Sunday, January 31, 2010

Republicans Are Hypocritical, but Correct

Steve Chapman skewers Republicans for being the party of big government when they were in power, but also notes that they are right to criticize Obama's reckless fiscal policies. Chapman hopes that the GOP will actually propose to shrink the burden of government. A good start would be an apology for all the wasteful programs of the Bush years:

After the administration floated a plan to cap non-defense, non-security discretionary spending for the next three years, the opposition party erupted in jeers. The complaints were many: It affected only one-eighth of the budget, it came on top of big increases, and the savings would be trivial next to the deficits that are in the pipeline. ...All the criticisms, as it happens, are true. Obama’s claim of stern fiscal discipline -- “we are prepared to freeze government spending for three years” -- collapsed into comical irrelevance as soon as he listed all the programs that won’t be included: national security, Medicare, Medicaid and Social Security, which happen to be the Four Horsemen of the Fiscal Apocalypse. There’s more: Unspent stimulus funds amounting to $165 billion. Other “mandatory” programs like unemployment and food stamps. Interest on the debt, which will triple in the next three years. Obama is going on a hunger strike, except during mealtimes. ...Still, it’s odd to hear complaints about excessive spending from the people who brought us the bloated budgets of the Bush years. During his tenure, federal spending did not retreat under the relentless assault of tight-fisted conservatives. In fact, during the Bush administration, total federal spending, adjusted for inflation, climbed by 72 percent. What was originally a fiscal surplus became a deficit, reaching $1.8 trillion in 2009, Bush’s final budget year (to which Obama contributed only a minor amount). Not until he had been in office for more than six years did he veto a bill because it cost too much. Bill Clinton may feel your pain, but next to his successor, he looked like Ebenezer Scrooge. ...If the GOP really wants to highlight the administration’s budgetary excesses, the right response is not to merely ridicule how little he offers in the way of savings, but to offer bigger and better savings of their own. Otherwise, they may find that the public disgust with runaway spending can scorch incumbent Republicans as well as incumbent Democrats.

Saturday, January 30, 2010

Is This One of the Federal Government Responsibilities Listed in the Constitution?

Maybe I have an outdated copy, but I don't see college football listed in the enumerated powers of the Congress. And it doesn't seem to be mentioned in any of the amendments. Yet the busybodies in Washington now want to exert their control over how the college football national championship is decided?!? Somebody needs to tell them to go jump in a lake. Here's a report from Sports Illustrated:

The Obama administration is considering several steps that would review the legality of the controversial Bowl Championship Series, the Justice Department said in a letter Friday to a senator who had asked for an antitrust review. In the letter to Sen. Orrin Hatch, obtained by The Associated Press, Assistant Attorney General Ronald Weich wrote that the Justice Department is reviewing Hatch's request and other materials to determine whether to open an investigation into whether the BCS violates antitrust laws. "Importantly, and in addition, the administration also is exploring other options that might be available to address concerns with the college football postseason," Weich wrote, including asking the Federal Trade Commission to review the legality of the BCS under consumer protection laws. ..."The administration shares your belief that the current lack of a college football national championship playoff with respect to the highest division of college football ... raises important questions affecting millions of fans, colleges and universities, players and other interested parties," Weich wrote.

Bureaucrats vs. Taxpayers, Part VI

I'm going to have to stop this series soon because it is getting too depressing. This Wall Street Journal column containts more surprising data, including the fact that pension costs for California bureaucrats jumped by 2000 percent in just one decade (revenues rose by 24 percent in the same period). The most shocking factoid, though, is that more than 15,000 former bureaucrats get pensions of more than $100,000 per year:

[California] is in a precarious position, with a 12.3% unemployment rate (more than two points higher than the national average) and a budget $20 billion in the red (only months after the last budget fix closed a large deficit). Productive Californians are leaving for states with less-punishing regulatory and tax regimes. Yet so far there isn't a broad consensus to do much about those who have prodded the state into its current position: public employee unions that drive costs up and fight to block spending cuts. ...California needs to take on its public employee unions. Approximately 85% of the state's 235,000 employees (not including higher education employees) are unionized. As the governor noted during his $83 billion budget roll-out, over the past decade pension costs for public employees increased 2,000%. State revenues increased only 24% over the same period. A Schwarzenegger adviser wrote in the San Jose Mercury News in the past few days that, "This year alone, $3 billion was diverted to pension costs from other programs." There are now more than 15,000 government retirees statewide who receive pensions that exceed $100,000 a year, according to the California Foundation for Fiscal Responsibility. Many of these retirees are former police officers, firefighters, and prison guards who can retire at age 50 with a pension that equals 90% of their final year's pay. ...A 2008 state commission pegged California's unfunded pension liability at $63.5 billion, which will be amortized over several decades. That liability, released before the precipitous drop in stock-market and real-estate values, certainly will soar. ...State Treasurer Bill Lockyer, another prominent liberal Democrat, told a legislative hearing in October that public employee pensions would "bankrupt" the state. And the chief actuary for the California Public Employees Retirement System has called the current pension situation "unsustainable."

Friday, January 29, 2010

Paulson Should Just Go Away

Like most statists and interventionists, former Treasury Secretary Henry Paulson raises the economic equivalent of monsters under the bed when justifying more government. Here's a blurb from a story about his recent testimony on Capitol Hill:

...former Treasury Secretary Henry Paulson on Wednesday defended his decision to complete a $182 billion bailout of American International Group Inc., arguing that the unemployment rate would have risen easily to 25% without the bailout. "If the system had collapsed millions more in savings would have been lost," said Paulson, who was Treasury Secretary at the time of the bailout, at a hearing. "Industrial companies of all size would not have been able to raise funding and they would not have been able to pay employees, this would have rippled through the economy."
For the sake of argument, let's assume he is right and that the economy would have collapsed without huge amounts of money being pumped into the financial system. Does that justify Paulson giving money to his friends on Wall Street? Not at all. The crowd in Washington could have used what's known as the FDIC-resolution approach, which would have resulted in the government paying healthy financial institution to take over the insolvent ones. In effect, this is what happened during the savings & loan crisis twenty years ago. It's not an ideal libertarian solution since tax dollars are pumped into the financial system and there is some degree of increased moral hazard since consumers/customers have less reason to monitor the safety and soundness of the banks they patronize. But the FDIC-resolution approach has one enormously good feature, at least compared to the Bush-Paulson-Obama-Geithner bailout: Bad banks are shut down, meaning that shareholders lose all their money and senior managers lose their jobs.

There was no justification for bailing out the institutions that went under water. To the extent a system-wide collapse was a real possibility, the FDIC-resolution approach would have worked. Indeed, it would have worked much better since the economy would not be plagued by the zombie banks that are only alive because of handouts from the Treasury (similar to what happened in Japan). But politicians instead chose the approach that was bad for the economy, but good for raising campaign cash and increasing the power of government.

Bureaucrats vs. Taxpayers, Part V

This may not be as dumbfounding as being told not to advertise for reliable people in England, but I certainly was shocked to see that nearly one-in-five federal bureaucrats is paid more than $100,000 - and that doesn't even include overtime and bonuses! Or how about the fact that number of bureaucrats making more than $170,000 at the Department of Transportation jumped from one to 1,690. No wonder the average bureaucrat makes 76 percent more than someone in the productive sector of the economy. If you want to get angry, read Jeff Jacoby's column:

Since December 2007, when the current downturn began, the ranks of federal employees earning $100,000 and up has skyrocketed. According to a recent analysis by USA Today, federal workers making six-figure salaries - not including overtime and bonuses - “jumped from 14 percent to 19 percent of civil servants during the recession’s first 18 months.’’ The surge has been especially pronounced among the highest-paid employees. At the Defense Department, for example, the number of civilian workers making $150,000 or more quintupled from 1,868 to 10,100. At the recession’s start, the Transportation Department was paying only one person a salary of $170,000. Eighteen months later, 1,690 employees were drawing paychecks that size. All the while, the federal government has been adding jobs at a 10,000-a-month clip. Between December 2007 and June 2009, federal payrolls exploded by nearly 10 percent. “Federal workers are enjoying an extraordinary boom time in pay and hiring,’’ USA Today observes, “during a recession that has cost 7.3 million jobs in the private sector.’’ And to add public-sector insult to private-sector injury, data from the Office of Personnel Management show the average federal salary is now roughly $71,000 - about 76 percent higher than the average private salary.

Thursday, January 28, 2010

England Is Going Nuts...Again

My jaw is gaping with amazement once more at the hare-brained political correctness that is infecting (or should I say infesting?) the United Kingdom. A story in the Daily Mail states that a recruitment agency was told not to advertise for "reliable" and "hard-working" people since that discriminated against...well, people that aren't reliable and hard working. The silver lining to this dark cloud is that the the bureaucracy in charge of such matters backed down to avoid public ridicule, but the mere fact that this happened says a lot about what's happening across the pond - and what's beginning to happen in America:

When it comes to hiring staff, there are plenty of legal pitfalls employers need to watch out for these days. So recruitment agency boss Nicole Mamo was especially careful to ensure her advert for hospital workers did not offend on grounds of race, age or sexual orientation. However, she hadn't reckoned on discriminating against a wholly different section of the community - the completely useless. When she ran the ad past a job centre, she was told she couldn't ask for 'reliable' and 'hard-working' applicants because it could be offensive to unreliable people. 'In my 15 years in recruitment I haven't heard anything so ridiculous,' Mrs Mamo said yesterday. 'If the matter wasn't so serious I would be laughing out loud. 'Unfortunately it's extremely alarming. I need people who are hardworking and reliable - and I am pleased to discriminate in that way. If they're not then I really can't use them. The reputation of my business is on the line. 'Even the woman at the jobcentre agreed it was ridiculous but explained it was policy because they could get sued for being discriminatory against unreliable people. ...She filed the advert for a £5.80-an-hour domestic cleaner at a hospital in Bury St Edmunds, Suffolk, through the Jobcentre Plus online service last Thursday. However, when she rang the nearest branch in Thetford, Norfolk, to make sure details would be available to jobseekers who turned up in person, she was transferred to a woman who said the wording was unacceptable.

Wednesday, January 27, 2010

Crazy Oregon Voters Choose Higher Tax Rates

While most political observers are paying lots of attention to the stunning Senate race in Massachusetts, there were two important ballot initiatives in Oregon on Tuesday and in both cases 54 percent of voters decided to impose higher tax rates on some of their neighbors. This is a disturbing development since voters rarely get tricked into supporting such measures. The corporate tax initiative is somewhat of a nuisance initiative, boosting the minimum annual tax from $10 to $150, but the ballot initiative on personal income tax rates is much more significant. Oregon already has a 9 percent top tax rate on individuals, which is one of the highest in the nation, yet voters were willing to boost the rate even higher (11 percent for 2009-2011 and 9.9 percent thereafter). This will be good news for neighboring states with no income tax, such as Nevada and Washington, but it is a worrisome sign that government employee unions were able to fund a campaign that generated such a disappointing result. Here's a brief blurb from the state:

It looks like Oregon corporations and high-income earners will pay higher state taxes as voters weighed in Tuesday on two hotly debated measures. ...Measure 66 raises the income tax paid by households earning at or above $250,000 a year or individual filers who make $125,000 or more. Measure 67 raises the state's $10 minimum corporate income tax. ...The tax measures were strongly supported by the state's teachers and other public employee unions. ...Pat McCormick, spokesman for the opposing campaign, "Oregonians Against Job-Killing Taxes" described the results as "disappointing and discouraging."

Live-Blogging the State-of-the-Union Address

It's not live anymore, of course, but click here to see what Cato Institute scholars said.

Adding Fiscal Insult to Budget Injury

A recent poll, conducted in early January, shows that the America pepole are catching on to the stimulus scam. Three-fourths of respondents believe that at least one-half of the money has been wasted. Here's a brief excerpt from the CNN story, which includes a rather bizarre assertion that the stimulus represented a "cost to the government." Actually, the so-called stimulus was a shot-in-the-arm to government. The burden of all the new spending is borne by the economy today and taxpayers in the future:

Nearly three out of four Americans think that at least half of the money spent in the federal stimulus plan has been wasted, according to a new national poll. A CNN/Opinion Research Corporation survey released Monday morning also indicates that 63 percent of the public thinks that projects in the plan were included for purely political reasons... the program, formally known as the American Recovery and Reinvestment Act of 2009, attempts to stimulate the country's economy...at a total cost to the government of $787 billion.
But it gets worse. According to the new CBO budget numbers, Obama's boondoggle proposal actually will cost $75 billion more than he said last year (typical mistake with government budgeting, yet we're somehow supposed to believe his fatuous claims that a giant new healthcare entitlement will reduce the deficit). By the way, this doesn't count the added interest on the debt from all this new spending, so the actual cost of the so-called stimulus is more than $1 trillion - and rising. And as this AP story notes, there's more bad news since the Senate is crafting a second "stimulus" to waste another $82.5 billion:

Last year's $787 billion economic stimulus bill is going to be even more expensive — $75 billion more. The new Congressional Budget Office estimate, released Tuesday, provides more ammunition for Republicans who say the stimulus has been long on spending and short on creating promised jobs. ...Democrats are pressing for another stimulus measure and top Senate Democrats have drafted an $82.5 billion jobs plan that would help small businesses, boost spending on road construction and mass transit, and give local governments money to retain teachers.

Tuesday, January 26, 2010

Bureaucrats vs. Taxpayers, Part IV

This Bloomberg article reinforces the theme that bureaucrats have plush sinecures while workers in the productive sector of the economy are facing difficult times. But the most shocking nmber is that state and local governments have underfunded pensions for bureaucrats by $1 trillion, not to mention $500 billion of unfunded health care promises. Needless to say, the politicians will want me and you to pay for their reckless promises:

Any expectation that state and local governments would use the worst fiscal crisis since the Great Depression to reduce their biggest expenditures is proving to be wishful thinking. Companies have cut 7.3 million jobs, 6.29 percent, since business employment peaked at 115.8 million in December 2007. State and local governments kept adding jobs through August 2008 to 19.8 million and have since cut 132,000 positions -- 0.66 percent, according to the U.S. Labor Department. ...Reducing headcount would help narrow budget deficits. It would also reduce public-pension liabilities, which analysts say threaten state and local credit ratings and even, at the local level, solvency. State and local government pensions nationwide are underfunded by about $1 trillion, Orin S. Kramer, chairman of the New Jersey Investment Council, which oversees the state’s pension fund, estimated in November. That doesn’t include other retirement benefits, such as health care, which Standard & Poor’s earlier this year pegged at about $500 billion for the states alone.

Another Video for Me to Envy

Nobody would ever want me to sing, so I won't be appearing in any videos like this very clever production about John Maynard Keynes and Friedrich Hayek.



The video is entertaining, for sure, but it also includes some very good economic analyis.

Locker-Room Talk Between Obama and Tiger

After we see the tax increases in Obama's soon-to-be-released budget, every taxpayer will agree with this.

Obama's Spending Freeze: Is It Real or Is He Copying Bush?

As reported by the Wall Street Journal, the Obama Administration will propose a three-year freeze for a portion of the budget known as "non-defense discretionary" spending. Many critics will correctly note that this is like going on a drunken binge in Vegas and then temporarily joining Alcoholics Anonymous. Others will point out that more than 80 percent of the budget has been exempted, which also is an accurate criticism. Nonetheless, even a partial freeze would be a semi-meaningful achievement. But don't get too excited yet. It is not clear whether the White House is proposing a genuine spending freeze, meaning "budget outlays" for these programs stay at $477 billion for three years, or a make-believe freeze that applies only to "budget authority." This is an enormously important distinction. Budget outlays matter because they represent the acutal burden of government spending. Budget authority, by contrast, is a bookkeeping measure that - at best - signals future intentions. During the profligate Bush years, for instance, apologists for the Administration tried to appease fiscal conservatives by asserting that budget authority was growing at ever-slower rates. In some cases, they were technically correct, but their arguments were deceptive because real-world spending kept climbing to record levels. And needless to say (but I'll say it anyhow), future intentions never became reality. Domestic discretionary spending soared from less than $350 billion to more than $600 billion during the Bush years (and rose almost another $100 billion in Obama's first year!). If the Obama Administration proposes a genuine outlay freeze, he will be taking a genuine (albeit small) step in the right direction. If the "freeze" applies only to budget authority, however, that will be a pretty clear indication we are in George W. Bush's third term.

To attack the $1.4 trillion deficit, the White House will propose limits on discretionary spending unrelated to the military, veterans, homeland security and international affairs, according to senior administration officials. Also untouched are big entitlement programs such as Social Security and Medicare. The freeze would affect $447 billion in spending, or 17% of the total federal budget, and would likely be overtaken by growth in the untouched areas of discretionary spending. It's designed to save $250 billion over the coming decade, compared with what would have been spent had this area been allowed to rise along with inflation. ...administration officials acknowledged the freeze is directed at only a small part of overall spending, but that fiscal discipline has to start somewhere. President Obama had requested a 7.3% increase last year in the areas he now seeks to freeze.

Monday, January 25, 2010

Maybe Obama Will be Half Right

You can choose which part of the President's statement in the title of this story is likely to come true.

I know what many of you are thinking, but Republicans shouldn't count their chickens. There's no Reagan on the horizon.

In which case, the title would be completely wrong.

Bureaucrats vs. Taxpayers, Part III

If you work for the government and you want to feel good about living on Easy Street, check out this link from the Goldwater Institute. But if you're a taxpayer and don't want to deal with high blood pressure, you might want to avoid even this small excerpt:

...government employees of all stripes have manipulated the system to spike their pensions. The old deal seemed fair: public employees would earn lower salaries than Americans working in the private sector, but would receive a somewhat better retirement and more days off. Now, public employees get higher average pay, far higher benefits, and many more days off and other fringe benefits. They have also obtained greatly reduced work schedules, thus limiting public services even as pay and benefits shoot ever higher. The new deal is starting to raise eyebrows, thanks to efforts by groups such as the California Foundation for Fiscal Responsibility, which publishes the $100,000 Club, a list of thousands of California government retirees with six-figure, taxpayer-guaranteed incomes. The story doesn’t end with the imbalance in pay and benefits. Government workers also enjoy absurd protections. The Los Angeles Times published a recent series about the city’s public school district, which doesn’t even try to fire incompetent teachers and is seldom able to get rid of those credibly accused of misconduct or abuse. The real scandal is a two-tier society where government workers enjoy benefits far in excess of those for whom they supposedly work. It’s past time to start cleaning up the mess by reforming retirement systems and limiting the public unions’ power.

The Case Against Bernanke

The Washington establishment is rallying behind Ben Bernanke, so that probably means the Fed Chairman will get confirmed for another term. But this is precisely why he is the wrong man for the job. As the Wall Street Journal opines, Bernanke is guilty of two sins. His track record on monetary policy is weak, indicating an insufficent commitment to protecting the value of the dollar. And his willingness to resist political pressure is even weaker, suggesting that America could be headed back to 1970s-style inflation:

The White House said yesterday it has damped down a political revolt against Ben Bernanke and now has the votes to secure the Federal Reserve Chairman's second four-year term. Whether or not Mr. Bernanke is confirmed, the lesson we draw is that overly political central bankers will eventually be undone by politics. ...When we opposed Mr. Bernanke's reconfirmation on December 3, the facile consensus was that the Fed chief was a master of the universe who had saved the world from depression. But after Scott Brown's victory in Massachusetts last week, Senate Democrats are suddenly looking for a financial political sacrifice. ...The Democrats' loudest complaint, moreover, is that Mr. Bernanke and the Fed haven't been easy enough in printing money. ...The Fed has already kept interest rates at near zero for more than a year, and it is buying $1.25 trillion in mortgage-backed securities to refloat the housing bubble, among other interventions into fiscal policy and credit allocation. Is the Fed going to buy another $1.25 trillion, or promise to keep rates at zero for another 14 months? Mr. Reid's declaration of a confirmation quid pro quo will not reassure global investors who already fear that the Fed lacks the political will to withdraw its historic post-crisis liquidity binge soon enough to avoid new asset bubbles. ...Mr. Bernanke is already far too susceptible to political pressure. As a Fed governor, he was Alan Greenspan's intellectual co-pilot last decade when their easy money policies created the housing mania. When Congress later put political pressure on the Fed to direct credit toward housing, and even to student loans, Mr. Bernanke (who was then chairman) also quickly obliged. More ominously for the next four years, Mr. Bernanke continues to deny any Fed monetary culpability for creating the mania. Shortly after the New Year, even with his nomination pending, Mr. Bernanke issued an apologia that was striking for its willingness to play to the Congressional theory of the meltdown by blaming bankers and lax regulators. ...Yes, much of Wall Street wants to see Mr. Bernanke confirmed. The Street is currently making a bundle off Fed policy, as it borrows at near-zero rates and lends long, and the banks don't want that to end. The banks also loved negative real interest rates in the middle of the last decade, and we know how that turned out.

Doubling Down on Big Government

This new video from the Center for Freedom and Prosperity explains how last year's so-called stimulus was a flop - and also reveals why politicians are pushing for another big-government spending bill.



Interestingly, since last year's stimulus was such a disaster, the redistributionists in Washington are calling their new proposal a "jobs bill." But as I say in the video, this is akin to putting perfume on a hog.

Sunday, January 24, 2010

Bureaucrats vs. Taxpayers, Part II

It is horribly unjust that politicians do things to destabilize the economy, but it is workers in the productive sector of the economy who pay the price by losing their jobs and foregoing wage increases. To add insult to injury, government bureaucrats are living the high life, getting more pay - even though they already get ("earn" would be the wrong word) for more than their private-sector counterpart. A column posted at realclearmarkets.com has some of the depressing details:

There's a recession going on, but you wouldn't necessarily know it by looking at public employee earnings. If you work for the government, you're far less likely than your private-sector counterparts to have been laid off in the recession, and you probably also saw relatively fast wage growth. ...During the recession, public employees have done better than private ones on two measures: total employment and hourly compensation. Over the last two years, private payrolls shed 7.3 million jobs, but public sector civilian employment actually grew very slightly, adding 98,000 jobs. ...public sector compensation (as measured by the Department of Labor) rose 42% faster than private sector compensation over the last three years. Since the end of 2006, hourly total compensation (wages plus benefits) has risen 6.5% for private sector workers, essentially keeping pace with inflation. But state and local government workers saw their hourly compensation rise 9.2%. Federal civilian workers (about 10% of the public sector civilian workforce) are excluded from the above measure, but they did even better, receiving Congressionally-approved wage rises totaling 9.9% over the same period. ...If states and localities had kept pace with private sector wage growth over the last three years, state budget gaps would be approximately $36 billion less than they are today.

The Global Warming Shakedown

When people ask me about global warming, or climate change, or whatever they're calling it now, I freely admit that I'm not a climatologist and thus have no informed opinion on whether the planet is warming due to human activity (or whether this, on net, would be a bad thing). But I am somewhat familiar with how special interests like to obtain power and unearned wealth using the coercive power of government. So when I see people who have always favored statism suddenly say we need big government to fight global warming, I am inherently skeptical. My doubts become even larger when I see that some of the same people were playing Chicken Little a few decades ago saying we faced a coming ice age. And I get downright suspicious when these people (did someone say Al Gore?) directly line their own pockets as a result of the policies they promote. So I was not surprised when the climate-gate scandal broke. After all, these supposed scientists had every reason to behave dishonestly and unethically to keep the gravy train of government grants rolling. The latest scandal comes from a high-level con artist with the so-called Intergovernmental Panel on Climate Change at the United Nations. First, we have a stunning confession that a major claim of the IPCC is fake, as noted by the Wall Street Journal:

...when it comes to unsubstantiated research it's hard to beat the IPCC, whose 2007 report insisted that the glaciers—which feed the rivers that in turn feed much of South Asia—were very likely to nearly disappear by the year 2035. "The receding and thinning of Himalayan glaciers," it wrote in its supposedly definitive report, "can be attributed primarily to the [sic] global warming due to increase in anthropogenic emission of greenhouse gases." It turns out that this widely publicized prediction was taken from a 2005 report from the World Wildlife Fund, which based it on a comment by Indian glacier expert Syed Hasnain from 1999. Mr. Hasnian now says he was "misquoted." Even more interesting is that the IPCC was warned in 2006 by leading glaciologist Georg Kaser that the 2035 forecast was baseless. ...Mr. Kaser told the Agence France-Presse. "It is so wrong that it is not even worth discussing."
Then we have the revelation that the Chairman of the IPCC used (and almost certainly was aware that he was using) totally dishonest assertions to fleece donors - including gullible American foundations and oppressed European taxpayers. Chairman Pachauri already has been appropriate mocked for his giant "carbon footprint" due to his globe trotting (in first class, of course). Now he's catching some much-deserved flak for lining his pockets while pimping for the IPCC hucksters. Here's what the UK-based Times reported:

The chairman of the UN's Intergovernmental Panel on Climate Change (IPCC), has used bogus claims that Himalayan glaciers were melting to win grants worth hundreds of thousands of pounds. Rajendra Pachauri's Energy and Resources Institute (TERI), based in New Delhi, was awarded up to £310,000 by the Carnegie Corporation of New York and the lion's share of a £2.5m EU grant funded by European taxpayers. It means that EU taxpayers are funding research into a scientific claim about glaciers that any ice researcher should immediately recognise as bogus. ...In one presentation at last May's launch, Anastasios Kentarchos, of the European Commission's Climate Change and Environmental Risks Unit, specifically cited the bogus IPCC claims about glacier melt as a reason for pouring EU taxpayers' money into the project. ...questions remain. One of the most important is in connection with Pachauri's earnings. In an interview with The Sunday Times he said his only income came from his salary at TERI. However TERI does not publish his salary and he refused to divulge it. In India questions are also being asked about Pachauri's links with GloriOil, a Houston, Texas-based oil technology company that specialises in recovering extra oil from declining oil fields . Pachauri is listed as a founder and scientific advisor.
But you have to give the guy credit for cojones. An article in the Times of India reports that, "...while his credibility and that of the IPCC has taken a battering, Pachauri maintains his chutzpah in the face of growing skepticism, arguing that his acceptance that the research on glaciers had been dodgy had actually somehow enhanced the credibility of the body."

Saturday, January 23, 2010

Bureaucrats vs. Taxpayers

The Pampered and Insulated Life of Unionized Government Workers. New data from the Bureau of Labor Statistics shows that only 7.2 percent of private-sector workers belong to unions, which makes sense since unions behave in a myopic fashion and undermine competitiveness (and thus reduce jobs in the long run). On the other had, insulated from competition, 37.4 percent of bureaucrats are unionized. Moreover, because the burden of government has been climbing so fast during the Bush-Obama spending binge, this has resulted in bloated government payrolls. One consequence is that a majority of union workers, for the first time in American history, are now bureaucrats. The New York Times has the story, including a good observation by a scholar that there is a corrupt relationship between Democrats and bureaucrats that is leading to huge burdens on taxpayers:

For the first time in American history, a majority of union members are government workers rather than private-sector employees, the Bureau of Labor Statistics announced on Friday. In its annual report on union membership, the bureau undercut the longstanding notion that union members are overwhelmingly blue-collar factory workers. It found that membership fell so fast in the private sector in 2009 that the 7.9 million unionized public-sector workers easily outnumbered those in the private sector, where labor’s ranks shrank to 7.4 million, from 8.2 million in 2008. ...According to the labor bureau, 7.2 percent of private-sector workers were union members last year, down from 7.6 percent the previous year. That, labor historians said, was the lowest percentage of private-sector workers in unions since 1900. Among government workers, union membership grew to 37.4 percent last year, from 36.8 percent in 2008. ...government employment grew last year, inching up 16,000, to 22,516,000, according to the bureau. ...Fred Siegel, a visiting professor of history at St. Francis College in Brooklyn and a senior fellow at the Manhattan Institute, a conservative research organization, said, “There were enormous political ramifications” to the fact that public-sector workers are now the majority in organized labor. “At the same time the country is being squeezed, public-sector unions are a rising political force in the Democratic Party,” he said. “They depend on extra money for the public sector, and that puts the Democrats in a difficult position. In four big states — New York, New Jersey, Illinois and California — the public-sector unions have largely been untouched by the economic downturn. In those states, you have an impeding clash between the public-sector unions and the public at large.”

A Very Encouraging Cover on The Economist

Congratulations to Tea Party activists, protesters at townhall meetings, Massachusetts voters, and everyone else in America who has helped create a counter-revolution against bloated, inefficient, and wasteful government. The establishment definitely is paying attention, as indicated by the cover of this week's Economist magazine.

Friday, January 22, 2010

Another Very Funny Video

I used to have a weekly political humor post, but this administration is generating too much material, so I'm just going to post amusing things as I find them. Such as this song parody...

A Victory for the Rule of Law over IRS Bullying

A Swiss court just threw a wrench in the gears of an IRS effort to impose bad US tax law on an extraterritorial basis, ruling that UBS does not have to hand over data to the American tax authorities. This ruling nullifies an agreement that the Swiss government was coerced into making with the US government last year. In typical arrogant fashion, the IRS already has indicated that it still expects acquiescence, notwithstanding Switzerland's strong human rights policy on personal privacy. The Bloomberg story excerpted below has the details, but it's worth noting that this entire fight exists solely because the internal revenue code imposes double taxation on income that is saved and invested and imposes that bad policy on economic activity outside America's border. But just as other governments should not have the right to impose their laws on things that happen in America, the United States should not have the right to trample the sovereignty of other nations:

A UBS AG account holder won a Swiss court case preventing data from being disclosed in a ruling that may impede a U.S. crackdown on overseas tax evasion. The failure by U.S. citizens to complete certain tax forms or declare income doesn’t constitute “tax fraud” that would require Switzerland to disclose account data, the country’s Federal Administrative Court ruled in a judgment released today. ...“The prosecutors at the Justice Department are not going to be happy with this opinion,” Namorato said in an interview in Washington. “It guts the settlement that they negotiated with the Swiss authorities.” ...The Swiss government said in a statement that it will decide Jan. 27 how the Swiss-U.S. agreement can be implemented in light of the ruling. U.S. Justice Department spokesman Charles Miller declined to comment. ...The Internal Revenue Service said in a statement that while the agency hadn’t reviewed the ruling it “had every expectation that the Swiss government will continue to honor the terms of the agreement.” ...Today’s ruling involved a single test case, and the court said there were 25 more involving similar claims that it will ask the Swiss tax authority to review. “It’s a landmark decision,” said Bernhard Loetscher a partner at Zurich-based law firm CMS von Erlach Henrici AG. “The court considers the case so crystal clear that it invited the SFTA to withdraw the 25 other claims.” ...Under the 1996 double taxation treaty, “tax fraud and the like” means fraudulent behavior that causes or attempts an illegal and important reduction in tax owed. Examples included keeping separate accounts of incorrect profit, losses and orders, as well as a scheme of lies. Switzerland distinguishes between tax fraud, which is a crime, and tax evasion, which is a civil offense. “The U.S. will soon start to renegotiate the double taxation treaty, to give up the distinction between tax evasion and tax fraud,” said Zurich lawyer Wolfram Kuoni. “The key battle will be if it will apply retrospectively.”
This battle is part of a broader effort by uncompetitive nations to persecute "tax havens." Creating a tax cartel for the benefit of greedy politicians in France, Germany, and the United States would be a mistake. An "OPEC for politicians" would pave the way for higher taxes, as explained here, here, and here. But this also is a human rights issue. Look at what happened recently in the thugocracy known as Venezuela, where Chavez began a new wave of expropriation. The Venezuelans with money in Cayman, Miami, and Switzerland were safe, but the people with assets inside the country have been ripped off by a criminal government. Or what about people subjected to persecution, such as political dissidents in Russia? Or Jews in North Africa? Or ethnic Chinese in Indonesia? Or homosexuals in Iran? And how about people in places such as Mexico where kidnappings are common and successful people are targeted, often on the basis of information leaked from tax departments. This world needs safe havens, jurisdictions such as Switzerland and the Cayman Islands that offer oppressed people the protection of honest courts, financial privacy, and the rule of law. Heck, even the bureaucrat in charge of the OECD's anti-tax competition campaign admitted to a British paper that "tax havens are essential for individuals who live in unstable regimes." With politicians making America less stable with each passing day, let's hope this essential freedom is available in the future.

A Victory for the 1st Amendment

I've been asked by a reader to comment about Supreme Court's 5-4 decision to strike down campaign finance laws that restricted the ability of people to participate in the political process. I am very happy with this decision because the main goal of campaign finance laws is to protect incumbents by limiting the amount of money (which enables speech) that can be spent. This, of course, makes it harder for challengers and critics to publicize negative information about incumbents or positive information about alternatives. I know that many companies and unions (both of which are collections of individuals) will now spend money in ways that will irritate me, but so what? The 1st Amendment protects other forms of speech I don't like, but that doesn't me I want to ban speech - or should be allowed to ban speech if I was a low-life politician. Obviously, it's good news that the Supreme Court is protecting us from politicians who want to restrict speech they don't like. Matt Welch of Reason has a great article at CNN:

Free speech really does mean free speech, and the laws that the "Citizens" ruling overturned directly and heinously restricted the stuff. ...Citizens United, a conservative 501(c)(4) nonprofit that has funded a dozen political documentaries over the years, produced a critical documentary about Hillary Clinton in 2008 entitled "Hillary: The Movie." By a decision of the federal government, which was enforcing the Bipartisan Campaign Reform Act (known more broadly as McCain-Feingold), this piece of political speech was banned from television. Let's boil it down to the essential words: Political documentary, banned, government. You don't have to be a First Amendment purist to intuit that political speech was, if anything, the most urgent subcategory covered by the First Amendment's "Congress shall pass no law" restrictions. ...As Justice Anthony Kennedy wrote in his majority opinion, "The law before us is an outright ban, backed by criminal sanctions. Section 441b makes it a felony for all corporations -- including nonprofit advocacy corporations -- either to expressly advocate the election or defeat of candidates or to broadcast electioneering communications within 30 days of a primary election and 60 days of a general election. ... If the First Amendment has any force, it prohibits Congress from fining or jailing citizens, or associations of citizens, for simply engaging in political speech." ...As the Supreme Court rightly noted today, "The First Amendment confirms the freedom to think for ourselves."

Good Advice for Republicans from Tom Sowell

I've always been mystified by GOP politicians, pollsters, and consultants who argue that the GOP needs to support big government in order to win votes. The biggest victories for Republicans in living memory, after all, are the 1980 and 1994 landslides, when the GOP was most aggressive in promoting an anti-government message. The big-government, compassionate-conservative message of Bush, by contrast, led to electoral debacles in 2006 and 2008. Tom Sowell has been addressing the strange predilection of some Republicans to tack left. In his third column of the series, Sowell explains that the GOP should use an explicitly conservative message to appeal to black voters rather than foolishly assuming that a "me-too" platform will somehow work:

One of the things that is long overdue is some Republican re-thinking-- or perhaps thinking for the first time-- about the approach that they have been using, with consistently disastrous results, for trying to get the black vote. ...There is no point today in Republicans continuing to try to win over the average black voter by acting like imitation Democrats. Those who like what the Democrats are doing are going to vote for real Democrats. ...[Blacks] want their children to get a decent education, which they are unlikely to get so long as public schools are a monopoly run for the benefit of the teachers' unions, instead of for the education of the children. Democrats are totally in hock to the teachers' unions, which means that Republicans have a golden opportunity to go after the votes of black parents by connecting the dots and exposing one of the key reasons for bad education in inner cities and the bad consequences that follow. But when have you ever heard a Republican candidate get up and hammer the teachers' unions for blocking every attempt to give parents-- black or white-- the choice of where to send their children? The teachers' unions are going to be against the Republicans, whether Republicans hammer them or keep timidly quiet. Why not talk straight to black voters about the dire consequences of the pubic school monopoly that the teachers' unions and the Democrats protect at all cost, even though many private schools-- notably the KIPP schools in various states-- have achieved remarkable success with low-income and minority youngsters?
In his fourth column in the series, Sowell makes the common-sense point that a squishy, moderate message winds up appealing to nobody. That doesn't guarantee a lost election, to be sure. As Bush and Nixon showed, a milquetoast Republican can prevail if facing an incompetent Democrat in the right national climate, but those often turn out to be Pyrrhic victories since they often set the stage for big Democratic victories in the future. As Sowell notes, Reagan is the right model for the GOP:

A long-standing battle within the Republican Party, going back at least as far as the 1940s, is between those who want the party to clearly differentiate itself from the Democrats and those who seek a broader appeal by catering to a wider spectrum of social and ideological groups. The "smart money" advocates a "big tent" and deplores those who want a clearer adherence to the kinds of ideas espoused by Ronald Reagan. What the "smart money" fails to explain is how Reagan won two landslide presidential elections in a row. He certainly didn't do it by trying to act like Democrats. That's how the Republicans later turned off their own supporters, without gaining enough other voters to keep from being wiped out by the Democrats in two consecutive elections. ...When you try to waffle and be all things to all people, you can end up being nothing to anybody. That is where the "smart money" crowd have gotten the Republicans in recent years.

Thursday, January 21, 2010

America Is Less Free than Canada?!?

My favorite Heritage Foundation publication (other than the papers I wrote, of course) is the Index of Economic Freedom. The 2010 Index was just released and it is bad news for America. The United States moved significantly in the wrong direction, dropping 2.7 points (on a 0-to-100 scale), which was almost as bad as the reduction of 2.8 points in the thugocracy known as Venezuela. America now ranks below Canada, which is rather embarrassing, and has dropped from "free" to "partly free" in the overall ratings. These findings echo the data in the Fraser Institute's Economic Freedom of the World (co-published by Cato), which also show a decline in America's score (as an aside, I will brag that the EFW must be a bit more accurate than the IEF since it was quicker to show America (see page 185) becoming less free during the big-government Bush years). The new Heritage Index has lots of fascinating information, including Chile's top-10 ranking, making it far and away the freest economy in Latin America. Montenegro enjoyed the biggest jump in the yearly rankings, climbing by 5.4 points (though it still ranks only #68), and Timor-Leste (wherever that is) had the biggest fall, dropping by 4.7 points (are they getting advice from Obama's economic team?). One final thing worth noting, as seen below, is that the United Kingdom and six of its former colonies dominate the top 10.

Pinocchio Rove Strikes Again

George Bush ranks as one of America's most fiscally irresponsible presidents. He increased overall spending from $1.8 trillion to $3.5 trillion and most of that new spending was used to create or expand domestic programs (no-bureaucrat-left-behind education spending, pork-filled highway bills, sleazy Wall Street bailouts, corrupt farm spending, new Medicare entitlements, etc) that are not legitimate functions of the federal government. So it is galling to see his former senior adviser writing articles complaining about Barack Obama being a big spender. Many of the criticisms about the Obama Administration in his latest WSJ column are correct, to be sure, but Karl Rove has zero moral authority to make those arguments. Moreover, Rove once again engages in sloppy or dishonest (you choose) analysis by blaming Obama for some of Bush's mistakes. In the excerpt below, he blames Obama for any of the Fiscal Year 2009 debt that was incurred after January 20 of last year. But as I've already explained, 96 percent of the spending in FY2009 is the result of Bush's policies:

Consider that from Jan. 20, 2001, to Jan. 20, 2009, the debt held by the public grew $3 trillion under Mr. Bush—to $6.3 trillion from $3.3 trillion at a time when the national economy grew as well. By comparison, from the day Mr. Obama took office last year to the end of the current fiscal year, according to the Office of Management and Budget, the debt held by the public will grow by $3.3 trillion. In 20 months, Mr. Obama will add as much debt as Mr. Bush ran up in eight years. ...Mr. Bush's deficits ran an average of 3.2% of GDP, slightly above the post World War II average of 2.7%. Mr. Obama's plan calls for deficits that will average 4.2% over the next decade. Team Obama has been on history's biggest spending spree, which has included a $787 billion stimulus, a $30 billion expansion of a child health-care program, and a $410 billion federal spending bill that increased nondefense discretionary spending 10% for the last half of fiscal year 2009. Mr. Obama also hiked nondefense discretionary spending another 12% for fiscal year 2010.
Correction: In an earlier post on one of Rove's columns, I incorrectly claimed that Bush never vetoed a bill because it spent too much.That was wrong. He did veto a handful of bills once Democrats took control of Congress.

Replace TSA Incompetence with Market Efficiency

Arnold Kling and Nick Schulz have a great column in USA Today explaining why we should let private companies be in charge of airline security. As a frequent traveler, I wish this would happen, but governments rarely give up power once they have expanded into a new area:

After the underwear bomber's attempted mass murder, Americans are losing patience with the airline security system. It is bad enough that our screening process makes innocent people work far too hard to prove that they are not terrorists. It also manages to make it too easy for actual terrorists to be treated as innocent. ...The security process needs several things it is lacking. It needs continuous adaptation, with a strong focus on satisfying customers and improving results. It needs to find new and better methods of meeting the demands of customers who value safety as well as speed and efficiency. It needs to function in a dynamic environment, disciplined by rigorous competitive pressure. In short, it needs the market. ...Responsibility for the design and implementation of airline security should be handed back to the private sector. ...A post-9/11 market system would combine the benefits of a competitive system with the much-stricter federal oversight necessary to ensure a basic standard of travel security. Airlines would select firms to screen passengers who will fly on their planes. Let's say that it would be up to each airline to contract with at least one security firm at each airport. The airline would pay the firm a set dollar amount per passenger, and this cost would be passed along through ticket prices. ...Several incentive mechanisms, some of them market-based, would keep private sector firms focusing on safety. First of all, the flying public may show a preference for airlines that employ security firms with rigorous procedures just as today many drivers prefer safer cars that get lower gas mileage. Second, if a private firm were to allow a single failure or even a near-miss, it would immediately lose the confidence of fliers. Airlines would switch to other suppliers, and the flawed firm would go out of business. Security companies also could be required to be liable for damages up to, say, $25 million from terrorism, and to post bond to cover that liability. (It is harder to sue the government for damages than the private sector.) The government's role would include two functions. It would collect intelligence on high-risk suspects (as it does today) and share this intelligence with private airline security firms — which will require the firms to have robust data security. And government would audit private security companies, with the power to impose fines if lapses are found. The government could still ensure, for instance, that every firm at least meet the minimum standards that the TSA employs today. ...good solutions are more likely to emerge regularly and consistently under a robust market dynamic than under government monopoly. Competition will force even the lowest-quality provider to raise standards year after year by adopting the good ideas that emerge from their competitors. This is why even a cheap automobile today has more amenities than a luxury car of 30 years ago.

Statism Update from Brussels

It seems that the European Union's governing entities, the European Commission and the semi-ceremonial European Parliament, combine the worst features of statism and collectivism from the entire continent. The Euro-crats make lots of noises about subsidiarity and other policies to leave decision making in the hands of national and local governments, but it seems every policy coming from Brussels is a new power grab for unelected and unaccountable bureaucrats. The latest example is possible EU-wide driving laws for the purposes of imposing absurdly low speed limits and to requiring foolish rules against more comfortable and safer large cars. Here's what the UK-based Express wrote about the topic:

Brussels bureaucrats want to slap draconian European Union driving laws on Britain’s roads in a new “green” campaign on motorists, it emerged last night. Measures being considered include a barrage of new maximum speed limits in town and city areas. British motorists could also be forced to undertake exams in “environmentally-friendly” road skills as part of an EU-wide overhaul of driving tests. And many large cars and other so-called gas-guzzling vehicles face being banned from newly-declared “green zones” in urban centres. The latest threat of meddling from Brussels comes in an Action Plan on Urban Mobility drawn up by European Commission transport chiefs. ...Mats Persson, of the Euro-sceptic think tank Open Europe, commented: “This illustrates that the EU simply can’t stop interfering in every aspect of people’s lives.”
Meanwhile, a different tentacle of the European octopus is proposing that the European Union be given the power to audit budget numbers from member nations. Given the fiscal fiasco in Greece, this seems like it might be a reasonable step - until one remembers that the EU's auditors every year give a failing grade to the EU's own budget practices. The EU Observer reports on the issue, but the phrase "blind leading the blind" somehow did not get included:

...the European Commission has indicated it will seek audit powers for the EU's statistics office, Eurostat, in order to verify elements of national government accounts. ...Speaking to journalists after a meeting of EU finance ministers on Tuesday (19 January), outgoing EU economy commissioner Joaquin Almunia said greater Eurostat auditing powers could have avoided the mistakes that led to the Greek revision. He said the commission will propose "a new regulation in order to obtain powers, which we've already requested, to give Eurostat the possibility of carrying out audits."
Last but not least, that same EU Observer story has a tiny bit of good news, or at least a dark cloud with a silver lining. Some of Europe's governments want to impose an EU-wide tax on banks. This certainly fits the theme of ever-growing levels of bureaucracy and interference from Brussels, but the good news is that there is still (even under the statist Lisbon Treaty) a national veto on tax matters. So even though some of the big nations in Europe want to demagogue against the financial sector, the EU's taxation commission (and former communist from Hungary) sadly indicated that such a tax probably would not make it through the process:

While discussion on Greece took up considerable time, EU finance ministers did have an opportunity to discuss a Swedish proposal for an EU-wide bank levy to mitigate the effects of future financial crises. ...British, Belgian and German ministers were amongst those who showed moderate support for the idea. However, outgoing EU taxation commissioner Laszlo Kovacs said it was unlikely to fly because of EU unanimity voting in the area of taxation.

Wednesday, January 20, 2010

Call the Language Police! Sometimes the French Oppose Harmonization

The French government is relentlessly awful in its support for tax harmonization, regulatory harmonization, and other policies to drag other nations into the cesspool of statism. But France's desire for a one-size-fits-all approach miraculously vanishes when it comes to language. Even though English is now the world's language, especially for commerce, the French are resorting to coercion and protectionism to protect against - gasp! - English words. I greatly enjoyed this WSJ column about France's fight against modernity:

A French group entitled Avenir de la Langue Française (Future of the French Language) has claimed that the invasion of English words poses a greater "threat" to France's national identity than the imposition of German under the Nazis. Writing recently in Le Monde and l'Humanite, the group, supported by eight other patriotic organizations, has called on the Sarkozy government to turn back the English flood. "There are more English words on the walls of Paris," they state, "than German words under the Occupation." ...English has became the dominant language of the Internet, air traffic control, computers, international business and by 2030 more Chinese people will be able to speak it than there are Americans. Already by 2001, English was being spoken by more than one in three of the 350 million citizens of the European Union, whereas fewer than one in 10 spoke French outside France itself. Even in those areas where French influence has been strong —Morocco, Algeria, Syria, Vietnam, Cambodia, Chad, and elsewhere—English has encroached very successfully. English is the official language used by the Organisation of the Petroleum Exporting Countries, and the only working language of the European Free Trade Association, the Baltic Marine Biologists Association, the Asian Amateur Athletics Association, the African Hockey Federation, while it is the second language of bodies as diverse as the Andean Commission of Jurists and the Arab Air Carriers Organization. ...France's traditional response to this linguistic "Anglobalization" has been to attempt a form of legal protectionism against the steamroller tongue of "les rosbifs" and "les Anglo-Saxons". In 1994 the French Assemblée Nationale passed the Loi Toubon, which was signed into law by President François Mitterand. Named after Jacques Toubon, the culture minister, it stipulated that "French shall be the language of instruction, work, trade and exchanges and of the public services. "The use of French shall be mandatory for the designation, offer, presentation, instructions for use, and description of the scope and conditions of a warranty of goods, products and services as well as bills and receipts. The same provisions apply to any written, spoken, radio and television advertisement" and so on for another 21 highly prescriptive clauses. The law has been used against American and British companies, such as Disney and the Body Shop on the Champs Elysées that had labels in English. ...In two centuries, French may have to be protected as a linguistic curio, like Britain does with Cornish or Manx. Until then, the French must learn to be bilingual, or risk being left behind in the global market-place, gasping outraged complaints in a tongue fewer and fewer people understand.

I've Become a Stereotype

First came the blog. Now I have a twitter account (my call sign, or whatever it's called, is @danieljmitchell for those who care). These are the things the young "with-it" people at Cato say I should have, so I meekly comply. But I sometimes feel that I'm sinking to the level of being a journalist.

Though so long as it's for the cause of liberty, who am I to argue?

A Comedy Classic

All I can say is that I wish I had done this.

Four Lessons from Massachusetts

While there is always a tendency in Washington to over-analyze the meaning of elections, I think that we can draw the following conclustions from Scott Brown's victory:

1. Obamacare is an albatross for the Democrats. The White House wants to blame Coakley for being a bad candidate, but Massachusetts is a very left-wing state. Every single member of its congressional delegation is a Democrat. It went for Obama by 26 percentage points. It has sent reflexive statists like Ted Kennedy and John Kerry to the Senate for decades. Yes, Scott Brown was a good candidate, but good GOP candidates normally lose 60-40 in the Bay State. It's hard to draw any conclusion other than the fact that voters were registering disapproval with what is happening in Washington, and healthcare was at the top of their list.

2. Democrats should ram through government-run healthcare. I hope they don't, of course, but smart Democrats understand that Obamacare is not (and never has been) about health care, but rather about creating more dependency on government. Yes, Democrats will lose more seats in November if they move forward, but they presumably will strengthen their long-term political status by making more people rely on politicians.

3. Obama is not a centrist. A few people were under the illusion that Barack Obama was something other than a doctrinaire statist. This always struck me as absurd, since a quick look at the NTU vote ratings reveals that he received an "F" every single year and generally was graded as being worse than even Ted Kennedy. I suppose the charitable interpretation of why people got snookered is that Obama's rhetoric during the presidential election was very bland and he projects a thoughtful demeanor. But so what? Obama and his strategists knew the Republicans had spent their way into a ditch and that voters wanted a change. Obama simply had to appear semi-reasonable to win, and that's exactly what he did. Ever since he took office, though, he has pushed to make government bigger and more oppressive. Voters don't like that. They rejected Republicans for being for big government. Now they're rejecting Democrats for the same reason.

4. The GOP succeeds when it presents a conservative alternative. Scott Brown is presumably not another Jim DeMint, but his campaign rhetoric was very conservative by Massachusetts standards: For lower taxes, against government-run healthcare, for less spending. That message has worked very well for the GOP when it is a national theme, as it was in 1980 and 1994. When Republicans try to be "compassionate" (with other people's money, of course), by contrast, they get debacles like what happened in 1992, 2006 and 2008. This doesn't mean Republicans will always win by being conservative and it doesn't mean squishy Republicans never win, but it does mean that the GOP's long-term success is tied to whether taxpayers perceive Republicans as protecting America from big government. I'm not sure the national GOP really understands this, but they're at least pretending to be for small government again. That's a start.

Tuesday, January 19, 2010

The First Shot of the Second American Revolution

I must confess that I didn't think Scott Brown was going to win the election in Massachusetts, even though I predicted a 50-48 GOP victory. This is a monumental development. It doesn't necessarily mean Obamacare can be stopped. And it may be that Brown turns out to be a big government squish, like Snowe in Maine. But his election does show that the American people do not want Obama's statist agenda. The interesting thing to watch now is whether Democrats flee Obama's sinking ship and scuttle the statist healthcare scheme. Here's an AP report on Brown's upset:

In an epic upset in liberal Massachusetts, Republican Scott Brown rode a wave of voter anger to defeat Democrat Martha Coakley in a U.S. Senate election Tuesday that left President Barack Obama's health care overhaul in doubt and marred the end of his first year in office. The loss by the once-favored Coakley for the seat that the late Sen. Edward M. Kennedy held for nearly half a century signaled big political problems for the president's party this fall when House, Senate and gubernatorial candidates are on the ballot nationwide. More immediately, Brown will become the 41st Republican in the 100-member Senate, which could allow the GOP to block the president's health care legislation and the rest of Obama's agenda. Democrats needed Coakley to win for a 60th vote to thwart Republican filibusters.

Germany Opposes EU-Wide Tax

German politicians are notoriously bad on European issues, almost always pushing for more centralization, harmonization, and bureaucracy. So it is surprising to see that the German government is rejecting a Luxembourg proposal to give the EU a direct source of tax revenue. This may just be a case of a stopped clock being right twice a day, but it is refreshing to see Germany on the right side for once. The Wall Street Journal reports on the good news:

Germany opposes a proposal to introduce a European Union-wide tax because the bloc already has sufficient funds, the finance ministry said Monday. The comments come ahead of a meeting of euro-zone and EU finance ministers in Brussels later Monday and Tuesday. Ministers are expected to discuss economic policy coordination. Luxembourg's Finance Minister Luc Frieden has proposed the introduction of a European tax, with proceeds going directly into the EU budget. ...The German finance ministry said "such a tax is not necessary because existing funding rules already ensure sufficient own funds for the EU." The ministry said such a tax would complicate the existing financial funding system of the EU, which is based on revenues from custom duties and the EU's shares in the member states' value-added tax and gross national income.

Election Prediction

Regular readers of this blog already know that markets are not always right. Our message is the more limited argument that markets simply do the best job of creating wealth and maximizing liberty (especially compared to government!).

So with this caveat in mind, the market prediction at intrade this morning says that Scott Brown has a 75.0 percent chance of winning today's Senate race in Massachusetts and Martha Coakley has a 26.5 percent chance (yes, I realize that those numbers add up to more than 100 percent, but these numbers are the result of independent bets on the likelihood of either candidate winning).

A Brown victory does not guarantee that Obama's government-run healthcare scheme will be defeated. As a matter of fact, it's likely that something awful will get enacted regardless of what happens in Massachusetts. But the chances of stopping this fiscal and health nightmare will be much greater if Democratic Senators and Representatives become more scared that voters will throw them out in November.

For what it's worth, I'm predicting Brown, 51-48.

Monday, January 18, 2010

The American People Reject Big Government

According to a Washington Post story, Obama wants to be the anti-Reagan, a President who permanently changes the American people's attitude about big government. Obama's efforts to make statism popular, however, are not exactly working out as he hoped. According to a new Washington Post-ABC poll, the American people have become much more libertarian when asked if that want a bigger government with more services or a smaller government with fewer services. But this is just part of the story. As David Boaz points out, more accurate polling data, which mentions that bigger government also means higher taxes, reveals that support for small government becomes even more pronounced. Here's an excerpt from the Post story:

Could he restore confidence in government, even as he was proposing the biggest federal intervention in the domestic economy in a generation? ...As Obama marks the first anniversary of his inauguration on Wednesday, that question remains one of the most politically charged of his presidency -- and central to the politics of this election year -- and will hinge on how Americans judge Obama and his policies. Will the public conclude that his policies worked, however much they may cost and however much they may entail more government intervention in the economy? Or will they regard his agenda as intrusive and ineffective big government? What steps may Obama take to alleviate public discontent over these first-year decisions? ...Obama receives mixed reviews for his first-year performance, according to a new Washington Post-ABC News poll. His approval rating stands at 53 percent, with 44 percent disapproving. Among independents, 49 percent approve, the lowest of any of his recent predecessors at this point in their presidencies. ...The poll also shows how much ground Obama has lost during his first year of trying to convince the public that more government is the answer to the country's problems. By 58 percent to 38 percent, Americans said they prefer smaller government and fewer services to larger government with more services. Since he won the Democratic nomination in June 2008, the margin between those favoring smaller over larger government has moved in Post-ABC polls from five points to 20 points.

An Omen for America?

This has a similar title to an earlier blog post, but the topic is completely different. The U.K.-based Times has a fascinating story about how how tax rates are driving business out of London, thus showing the insanity of class-warfare tax policy. Two excerpts are must reading, though the message will fall on deaf ears at the White House. The first looks at the big picture, noting how Switlzerland is very attractive because of reasonable tax rates and political stability:

As the financial weather worsens in Britain — bankers are being taxed 50% on this year’s bonuses, and from April half of any income over £150,000 will go straight to the Inland Revenue — many of our super-rich are threatening to abandon London. Discreet advisers in Geneva, Zurich and the high-end Swiss ski resorts say that a steady trickle of wealthy Brits have either made the move or are strongly considering a new life in the mountains. In December alone eight British-based hedge funds decided to move there. “They want to be out of the UK by April,” says David Butler of Kinetic, which provides services for hedge funds. “There’s a lot of momentum to leave. Geneva is the most popular choice. These people are a kind of club: they go where the others are.” He predicts that up to 150 funds will follow. ...Switzerland is also enormously stable: 100-year mortgages are common, property is a safe investment, and the average income is $68,000, against $44,000 in the UK. The Swiss are unlikely to bring in the kind of arbitrary tax changes that have made London’s bankers so jumpy. ...The fear for the British Treasury is that a big international investment bank might relocate. So far, that has not happened. But Bob Diamond of Barclays Capital, one of Britain’s highest-paid bankers, warned last month: “Both financial capital and human capital are extremely mobile.”
The second excerpt is based on two conversations with former British residents, both of whom are no longer being raped by Gordon Brown and his crowd of redistributionists. This should be a warning to Obama and his crowd, but England actually is not as bad as America in one key respect - investors and entrepreneurs can leave the United Kingdom without being ransacked at the border. People leaving the United States, by contrast, has subject to onerous exit taxes (disturbingly akin to the policies imposed by the Soviet Union and Nazi Germany, albeit motivated by greed and envy rather than hate):

As a British citizen, “I’d get totally clobbered by the taxman if I came back to London”, he admits. He is not wrong. Mike Warburton, tax director at Grant Thornton accountants, says: “If he returned to the UK, he would be taxed on his worldwide income and gains as a UK resident domiciled individual.” Say James has £40m invested, and is getting a paltry return of 2% a year (£800,000); it would give him a tax bill of around £400,000. He would also be clobbered, says Warburton, “on income and gains arising after his return to the UK from any capital built up while he was overseas, and gains are taxable at 18%. Even if he put the capital into an offshore trust, he would still be caught by tax-avoidance rules in the UK. Not an appealing prospect.” In Switzerland, by contrast, life is sweet. All that is required is a deal with the local canton to pay a flat yearly forfait (forfeit). Happily for bankers, it is all negotiable: the better connected your tax lawyer is with the local canton official, the better your deal. The Swiss are famously good at keeping financial secrets, so there is no published list of which canton charges what, but the going rate in Geneva, the most expensive one, is about £180,000 a year. ...Another option is to become a resident, which is fairly simple as long as you are rich and from America or the EU, then pay tax at the local rates, which are linked to the value of property and are typically only 20% of income. ...Might her London banking friends follow her out here? “Sure, why not?” she says, sipping white wine. “They’re all pretty pissed off at the tax on bonuses and the new top rate of 50%. People like me, we’re motivated by money. If you take so much away in tax, there’s no incentive.” Just look at the tax on a bonus of £200,000. First, there is the new bonus tax of 50%, which costs the company another £87,500. Then there is employer’s National Insurance of £25,600. Then the employee pays income tax at 40% on the £200,000, which is £80,000, and employee’s NI, another £2,000. So the total tax is a whopping £195,100. This represents a 98% tax burden on the net payment of £200,000 to the employee.

Omen for Massachusetts?

As reported by the Financial Times, Sebastian Pinera, the brother of Cato's Jose Pinera, was elected President of Chile this weekend. The press is viewing Pinera's election through the right-left lens of Latin American politics, but this is a bit misleading since Chile has remained a very pro-market nation during nearly two decades of supposedly left-wing rule. According to Economic Freedom of the World (see page 10), Chile was the world's fifth-most free-market nation as of 2007, ranking above the United States, Australia, and Estonia. The new president hopefully will push Chile even farther in the right direction, but the real lesson from Chile is that free markets boost prosperity regardless of which political party is in charge. That being said, hopefully this is a harbinger of good election results elsewhere in the world:

Sebastián Piñera, a billionaire businessman, has defeated Chile’s ruling leftist coalition to return the right to power for the first time since the return of democracy after General Augusto Pinochet’s dictatorship in 1990. With 99.2 per cent of the vote counted, giving Mr Piñera a lead of 51.61 per cent to Mr Frei’s 48.38 per cent, the former president conceded defeat. It was the right’s first victory at the ballot box in Chile since 1958 and bucks a South American trend with the left in power in many countries from Venezuela to Brazil to Argentina.

Sunday, January 17, 2010

Sounds Like the School Bureaucrats Need Counseling, not the Student

This story from San Diego seems like a typical case of bureaucratic over-reaction. A school vice principal decided that a student's science project may have been a bomb, so he set in motion events leading to a school evacuation. Without knowing further details, that decision may have been at least somewhat reasonable, but the part of the story that seems completely absurd is that the authorities (not clear whether the story is talking about school authorities or local cops, or whoever) want the student and parents to get counseling - even though it was determined that the science project was harmless and that a search of the home revealed nothing hazardous. I first saw this story on Instapundit and I fully agree that the student's family should sue the school:

Students were evacuated from Millennial Tech Magnet Middle School in the Chollas View neighborhood Friday afternoon after an 11-year-old student brought a personal science project that he had been making at home to school, authorities said. ...The school, which has about 440 students in grades 6 to 8 and emphasizes technology skills, was initially put on lockdown while authorities responded. Luque said the project was made of an empty half-liter Gatorade bottle with some wires and other electrical components attached. There was no substance inside. ...A MAST robot took pictures of the device and X-rays were evaluated. About 3 p.m., the device was determined to be harmless, Luque said. Luque said the project was intended to be a type of motion-detector device. Both the student and his parents were "very cooperative" with authorities, Luque said. He said fire officials also went to the student's home and checked the garage to make sure items there were neither harmful nor explosive. "There was nothing hazardous at the house," Luque said. The student will not be prosecuted, but authorities were recommending that he and his parents get counseling, the spokesman said. The student violated school policies, but there was no criminal intent, Luque said. ...Luque said both the student and his parents were extremely upset. "He was very shaken by the whole situation, as were his parents," Luque said.

Saturday, January 16, 2010

Want to Know Who Will Win in Massachusetts?

Everyone in Washington is fixated on the special election in Massachusetts next Tuesday to replace Ted Kennedy. Some polls now show the Republican, Scott Brown, in the lead, which is a shocking result even if Martha Coakley eventually wins. A GOP victory doubtlessly would make Democrats very nervous about ramming through government-run health care, so Republicans are celebrating new polling data showing Brown in the lead.

But if you want to know who is going to win (or at least have a very informed opinion), don't pay attention to polls. Instead, check out the Intrade betting market, which predicts winners based on people putting real money at risk. Intrade does show a large shift away from Coakley in the last week, but it's still a very close battle.

Here's some more interesting Intrade data showing the betting on the 2008 presidential election. It shows that McCain actually took the lead right after the GOP convention, boosted perhaps by the Palin selection. But when McCain rushed to Washington to support the bailout - and made a public spectacle of screwing over taxpayers - his numbers fell through the floor and never recovered.

Greetings from the Cayman Islands

I'm now relaxing in the warm sunshine of the Cayman Islands, having given a speech to an International Funds Conference.

My speech was a standard critique of high-tax governments and international bureaucracies for trying stifle tax competition and create a global tax cartel - sort of an OPEC for politicians.

The most interesting part of the conference was when an expert from Hong Kong equated the tax system of the United States with North Korea and Libya. A bit of hyperbole, to be sure, but our tax system has totalitarian aspects that are far worse than anything found even in places such as France. And now Obama wants to further increase the power of the IRS and strip away even more of our freedoms.

For those who want more information on the topic, here's my video on tax competition, followed by a video castigating Obama's anti-tax haven demagoguery.



Friday, January 15, 2010

America vs. Europe

The blogosphere has been buzzing with a debate on whether America or Europe is more prosperous. A partial list of contestants includes Jim Manzi, Paul Krugman, Matt Welch, Megan McArdle, Matthew Yglesias, and Tino (don't know who he is, but his blog has lots of good info).

I've addressed this issue in the past, with detailed comparisons in my Cato study on the Nordic Model, as well as a paper for the Heritage Foundation looking at Fiscal Policy Lessons from Europe.

I'm frankly shocked when people claim Europe is as rich as the United States, for the simple reason that the data showing otherwise is so abundant. The following charts, both from presumably impeccable sources, should be more than enough to end the argument. The first one is from OECD data (see page 6), showing average individual consumption per capita. I compare America to the EU-15 (Western Europe), but then also add Norway and Switzerland to the mix to boost the European score.

The next bit of data comes from a Danish Finance Ministry study (see page 3), and it shows another measure of individual consumption per capita. Once again, I only look at Western Europe, as defined by the EU-15 plus Norway and Swtizerland. And I even include consumption financed by government transfers. Nonetheless, the gap between US and European living standards is stunning.

The data for both these charts is from earlier this decade, but as this up-to-date OECD data on economic performance indicates, the United States certainly has not lost any ground relative to Western Europe in recent years. Last but not least, this post is not an attack on Western Europe, which is a very wealthy region by global standards. But the data certainly show that America is even richer. And since the biggest policy difference between the US and Western Europe is the burden of government, this certainly suggests that the Bush-Obama policies of bigger government and more intervention may not be a path to more prosperity.

One final comment. Luxembourg is the one Western European nation that ranks above the United States according to both the OECD and the Danish Finance Ministry. If any statists want to suggest that we mimic Luxembourg's tax haven policies, you can count on my support.

IRS Commissioner Uses Professional Tax Preparer

The internal revenue codes is so mind-numbingly complex that even the head of the IRS uses a professional tax preparer. But that's hardly a surprise. What is a bit shocking, though, is that Commissioner Shulman has the gall to claim that he favors tax code simplification when his IRS has been promulgating rules and regulations to make the tax system even more onerous and oppressive. The Hill has the details of Shulman's confession:

During an interview on C-SPAN's "Newsmakers" program that aired on Sunday, Shulman said he uses a tax preparer for his own returns. "I've used one for years. I find it convenient. I find the tax code complex so I use a preparer," Shulman said. Pressed on how he would make the tax code simpler, Shulman responded, "I don't write the tax laws. Congress writes the tax laws so that's a whole different discussion." ...Later in the C-SPAN interview, Shulman downplayed his use of a tax preparer, saying he has used one for 10 years. He noted that he and President Barack Obama are proponents of simplifying the tax code. Shulman said about 60 percent of Americans use tax preparers and another 20 percent use software to file their returns.

Thursday, January 14, 2010

Does TSA Stand for Three Stooges Association?

The government is so incompetent that it never put the Christmas-day underwear-bomber on the no-fly list - even though the nutjob's father reported his son't radical views to American authorities. But the TSA for several years has targeted Mikey Hicks, a cub scout from New Jersey who is eight years old. Nobody got fired after 9-11. Nobody got fired for this latest screw-up. Must be nice to have a government job:

Travel is a hassle for an 8-year-old Cub Scout from New Jersey. That's because Mikey Hicks shares the same name of a person who has drawn the suspicion of the Homeland Security Department. His mother tells The New York Times she sensed trouble when her son was a baby and she couldn't get a seat for him at a Florida airport. She says airline officials explained his name "was on the list." ...TSA officials have been under fire of late, after the failed Christmas Day terror plot aboard a U.S.-bound plane and a complete security breach led to a chaotic breakdown at Newark Liberty International Airport.

Tom Sowell vs. Empty Pseudo-Intellectualism

Do stores in low-income neighborhoods charge higher prices because of racism, or greed? That's what some academics argue, but Tom Sowell points out that there are real economic factors that drive priciing decisions. The example below is about stores, but his IBD column also has a great example using financial services:

Low-income neighborhoods tend to have their own economic characteristics, one of the most salient of which is that prices tend to be higher there than in other neighborhoods. Intellectuals' discussions of the fact that "the poor pay more" are often indignant indictments and condemnations of those who charge higher prices to people who can least afford to pay them. The causes of those high prices are implicitly assumed to originate with those who charge them, and in particular to be due to malign dispositions such as "greed," "racism" and the like. ...Among the underlying realities in many low-income neighborhoods are higher rates of crime, vandalism and violence, as well as a lack of the economic prerequisites for the economies of scale which enable big chain stores to charge lower prices and make profits on higher rates of inventory turnover in more affluent neighborhoods. But such mundane considerations do not present intellectuals with either an opportunity to display their special kind of knowledge or an opportunity to display their presumptions of superior virtue by condemning others. ...With intellectuals who consider themselves knowledgeable, as well as compassionate, it would seldom occur to them to regard themselves as interfering with things of which they are very ignorant — and doing so at costs imposed on people far less fortunate than themselves.

Wednesday, January 13, 2010

The English Have Gone Bonkers

This blog periodically makes fun of England (even though it is one of my favorite nations) for big government and political correctness, but these two stories caused my jaw to drop. First, the Daily Mail reports that a man was jailed for several hours because he was falsely suspected of writing an email that indirectly may have made an un-PC reference to Gypsies. Yes, you read correctly. It is a crime to utter bad thoughts in the nation that gave the world the Magna Carta. To add insult to injury, the investigation cost taxpayers more than $15,000:

A...businessman was arrested at home in front of his wife and young son over an email which council officials deemed ‘offensive’ to gipsies – but which he had not even written. ...The 45-year-old IT boss was held in a police cell for four hours until it was established he had nothing to do with the email, which had been sent by one of his then workers, Paul Osmond. But police had taken his DNA and later confirmed they would be holding it indefinitely. The businessman, who has asked not to be named, was also fingerprinted in the police investigation estimated to have cost taxpayers up to £12,000. He said two uniformed officers came to his house on a Sunday afternoon and said he would be handcuffed if he did not accompany them to the police station. His computer and other internet equipment were also seized.
This next story may be even crazier. The Guardian reports that a woman - alone with her daughter inside her own home - was warned by police for waving a knife at some thugs who were looking in her window. The police (and this is not a joke) told her that you're not allowed to protect yourself against an intruder. Gee, that must be very comforting for the rape, assault, and burglary victims in the United Kingdom. Let's pray this level of idiocy does not cross the Atlantic:

Myleene Klass has been warned by police for waving a knife at teenagers who were peering into a window of her house late at night. Klass was in the kitchen with her daughter upstairs when she spotted the youths in her garden just after midnight on Friday. She grabbed a knife and banged the windows before they ran away. Hertfordshire police warned her she should not have used a knife to scare off the youths because carrying an "offensive weapon", even in her own home, was illegal. ...Klass's spokesman, Jonathan Shalit, ...told the Sunday Telegraph. "...the police explained to her that even if you're at home alone and you have an intruder, you are not allowed to protect yourself."