Freedom Line Blog

Below is one of the latest cartoons from two-time Pulitzer Prize-winner Michael Ramirez.

View more of Michael Ramirez’s cartoons on CFIF’s website here.

The ‘Occupy’ protests that have been springing up around the nation aren’t particularly well-defined. As best I can tell, there’s a visceral aversion to capitalism, accompanied by an endless array of non sequitur liberal causes (one protester’s sign at Occupy Los Angeles read “end heterosexism”).  In truth, however, this seems to be first and foremost an aesthetic movement aimed at recapturing the grimy romance of the halcyon years of protest in the Vietnam era. As such, it defines itself primarily by its opposition to institutional power, capaciously defined.

That’s why it’s so ironic that the movement now has the backing of one of the most powerful — and malign — special interests in the nation. From the San Francisco Chronicle:

The California Teachers Association jumped on the Occupy Wall Street bandwagon Thursday, throwing the weight of 325,000 state teachers behind the movement for “tax fairness and against corporate greed.”

About that last bit: the CTA, which is one of the most nation’s destructive teachers unions, knows a thing or two about big money. It’s spent over $210 million in the course of the last decade to influence California state government — more than “big oil”, “big tobacco”, and “big pharma” combined. The results? Defeats for school voucher propositions, teacher accountability measures, and paycheck protection for educators. Not to mention that California — formerly a national leader in the classroom — now ranks among the bottom five American states in most education metrics.

Corruption, nest-feathering, and sticking it to the little guy. Sound familiar, Occupy protesters? Don’t look know, but you just got in bed with The Man.

Aside from being unconstitutional, Obamacare is also financially unsustainable.  Of course, everyone except the White House and their drones at HHS acknowledged this when the law passed.  Now, fiscal reality has forced the Obama Administration to scrap a program that was supposed to provide half of the fallacious budget savings from passing Obamacare.  Per Phillip Klein of the DC Examiner:

As Obamacare’s critics noted at the time, Democrats’ deficit reduction claims were based on a series of accounting gimmicks. One of the most obvious was the inclusion of the Community Living Assistance and Support Services Act, a program that was slated to collect five years of premiums before paying out any benefits. Though it was unsustainable over time, on paper it produced surpluses during the Congressional Budget Office’s 10-year budget window.

At the time of final passage, the CBO found that the health care law would reduce deficits by $143 billion, and $70 billion of that was attributable to the CLASS program.

Earlier, I noted a new HHS report recomending against implementing the program. HHS Secretary Kathleen Sebelius has now sent a letter to Congress conceding that there’s no path forward.

Republicans are still rightly moving to formally repeal the CLASS Act from federal law.  Let’s hope they keep pressing for a complete elimination.

Perhaps a head nod to Hot Shots fans will lessen the depressing (but by no means surprising) analysis from the Sacramento Bee’s Alan Autry on the dismal failure of Jerry Brown’s resurrected governorship:

The governor has signed nearly 745 bills, most aimed at yet more micromanagement of every aspect of our lives from Sacramento or at satisfying the interests of the organizations that funded his election. The Los Angeles Times said, “When the dust settled on Gov. Brown’s first legislative session in nearly three decades, no group had won more than organized labor.”

There you have it, the product of Brown’s first year in office: signing off on campaign payoff obligations, more Sacramento micromanagement, vetoing of bipartisan common sense reforms to increase government efficiency and effectiveness, procrastinating on regulatory reforms to help job creation, and signing a gut-and-amend bill that will ensure even more partisan gridlock – this from the man who ran on breaking the “morass of poisonous partisanship.”

The canary is dead and the coalmine is collapsing.  If you run a business and you have an option outside of California – take it.

The hits just keep on coming at Republican presidential candidate Rick Perry.  The governor of Texas is in increasingly hot water as he tries to parry away charges that he’s soft on illegal immigration and insider tax breaks for friendly corporations.

In Texas, Tea Party activists are demanding that Perry sign an executive order or call a special session of the state legislature to pass an Arizona-style law authorizing state police to check a person’s immigration status.  On the business front, Perry’s use of a governor-controlled “emerging technology fund” is drawing criticism for producing more misses than hits for taxpayers told that tax holidays for some would create jobs for many others.

Perry can’t run away from his record.  He can, however, enhance it with better defenses of it.

We’ll see if he’s up to the challenge.

Follow the links. Rick Santorum is right.

This is, I guess, my week to focus on Herman Cain. Jennifer Rubin does a good job providing the right focuses (foci?) this morning. As I wrote last week, Cain merits some serious vetting. I really really like the guy; I’ve liked most of what I’ve seen from him for 17 years now. I think his basic economic proclivities and understandings are right on target (even if I have doubts about the long-term impact of 9-9-9). But he’s running for president. It’s a huge job. Is he ready for it? I certainly think he has some of the experience needed, and all the intelligence needed, and the character needed, and most of the right principles needed. But is “some” of the experience enough? And is he temperamentally suited to political give and take while still maintaining his principles? Some people do the principles without the politics; some do the politics without the principles; but a great president must be able to do both.

I don’t know the answers to these questions. I think he may have the stuff of greatness in him. But the vetting must be thorough.

In this week’s Freedom Minute, CFIF’s Renee Giachino contrasts the “Occupy Wall Street” protests with those of the Tea Party and highlights the mainstream media’s double standard in its coverage of the two.

So Warren Buffett, who falsely claims that the wealthiest Americans pay lower tax rates than their receptionists, finally got around to disclosing (some) of his tax information.

It turns out that he paid approximately $7 million in federal income taxes from a taxable income of approximately $40 million.  That’s approximately 17.5%, substantially more than the 12% rate paid by the middle quintile of taxpayers in America, according to the Tax Policy Center.  Interestingly, Buffett’s $40 million taxable income was also significantly smaller than his total $63 million in gross income, but he apparently didn’t bother to explain that $23 million gap.

On top of all that, Buffett also apparently didn’t explain why he took any deductions at all, or why he didn’t simply pay more to the federal government if he felt that he was undertaxed.  Nobody is stopping him from putting his money where his mouth is, after all.  So the evidence suggests that Buffett is not only incorrect, but hypocritical.

In my column this week, I noted that the very man who provided the official “scoring” for Herman Cain’s 9-9-9 plan, the estimable Gary Robbins, had recently co-written a Wall Street Journal column in which he blasted the idea of a Value Added Tax (VAT) because of its proclivity for serving as in invitation to bigger government. And, since two-thirds of Cain’s plan (in combination) seemed to me to be a functional equivalent of a VAT, I thought Robbins’ critique would largely apply to Cain’s plan.

Well, I briefly interviewed Mr. Robbins today. (Politico did the same yesterday, but my questions were more precise.) His comments seemed, to me at least, to be absolutely right on target, both as to the strengths and weaknesses of Cain’s plan. Indeed, I don’t think I can disagree with a word Mr. Robbins said.

For instance: “If you cut out all the special treatments [in the tax code], you can cut the rate an awful lot. That’s a valuable message.” Cain, he said, merits praise for putting that message front and center in the campaign: “Give Mr. Cain the credit for injecting into the campaign a better way to go.  You tax money once and only once.” That’s a great prescription, he said, for growth.

So what about the idea that the nine percent business transaction tax combined with a nine percent sales tax act (in concert) very much like a VAT?  Robbins agreed. And he said he is indeed against a VAT, not so much in theory but in practice because of how it has allowed European governments to grow too large and unwieldy. But, he said, that’s in part because a VAT in effect “hides” so much of the taxes because they are built into each transaction, whereas a sales tax is highly visible.  Moreover, he said, the very public aspect of tying each of the “nines” together in Cain’s plan would mean that the nines are so embedded in the public mind that any attempt to fiddle with the formula would cause a public backlash. And, he said, “If you can keep [all three ‘nines’] tied together, it becomes really difficult to raise them” — because if you raise one, you’ll need to raise all three, and the public would rebel.

Robbins clarified that he did not design Cain’s plan; he was simply asked to “score” it to see what its revenue effects would be — and he did, indeed, find that it would be revenue neutral.

Now this is a key point: DESPITE what Herman Cain himself said in the debate the other day (raising questions as to whether Cain fully grasps the numbers behind his own plan), Robbins did NOT rely on “dynamic” scoring to conclude that it would be revenue neutral. While we supply-siders believe in dynamic scoring, the media doesn’t, and if Cain’s plan would not raise enough money without taking dynamic effects into account, the media and the Obamites would excoriate it for further starving a government already deeply in debt.

Instead, Robbins scored it using “absolutely static” analysis, meaning his scoring should be unassailable from even halfway-fair-minded critics. Indeed, he told me that scored dynamically, Cain’s plan would bring in probably 15 percent more revenue than the current tax system does.

Conservatives who understand these things should welcome, not balk at, added revenues, if those revenues are generated by economic growth rather than by raising rates — rather than, in other words, higher burdens on individuals or on investments.  Even Jack Kemp agreed that the government needs more revenues in order to solve its deficit/debt problems. It just shouldn’t get those higher revenues by burdening economic growth and job creation.

All of which leads to Robbins’ conclusion: “I don’t think in this form Cain’s plan is bad; I myself would do it differently.”

What do I think? In theory, I would take Cain’s plan in a heartbeat over the current system. In practice, I think it would be a tremendous short-term improvement, with serious long-term risks. During the debate on Tuesday, one of Cain’s weakest answers was about how he would ensure that 9-9-9 didn’t lead to higher rates later on:

“The first deterrent is that I’m going to ask the United States Congress to include a two-thirds majority vote before they can raise the 9-9-9 tax. The second deterrent is the fact that because it is visible, simple, and transparent, the American people are going to be the ones to hold Congress’ feet to the fire. The third deterrent is that I will be president and I won’t sign anything that raises the 9-9-9.”

While the second argument, which mirrors that of Robbins’, makes sense, the other two don’t even come close to withstanding scrutiny. Does Cain not know the Constitution? There is no way, short of a constitutional amendment, to require a two-thirds vote to raise a tax. Our system, quite rightly, won’t allow it. One Congress cannot bind another to procedures that contradict the Constitution, and a two-thirds requirement to pass a bill (other than to override a veto) is not constitutional.

Second, the problem isn’t that anybody fears Cain would allow 9-9-9 to be raised; the problem is that people fear what would happen in the future. Unless Cain will be president in perpetuity, world without end, amen, then his pledge not to sign such a tax hike is utterly meaningless.

CONCLUSION: Cain is an appealing man with an appealing plan. But it’s a plan fraught with practical drawbacks, or at least potential ones. It’s a bit of a high-wire act, one which might not withstand buffeting from the political winds.

In my column this week, I argued that members of Congress from both sides of the aisle are playing with fire in their attempt to prevent China’s “currency manipulation.” The problem, I contended, is actually much smaller than the damage that could be engendered by the proposed remedy; damage that could include a trade war, driving up prices throughout the American economy.

In the column’s coda, I noted:

The antidote to America’s economic ills won’t come from engaging in trade wars. It will come from reducing the debt and making Chinese credit irrelevant; strengthening incentives for entrepreneurs and job creators, and expanding exactly the kind of international trade that this proposal will derail.

Now comes news that House Minority Leader (the three sweetest words in the English language when appearing before her name) Nancy Pelosi not only wants to shut down trade via the China bill, she also wants to gut  free trade agreements with Colombia, Panama, and South Korea that have already been delayed by nearly half a decade. Per Politico:

House Minority Leader Nancy Pelosi took to the floor Wednesday to urge lawmakers to abandon work on three pending free-trade agreements until they take up a bill dealing with China’s manipulation of its currency.

Both the House and Senate are expected to pass the trade deals with Colombia, Panama and South Korea with bipartisan majorities later Wednesday. But the California Democrat, who’s been critical of the pacts, said in a fiery speech that targeting currency manipulation would ultimately benefit more U.S. workers than the free-trade agreements.

At least give the erstwhile speaker credit for consistency. Passing the currency manipulation bill and blocking the free trade agreements would have exactly the same effect: keeping prices artificially high for American businesses and consumers, making it harder to sell American goods overseas, and further delaying meaningful economic recovery. Reviewing that list, it quickly becomes apparent that Nancy Pelosi is a much bigger threat to the state of the American economy than the value of the yuan.

Well, sort of. One of the most common complaints from the unwashed masses gathered in urban centers throughout the nation has been the astronomical cost of their student debt. And they have a point. As Jenna Johnson notes at the Washington Post:

Two-thirds of the Class of 2008, graduated with debt and an average of $24,651 in student loans. Since then, graduates have faced some of the worst job markets in recent history. In August 2010, the amount of student loan debt ($829.785 billion) outpaced credit card debt ($826.5 billion) for the first time.

The cost of a good college education is probably never going to be cheap. But that doesn’t mean that it has to be as expensive as it is now. The dilemma for the union-backed, government-expanding protesters, however, is that it is precisely those two forces — organized labor and big government — that have driven the inflated costs of a college degree. As Conn Carroll writes at the DC Examiner

[The] University of California chapter of the American Federation of Teachers is doing all they can to make it harder for the state to lower tuition by blocking the development of online courses:

“We believe that if courses are moved online, they will most likely be the classes currently taught by lecturers,” reads a brief declaration against online education on the website of UC-AFT, the University of California chapter of the American Federation of Teachers, “and so we will use our collective bargaining power to make sure that this move to distance education is done in a fair and just way for our members.”

More convenience, less cost, better professors (otherwise you’ll just take a different course with a more capable instructor), and theoretically limitless access. What’s not to love? Plenty, if you’re tenured mediocrity is on the line. No word yet on any concern for the students from the AFT.

Below is one of the latest cartoons from two-time Pulitzer Prize-winner Michael Ramirez.

View more of Michael Ramirez’s cartoons on CFIF’s website here.

I’ve written at length here at CFIF about the doomsday scenario that will ensue should the congressional supercommittee fail to pass at least $1.2 trillion in debt reduction by its November 23 deadline. Because of an outrageous provision in last summer’s debt ceiling agreement, a fail to act would produce defense cuts that could end up cutting as much as $1 trillion from American’s national security budget.

While the supercommittee’s broad goal of debt reduction is laudable, congressional Democrats are digging in their heels and asserting that the real problem is that Americans are being taxed too lightly, not that Washington is spending too much. From the Associated Press:

The supercommittee is struggling. After weeks of secret meetings, the 12-member deficit-cutting panel established under last summer’s budget and debt deal appears no closer to a breakthrough than when talks began last month…

Democrats won’t go for an agreement that doesn’t include new tax revenue; Republicans are just as ardently antitax. The impasse over revenues means that Democrats won’t agree to cuts to popular entitlement programs like Medicare…

 “There’s been no movement on (new) revenues, and I’m not sure the Democrats will agree to anything without revenues,” said a Democratic lobbyist who required anonymity to speak candidly.

Let’s be clear here: either scenario — either massive cuts to the Pentagon’s budget or higher taxes — would imperil America’s ability to maintain its global leadership position. The former would gut our defense resources now, while the latter would hollow out our ability to generate the economic growth that will be necessary to fund our military in the future.

On yesterday’s Meet the Press, Rep. Paul Ryan (R-WI) demonstrated how to reframe quickly just about any debate on taxes or the economy into one that favors free markets and opportunities for everyone:

“I don’t worry about people who are already rich. I worry about getting people to become successful,” Ryan said Sunday on NBC’s “Meet the Press.” “Removing those barriers so that people who have never seen success before can actually become successful. … This redistribution idea of pinning people against each other does not work. It’s divisive, and it hardly gives us the kind of attitude we want for businesses to take risks so we can succeed in the future.”

Conservatives need more of this kind of rhetoric from leading politicians.  Let’s hope the eventual GOP nominee lifts Ryan’s lines to give an inspirational lift to what will surely be a withering attack on the failed Obama economy.

According to an article in the journal Regulation, there are two ways to regulate the flow of administrative agency rules.  The “downstream” approach tries to “rein in onerous regulations after they have been promulgated.”  The “upstream” method allows Congress “to restrict administrative agencies before giving them rulemaking authority during the legislative process.”  The idea is to get fewer and less costly regulations with five key reforms:

1)      Require agencies to review existing regulations for inefficiency at a set time after implementation (which sounds like something similar to Texas’ Sunset process)

2)      Require agencies to eliminate duplicative rules if a new regulation would supersede an older one

3)      Limit the total number of regulations during implementation of any new law (an attempt to make rule writers more cautious when spending their regulatory chips)

4)      Establish a regulatory “pay-as-you-go” that rescinds one old rule for every new rule implemented (the authors also argue for a proportionality requirement that ensures against an economy-killing rule replacing a forgotten restriction no longer necessary)

5)      Prohibit new regulations where costs exceed benefits

The key perk of the last proposal is requiring agencies to engage in a formal cost-benefit analysis during the implementation phase.  That helps put the agency on record – and the voting public on notice – of the true impact about to hit before it’s too late.

Check out the short (4 page), tightly-argued article here.

H/T: Cato Institute

Things were already pretty bad in California, as it hurtles down the fast track toward junk bond status and a Greek-style financial collapse.  But instead of even tapping the brakes, its political leaders are flooring the accelerator.

On Saturday, Governor Moonbeam – pardon, Jerry Brown – signed into law taxpayer-funded financial aid to illegal immigrants.  Never mind that undocumented students can’t even legally work in the state, or that fewer financial aid dollars will now be available to legal residents.  No, what California’s political leaders think the state needs is another new government benefit.

Compounding that assault against California taxpayers, Gov. Brown today signed A.B. 144, which prohibits openly carrying firearms in public – even if they’re unloaded.  The bill also prohibits “allowing a person to bring an open and exposed unloaded handgun into the vehicle,” along with an array of other new restrictions.  While other states continue to allow greater Second Amendment freedoms and enjoy lower crime rates as a result, California opts for the European model (where firearms bans have led to higher crime).

After years of policy mistakes like these, it’s no wonder the formerly golden state failed to gain a new House seat for the first time since 1920.

I join Ashton in saying that Eric Holder must go. I just think that he needs to take the whole Obama team down with him, for massive corruption. Holder and his ilk are race hustlers.  They violate the law with impunity, on more fronts than one might have possibly imagined.

The GOP presidential candidate who first makes an effective issue of all this will gain some real momentum in the race.  The rotten underbelly of the Obama/Holder Justice Department is just now being uncovered. There is a lot more rot still to come to light.

World Net Daily reports that a rediscovered C-SPAN video shows Eric Holder’s deputy linking the un-stimulating Recovery Act to funding for Project Gunrunner, a sister program to ATF’s Fast and Furious ‘gun-walking’ scheme to track guns sold to Mexican drug cartels.

Here’s the money quote from Deputy Attorney General David Ogden:

“Attorney General Holder and I are taking several new and aggressive steps as part of the administration’s comprehensive plan. Those steps include the following: DOJ’s Drug Enforcement Administration, which already has the largest U.S. drug enforcement presence in Mexico with 11 offices in that country, is placing 16 new DEA positions in southwest border field positions .., uh, field operations, specifically to target Mexican trafficking and associated violence,” he said.

“The DEA is also deploying four new mobile enforcement teams to specifically target Mexican methamphetamine trafficking both along the border and in U.S. cities impacted by the cartels,” he continued.

“DOJ’s bureau of Alcohol, Tobacco, Firearms and Explosives is increasing its efforts by adding 37 new employees and three new offices, using $10 million in Recovery Act funds and redeploying 100 personnel to the southwest border in the next 45 days to fortify its Project Gunrunner, which is aimed at disrupting arms trafficking between the United States and Mexico,” he said.  (Emphasis added)

The date of the press conference: March 24, 2009.  That’s fifteen months prior to the June 2010 memos that earlier this week showed Holder lying to Congress about when he was first aware of the ATF programs.

Holder has no credibility left.  It’s time to fire him, immediately.

With the unwashed masses “occupying” Wall Street and other financial centers throughout the country, Community-Organizer-in-Chief Barack Obama is trying to convince the protesters of crony capitalism that their grievance is really his.  From today’s Wall Street Journal:

Asked about the demonstrations that have spread to cities across the U.S., Mr. Obama empathized with protesters’ frustrations without embracing the movement: “The American people understand that not everybody has been following the rules; that Wall Street is an example of that.”

Haven’t been following the rules? How’s this for a list of people not following the rules:

• Treasury Secretary Timothy Geithner fails to pay federal income taxes while working at the taxpayer-supported International Monetary Fund

• Health and Human Services Secretary Kathleen Sebelius grants over 1,000 ObamaCare waivers – many of them to unions

• Energy Secretary Steven Chu rubber stamps another taxpayer subsidy to Solyndra after the company defaulted on a $535 million loan (the company couldn’t get sufficient venture capital funding but did grease the skids to get taxpayer money thanks to an Obama fundraiser – who was also an investor – pulling strings)

• Attorney General Eric Holder lies to Congress about allowing a criminally stupid ‘gun-walking’ program at ATF to continue that sends 2,000 guns to Mexican drug cartels, killing a Border Patrol Agent

• Education Secretary Arne Duncan violates the No Child Left Behind law by unilaterally issuing waivers that require recipients to accept White House dictated regulations that cannot get through Congress – an unheard of abuse of the waiver process

I could go on, but I think the point is made.  The American people are viscerally aware of a politically connected elite waging war on the rule of law.  But it’s the Tea Party, not those squatting outside America’s nodes of commerce, that has identified the biggest threat to prosperity.  It’s time to occupy the White House and the Cabinet with people who not only respect the law, but also know how to grow the economy in a real, free market fashion.