing power” as required by [Article I, section 8,] clause 18.
- 309 bills cite two or more of the “general welfare” clause, commerce clause, or the “necessary and proper” clause.
- 87 bills cite Article 1, Section 9, Clause 7, which provides that no money shall be drawn from the Treasury, but in consequence of appropriations made by law.
- 210 bills cite Article 4, Section 3, which provides that Congress shall have the power to make rules and regulations respecting the territory or property of the United States.
- 252 bills cite an amendment to the Constitution. For example, 54 cite the 10th Amendment (powers not delegated to the federal government), 30 cite the 14th Amendment (“equal protection, etc.”), and 64 cite the 16th Amendment (income tax).
Pretty thin gruel and, as I noted above, not unexpected. Then again, if the constitutional authority statement requirement has caused even one House member to waver over what he has the power to propose — let alone to refrain from offering a bill — this minor legislative rule will have been an improvement on the status quo ante.
Cillizza on Cain and Know-Nothing Foreign Policy
Asked on Meet the Press this weekend whether the alleged Iranian plot to assassinate the Saudi ambassador was an act of war, Herman Cain gave the following response:
After I looked at all of the information provided by the intelligence community, the military, then I could make that decision. I can’t make that decision because I’m not privy to all of that information… I’m not going to say it was an act of war based upon news reports, with all due respect. I would hope that the president and all of his advisers are considering all of the factors in determining just how much, how much the Iranians participated in this.
That struck me as a refreshingly reasonable position. Yet the Washington Post‘s election handicapper, Chris Cillizza, decided to make that quote the centerpiece of an article on Cain’s “know-nothing foreign policy.” He then presents a poll showing that Republicans don’t care much about foreign policy this year, only to conclude that foreign-policy ignorance could be a fatal handicap for Cain. His evidence for that conclusion is a quote from Max Boot of the Council on Foreign Relations, who specializes in arguing for wars and imperialism. Boot, as it happens, just wrote a blog post for Commentary titled, “Iran Plot Goes Straight to the Top,” where he attacks those willing to question the evidence against Iran’s leaders and vaguely supports attacking them.
Cillizza’s article makes clear that foreign-policy ignorance is far preferable to the Washington Post‘s idea of expertise. The worst part is that Cain, who claims not to know what neoconservatives are, seems likely to become one, call Boot for advice, and win the Post‘s respect.
Race-Based Tax Exemptions Are Unconstitutional
Hawaii continues to think that it’s not quite part of the United States and thus not fully subject to U.S. law.
In the 2000 case of Rice v. Cayetano, the Supreme Court struck down race-based voting requirements for certain Hawaii state officers because government schemes that distinguish between “native Hawaiian” and “Hawaiian” are racial classifications that must pass “strict scrutiny” to be deemed constitutional; they must be narrowly tailored to achieve a truly “compelling” purpose (a standard nearly impossible to meet). Yet that exact same category of “native Hawaiian” — whose frighteningly archaic definition is “any descendant of not less than one-half part of the blood of the races inhabiting the Hawaiian Islands previous to 1778” — was used in the Hawaii Homes Commission Act to distinguish those who can hold certain leases that are subject to little or no property tax.
A group of Hawaiians who do not meet the state’s definition of “native Hawaiian” and therefore suffer under the explicitly race-based law decided to challenge these property-tax exemptions. After paying their taxes, these plaintiffs sought refunds on the grounds that the classification scheme violates the Fourteenth Amendment’s Equal Protection Clause.
The Supreme Court of Hawaii, however, ruled that they didn’t have standing — a legal doctrine that determines who can bring a claim — to challenge the taxes on the ground that they had not yet asked for the leases (for which they were indisputably ineligible due to not having enough “blood of the races” flowing through their veins). A lower state court had even ruled that the classification was not race-based—that it merely distinguishes leaseholders and non-leaseholders, even though Hawaiians without the sufficient “blood quantum” cannot be leaseholders!
The group of taxpayers now seek review in the U.S. Supreme Court. Cato, joined by the Pacific Legal Foundation, the Grassroot Institute of Hawaii, the Goldwater Institute, and Professor Paul M. Sullivan, filed a brief urging the Court to take the case and rectify Hawaii’s explicitly unconstitutional taxation scheme. We argue that, after Hawaii’s state judiciary refused to address the issue of racial discrimination head-on, only the U.S. Supreme Court is in a position to guarantee the constitutional protections that Hawaiians have lived under for over a century (since Hawaii became a territory). Only by taking this case and overturning the racially charged definition can the Court continue to ensure that Hawaii is a state that “neither knows nor tolerates classes among citizens.”
The Supreme Court will likely decide by the end of the year (or in early 2012) whether to hear this case, Corboy v. Louie.
Ron Paul’s ‘Plan to Restore America’
Presidential candidate Ron Paul has released a fiscal reform plan that would dramatically cut spending and rein in the size and scope of the federal government. My reaction to the proposal can be summed up in one word: hallelujah.
Republican policymakers – including the current GOP field of presidential candidates – talk a good game about reducing spending, but very few are willing to spell out exactly what they’d cut. As NRO’s Kevin Williamson puts it in the title of his write-up on the plan, “Ron Paul Dropping a Reality Bomb on the GOP Field.”
The following are some of the plan’s highlights:
- Paul would immediately eliminate five cabinet-level departments: Commerce, Education, Energy, HUD, and Interior.
- Paul says his plan would cut spending by $1 trillion in the first year alone, and balance the budget in three years without increasing taxes.
- Funding for the wars would end. That’s not isolationism – it’s a common sense position that also reflects popular opinion. In addition, foreign aid spending would be zeroed out.
- Intelligent government reforms are proposed, including privatizing the Federal Aviation Administration and repealing costly Davis-Bacon rules.
- On entitlements, younger people would be given the freedom to opt out of Social Security and Medicare. Spending would be frozen for Medicaid and other welfare programs and they would be converted to block-grant programs.
That’s an ambitious agenda to say the least, and one that the press is likely to dismiss as a pipe-dream. Then again, Paul has managed to single-handedly turn the Federal Reserve into a campaign issue, which nobody could have foreseen just several short years ago. In fact, several of Paul’s fellow candidates for the GOP nod have taken to echoing his anti-Federal Reserve sentiments. Hopefully, the other candidates will copy Paul again by getting specific on what they’d cut. If not, they should be prepared to explain to the electorate why taxpayers should keep funding the departments that Paul would ax.
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