Thursday, December 31, 2009

Fortunately Child Protective Services Didn't See this Photo

Nothing too exciting on the slopes yesterday. The temperature was much warmer, a positively balmy 15 this morning. Final day of skiing today.

Here's a photo of my oldest sun from a couple of years ago.

Do Taxes Make People Unhappy?

A column in the Wall Street Journal reports on a new study showing that people tend to be unhappiest in high-tax states. This type of research is very imprecise, to be sure, and it may be that the causality (if any) is that unhappy people vote for higher taxes. The most persuasive part of the column, at the end of the excerpt below, is that people keep moving out of high-tax states and into low-tax states:

Does living in a blue state make people blue? It seems so, according to a new study in Science magazine that ranks states according to their happiness. The study finds that New Yorkers are the unhappiest people in America and their neighbors in Connecticut come in a close second, followed by Michigan, Indiana, New Jersey, California, and Illinois. And the happiest states? Drum roll, please…Louisiana, Hawaii, Florida, Tennessee, and Arizona. Eight of the ten happiest states lean right while eight of the ten unhappiest tilt left. While the study by no means proves that being liberal makes people unhappy, it does reflect some of the unfortunate implications of living in a blue state. ...According to the Tax Foundation 2008 analysis, three of the top five unhappiest states—New York, Connecticut and New Jersey—have the highest state-local tax burdens. On the other hand, four of the top five happiest states—Louisiana, Florida, Tennessee and Arizona—are among the states with the lowest state-local tax burdens. True, correlation doesn't prove causation, and high taxes alone don't always make people miserable, but there's something going on here. ...Many liberal state governments like those in Albany, Trenton and Sacramento are spending more and more on entitlement programs and public employee pensions, racking up more and more debt, and imposing more and more taxes to pay for it all---while ignoring their taxpayers' needs. Taxpayers, however, aren't just getting unhappy. They're getting out. United Van Lines' 2009 annual study shows that New York, New Jersey, Michigan and Illinois are among the states with the highest outbound migration while Alabama and Tennessee are among the states with the highest inbound migration. ...Taxes may not be the root of all unhappiness, but they do result in some very sad citizens.

Wednesday, December 30, 2009

Ski Update: My Encounter with Local Government

I'm not sure what today will bring, but yesterday was a mixed experience. The skiing was fairly nice, even though the morning started with the thermostat reading -8.

The trip to the slopes was the bad part. I'm driving in a convoy of cars through a small Vermont town, going as fast as the car in front of me and the car behind me. But I made a big mistake. I had out-of-state plates on my car, so the local bureaucrat with a gun pulls me over for going 38 in a 25.

And people wonder why I don't feel warm and fuzzy about government.

Bureaucrats Living on Easy Street

A Michael Barone column in the Washington Examiner compares the bloated payrolls and happy times for the bureaucracy with the challenging times for workers in the productive sector of the economy. The column does not mention that bureaucrats also are vastly overpaid compared to private sector workers:

It looks like a happy new year for you -- if you're a public employee. That's the takeaway from a recent Rasmussen poll that shows that 46 percent of government employees say the economy is getting better while just 31 percent say it's getting worse. In contrast, 32 percent of those with private-sector jobs say the economy is getting better, while 49 percent it is getting worse. Nearly half, 44 percent, of government employees rate their personal finances as good or excellent. Only 33 percent of private-sector employees do. It sounds like public- and private-sector employees are looking at different Americas. And they are. Private-sector employment peaked at 115.8 million in December 2007, when the recession officially began. It was down to 108.5 million last November. That's a 6 percent decline. Public-sector employment peaked at 22.6 million in August 2008. It fell a bit in 2009, then has rebounded back to 22.5 million in November. That's less than a 1 percent decline. This is not an accident; it is the result of deliberate public policy. ...At some point -- and this already has occurred in much of Western Europe -- public sector spending tends to choke off private-sector growth. America's current high unemployment levels have been commonplace in much of Western Europe for the last 25 years. The question now is whether they will become commonplace in the United States in the decade ahead.

Tuesday, December 29, 2009

Weekly Economics Lesson

Great column by Arnold Kling and Nick Schulz on how markets really operate - and why government intervention either causes problems or prevents markets from fixing them. For those of you who care to get in the weeds, this is one of the reasons why the "Austrian School" of Hayek and Mises is better for understanding economics than the (also great) "Chicago School" of Friedman and Becker:

Two camps have fought the political and philosophical battle for influence over the economy in the United States for the past 100 years. They differ in their views over the nature of markets and government. And both are wrong. One camp makes it sound as if markets can do no wrong. ...The other camp argues, "Markets fail, and that's why we need government." ...In the wake of the financial crisis that gave way to the broader economic downturn, the advocates of government involvement in the economy are once again on the march and traditional defenders of markets are in retreat. And so we have seen government advance its role with partial ownership of many big banks, with a take-over of automotive firms, with a large "stimulus" program, with proposals for cap-and-trade for carbon emissions, and with a major initiative on healthcare. ...Over the past two generations, a different view of markets and government has begun to emerge, one whose moment may have arrived. It is a view that believes both traditional camps have overlooked some important aspects of markets. ...This view can be summarized as "Markets fail. That's why we need markets." ...According to this view, entrepreneurs at work in the economy--in finance, high tech, manufacturing, services, and beyond--are constantly experimenting, creating new business models, techniques, and technologies that upend the established order of things. Some new technologies and innovations are genuine improvements and are long-lasting welfare enhancers. But others are the basketball equivalent of pump fakes--they look like the real deal and prompt market actors to leap hastily into action, only to realize later that their bets were wrong. Given this dynamic, markets are unpredictable, prone to booms and busts, characterized by bouts of exuberance that are rational or irrational only in hindsight. But markets are also the only reliable mechanism for sorting out this messy process quickly. In spite of the booms and busts, markets drive genuine long-run innovation and wealth creation. When governments attempt to impose order on this chaotic and inherently risky process, they immediately run up against two serious dangers. The first is that they strangle new innovations before they can emerge. Thus proposals for a Consumer Financial Protection Agency, a systemic risk regulator, a public health insurance plan, a green jobs policy, or any attempt at top-down planning may do more harm than good. The second danger has to do with the nature of political economy. Politics creates its own kind of innovators who can be as destabilizing to markets as market actors themselves--but in far more pernicious ways. Economists call these political entrepreneurs "rent-seekers." Rent-seekers gain wealth, not by creating it, but by channeling it through political favors. Examples include government-sponsored monopolies, "targeted" tax breaks for special industries, and legislative loopholes inserted by lobbyists. The boom in housing and mortgage securities that ended so badly was fueled by government policies that were encouraged by rent-seekers in the real estate, home building, and mortgage finance industries.

Good Things Come in Threes...

...at least for videos promoting the 2nd Amendment. Here's a third video I found, this one featuring Ted Nugent:



Miserable drive to Vermont, by the way. Traffic in Maryland, New Jersey, New York and Connecticut.

Light Blogging the Next Few Days

I'm heading to Vermont with the kids to see family and do some skiing.

That means less time for blogging. But since I only post three or four times per day, I'm not sure anyone will even notice if I post one or two times per day instead.

Here we are three years ago. With any luck, I'll have an updated photo.

Monday, December 28, 2009

Another Great Video on the Second Amendment

The whole video is worth watching, but there's a really powerful moment shortly after the five-minute mark.

More TSA Incompetence

Isn't this just wonderful? The feds have announced new rules, but it's not clear what they are. According to some reports, though, passengers will not be allowed to have anything it their laps. Does this mean books? Blackberries? Are we allowed to twiddle our thumbs? Since I have speeches next month in Canada and the Cayman Islands, I look forward to seeing what petty and pointless inconveniences the bureaucrats at the Transportation Security Administration have in store for me:

The government was vague about the steps it was taking, saying that it wanted the security experience to be "unpredictable" and that passengers would not find the same measures at every airport — a prospect that may upset airlines and travelers alike. But several airlines released detailed information about the restrictions, saying that passengers on international flights coming to the United States will apparently have to remain in their seats for the last hour of a flight without any personal items on their laps. It was not clear how often the rule would affect domestic flights.
The key question, of course, is whether any of these rules make flying safer. After all, there are real nutjobs out there who want to kill Americans. But as Christopher Hitchens explains, the new rules are bureaucratic nonsense:

For some years after 9/11, passengers were forbidden to get up and use the lavatory on the Washington-New York shuttle. Zero tolerance! I suppose it must eventually have occurred to somebody that this ban would not deter a person who was willing to die, so the rule was scrapped. ...But now fresh idiocies are in store. Nothing in your lap during final approach. Do you feel safer? If you were a suicide-killer, would you feel thwarted or deterred? ...Why do we fail to detect or defeat the guilty, and why do we do so well at collective punishment of the innocent? The answer to the first question is: Because we can't—or won't. The answer to the second question is: Because we can. The fault here is not just with our endlessly incompetent security services, who give the benefit of the doubt to people who should have been arrested long ago or at least had their visas and travel rights revoked. It is also with a public opinion that sheepishly bleats to be made to "feel safe." The demand to satisfy that sad illusion can be met with relative ease if you pay enough people to stand around and stare significantly at the citizens' toothpaste. My impression as a frequent traveler is that intelligent Americans fail to protest at this inanity in case it is they who attract attention and end up on a no-fly list instead. Perfect. It was reported over the weekend that in the aftermath of the Detroit fiasco, no official decision was made about whether to raise the designated "threat level" from orange. Orange! Could this possibly be because it would be panicky and ridiculous to change it to red and really, really absurd to lower it to yellow? But isn't it just as preposterous (and revealing), immediately after a known Muslim extremist has waltzed through every flimsy barrier, to leave it just where it was the day before?

Great Video on Gun Ownership, Freedom, and Resisting Tyrany

The guns-cause-crime mantra of the left has never made sense, particularly when there are some heavily-armed nations where crime is very low. Israel is a good example, but Switzerland may be an even better country to highlight since it has been living in peace with its neighbors since the Napoleanic Wars. This video helps explain why:

Sunday, December 27, 2009

Another Dave Barry Classic

Here's his annual year-in-review column. Plenty of good political satire. My favorite line, which comes eerily close to the truth since politicians in Sacramento do chase after taxpayers who flee to lower-tax states, is:

On the economic front, California is caught on videotape attempting to shoplift 17,000 taxpayers from Nevada.
There are also some good jabs at Geithner, bailouts, and popular culture.

TSA Announces New Anti-Terrorism Rules for Air Travel

It hasn't gotten this bad yet, but give the bureaucrats a bit more time.

The Real Healthcare "Chart of the Day"

Andrew Sullivan posted the following chart, which he found in National Geographic, and he noted, with considerable justification, that this was evidence of an insane and inefficient healthcare system in America.

The chart shows that America spends a lot more than other nations without a concomitant increase in life expectancy. Let's set aside whether the right side of the chart is a bit misleading because American life-expectancy numbers are influenced by things that have nothing to do with the quality of the healthcare system, such as highway fatalities, homicides, and obesity, and focus on Andrew's claim that Obama's proposal will make things better because of its "cost-control measures." Since the Administration's own experts have predicted that Obama's proposal will increase total healthcare spending, one can only wonder what he's talking about. Does he actually think a new government entitlement program will lead to lower costs, when all the evidence suggests otherwise?

If he really wanted a chart that captures what's wrong with America's healthcare system, he should have gone to the Centers for Medicare and Medicaid Services' national health expenditures data website and downloaded the figures showing how rampant third-party payment has resulted in consumers directly paying for less than 12 percent of healthcare costs. And when people are purchasing something with (what is perceived to be) other people's money, it's understandable that they don't pay much attention to cost. My homemade chart does not compared to the one produced by National Geographic, but it does identify the real problem. Sadly, Obama's plan (like Bush's Medicare expansion, and everything else politicians have done for the past 50 years) will exacerbate the third-party payment problem and lead to even higher costs and more inefficiency.

Great Moments in Bureaucratic Stupidity

Having observed government in action for 25 year, I thought I was no longer at the stage where I could be shocked by bureaucratic stupidity. Looking at the response to the recent terrorist attack, I was wrong. No, I'm not talking about the fact that the government knew Abdul Farouk Umar Abdulmutallab was an Al Qaeda sympathizer yet they were too incompetent to put him on the no-fly list. Nor am I talking about the inane political correctness that leads to random searches of grandmothers rather than focusing on young muslim men. Or the periodic seizure of my toothpaste by TSA drones. These are examples of typical government behavior.

What does shock me are two of the new "security" rules announced in the wake of Friday's attempt. According to the Washington Post, "Passengers must remain seated for the final hour before landing. During that time, they may not have access to their carry-on baggage or hold personal items on their laps." Let's think about what possible impact this may have. Imagine you are Achmed the terrorist, and that you have something dangerous in your carry-on luggage. If your goal is to crash the plane, is it really going to matter to you whether you launch your attack 65 minutes before landing or 55 minutes before landing? What exactly do the bureaucrats think they are accomplishing with this rule?

The second rule - which also only could be dreamed up by a bureaucrat - is that: "While over U.S. airspace, flight crews may not make any announcements to passengers concerning the flight path or the airplane's position over cities or landmarks." Once again, let's put ourselves in the mind of Achmed. And let's assume Achmed has an IQ above 53. Achmed knows the projected time for his flight, and he presumably knows how to tell time. Is there even the slightest chance that this rule would stop a terrorist from taking down a plane, even if he wants to strike while the plane is in U.S. airspace? Again, what do the bureaucrats think will be achieved by this rule? But I suppose we should be happy they didn't insist that all the windows be covered with newspaper so Achmed can't tell when the plane is over land rather than ocean.

Saturday, December 26, 2009

Story on GOP Hypocrisy Illustrates that Sometimes It's Better to Lose an Election

The Associated Press nails the GOP for budget hypocrisy, pointing out that a majority of Republicans voted for Bush's reckless Medicare expansion. This story gives me an excuse to pontificate on why fans of limited government and free markets should not blindly link themselves with the Republican Party. And sometimes they should even hope Republicans lose. There is a very strong case to be made, for instance, that big-government RINOs such as Bush (on economic policy issues) are far more dangerous to economic liberty than Democrats. Not only do they expand government while in power, they create a fertile environment for Democrats, with their out-of-the-closet statism, to gain power and impose even more government.

That certainly has happened this decade. Bush's profligacy slowed the economy and discouraged the GOP base, which (combined with unhappiness about his nation-building exercise in Iraq) helped deliver the House and Senate to Democrats in 2006 and the White House to Obama in 2008. It is quite likely, by contrast, that the GOP would control both ends of Pennsylvania Avenue today if Kerry had won the 2004 election. A Kerry victory almost certainly would have enabled Republicans to hold the House and Senate in 2006. And since Kerry would have followed Bush's big-government interventionist policies, the bailout would have occurred on his watch, making it quite likely that the GOP would have enjoyed a strong year in 2008. There may have been some damage to liberty caused by a Kerry presidency (above and beyond the damage caused by Bush), but nothing compared to the damage now being imposed by Obama, Pelosi, and Reid. Food for thought. If nothing else, this AP story shows that we'd be better off if politicians of both parties stayed home all year long:

Republican senators attacking the cost of a Democratic health care bill showed far different concerns six years ago, when they approved a major Medicare expansion that has added tens of billions of dollars to federal deficits. The inconsistency — or hypocrisy, as some call it — has irked Democrats, who claim that their plan will pay for itself with higher taxes and spending cuts and cite the nonpartisan Congressional Budget Office for support. By contrast, when Republicans controlled the House, Senate and White House in 2003, they overcame Democratic opposition to add a deficit-financed prescription drug benefit to Medicare. The program will cost a half-trillion dollars over 10 years, or more by some estimates. With no new taxes or spending offsets accompanying the Medicare drug program, the cost has been added to the federal debt. ..."As far as I am concerned, any Republican who voted for the Medicare drug benefit has no right to criticize anything the Democrats have done in terms of adding to the national debt," said Bruce Bartlett, an official in the administrations of Ronald Reagan and George H.W. Bush. He made his comments in a Forbes article titled "Republican Deficit Hypocrisy." Bartlett said the 2003 Medicare expansion was "a pure giveaway" that cost more than this year's Senate or House health bills will cost.

Blank-Check Bailout for Fannie and Freddie Means Taxpayers Get a Lump of Coal from Obama

Even though politicians already have flushed $400 billion down the rathole, the Obama Administration has announced that it will now give unlimited amounts of our money to prop up Fannie Mae and Freddie Mac, the two government-created mortgage companies. While President Obama should be castigated for this decision, let's not forget that this latest boondoggle is only possible because President Bush did not do the right thing and liquidate Fannie and Freddie when they collapsed last year. And, to add insult to injury, Obama's pay czar played Santa Claus and announced that that a dozen top "executives" could divvy up $42 million of bonuses financed by you and me. Not a bad deal for a group of people that more properly should be classified as government bureaucrats. Here's an excerpt from the Washington Post about the Administration's latest punch in the gut for taxpayers:

The Obama administration pledged Thursday to provide unlimited financial assistance to mortgage giants Fannie Mae and Freddie Mac, an eleventh-hour move that allows the government to exceed the current $400 billion cap on emergency aid without seeking permission from a bailout-weary Congress. The Christmas Eve announcement by the Treasury Department means that it can continue to run the companies, which were seized last year, as arms of the government for the rest of President Obama's current term. But even as the administration was making this open-ended financial commitment, Fannie Mae and Freddie Mac disclosed that they had received approval from their federal regulator to pay $42 million in Wall Street-style compensation packages to 12 top executives for 2009. The compensation packages, including up to $6 million each to Fannie Mae and Freddie Mac's chief executives, come amid an ongoing public debate about lavish payments to executives at banks and other financial firms that have received taxpayer aid. But while many firms on Wall Street have repaid the assistance, there is no prospect that Fannie Mae and Freddie Mac will do so.

Was Jesus a Socialist?

Speaking earlier this week to a group of kids, President Obama invoked Jesus and the three wise men to justify his agenda of redistribution. I'm not exactly a religious scholar, but this surely is absurd. Doesn't Christianity (and, I assume, Judaisim and other faiths) require individuals - using free will - to act charitably? Using the coercive power of government to forcibly redistribute other people's money, by contrast, is moral preening at best and could be characterized as government thuggery. Writing for Townhall.com, Cal Thomas certainly was not amused:

Speaking Monday afternoon to a group of children from the Washington, D.C., Boys and Girls Club, the president delivered a mini sermon on "why we celebrate Christmas." He asked the children if they knew. One piped up and said "The birth of baby Jesus." ...The president spoke of what Jesus "symbolizes for people all around the world," which he said, "is the possibility of peace and people treating each other with respect." And then, in the best tradition of a community organizer, the president said Jesus is about "doing something for other people." Even the "three wise men" were invoked to support the president's idea of wealth redistribution: "...these guys ... have all this money, they've got all this wealth and power, and they took a long trip to a manger just to see a little baby." And what conclusion should be drawn from that journey? The president told the children, "...it just shows you that because you're powerful or you're wealthy, that's not what's important. What's important is ... the kind of spirit you have." To the president, this means the spirit of government taking from the productive and giving to the nonproductive. To Him, Jesus is a socialist, or perhaps an early Robin Hood. ...only people can be compassionate. A government check too often brings dependence and a sense of entitlement.
I must quibble with one small part of Cal's column. Robin Hood was a freedom fighter, not a redistributionist. His mission was to reclaim money that the nobles stole (i.e., taxed) from the peasantry. Modern society has turned the story upside down.

Friday, December 25, 2009

A Politically Correct Christmas Greeting

To My Normal Friends: Merry Christmas and a Happy New Year!

To All My Left-Wing Friends: Please accept with no obligation, implied or explicit, my best wishes for an environmentally conscious, socially responsible, low-stress, non-addictive, gender-neutral celebration of the winter solstice holiday, practiced within the most enjoyable traditions of the religious persuasion of your choice, or secular practices of your choice, with respect for the religious/secular persuasion and/or traditions of others, or their choice not to practice religious or secular traditions at all. I also wish you a fiscally successful, personally fulfilling and medically uncomplicated recognition of the onset of the generally accepted Calendar Year 2010, but not without due respect for the calendars of choice of other cultures whose contributions to society have helped make America great. Not to imply that America is necessarily greater than any other country nor the only America in the Western Hemisphere . Also, this wish is made without regard to the race, creed, color, age, physical ability, religious faith or sexual preference of the wishee.

Thursday, December 24, 2009

Merry Christmas

Merry Christmas from the IRS

Here are a few stories to bring holiday cheer for taxpayers. First, we have an Associated Press report that several hundred thousand federal bureaucrats have serious tax delinquencies. The Department of Housing and Urban Development always ranks high on the list of government entities that should be abolished, so it's interesting to see that HUD bureaucrats are most likely to be dodging their taxes:

More than 276,000 federal employees and retirees owed back income taxes as of Sept. 30, 2008, according to data from the Internal Revenue Service. The $3.04 billion owed was up from $2.7 billion owed by federal employees and retirees in 2007. Among cabinet agencies, the Department of Housing and Urban Development had the highest delinquency rate, at just over 4 percent.
This rampant nonpayment is especially outrageous since federal bureaucrats "earn" twice as much compensation, on average, as those of us laboring in the productive sector of the economy. One might think they would go out of their way to comply since their bloated salaries come from tax collections. Speaking of outrage, the internal watchdogs at the Treasury have just published a report showing that it is almost impossible to verify eligibility for the special interest tax breaks in the so-called stimulus. As Investor's Business Daily opines, this is an invitation to fraud:

A new report from the Treasury Department's Inspector General for Tax Administration counts 56 tax provisions in the bill having a potential cost of $325 billion. Of those, 20 are tax breaks for individuals and 36 are for businesses. The problem, the Inspector General says, is the IRS can't verify taxpayer eligibility "for the majority of Recovery Act tax benefits and credits." For individual taxpayers, 13 of the 20 benefits and credits can't be verified; for businesses, it's 26 of 36. ...To suggest, as Treasury does, that the biggest chunk of the $325 billion in stimulus package tax breaks can't be adequately followed violates the pledges of openness and fairness made when the stimulus was passed last February. As the government-stimulus-oversight Web site, recovery.gov, notes, last year's package "requires that taxpayer dollars spent under the Act be subject to unprecedented accountability." We wouldn't call being unable to verify upwards of two-thirds of the $325 billion handed out as "unprecedented accountability." Sounds more like an invitation to fraud, all at the expense of the taxpayers.
To be fair, even a competent government agency might have trouble making a bad law work, and the $787 boondoggle was rushed through the legislative process with very little - if any - attention paid to anything other than funneling other people's money to special interest groups. That being said, the IRS has trouble even with routine tasks. According to another IG report, the agency has a staggering 70 percent error rate in its processing of taxpayer identification numbers for individual taxpayers:

The Treasury Inspector General for Tax Administration (TIGTA) today publicly released its review of the IRS's processing of applications for Individual Taxpayer Identification Numbers (ITINs). TIGTA reviewed a sample of ITIN applications and found that almost 70% contained significant errors and/or raised concerns that should have prevented the issuance of an ITIN. The IRS estimates that it has issued more than 14 million ITINs as of December 2008. ITINs are intended to provide tax identification numbers to resident and nonresident alien individuals who may have U.S. tax reporting or filing obligations but do not qualify for Social Security Numbers, which generally are only issued to U.S. citizens and individuals legally admitted to the U.S. ..."The number of individual income tax returns filed using ITINs and reporting wage income has increased by 247 percent from 2001 to 2008," commented J. Russell George, the Treasury Inspector General for Tax Administration. "If the IRS continues to issue ITINs without proper verification, the risk of fraudulently filed returns – along with fraudulently claimed refunds – will continue to rise," added Inspector General George.
Just think how much fun it will be when the IRS is in charge of determining those of us who should get fined or jailed for noncompliance with government-run healthcare! No wonder so many taxpayers put a flat tax or national sales tax on their Christmas lists.

The Grinch that Stole Education

Walter Williams eviscerates the government education monopoly for its grotesque failure to properly educate most black students. Walter punctures every shibboleth the other side has created, including the notions that more money and smaller class sizes are the keys to educational achievement:

Detroit's (predominantly black) public schools are the worst in the nation and it takes some doing to be worse than Washington, D.C. Only 3 percent of Detroit's fourth-graders scored proficient on the most recent National Assessment of Education Progress (NAEP) test, sometimes called "The Nation's Report Card." Twenty-eight percent scored basic and 69 percent below basic. "Below basic" is the NAEP category when students are unable to demonstrate even partial mastery of knowledge and skills fundamental for proficient work at their grade level. It's the same story for Detroit's eighth-graders. Four percent scored proficient, 18 percent basic and 77 percent below basic. ...The academic performance of black students in other large cities such as Philadelphia, Chicago, New York and Los Angeles is not much better than Detroit and Washington. What's to be done about this tragic state of black education? The education establishment and politicians tell us that we need to spend more for higher teacher pay and smaller class size. The fact of business is higher teacher salaries and smaller class sizes mean little or nothing in terms of academic achievement. Washington, D.C., for example spends over $15,000 per student, has class sizes smaller than the nation's average, and with an average annual salary of $61,195, its teachers are the most highly paid in the nation. What about role models? Standard psychobabble asserts a positive relationship between the race of teachers and administrators and student performance. That's nonsense. Black academic performance is the worst in the very cities where large percentages of teachers and administrators are black, and often the school superintendent is black, the mayor is black, most of the city council is black and very often the chief of police is black. ...Another issue deemed too delicate to discuss is the overall quality of people teaching our children. Students who have chosen education as their major have the lowest SAT scores of any other major. Students who have an education degree earn lower scores than any other major on graduate school admission tests such as the GRE, MCAT or LSAT. Schools of education, either graduate or undergraduate, represent the academic slums of most any university. They are home to the least able students and professors. Schools of education should be shut down.

Wednesday, December 23, 2009

Offensive Government Spending

In the good old days, members of Congress had very little staff, sometimes just one professional aide and one administrative person. Today, Capitol Hill has become a bloated bureaucracy with the average politician having a couple of dozen aides. That's bad news, and it probably contributes to misguided policy since many of those staffers exist to help redistribute other people's money to campaign contributors and other political supporters. But to add insult to injury, some polticians get to pad their payrolls and subsidize their expenses even after they leave office. The Politico reports that the former Speaker of the House is squandering $40,000 of our money every month, even though he is a highly-paid lobbyist:

U.S. taxpayers are spending more than $40,000 per month on office space, staff, cell phones and a leased SUV for former House Speaker Dennis Hastert, even as he works as a lobbyist for private corporations and foreign governments. ...his spokesman, Brad Hahn, said the former 11-term congressman is in full compliance with rules covering how the federal funds are spent. Hahn said Hastert’s lobbying work “is completely separate [from the office of the former speaker], and he keeps them completely separate.” The federal government pays $6,300 per month to rent an office for Hastert and his staff in Yorkville, Ill. Hahn conceded that Hastert has no other office set aside for lobbying work in Illinois but said that the former speaker travels to Washington frequently for work. In addition to the office, the government pays the salaries of three of Hastert’s assistants in his Illinois office — each more than $100,000 in 2008. Bryan Hardin, Hastert’s administrative assistant (the title often used by a chief of staff in a congressional office) earned $138,000. ...Taxpayers also make the lease payments on a 2008 GMC Yukon and pay for a satellite TV subscription, cell phones, laptops and other expenses. ...Other expenditures include $745 for a printer and about $620 to transport a clock. ...Hastert is authorized to spend as much as $840,000 annually to run his office but has not used all the money made available to him by Congress. “He’s worked on a nonpaid basis, but as a former speaker, [Hastert] helped out with the Chicago Olympic bid, Advance Illinois [an education program] and Illinois Works,” a jobs program, Hahn added.

Stupid Government Spending

Isn't it nice to know that our tax dollars were used for a study showing that - gasp! - that people are not totally honest when using online dating sites. Maybe the next taxpayer-financed study can investigate whether it's hotter at the equator. The Washington Post reports on this boondoggle (though only about the results, of course, not about the waste of taxpayer money):

It won't surprise anyone who's tried online dating to learn that eight out of 10 people lie somewhere in their profiles, according to a series of studies funded in part by the National Science Foundation. And it didn't surprise Jeffrey T. Hancock, a communications professor at Cornell University who conducted the research over the last few years and explained the findings in a NSF webcast earlier this month. Fabrications "have been driving human behavior for millennia," Hancock says in a phone interview. "It's new bottles, in a way, but very old wine."

Need a Last-Minute Christmas Present for a Taxpayer?

for those of you who can’t find zhu zhu pets, here's an option sure to bring a smile - a long-sleeved t-shirt honoring the Secretary of the Treasury. Maybe if you've been very good all year long, Santa also will bring you a special Tim "Turbotax" Geithner free pass, allowing you to cheat on your taxes and get away with no penalties once you're caught.

Tuesday, December 22, 2009

University of Michigan Study Confirms Link Between Financial Bailout and Corruption

Since Senators engaged in open extortion and bribery to enact Reid's government-run healthcare plan, it is hardly newsworthy that Washington is riddled with Corruption. But the magnitude of sleaze is probably far greater than most people realize. There is a new study from a couple of academics at the University of Michigan, who found significant relationships between lobbying and bailout money, as well as a greater chance of getting bailouts depending on a bank's ties with either the Federal Reserve or key members of Congress. Hopefully, people across America will draw the obvious conclusion and realize that big government is inherently corrupting, as discussed in this video. Reuters has the details on this latest example of big government and malfeasance:

U.S. banks that spent more money on lobbying were more likely to get government bailout money, according to a study released on Monday. Banks whose executives served on Federal Reserve boards were more likely to receive government bailout funds from the Troubled Asset Relief Program, according to the study from Ran Duchin and Denis Sosyura, professors at the University of Michigan's Ross School of Business. Banks with headquarters in the district of a U.S. House of Representatives member who serves on a committee or subcommittee relating to TARP also received more funds. Political influence was most helpful for poorly performing banks, the study found. "Political connections play an important role in a firm's access to capital," Sosyura, a University of Michigan assistant professor of finance, said in a statement. Banks with an executive who sat on the board of a Federal Reserve Bank were 31 percent more likely to get bailouts through TARP's Capital Purchase Program, the study showed. Banks with ties to a finance committee member were 26 percent more likely to get capital purchase program funds.

Pontificating about Fiscal Policy

I did this interview a while ago, and I thought it was well produced, but only just now figured out how to embed it.

Weekly Political Humor

To be sure, this message also should be delivered to both Bush I and Bush II, Carter, Nixon, LBJ, and 90 percent of House and Senate members.

This Is about Dependency, not Health Care

Those fighting Obamacare keep hoping that there will be an issue radioactive enough to topple the legislation. At various times, they have focused on the individual mandate, the so-called public option, abortion, and taxes. Derailing the bill with any of these issues would be great, to be sure, but I'm not terribly optimistic. Democrats in Washington would like to have legislation that represented all their statist proclivities, of course, but the main goal - as George Will explains - is to create more dependency:

The legislation does solve the Democrats' "problem" of figuring out how to worsen the dependency culture and the entitlement mentality that grows with it. By 2016, families with annual incomes of $96,000 will get subsidized health insurance premiums. ...Reid was buying the votes of senators whose understanding of the duties of representation does not rise above looting the nation for local benefits. And Reid had two advantages -- the spending, taxing and borrowing powers of the federal leviathan, and an almost gorgeous absence of scruples or principles. Principles are general rules, such as: Nebraska should not be exempt from burdens imposed on the other 49 states.

Monday, December 21, 2009

Standing in the Schoolhouse Door

Few things nauseate me more than leftists who send their kids to private schools while at the same time fighting against school choice for poor kids. There is no explanation for this hypocrisy beyond a selfish political desire to act as lapdogs for the teacher unions. It's ironic that George Wallace and the segregationists stood in the schoolhouse door 40-plus years ago to lock black children out and now Democratic politicians are standing in the schoolhouse doore to lock them in. The Wall Street Journal opines:

Democrats in Congress voted to kill the District's Opportunity Scholarship Program, which provides 1,700 disadvantaged kids with vouchers worth up to $7,500 per year to attend a private school. ...The program's popularity has generated long waiting lists. A federal evaluation earlier this year said the mostly black and Hispanic participants are making significant academic gains and narrowing the achievement gap. But for the teachers unions, this just can't happen. The National Education Association instructed Democratic lawmakers to kill it. "Opposition to vouchers is a top priority for NEA," declared the union in a letter sent to every Democrat in the House and Senate in March. ...Senator Dick Durbin, who heads the subcommittee that oversees funding, has been saying for the better part of a year that he's open to supporting the program's continuation if certain conditions were met. In retrospect, this looks like bad faith. Earlier this year, Mr. Durbin said the local D.C. Council needed to sign off on the program before Congress could reauthorize it. The council did exactly that, sending Congress a letter expressing solid support for the scholarships. Senator Durbin then said he wants participating schools to administer the same exams to voucher students that D.C. public school students take. Done, said proponents. The program's supporters now feel they've been had. "Durbin has engaged in that classic game of moving the goal posts," says Kevin Chavous, a former D.C. council member and one of many local Democratic leaders who back school vouchers. "He's just been less than honest. He's made promises to colleagues and school leaders—like Michelle Rhee, our schools Chancellor—saying, 'All I need is this.' But the reality is that they've been finding reasons not to support the program." The voucher program is closed to new students. "It's duplicitous and shameful," says Mr. Chavous. Strong language. But if you're a kid in D.C. trying to escape its awful schools, maybe not strong enough.

Would You Sell Out Your Country and Your Freedom for "Two Smoking Hot Colombian Chicks"?

It's difficult for me to imagine what it would be like to be a statist, but I wonder whether they really think they can turn people into collectivists with sex. If you think I'm kidding, just watch this video from Rock the Vote.

A Christmas Present for the Non-Statists on Your List

Recent posts have reviewed the enviro war against toilet paper and suggested the ideal present for your neighborhood collectivist. So it is appropriate to mix these two themes and suggest the ideal Christmas present for beleaguered taxpayers. It's a bit pricey (at least compared to what I spend at Costco) and I have no idea whether it is made of recycled fibers, but that shouldn't matter since conservatives and libertarians generally don't care about hollow gestures.

Sunday, December 20, 2009

Maybe This Explains Why Statists Are so Interested in Hand-Cranked Vibrators

An earlier post poked fun at green-friendly sex toys. In the same spirit, let's now look at the enviro-fanatic campaign against soft toilet paper. For those of you who have had the pleasure of traveling abroad, you have probably had the less-than-satisfactory experience of...well, let's just say the mixed experience of using inadequate bathroom paper products. It's not quite as bad as using wax paper, but it definitely falls short of the comfort - and ultimate cleanliness - of an American bathroom. It definitely would be a step in the wrong direction if substandard products were imposed on Americans. Heck, that may just be the beginning. Limousine liberals such as Cheryl Crow want us to use just one square of toilet paper. And let's not forget the toilet paper police that will be necessary to enforce this policy. So imagine a future world where we get to use one square of crummy toilet paper. Is it any surprise that we will be less likely to be attracted to a significant other, or for a significant other to be attracted to us. Give the left credit for thinking ahead. Sex toys will be far more popular in that world. Here's a news report about the toilet paper fight:

The issue over tissue in the bathroom — the really super-soft stuff — is more like the fight about the big SUVs loved by many Americans. Anti-green, according to environmentalists. Politically incorrect. Why should Americans use luxurious toilet paper made from old-growth trees when much of the world gets by with a far more basic and often recycled product? ...Greenpeace, the Natural Resources Defense Council and other environmental groups have pushed manufacturers such as Kimberly-Clark (Cottonelle) and Procter & Gamble (Charmin) to stop using wood from virgin forests to make tissue products. Mountains of paper are dumped every day into recycling bins in homes, offices, factories and schools. Use that to make toilet paper, the activists said. ...The problem, though, is that each time paper is shredded during the recycling process, its fibers get shorter. The shorter the fiber, the less soft the tissue. And Americans, though indicating in surveys that they embraced green initiatives, also said they don't want to sacrifice comfort.

DIgging Out

I'm not sure about the official total accumulation, but I had almost two feet on top of the trash cans. I can barely imagine how bad it would be if we didn't have global warming.

I now realize why I have sons. They are miserably complaining, but nonetheless are in the process of shoveling the driveway.

The Perfect Christmas Gift for Your Global Warming Friends

I'm not really sure what to say about this story. A company in Ireland has started to produce environmentally-friendly vibrators. My guess is that consumers won't be...um, what's the right word...satisfied with this product, but human ingenuity and the free market are a potent combination:

The global sex toy industry is worth an estimated annual $15 billion and uses up a mountain of batteries in the process, many of which end up as toxic waste. But now one Irish company reckons they’ve got the solution to shake up the market: a vibrator they are calling the world’s first-ever "green technology sex toy". The Earth Angel, described as "eight inches (20 centimetres) with a sleek white finish", is a wind-up vibrator which comes with a handle built into the bottom. "You just flip out the handle, grab a hold of it there, and you just wind it," said Janice O’Connor, the co-founder of Earth Angel makers Caden Enterprises along with her husband Chris. ...The vibrator is made of 100 per cent recyclable materials and the couple hope it will encourage sex toy fans around the globe to do their bit for the environment. ..."We wanted to produce an environmentally-friendly sex toy that appealed to all consumers. ...the O’Connors, both practicing Catholics, believe God is on their side. "In all fairness, wouldn’t God want something that’s green and that doesn’t do any damage to the environment?" asked Chris. An Earth Angel costs 70 euros (100 dollars) plus shipping costs and around 1,000 have already been sold to people seeking its special brand of "sustainable pleasure".

Saturday, December 19, 2009

Candy from Obama

A previous post had a different version, but this also is quite amusing.

Great Moments in Foreign Government

German politicians apparently have been hot on the trail of evil evaders who did not pay tax on coffee ordered over the Internet. To address this terrible crisis, the government spent 800,000 euro and tracked down 4000 dangerous criminals. Shockingly, a few cynics, including the folks at Reuters, are trying to diminish this triumph by pointing out that the government spent 30 times more than it collected:

Germany spent more than 30 times as much collecting taxes on coffee beans ordered online from abroad than it received in the tax revenues, the accounting office said on Tuesday. Some 4,000 Germans who bought coffee over the Internet from other EU countries but failed to pay the coffee tax have been charged between a few cents to 10 euros ($14.81) in taxes and fees, said Dieter Engels, head of Germany's Federal Accounting Office. Tax collectors ended up with just 25,000 euros, way below the 800,000 euros in the costs of staff charged with collecting the payments, Engels said.

The Gang that Couldn't Steal Straight

You would think after decades of figuring out new ways of stealing other people's money, the politicians would have developed a certain expertise. But this story from the Washington Times shows that the incompetence in Washington is quite remarkable:

When he earmarked $100,000 in taxpayer spending to go to Jamestown's library, Rep. James E. Clyburn meant for it to go to the library in Jamestown, S.C., which is in his district. But in the bustle to write and pass the $1.1 trillion catchall spending bill, Congress ended up designating the money for Jamestown, Calif. - 2,700 miles away and a town that doesn't even have a library. "That figures for government, doesn't it," said Chris Pipkin, who runs the one-room library in Jamestown, S.C., and earlier this year requested $50,000, not the $100,000 that Congress designated, to buy new computers and build shelves to hold the books strewn across the room. The library is just one of more than 5,000 "earmarks," or pork-barrel spending projects, totaling $3.9 billion, tucked inside the report accompanying the catchall spending bill Congress sent to President Obama this week. ...The bill, which funds most domestic federal agencies for fiscal 2010, includes projects such as $200,000 to study elderly Irish immigrants in New York, $1 million to add plumbing to houses in Maryland and $487,000 to build office space so Winston-Salem, N.C.

Friday, December 18, 2009

The Global Warming Shakedown, Part III

Should your tax dollars be used to destroy American jobs and subsidize them being relocated to other nations? Sounds crazy, but it's already happening in England thanks to global warming policies, as this Wall Street Journal column explains. Only politicians and bureaucrats would think this is a good idea:

The Kyoto Protocol of 1997 required signatories to reduce their carbon emissions, and the European Union in 2005 launched its own cap-and-trade system. The program sets a limit on carbon emissions, and companies are issued free carbon allowances that they can buy or sell based on their emissions needs. Fast forward to this month's news that Corus, Europe's second-largest steel producer, is shuttering a giant U.K. steelmaking plant at Redcar, cutting 1,700 jobs. ...By closing Redcar's annual capacity of three million tons of steel, Corus will produce six million fewer tons of CO2. That means more carbon allowances, which could translate into about $300 million a year if credits hit $50. Corus is essentially being paid to lay off British workers. ...Were Corus to move production to a "clean" Indian factory, it could receive hundreds of millions of dollars annually from the Clean Development Fund. The kicker is that none of this results in fewer carbon emissions. ...The Corus story also shows that cap and trade isn't really a free market. Markets develop to efficiently allocate resources and capital. Carbon cap and trade is a government-rigged market, in which carbon allowances are dispensed based on political influence. Such a system is ripe for manipulation, and Corus is merely the latest example.

The Global Warming Shakedown, Part II

Let's all be thankful this holiday season for our Founding Fathers, who wisely created a system based on separation of power. As such, when the Secretary of State blithely pontificates about fleecing American tapxayers to help finance $100 billion of added foreign aid, the good news is that this money can only be squandered if the House and Senate also agree. That's a real possibility, of course, but at least there's some hope that common sense will prevail since the fiscal burden of government already is far too large. Here's a NY Daily News report on what's happening in Copenhagen, including worrisome signs that politicians who don't pay for their own travel are planning to make the rest of us pay more:

“The US is prepared to work with other countries toward a goal of jointly mobilizing $100 billion a year by 2020 to address the climate change needs of developing countries,” Secretary of State Hillary Clinton said. ...While she would not disclose how much the U.S. would be contribution to the climate fund, Clinton said there would be a fair amount contributed to the pot that would be made available in 2020. The finances will reportedly be raised partially by taxing aviation and shipping, as proposed by the European Union.
Pat Buchanan, meanwhile, cuts to the heart of the issue, explaining for Townhall.com that global warming is a "racket" for the benefits of political elites:

"Zenawi said he would accept $30 billion in the short term, rising to $100 billion by 2020. ... This was seen as a key concession by developing countries, which had previously spurned that figure ... as too low." There was a time when a U.S. diplomat would have burst out laughing after listening to a Third World con artist like this. But not the Obamaites. They are already ponying up. Secretary of Agriculture Tom Vilsack just pledged $1 billion at Copenhagen to developing countries who preserve their forests. Thus, America, $12 trillion in debt and facing a second straight $1.4 trillion deficit, will borrow another $1 billion from China to send to Brazil to bribe them to stop cutting down their trees. When you slice through the blather about marooned bears and melting ice caps, oceans rising and cities sinking, global warming is a racket and a crock. It is all about money and power. Copenhagen has always been about an endless transfer of wealth from America, Europe and Japan and creation of a global bureaucracy to control the pace of world economic and industrial development.

The Global Warming Shakedown, Part I

The Wall Street Journal's editorial page lifts a rock and looks at the sordid redistribution of other people's money that is happening in Copenhagen. The unavoidable conclusion is that developing countries are there to cash in on a new foreign-aid boondoggle and rich countries are there because politicians are seeking a new source of power over their national economies:

Monday's walkout revealed the real reason that the developing world is in Copenhagen in the first place: They see climate change as a potential foreign-aid bonanza, and they are at the table to leverage the West's environmental angst into massive transfers of wealth. ...the developed world has been pouring trillions of dollars into development aid in various forms for decades, with little to show for it. The reasons are well-known: Corruption, political oppression, government control of the economy and the absence of rule of law combine to keep poor countries poor. And those factors also ensure that most aid is squandered or skimmed off the top.Recasting foreign aid as "climate mitigation" won't change any of that. ...The G-77 scoffed at a European offer of €7.2 billion ($10 billion) over three years. Instead, the Sudanese chairman of the group, Lumumba Stanislaus Di-Aping, suggested in an interview with Mother Jones magazine that something on the order of a trillion dollars, or more, would be appropriate. "The world's scientists and policy decision makers have publicly stated that this is the greatest risk humanity has ever faced," says Mr. Di-Aping. "Now if that's the case, it's very strange that $10 billion is considered adequate financing." Mr. Di-Aping deserves credit for taking the climate alarmists on their own terms and drawing consistent conclusions.

Thursday, December 17, 2009

Chatting with Instapundit

Here's my interview with Glenn Reynolds on PJTV. We chat about a wide range of fiscal policy topics, ranging from tax havens to stimulus to tea parties.

Is Greece's Fiscal Crisis Caused by too Much Spending or too Little Revenue?

It's been a rough couple of weeks for Greece, which has been battered by rumors of government default. Interest rates have been climbing, as investors are nervous about state finances, and the country's debt rating has been downgraded.

Not surprisingly, Greek politicians are dealing with the crisis in large part by further increasing the tax burden. One particularly horrible idea is a 90 percent tax on bank bonus payments. I don't know if lawmakers in Athens have heard of the Laffer Curve, but they're about to get a real-world lesson that will teach them how punitive tax rates lead to less revenue.

For those who wonder how Greece got into this mess, here's a quick chart I put together, based on OECD fiscal data. Don't be bsurprised if America has a similar chart in about 10 years.

Wednesday, December 16, 2009

Was I Right Six Months Ago?

With Obama and the Democrats talking about another "stimulus," it's time to dig through the archives for this clip from CNBC.

Weekly Political Humor

I don't have any strong feelings about Obama's Nobel Prize, though it obviously was an exercise in political correctness by a bunch of pretentious judges who gave the same prize to Arafat, but I did get a chuckle out of this sign.


And I definitely don't subscribe to the sentiments in this photo, but I will admit that I laughed when it arrived in my inbox.

Tuesday, December 15, 2009

More Dismal Results from Gordon Brown's Higher Tax Rates

Investors and entrepreneurs are escaping the new 50 percent tax rate in the United Kingdom, which is just one of many reasons why higher tax rates are foolish and misguided. Sadly, Barack Obama seems determined to repeat the same mistake, which means America will suffer the same adverse consequences of slower growth and reduced competitiveness. The Daily Telegraph has the unpleasant details of what is happening on the other side of the ocean:

The number of directors of British companies who have registered in the Channel Island tax havens of Jersey and Guernsey, along with the Isle of Man, has risen by almost 500 in the past 12 months. ...The British Virgin Islands, a popular tax haven in the Caribbean, has seen an 18pc rise on a year ago. Those who are fleeing what they see as the mainland's punitive tax rates include highly paid bankers and hedge fund mangers along with entrepreneurs who run luxury travel firms, health care companies, property firms and call centres. ...Stephen Hedgecock is a partner in Altis, a £1bn hedge fund company with 35 staff that has relocated to Jersey, leaving only a small presence in London. "The UK model is broken," he said. "It's not just the 50 per cent rate – it's National Insurance, the treatment of pensions. . . everything. It's just a ridiculous amount of taxation." A new marketing brochure published by the island's authorities promises "in Jersey, keep more of what you earn" based on corporation tax at 10 per cent and income tax at 20pc. There is no inheritance tax or capital gains tax and property taxes are also low. ...According to research by Philip Beresford, compiler of The Sunday Times Rich List, using information available from Companies House, 498 directors and partners of UK companies have changed their addresses to Jersey, Guernsey or the Isle of Man. A further 91 UK companies have registered in the islands in the past year. ...Meanwhile, at the other end of the income scale, new statistics buried within last week's pre-Budget report show the number of low income families facing marginal tax rates over 90pc has doubled over the recession.

The Problem is Spending, not Deficits

Reckless spending increases under both Bush and Obama have resulted in unprecedented deficits. Congress will soon be forced to increase the nation's debt limit by an astounding $1.8 trillion. Government borrowing has become such a big issue that some politicians are proposing a deficit reduction commission, which may mean they are like alcoholics trying for a self-imposed intervention.

But all this fretting about deficits and debt is misplaced. Government borrowing is a bad thing, of course, but this video explains that the real problem is excessive government spending.



Fixating on the deficit allows politicians to pull a bait and switch, since they can raise taxes, claim they are solving the problem, when all they are doing is replacing debt-financed spending with tax-financed spending. At best, that's merely taking a different route to the wrong destination. The more likely result is that the tax increases will weaken the economy, further exacerbating America's fiscal position.

Monday, December 14, 2009

Great Moments in Bureaucracy

The picture below, taken from a story in The Economist, shows that France, Germany, and Italy are among the nations with the most central bank employees (as a share of the population). In some sense, this is a dog-bites-man factoid. After all, is anyone suprised that Europe's major welfare states have bloated public payrolls? But there's more to this story. All three of these central banks ceased to have a monetary policy, starting back in 2002, when their nations adopted the euro. The mission is gone, but the bureaucracy lives on.


To be fair, the bureaucrats in these nations presumably are not sitting in quiet rooms playing minesweeper. Perhaps these central banks are responsible for other functions, such as financial regulation. Of course, given how governments around the world pursued policies that led to a financial crisis, perhaps all of us would be better off if bureaucrats did play computer games all day.

Pampered European Bureaucrats Threaten Strike

There's been a lot of attention given to overpaid government workers in America, as many people have documented, but the problem is global. Bureaucrats who work for the European Union get lavish pay and benefits, yet are threatening to strike because of a proposed pay freeze. These mandarins already pay reduced taxes, get a host of special allowances, and even have the gall to demand free travel on public transport. Interestingly, as this story for Euractiv.com indicates, they apparently realize they have privileged positions and are worried that the current controversy may spark some resentment from over-burdened taxpayers:

Staff at the European institutions are preparing to go on strike next week in a bitter pay dispute sparked by national governments' decision to block a routine salary increase for EU civil servants. Civil service staff are due to receive a 3.7% pay hike... There is widespread acceptance that the pay rise is legally binding but other options are currently under consideration – much to the chagrin of unions. Diplomatic sources indicated it may be possible to proceed with the 3.7% pay rise, but to initiate a parallel move which would effectively negate the increase. This could include increasing the so-called 'crisis levy', which allows European civil servants to be taxed in exceptional circumstances. ...Diplomats said some EU civil servants are concerned that the dispute could open a can of worms if the spotlight is turned on their generous pay and benefits, including the permanent repatriation allowance paid to civil servants – even if they have been in Brussels for 30 years.

Sunday, December 13, 2009

More Power for the IRS

Continuing a bad trend, Congress is poised to boost the budget, staffing, and power of the IRS in order to further pester investors and entrepreneurs. Improving tax compliance is the excuse for this move, but it will further diminish job creation and investment. If politicians were serious about wanting to improve compliance, they would lower tax rates and reform the tax system. Reuters reports:

A new Internal Revenue Service unit set up to catch rich tax cheats hiding their wealth in complex business entities is rapidly taking shape with the hiring of hundreds of employees. ...Another IRS official told Reuters "hundreds" of people have already been hired to staff the new unit, including some from within the agency. ...Tax authorities in Japan, Germany and the UK have also created similar units. The U.S. House of Representatives on Thursday approved a $387 million boost for the IRS for the fiscal year that started October 1, in part to fund the high-wealth unit. ...The IRS has also begun initial steps to join forces with other governments to scrutinize corporate tax filings to prevent "tax arbitrage" by companies seeking the best regime. ...Some tax practitioners expressed worry about such coordination. "With any new thing, you never want to be the guinea pig," Mary Lou Fahey, general counsel for the Tax Executive Institute, comprised of business executives, said.

Saturday, December 12, 2009

General Electric: A Morally Corrupt Company

There are many reasons to dislike the statist economic policies emanating from Washington, and high on the list is the way big government lures companies into mooching off taxpayers rather than earning money honestly. If CEOs at least had the dignity to be embarrassed about their plunder, that would provide a bit of solace, but that is rarely the case. The head of General Electric is parroting inaccurate left-wing talking points and trumpeting corporatist policies. It's not clear whether he believes this nonsense or is merely trying to please his political masters. The FT reports:

Jeffrey Immelt, General Electric’s chief executive, said on Wednesday his generation of business leaders had succumbed to “meanness and greed” that had harmed the US economy and increased the gap between the rich and the poor. ...“We are at the end of a difficult generation of business leadership ... tough-mindedness, a good trait, was replaced by meanness and greed, both terrible traits,” said Mr Immelt... “Rewards became perverted. The richest people made the most mistakes with the least accountability.” ...“The bottom 25 per cent of the American population is poorer than they were 25 years ago. That is just wrong,” he said. “Ethically, leaders do share a common responsibility to narrow the gap between the weak and the strong.” GE wants to win a large slice of the infrastructure projects funded by governments around the world in an effort to kick-start their economies. Mr Immelt said business should welcome government as “a catalyst for leadership and change”.

Friday, December 11, 2009

Greetings from Croatia

I'm on the coast of Croatia, preparing for a couple of speeches later today. As you can see from the picture below, the view from my balcony is spectacular, even for a rube like me. But this blog is dedicated to public policy, so time for a lesson about the inefficiencies of communism and central planning. My hotel may have a beautiful view, but it was built by the government during the communist era (when Croatia was still part of Yugoslavia) and it remains a state-run enterprise still today. This becomes apparent in many ways, including a breakfast buffet that is far less appetizing than the one at my hotel in Brussels. But the most revealing thing (and it would disappoint Al Gore) is the grotesque inefficiency of the heating system. There are no individual controls in the rooms. Guests merely control the fan, which pumps out heat in the winter and (one assumes) air conditioning in the summer. That doesn't sound too unreasonable, but my room stays above 80 degrees even with the fan completely off. So I have been sleeping with the sliding glass door open, even though the outside temperature at night is in the mid-30s. But this is hardly an ideal solution. When the wind blows, I am too cold. When the air is calm, I am too warm. I don't mean to whine, and I'm still glad to be in such a nice setting, but I can't help but think that if a government can't design and operate a hotel efficiently, what hope is there for government health care?

Thursday, December 10, 2009

Deficit Commission: Wrong Target, Wrong Approach

Legislation being considered on Capitol Hill would create a supposed deficit reduction commission. If politicians were bound by truth-in-advertising, this proposal would be called a tax increase commission. It creates a mechanism that will - at best - replicate the 1982 and 1990 budget summits, both of which were fiscal disasters from the perspective of those who favor limited government. The inevitable result of a "bipartisan" process is a 50/50 deal of "spending cuts" and "tax increases," but the spending cuts are off the "baseline" (which assumes spending goes up), so even if the changes are real (and they rarely are), they are merely reductions in increases. The tax increases, meanwhile, are real and come on top of all the revenue growth built into current law. Moreover, many of the so-called spending cuts are actually increases in revenue (the "offsetting receipts" charade). Last but not least, this legislation is a stalking horse for VAT (that's what all the talk about an "antiquated" tax system that needs to be "modernized" is all about). What's remarkable about this proposal is how Democrats are almost transparent in their desire to lure Republicans into committing political suicide. As demonstrated by the 1982 and 1990 budget deals, everything is examined through the prism of distribution tables once a budget summit or commission commences and the GOP inevitably comes across as the bad guys who try to protect the rich at the expense of the poor. Of course, if Republicans are really stupid enough to travel down this path, they'll deserve exactly what happens. But some people in Washington are aware that the proposed commission is a recipe for a major tax hike. The Financial Times cites Cato's Chris Edwards in its report:

The push for a bipartisan commission to deal with the fiscal challenges facing the US gained momentum on Wednesday as 27 senators sponsored revised legislation that would create such a task force. The bill, introduced by Democrat Kent Conrad and Republican Judd Gregg, both fiscal hawks, would charge an 18-member group of serving legislators and administration officials with coming up with a plan to solve what they called “the nation’s long-term fiscal imbalance”. ...In a sign that the concept of such a commission is gaining ground politically, anti-tax activists immediately attacked the proposal, saying it would lead to tax increases. Grover Norquist, head of Americans for Tax Reform, published an open letter saying the “commission is unacceptable from a taxpayer perspective” because “it would lead to a guaranteed tax increase”. ...However, Chris Edwards, director of tax policy at the small-government Cato Institute, said a commission was likely to put too much emphasis on tax increases when “long-term projections reveal a spending catastrophe, not a revenue challenge”.
One final comment. It is utterly absurd to categorize Senator Kent Conrad as a fisal hawk. This term supposedly suggests a member who actively pursues deficit reduction. Yet according to the vote rating of the National Taxpayers Union, Conrad's most recent rating is an F. Which is the same grade he got the previous year, and the year before that, and the year before that. Indeed, Conrad "earned" failing grades in 14 out of 17 years, and got a D in the other three years.

Nauseating Corruption, Even By Washington Standards

One of the hiddn aspects of Washington is the way the rich and powerful manipulate the system by funneling tax dollars into each other's pockets. This story from The Hill explains how a top Democratic pollster at a big PR firm got about $6 million of other people's money as part of the so-called stimulus. A fortune to the average American, but routine graft in the nation's capital. But isn't that what makes it so nauseating?

A contract worth nearly $6 million in stimulus funds was awarded by the Obama adminstration to two firms run by Mark Penn, Hillary Clinton's pollster in 2008. Federal records show that a contract worth $5.97 million, part of the $787 billion stimulus Congress passed this year, helped preserve three jobs at Burson-Marsteller, the global public-relations and communications firm headed by Penn. Burson-Marsteller won the contract to work on a public-relations campaign to advertise the national switch from analog to digital television. Nearly $2.8 million of the contract was awarded through a subcontract to Penn's polling firm, Penn, Schoen & Berland, according to federal records. Federal records also show that a former adviser to President Barack Obama's 2008 presidential campaign received nearly $70,000 from that contract to help alert viewers in difficult-to-reach communities that their televisions would ssoon no longer receive broadcast signals.

Wednesday, December 9, 2009

Great Speech, but I Hope the Story About the 86-Year Old Woman Is Not True

This is a great speech by Judge Napolitano. The first and last parts focus on whether Congress has the authority (or competence) to run a health care system. The answer, for those who care about the Constitution, is no. The middle section of the speech, though, is about government oppression and the PATRIOT Act. I hope that he somehow has it wrong and this is not really part of the law.

Tuesday, December 8, 2009

Finally, a CEO to Admire

Kudos to David Farr, CEO of Emerson Electric. Speaking recently at a conference, Farr actually told the truth about how big government is crippling American manufacturing. In response, an Obama bureaucrat at the Commerce Department actually had the chutzpah to claim that the White House is trying to help companies by (this is not a joke) creating a multi-trillion dollar healthcare entitlement! With this type of nonsense from Washington, no wonder Mr. Farr is angry. His best line (and one that other business leaders should copy) was “...My job is not to shrink and roll over for the U.S. government.” Here are excerpts from the Bloomberg report:

Emerson Electric Co. Chief Executive Officer David Farr said the U.S. government is hurting manufacturers with regulation and taxes and his company will continue to focus on growth overseas. “Washington is doing everything in their manpower, capability, to destroy U.S. manufacturing,” Farr said today in Chicago at a Baird Industrial Outlook conference. “Cap and trade, medical reform, labor rules.” ...Companies will create jobs in India and China, “places where people want the products and where the governments welcome you to actually do something,” Farr said. The unemployment rate in the U.S. jumped to 10.2 percent in October, the highest level since 1983. Emerson, which Farr said employs about 125,000 people worldwide, has eliminated more than 20,000 jobs since the end of 2008 to lower expenses. “What do you think I am going to do?” Farr asked. “I’m not going to hire anybody in the United States. I’m moving. They are doing everything possible to destroy jobs.” ...“This attack isn’t supported by the facts,” Kevin Griffis, a spokesman for U.S. Commerce Secretary Gary Locke, said today in an e-mail from Singapore, where they are attending the Asia-Pacific Economic Cooperation meetings. “This administration has made a significant commitment to U.S. manufacturing, including reforming the country’s health insurance system to bring down costs and make American companies more competitive globally,” Griffis said. “...My job is not to shrink and roll over for the U.S. government.”

Monday, December 7, 2009

Even Drug Dealers Don't Want to Use the Dollar

I'm not sure whether this is a good thing or bad thing, but it surely says something that international drug dealers and money launderers prefer the euro over the dollar. The good news, so to speak, is that this is not a referendum on Bernanke's easy-money policy. The drug lords apparently prefer larger denominations, and the U.S. no longer circulates bills larger than $100. The Guardian reports:

International drug cartels have abandoned the US dollar for high denomination euros to launder millions in illegal profits, Europol has revealed. The gangs no longer use $100 bills because €500 notes – the largest denomination of euro – take up less room when transporting large amounts of cash across the world. ...Rob Wainwright, director of Europol, said last week police forces across continental Europe were tracking the movements of smuggled and laundered euros and had traced much of it back to large drug gangs. ...The scale of the smuggling operation was revealed in figures from the Colombian National Directorate. Only $300,000 worth of euros were declared as entering Colombia between January and June 2007, but over $551m in euros left the country. Once in Europe, the notes can be exchanged for dollars.

Will Big Business Screw America on Health Care?

That's the question posed by the Wall Street Journal's editorial page, which discusses how companies often get seduced into supporting big government - or, in some cases, are active proponents of bigger government since they've learned how to milk the system. In the long run, of course, statism saps an economy's vitality, which is bad for workers, investors, and consumers.

One lesson that Democrats learned from the failure of HillaryCare in 1994 is that they had to buy the silence, if not the outright support, of the business class. They've done this brilliantly by peddling the illusion that ObamaCare will "lower costs" for employers. But slowly as the legislative details become clear, it is dawning on executives of businesses large and small that reform is boiling down to a huge tax increase to finance a gigantic new entitlement. ...With only a few exceptions, drug makers and health-care providers have shown that their priority is rent-seeking from government, which means that any last-minute push back will have to come from the other six-sevenths of the economy. The Chamber of Commerce and National Federation of Independent Business have finally figured out they were being taken for a ride. And now even the Business Roundtable, the association of CEOs from the largest companies, is engaged in a furious internal debate about the way forward. The Roundtable has been vaguely supportive but restive. But last week Roundtable president John Castellani was informed in a contentious conference call that many of his members will quit if the organization isn't more assertive against ObamaCare. ...The larger issue for business is the productivity and competitiveness of the U.S. economy. Democrats are about to pass the largest entitlement expansion in more than four decades when federal spending is already at unprecedented levels. The "pay or play" tax on employers and the hike in payroll taxes on top earners in the House and Senate bills are merely teaser rates. The long-term pressures created on the federal fisc would require enormous tax hikes that would depress capital investment and economic growth, to say nothing of the Roundtable's priority of reducing U.S. corporate tax rates that are among the world's highest. The tendency among business groups is usually to conciliate and speak the language of consensus—especially with Democrats running all of Washington and able to do great harm to anyone who doesn't cooperate. And no doubt the Roundtable is hearing from the CEOs of companies like Pfizer, Wal-Mart and General Electric that are deeply invested in more government control of the economy.

Sunday, December 6, 2009

Dan Hannan Rips the European Bureaucracy Racket

My earlier post noted that I would be speaking on a panel with Dan Hannan, one of the English members of the European Parliament who is famous in the blogosphere for his verbal dismantling of Gordon Brown. But since I'm in Brussels to discuss European reform in a city that is devoted to statism, this very short speech by Dan Hannan is much more relevant.



I wish Republicans were capable of doing this.

Greetings from Brussels

I'm in Belgium to speak at the 6th annual International Leaders Summit, which will be held in the European Parliament (a.k.a., belly of the beast) on Tuesday and Wednesday. I'm giving two speeches, including one that will focus on European reforms - including transparency and accountability. A key theme of my remarks will be that centralization is the enemy of good government. Unfortunately, the European Union has been morphing from a free-trade pact into a centralized and bureaucratized super-state. I will explain why this is a bad thing, both from an economic perspective and a civic-virtue perspective, but I'm not overly optimistic of altering Europe's drift to statism.

On a more positive note, I'm looking forward to hearing some of the other speakers. Dan Hannan, an MEP from the UK is famous on youtube for his damning indictment of Gordon Brown, and he will be with me on the first panel. In the afternoon, I'll be joined by the former Finance Minister of Slovakia, who is responsible for an amazing set of free-market reforms, including the flat tax and personal Social Security retirement accounts.

Saturday, December 5, 2009

Obamacare and Fiscal Incontinence

In a Cato podcast, I explain why government-run healthcare system will be vastly more expensive than we are being told. This covers some of the same material that is in my recent video, but there's no need to see my face (and if you don't like my voice or want to see my face, you can read a two-page report on the topic from Cato).

Friday, December 4, 2009

Weekly Economics Lesson: The Problem Is Spending, not Deficits

The Wall Street Journal has a column identifying fiscal deficits as the greatest threat to European economic performance. As this passage indicates, many European nations have enormous deficits and debt, much larger than the United States:

Excessive euro-zone deficits now present one of the biggest risks to the global recovery. Several European countries – Greece, Italy and Belgium – already have debts of more than 100% of gross domestic product. Others will join them in 2010. Across the euro zone, the deficit in 2010 is likely to be more than 7% of GDP. ...The snag is that no one knows how far or how fast countries must cut their deficits to retain the support of markets. Government bonds are being artificially supported by central-bank policies. ...Greece and Ireland's bonds already yield close to 5%, around 1.7 percentage points more than Germany's. ...If yields rise too high, deficits will become unsustainable. Medium-term, most countries need strong growth to reduce debt before they are hit by the huge demands on social spending as the baby-boomer generation retires. In theory, rising yields should impose market discipline on wayward governments. But without the traditional safety valve of devaluation, the sacrifices needed to restore competitiveness via wage deflation and falling living standards may be too much to expect from elected politicians. ...The market assumes that if one member state faced a buyers' strike, the others would ride to the rescue, despite the euro zone's no-bailout policy.
The column identifies some key concerns, but are budget deficits really the problem? Would these European nations be better off, for instance, if they imposed massive tax increases? Setting aside Laffer Curve concerns, big tax hikes could close the fiscal gap. Is it reasonable, then, to think that Europe's economies would respond with more growth? That is highly unlikely. Replacing debt-financed spending with tax-financed spending merely changes the mechanism for diverting resources from the productive sector of the economy to the government. Yes, deficits and debt undermine economic performance by draining resources from private credit markets. But higher tax rates also stifle growth by decreasing incentives to work, save, and invest.

The real problem is that government is far too big in Europe. This is the crisis, and it is a problem that America is now facing as a result of the profligate Bush-Obama policies.