It’s probably never wise to inject oneself into the middle of a food fight, but since I think both sides actually have something right and something wrong, its been a worthwhile debate to follow.  That is the ongoing debate between Peter Wallison at the American Enterprise Institute and David Min at the Center for American Progress (at least we can all agree we love America) on the role of Fannie Mae (and Freddie Mac) in the financial crisis.  If you can’t guess, Peter says Fannie/Freddie caused the crisis, David says they didn’t.

David makes an interesting point, one I’ve actually argued, in his latest retort.  That is, this wasn’t exclusively a housing crisis/bubble.  Other sectors, like commercial real estate, boomed and then went bust; other countries, with different housing policies, also had bubbles.  True from what I can tell.  I will also add that the U.S. office market actually peaked and fell before the housing market, so we can safely say there wasn’t contagion from housing to other parts of the real estate market. 

But the problem with this argument, at least for David, is that it undercuts the Dodd-Frank Act, which he has regularly defended.  The implicit premise of Dodd-Frank is that predatory mortgage lending caused the crisis, so now we need Elizabeth Warren to save us from evil lenders.  But how does predatory lending explain the office market bubble?  Do we really believe that deals between sophisticated parties, poured over by lawyers, were driven by predatory lending practices?  Do we also believe that other countries were also plagued by bad mortgage brokers?  Again, I think David is right about the problem being beyond housing, but he can’t have it both ways.

What is the common factor driving bubbles in commercial real estate, housing, and foreign real estate markets?  Maybe interest rates.  This was a credit bubble after all.  Especially since the Fed basically sets interest rate policy for the world.  It is hard for me to believe that three years (2002–2004) of a negative real federal funds rate isn’t going to end badly.  This is what I think Peter misses, the critical role of the Federal Reserve in helping blow the bubble.  But Dodd-Frank does nothing to change this. 

Now there are a ton of things I think both still miss.  We could argue all day about what a subprime mortgage is.  I think the definitions used by Wallison (and Pinto) are reasonable.  There is also a degree, a large one, to which David and Peter are just talking past each other.  For instance, there is something special about the U.S. housing market that transfers much of the risk to the taxpayer.  In contrast, the bust in the office market didn’t leave the taxpayer to pick up the tab.  That has to count for something, unless one just doesn’t care about the taxpayer. 

There are a few other issues that make Fannie/Freddie uniquely important in the crisis, but I lack the space to go into them here. Instead, I’ll wrap up by saying that their role in the overnight repurchase (re-po) market is under-appreciated and their ability to essentially neuter the Fed was critical in keeping the bubble going.  What’s for dessert?

The CAP-AEI Fannie Mae Food Fight is a post from Cato @ Liberty - Cato Institute Blog

The big-government advocates at the Center for American Progress recently released a series of charts designed to prove America is a low-tax nation. I wish this was the case.

The United States does have a lower overall tax burden than Europe, which is shown in one of the CAP charts, but that doesn’t exactly demonstrate that taxes are low in America. Unless, of course, you think weighing less than an offensive lineman in the NFL is proof of being skinny.

But the one chart that jumped out at me was the one showing that the United States collects less corporate tax revenue than other developed nations. The CAP document states, with obvious disapproval, that “Corporate income tax revenue in the United States is about 25 percent below the OECD average.”

The obvious implication, at least for the uninformed reader, is that the United States should increase the corporate tax burden.

But here’s some information that CAP didn’t bother to include in the study. The U.S. corporate tax rate is more than 39 percent and the average corporate tax rate in Europe is less than 25 percent.

So let’s ponder these interesting facts. CAP is right that the U.S. collects less tax revenue from corporations, but even they would be forced to admit (though they omit the info from their report) that the U.S. corporate tax rate is much higher. Let’s see…higher tax rate-lower revenue…lower tax rate-higher revenue…this seems vaguely familiar.

Could this possibly be an example of that “crazy” concept of (gasp!) a Laffer Curve? To be sure, it is only in rare cases, when tax rates get very high, that researchers find that high tax rates lose revenue. In most cases, the Laffer Curve simply implies that higher tax rates won’t raise as much money as politicians want.

But have our friends at CAP inadvertently identified one of those cases where a tax cut (i.e., a lower corporate tax rate) would “pay for itself”?

There certainly is strong evidence for this proposition. In a 2007 study, Alex Brill and Kevin Hassett of the American Enterprise Institute found that the revenue-maximizing corporate tax rate is about 25 percent (click chart to enlarge).

Somehow, I suspect this wasn’t their intention, but I want to thank the statists at CAP for reminding us about the self-destructive impact of high tax rates. 

For those who want to learn more about the Laffer Curve, these three videos will make you more knowledgeable than 99 percent of people in Washington (not a big achievement, I realize, but the information is still useful).

CAP Leftists Have Accidental Encounter with the Laffer Curve, Learn Nothing is a post from Cato @ Liberty - Cato Institute Blog

On June 12, 1967, the U.S. Supreme Court struck down bans on interracial marriage in more than a dozen states in the case of Loving v. Virginia. Today, the highest court in the United States may soon take on the issue of marriage equality for gay and lesbian relationships. Attorneys David Boies and Theodore B. Olson are hoping the case of Perry v. Schwarzenegger will further establish marriage as a fundamental right of citizenship. Also featured are John Podesta, President of the Center for American Progress, Cato Institute Chairman Robert A. Levy and Cato Executive Vice President David Boaz.

Watch the full event from which many clips were pulled here and Robert A. Levy’s presentation here.

The Constitutional Case for Marriage Equality is a post from Cato @ Liberty - Cato Institute Blog

• Please join us this Thursday, April 21 at 4:00 p.m. Eastern for a book forum and debate on “green energy” policy, following the recent release of the Cato book The False Promise of Green Energy. On Thursday, University of Alabama Professor of Law and Business Andrew P. Morriss (one of the book’s authors) and Center for American Progress Vice President for Energy Policy Kate Gordon will debate the merits of the “green” economic agenda, moderated by Cato Institute Senior Fellow Jerry Taylor. Complimentary registration is required of all attendees by noon TOMORROW, Wednesday, April 20. We hope you can join us in person and for the reception following the event–if you cannot attend in person, we hope you’ll tune in online or on Facebook.
• “Nothing in international law, however, can change the United States Constitution’s procedures for when the United States can go to war — which require the consent of Congress.”
• Nothing says it’s time to convert Medicaid to block grants like letters from 17 governors opposing the idea.
• Nothing would spur economic recovery like a “liberate to stimulate” regulatory agenda.
• Nothing says “failure” like 37,000 dead and climbing.
• Nothing is more complicated and convoluted than the U.S. tax code, which changed 579 times in the last year–more than one change every day:

Tuesday Links is a post from Cato @ Liberty - Cato Institute Blog

The latest canard offered for keeping taxpayers on the hook for mortgage risk is that, without such, homeownership would limited to the wealthy.  Sarah Rosen Wartell of the Center for American Progress stated before the House Subcommittee on Capital Markets, “The high cost, limited availability, and high volatility of pre-New Deal mortgage finance meant that homeownership was effectively limited to the wealthy.”  Congressman Al Green repeated the point.  As I’ve generally found Sarah to be one of the more reasonable CAP employees, and that this is fundamentally an empirical question, I would have expected her to offer some evidence to support such a claim.  Alas, she did not.  So I will.

According to the US Census Bureau, at the turn of the century in 1900, the US homeownership rate was 46.5%.  I’m pretty sure that even Sarah wouldn’t claim that close to half of US households in 1900 were “wealthy.”  Interestingly enough, homeownership after the first 10 years of the New Deal was lower than before the New Deal.

While 46.5% is about 20 percentage points below the current rate, the population in 1900 was considerably younger, and one thing we do know is that homeownership is positively correlated with age.  In 1900, 54% of the US population was under the age of 25, a reasonable cut-off for homeownership.  Today, that number is 35%.  I don’t think it would be a stretch to say the greatest driver behind the homeownership rate over the last 100 years has been the aging of the US population, probably followed by the increase in household incomes (homeownership and income are also closely correlated).

Hopefully this will put to rest the myth that FDR and the New Deal gave homeownership to the masses.  The fact is that homeownership was fairly widespread long before the New Deal.  I await the next myth from the Fannie Mae apologists.   If they are wise, they will try one that isn’t so easily falsified.

Homeownership Before the New Deal is a post from Cato @ Liberty - Cato Institute Blog

The Center for American Progress has a new weekly feature examining “tax expenditures” in the Internal Revenue Code.  As I’ve written before, there ain’t no such thing as a tax expenditure. Or a tax subsidy.  Targeted tax breaks are bad because, on balance, they expand government’s control over the people.  But they are not “expenditures” or “subsidies.”  Using either of those terms implies that the money not collected by the IRS because of a targeted tax break actually belongs to the federal government, rather than the people who earned it.

The Left would love to convince everyone that, as the Center for American Progress writes, “Tax expenditures are really just federal spending programs administered by the Internal Revenue Service.”  If everyone believes that this is really federal spending, then when Congress eliminates those “tax expenditures” maybe no one will notice that Congress is actually extracting resources from the private sector.

That very deception appears to be the aim of the Center for American Progress’ new feature.  Their first “Tax Expenditure of the Week” is the exclusion for employment-based health insurance.  They use the “tax expenditure” concept to argue that ObamaCare’s 40-percent “Cadillac tax” on high-cost health plans is actually a good thing:

The tax exclusion for employer-sponsored health care benefits is the largest tax expenditure and one of the most important. The Patient Protection and Affordable Care Act takes steps to make it more targeted and cost effective in the context of overall health care reform. Other tax expenditures should be similarly evaluated and considered in the context of the policy goals they serve.

See?  ObamaCare doesn’t raise your taxes.  It reallocates a tax expenditure.  George Orwell, call your office.

(To be clear: I favor eliminating all targeted tax breaks, even the personal and dependent exemptions, and having everyone pay the same low, low, low rate.  Eliminating tax breaks for health care is essential for bringing medical care within the reach of low-income people.  But the exclusion for employer-sponsored insurance is a particularly sticky wicket, such that reform will need to happen in two steps.  Here’s the first step.)

How the Term ‘Tax Expenditure’ Leads to Bigger Government is a post from Cato @ Liberty - Cato Institute Blog

As I’ve pointed out repeatedly, though the sector is no doubt rife with waste and home to some dirty-dealers, attacks on for-profit colleges are almost certainly driven by politics and ideology, not educational concerns. Were it otherwise, all of higher education would be taking a beating for its bankrupting waste and widespread failure.

A recent symptom of anti-profit witch-huntery was the misrepresentation of GAO reporting on what “secret shoppers” found while visiting select for-profit institutions. At the time the findings were released I thought the main problem was that members of the media and Sen. Tom Harkin (D-Iowa) — who has been leading the crusade against for-profit schools — were using the results to smear the whole proprietary sector when the GAO was clear about examining a nonrepresentative sample of schools. Unfortunately, it turns out the GAO might actually be in on the demonization.

On November 30 — without making any announcement that I could find on its website — the GAO released a modified version of its report, and according to a comparison between the old report and new one by the Coalition for Educational Success, the new version contains several changes that cast its for-profit targets in better light than they first appeared.

One vignette, for instance, originally said that a school’s admissions representative told an undercover applicant that she “should” take out maximum federal loans even if she didn’t need all the money. The change says the representative told the applicant that she “could” take maximum loans — a pretty big difference.

Another section went from only reporting that a representative told an applicant that the school has graduates making $120,000 to $130,000 in a job that, according to the GAO, typically makes less than $70,00 a year, to reporting that the representative also informed the applicant that she “could expect a job with a likely starting salary of $13-$14 per hour or $15 if the applicant was lucky.” $15 an hour translates into about $30,000 a year, and completely changes the tenor of the vignette.

According to Stephen Burd of the Center for American Progress, career colleges have been self-servingly crying – or at least whispering — foul over the GAO report for months now. Burd has been a leading for-profit basher, but I’d have been inclined to give only limited credence to concerns about dirty pool, too, until this latest revelation trickled out.

Now, though much needs to be determined about why the myriad changes to the report were made, I wouldn’t be terribly surprised to learn that people at the GAO have actually been in on the crusade to demonize proprietary colleges. I also, unfortunately, won’t be surprised if no one pays attention to any of this, and the shameless, responsibility-dodging war on for-profits continues unabated.

War on For-Profit Colleges Reeks Even Worse is a post from Cato @ Liberty - Cato Institute Blog

Congratulations to the wave of Republicans who successfully ran on promises to tackle rising government debt and cut the hugely bloated federal budget. On the campaign trail, most candidates were not very specific about how they would cut the budget, but when they come to Washington they will be looking for good reform targets.

Newcomers to Congress can find a wealth of budget-cutting ideas in recent plans by various D.C. think tanks:

• At the Heritage Foundation, Brian Riedl has come up with $343 billion in proposed annual cuts.
• At the Committee for a Responsible Federal Budget, Bill Galston and Maya MacGuineas have proposed $400 billion in annual cuts.
• Esquire magazine assembled four former senators who came up with $476 billion in annual cuts.
• The National Taxpayers Union teamed up with the U.S. Public Interest Research Group to propose $600 billion of cuts over five years.
• Michael Ettlinger and Michael Linden of the Center for American Progress offer one plan that would cut annual spending by $255 billion.

Cato’s website, www.downsizinggovernment.org, also provides a treasure trove of spending cuts, and I will be publishing a detailed budget-reform plan in coming days. 

Some of the above budget plans include tax increases, but voters gave a resounding message yesterday that they want Congress to focus on cutting spending, not raising taxes.

Out of the starting gate next year, fiscal reformers in Congress should push for an across-the-board cut to discretionary spending for the rest of the current fiscal year. One approach would be for House leaders to propose a continuing resolution that extends spending at last year’s levels, less some substantial percentage cut applied to every program.

For the upcoming fiscal year of 2012, reformers need to carefully target some major program cuts and eliminations. The president and the Democrats in the Senate will likely resist proposed cuts, but the point is to further the national debate that has begun about the proper size and scope of the federal government.

Some initial targets for GOP reformers, with rough annual savings, could include: community development subsidies ($15 billion), public housing subsidies ($9 billion), urban transit subsidies ($9 billion), and foreign development aid ($18 billion). On the entitlement side, initial cuts could include raising the retirement age for Social Security and introducing progressive price indexing to reduce the growth rate of future benefits.

We will not get federal spending under control unless we begin a national discussion about specific cuts. And we won’t get that discussion unless enough members of Congress start pushing for specific cuts. Ronald Reagan was able to make substantial cuts to state grants in the early 1980s because policymakers had discussed such reforms throughout the 1970s. Republicans in the mid-1990s were able to reform welfare because of the extended debate on the issue that preceded it.

The electorate wants spending cuts, and they will support the policymakers who take the lead on cuts if they are pursued in a forthright and serious-minded manner.

What Spending Should the GOP Cut? is a post from Cato @ Liberty - Cato Institute Blog

That’s the title of a recent paper from the liberal Center for American Progress, which attempts to demonstrate “what reducing the federal budget deficit through large spending cuts could really look like.”

The authors, Michael Ettlinger and Michael Linden, issue a challenge that I whole-heartedly embrace:

By showing sets of specific spending cuts we hope to deepen the discussion of where deficit reduction is going to come from. The challenge we issue is this: If you think all or most of the deficit problem should be dealt with on the spending side, are you then willing to own the cuts we outline? If not, then it’s time to go public with what your cuts are, with at least the same level of precision we do—no gimmicks, “sunsets,” or other games. No infomercial claims that you’ve got a magic elixir that gets the same results for half the money.

My colleague Chris Edwards anticipated this challenge with his 2005 book Downsizing the Federal Government. The book led to the creation of Cato’s Downsizing Government website, which is going department-by-department to outline specific — and substantial — spending cut recommendations.

The CAP authors lay out specific spending cuts of $255 billion in fiscal year 2015, which is the projected figure necessary to achieve a balanced “primary budget” in that year. (The primary budget is total spending minus outlays for servicing the federal debt). The White House’s most recent projections show “primary” spending of $3.8 trillion in FY2015, so we’re talking about an overall reduction of about 7 percent.

Ettlinger and Linden acknowledge that their proposed spending cuts will invite criticism. For instance, the authors only conjure up $57 billion in spending cuts from “entitlement” programs, which are the chief drivers of our unsustainable fiscal direction. More than 40 percent of the cuts come from defense. While many conservatives will have a problem with defense cuts, it’s definitely something Cato scholars support. In fact, the proposed cuts match up well with defense cuts proposed in a new policy analysis written by my colleagues Ben Friedman and Chris Preble.

Where we part ways with the authors of the paper is the presumption that “most spending cuts are painful, and in some ways, harmful.” There are two sides to the spending coin. As the Downsizing website repeatedly demonstrates, government spending not only inflicts pain on those who are forced to pay for it, but it also has harmful effects on the economy and even those who it purportedly helps.

Ettlinger and Linden also make a claim that is both subjective and obvious: “The truth is that, contrary to popular wisdom, most federal government dollars go to good and popular things.”

Even if one accepts, for the sake of argument, that most federal spending goes to “good things,” there’s still the tiny little question of whether the government should undertake the spending. What about the possibility — we’d say reality — that there are superior private and voluntary alternatives to the federal government assuming responsibility for doing “good things”?

From a moral perspective, it’s important to remember that everything “good” the government does necessarily comes with a “bad” given that government forcibly takes from one to give to another.

The authors claim that federal dollars go to “popular things.” Of course, subsidies are always popular with the recipients. Farm subsidies are popular with farmers, weapons programs are popular with defense contractors, and subsidized student loans are popular with students. As Frederic Bastiat so succinctly put it, “The state is the great fictitious entity by which everyone seeks to live at the expense of everyone else.”

Regardless, Ettlinger and Linden deserve credit for moving the ball in the direction of a serious debate on which government programs can be cut. As they correctly note, the position that all we need is “just a little belt-tightening and reductions in wasteful government spending” is “nonsense.”

A Thousand Cuts is a post from Cato @ Liberty - Cato Institute Blog

President Obama’s Secretary of Health and Human Services Kathleen Sebelius is still threatening to bankrupt insurance companies who tell their customers that ObamaCare‘s mandates will increase premiums by more than 2 percent, even though her department’s projections show that, starting this week, just one of the law’s new mandates will increase some premiums by nearly 7 percent.

In a CBS News story last week, Sebelius tried to defend those indefensible threats:

But don’t the insurance companies have a right to make their own analyses and claims to their customers?

“Absolutely, they have a right to communicate with their customers,” replied HHS Secretary Kathleen Sebelius. “We just want to make sure that communication is as accurate as possible.”

The government can and should police fraud — but that’s not what Sebelius is doing.  She is suppressing legitimate differences of opinion in the pursuit of political gain.

What if the government had said, “Absolutely, CBS News has a right to communicate with its customers — we just want to make sure that communication is as accurate as possible”?  Should the government be able to put CBS News out of business if it decides those communications are not as accurate as possible? How about the National Rifle Association?  Should the next Republican administration be able to put the Center for American Progress, the SEIU, or The New York Times out of business if it decides their communications are not as accurate as possible?

You don’t have to oppose ObamaCare to see the danger here.

President Obama’s Speech Czar is a post from Cato @ Liberty - Cato Institute Blog

Today’s Los Angeles Times features an op-ed by Lawrence Korb of the Center for American Progress, and Loren Thompson of the Lexington Institute, that is worthy of attention. The theme, cutting military spending, isn’t particularly original. It has grown into a regular topic of conversation across the media spectrum, with the New York Times featuring an editorial this past Sunday making the case for real cuts in Pentagon spending, not the half-hearted cost-shifting that Defense Secretary Gates is busy selling these days. Ben Friedman and I wrote about cutting military spending in the LA Times a few months ago, and I collaborated with Larry Korb on this same subject at The National Interest Online. Nothing particularly newsworthy there.

Loren Thompson’s contribution is significant, however. Building on his entry at the National Journal‘s National Security Experts blog earlier this month,he signals a willingness on the part of an established Washington insider to reconsider some fundamental propositions that have guided his work — and inside-the-Beltway thinking — for years.

One of Lexington’s bread-and-butter issues has been finding ways to grow the military budget. I don’t expect that to change entirely. Perhaps now, however, the focus will be on steering a finite and shrinking military budget to particularly worthwhile projects, and jettisoning the force structure that serves decidedly unnecessary or unwise missions (e.g. invading and occupying medium-sized countries in Southwest and Central Asia).

A related goal is to give U.S. taxpayers a break, and get others to spend more for their own defense. In this vein, I don’t agree with all of their predictions. I doubt that the Littoral Combat Ship will have much of a foreign market with a price tag exceeding $600 million a piece (when one includes the mission modules that each LCS will carry). I likewise am skeptical that the Joint Strike Fighter will attract a lot of buyers if the price continues on its current path — approaching $150 million a piece. Some countries that had previously committed to the JSF program, including Denmark and the Netherlands, are now getting cold feet.

That said, the bottom line in the Korb-Thompson collaboration is spot on, and worth repeating:

The big question for policymakers is not whether defense spending will be cut — that is inevitable — but how global security will be maintained as the U.S. role diminishes….

It appears the only way this can be accomplished without encouraging aggression is to expect more of allies and friends. In other words, countries such as Germany, Japan and India must help fill the strategic vacuum created by America’s retreat.

[...]

The White House has already embarked on a series of initiatives to engage allies in more robust security roles while loosening the export restrictions that impeded arming them. These steps may have trade benefits for America, but their real significance is that America’s eroding economic might makes unilateralism too costly to be feasible. Washington needs to help overseas friends play a bigger security role so it can concentrate on rebuilding its economy.

Congrats and kudos to them both for setting forth such a clear and convincing argument for a dramatic change of course.

Korb and Thompson on Military Spending is a post from Cato @ Liberty - Cato Institute Blog

A $600-million bill to enhance border enforcement has hit a temporary snag in the Senate, but it is almost inevitable, with an election only a few months away, that Congress and the president will spend yet more money trying to enforce our unworkable immigration laws.

“Getting control of the border” is the buzz phrase of the day for politicians in both parties, from Sen. John McCain, R-Ariz., to Sen. Chuck Schumer, D-N.Y. Never mind that apprehensions are down sharply along our Southwest border with Mexico, mostly I suspect because of the lack of robust job creation in the unstimulated Obama economy.

Meanwhile, since the early 1990s, spending on border enforcement has increased more than 700 percent, and the number of agents along the border has increased five-fold, from 3,500 to more than 17.000. (See pages 3-4 of a January 2010 report from the Center for American Progress and the Immigration Policy Center.) Yet the population of illegal immigrants in America tripled during that period. If this were a federal education program, conservatives would rightly accuse the big spenders of merely throwing more money at a problem without result.

To pay for this politically driven expenditure, Congress plans to nearly double fees charged for H1-B and L visas used by foreign high-tech firms to staff their operations in the United States. The increased visa tax will fall especially hard on companies such as the Indian high-tech leaders Wipro, Infosys, and Tata.

This all has the ring of election-year populism. Congress pretends to move us closer to solving the problem of illegal immigrants entering from Latin America by raising barriers to skilled professionals coming to the United States from India and elsewhere to help us maintain our edge in competitive global technology markets.

‘Border Enforcement’ Bill Driven by Election-Year Politics is a post from Cato @ Liberty - Cato Institute Blog

The folks at the Center for American Progress, in their daily anti-right email, wrongly call the Cato Institute conservative and wrongly spell our name CATO.

But what I find more amusing is that the email, prompted by Michael Steele’s confused remarks about Afghanistan and the reaction against him, is titled “The Right Wing’s Addiction to War.” They have a point. But who’s running the Iraq and Afghanistan wars now? Isn’t it the man who once said

I opposed this war in 2002. I will bring this war to an end in 2009. It is time to bring our troops home.

and

I was opposed to this war in 2002….I have been against it in 2002, 2003, 2004, 5, 6, 7, 8 and I will bring this war to an end in 2009. So don’t be confused.

The right wing may be addicted to war, but it seems to be a left-wing president who’s on the sauce now. I look forward to seeing the Center for American Progress start asking President Obama when it will be 2009.

At Least They Spelled Our Name Right. Oops. is a post from Cato @ Liberty - Cato Institute Blog

Damon Root points out that the Center for American Progress has a particularly one-sided view of “The Progressive Tradition in American Politics.” [.pdf]  To add to what Root is saying, my view is that American politics is essentially tribal warfare and an important factor in tribal warfare is the cohesion of the tribes.  One way to accomplish this is by romanticizing history to create a powerful identity with which the tribesmen want to associate themselves.  A political movement needs heroes, villains, narrative.  But CAP’s account of the Progressive movement’s history is remarkably one-sided.

When I ticked over to CAP’s “Progressive Tradition” document [.pdf], I looked to see whether they included Wilson’s 1916 reasoning that it was “in order to keep the white race or part of it strong to meet the yellow race — Japan, for instance, in alliance with Russia, dominating China — [that made it] wise to do nothing” with respect to the war in Europe.  They did not.  In fact, the authors select the passive voice for describing Wilson’s slapdash diplomacy that sucked America into the war: “In his second term, he became preoccupied with international affairs due to the U.S. entry into World War I.”  This phrasing makes it sound like “the U.S. entry” was an act of God, not an act of Wilson.  Moreover, if someone without any prior knowledge read the document they would be painfully unaware that the reason Wilson “became preoccupied with international affairs” was because he got us into a war.

George Creel

What about the Committee on Public Information, a government propaganda machine that made George Bush look like Glenn Greenwald?  The CPI worked in concert with (no kidding) the “Boy Spies of America” to root out insufficiently pro-war thinking.  CPI’s perhaps most metaphysical pronouncement was that U.S. entrance to the Great War was, in fact, “a Crusade not merely to re-win the tomb of Christ, but to bring back to earth the rule of right, the peace, goodwill to men and gentleness he taught.”  What about Roosevelt’s puffed-up belligerence, again foreshadowing Bush, in stating that “He who is not with us, absolutely and without reserve of any kind, is against us, and should be treated as an alien enemy”?  What about the Palmer Raids, named for ur-Progressive and Attorney General A. Mitchell Palmer, wherein the U.S. Government ransacked union halls and homes, snatched up prisoners and held them without access to counsel or courts, and engaged in mass, summary, and unilateral deportations?  Not a word.

As to the Red Scare more generally, the best the authors can do is to shrug that as Wilson’s “general intolerance of dissent during World I became exacerbated by fear of the 1917 Russian Revolution, he played a central role in promoting the Red Scare of 1917-20.  The Red Scare made domestic activism a target of both police suppression and nativist sentiment, producing an atmosphere hardly conducive to the cause of progressive reform.”  Is that supposed to be a denunciation?

In contrast to all this obfuscation and equivocation, poor Warren Harding comes in for a soaking for having produced “a sharp increase in racial violence and the rise of the Ku Klux Klan, new restrictions on immigration, rises in protective tariffs, increases in economic concentration, and tax cuts for the rich.”

Imagine if a conservative group came out with a history of American conservative thought that expressly linked modern American conservatism to the political thought of, say, John C. Calhoun, with only mealy-mouthed “to be sure” language like that used by CAP with respect to Progressivism.  Lefties would be outraged, and rightly so.  Will CAP clear the air on the Progressive movement’s history of racism, imperialism, executive supremacism and contempt for civil liberties?  I bet I know the answer.

Whitewashing Progressivism is a post from Cato @ Liberty - Cato Institute Blog

Zaid Jilani at the Center for American Progress put up a blog post titled, “College debate organizers unable to find any law professors to argue health reform is unconstitutional.” Indeed, it seems that none of the four panelists at the University of Washington Law School event had any issues with Obamacare.

Maybe the UW organizers, who couldn’t find anyone with the opposing view, are talking to the same folks who told John Conyers about the “Good and Welfare Clause.” Because, as I said before, it’s not that hard to find constitutional scholars who have problems with this legislation.

OK, look, I’ll make it easier:  I hereby announce that I am willing to travel anywhere at anytime to debate the constitutionality of Obamacare. Whoever sets up the debate has to pay my travel expenses, but that’s it.  Any takers?

Will Debate Constitutionality of Obamacare Anytime, Anywhere is a post from Cato @ Liberty - Cato Institute Blog

The Center for American Progress and the Immigration Policy Center released a new study this morning that finds comprehensive immigration reform would boost the U.S. economy by $189 billion a year by 2019. The bottom-line results of the study are remarkably similar to those of a Cato study released last August.

Titled “Raising the Floor for American Workers: the Economic Benefits of Comprehensive Immigration Reform,” the CAP study was authored by Dr. Raul Hinojosa-Ojeda of the University of California, Los Angeles.

It finds that legalizing low-skilled immigration would boost U.S. gross domestic product by 0.84 percent by raising the productivity of immigrant workers and expanding activity throughout the economy.

Using a different general-equilibrium model of the U.S. economy, the earlier Cato study (“Restriction or Legalization? Measuring the Economic Benefits of Immigration Reform,” by Peter Dixon and Maureen Rimmer) found that a robust temporary worker program would boost the incomes of U.S. households by $180 billion a year by 2019.

Both studies also concluded that tighter restrictions and reduced low-skilled immigration would impose large costs on native-born Americans by shrinking the overall economy and lowering worker productivity.

I’m partial to the Cato study. Its methodology is more comprehensive and more fully explained, but it is worth noting that very different think tanks employing two different models have come to the same result: Legalization of immigration will expand the U.S. economy and incomes, while an “enforcement only” policy of further restrictions will only depress economic activity.

If Congress and President Obama want to create better jobs and stimulate the economy, comprehensive immigration reform should be high on the agenda.

New Study Seconds Cato Finding: Immigration Reform Good for Economy is a post from Cato @ Liberty - Cato Institute Blog

1) Commandant of the Marine Corps announces part of justification for sending more troops to Afghanistan: “where we have gone, goodness follows.”  Pat Lang is displeased.

2) Glenn Greenwald observes that in Foreign Policy magazine’s survey of leading public intellectuals who write about foreign policy, the United States is tied with Somalia and Iran for second place in the category “Most Dangerous Country in the World.”

3) Afghanistan is an ideologically cross-cutting issue.  Rep. Dennis Kucinich (D-OH) praises Cato’s Afghanistan study on Fox News’ On the Record, saying

…I’m against any further taxes to pay for this war. But I think it has to be pointed out, this isn’t a left-right issue. I mean, here’s the Cato Institute, hardly a left-wing organization, wrote a piece called “Escaping the Graveyard of Empires,” and they have a plan, and I’ve met with them, that gets us out of Afghanistan, with advisers and a new approach to intelligence and also a new drug policy.

Meanwhile, the liberal Center for American Progress has produced a statement on Afghanistan that offers some empty rhetoric about an exit strategy but contains no actual plan–or even a call for a plan–for exiting.  Instead, their proposal for when to leave is limited to calling for a multinational effort that merely will “have all Afghan forces in the lead within four years, or the 12-year mark of our engagement.”  CAP is also offering a pretend plan to cut the Pentagon budget, urging Obama to spend more than $600 billion on defense for each of the next several years.

A Few Foreign Policy Items is a post from Cato @ Liberty - Cato Institute Blog

Today the Center for American Progress rolled out its proposal that we add “public directors” to the boards of companies that have been bailed out by the government.  CAP scholar Emma Coleman Jordan argues that “public directors will provide a corrective to the boards of the financial institutions that helped cause the crisis.”

One has to wonder whether Ms. Jordan has ever heard of Fannie Mae and Freddie Mac.  If she had, she might recall that a substantial number of the board members of Fannie and Freddie were so-called “public” members appointed by the President.  Perhaps she can ask CAP adjunct scholar and former Fannie Mae executive Ellen Seidman to review the history of those companies for her.

Where’s the evidence that any of those Fannie/Freddie “public” directors, whether they were appointed by Republican or Democrat Presidents, ever once look out for the public interest?  In fact all the evidence points to these public directors looking out for the interests of Fannie and Freddie, often lobbying Congress and the Administration on the behalf of these companies.

I suppose CAP would tell us that having the regulators pick the directors instead of the president would protect us from having those positions filled with political hacks.  Ms. Jordan argues that “regulators should determine most of the details of the public directorships—after all, they have the most direct experience in trying to regulate private companies that have received public funds.”  We tried that route as well.  In contrast to Fannie/Freddie, each of the twelve Federal Home Loan Banks had to have a number of its directors appointed by its then regulator, the Federal Housing Finance Board.  It was well known within the Beltway that these appointments were more often political hacks than not.  For instance one long time director of the Federal Home Loan Bank of Pittsburgh was the son of a senior member of the US House Committee on Finance Services.  Once again we’ve gone down this road, we know how this story ends.

If we are truly interested in protecting the taxpayer, we should, first, end the ability of the Federal Reserve to bailout companies, and second, as quickly as possible remove any government involvement in these companies.  Having the government appoint board directors only further entangles the government into our financial system; and if Fannie and Freddie are a good guide, actually increases the chances of future bailouts.

CAP’s Proposal to Add ‘Public Members’ to Corporate Boards Is Flawed is a post from Cato @ Liberty - Cato Institute Blog

Years ago, talking with a public school teacher friend of mine at the end of the school year, she told me how excited she was about her impending orca whale watching outings in the San Juan Islands. Not only would it be a blast, but it would count as a continuing education credit (toward a master’s of education degree, as I recall) that would boost her salary substantially.

Normally, I bite my tongue in such situations. But before I could stop myself I blurted out the question: “Is watching whales going to make you a better teacher?”

The lack of any relationship between education master’s degrees and student achievement is acknowledged in a recent study from the Center for American Progress by Marguerite Roza and Raegen Miller.  In fact, Roza and Miller find that states waste $8.6 billion every year paying for master’s degrees that do nothing to improve student performance. Ironically, the state that offers the highest wage bump to teachers who obtain an M. Ed. ($10,777) is my home state of Washington.

Watching whales may not do much for your students, but it does wonders for your pocketbook. (HT: Joanne Jacobs)

Does Watching Whales Make You a Better Teacher? is a post from Cato @ Liberty - Cato Institute Blog

Someone forwarded me an email update from our friends at the Center for American Progress Action Fund (motto: “Disagree with us? Then you hate progress.”).

In one blurb, CAPAF’s crack team of spin-disclosers chides Republicans for discussing health care reform using the language recommended by pollster Frank Luntz, who “advised Republicans to fearmonger” Obama’s proposals to death!  Or something.

The same email had another blurb titled, “INSURANCE COMPANIES AT THE TABLE?” There, CAPAF’s crack team of spin-disclosers describe how “health insurance companies and lobbying groups” stood beside President Obama last week to announce their support for reducing spending growth.  The blurb continues:

However, days later, the insurance companies tried to walk back their promises, saying Obama had overstated their commitments. Richard Umbdenstock, the president of the American Hospital Association, wrote to his company’s state and local affiliates to “clarify” that “[t]he groups did not support reducing the rate of health spending by 1.5 percentage points annually.” However, the letter to Obama signed by Umbdenstock and the other insurance leaders specifically pledged…

“Umbdenstock and the other insurance leaders”??  Since when do we classify hospitals as insurance companies?  And if “the insurance companies…sa[y] Obama had overstated their commitments,” why not quote the insurance companies?  Could they not find such a quote?

It’s as if CAPAF’s crack team of spin-disclosers has decided to blame every development that might threaten a — ahem — government take-over of health care on the insurance companies.  Now why might they want to do that?  Could it be because insurance companies are less popular than hospitals?

And how would CAPAF’s crack team of spin-disclosers know that?  By listening to a . . . pollster?

Irony! Get Your Red-Hot Health-Care Irony! is a post from Cato @ Liberty - Cato Institute Blog