Freedom Line Blog

GDP grew by two percent in the third quarter of this year. That’s not a particularly impressive number, but in this economy — with its now-ubiquitous diminished expectations — it falls under the category of “We’ll take what we can get.” The Mercatus Institute’s Veronique De Rugy and Keith Hall have scratched beneath the surface of those numbers, however, and what they’ve found is even more disheartening than the rate itself:

According to the Bureau of Economic Analysis, the economy grew by a modest 2 percent in the third quarter of 2012. While this was stronger growth than the preceding quarter, all of the increase in GDP growth came from the biggest increase in federal government spending in over two years.  Federal government spending rose 9.6% at an annual rate in the third quarter…Growth in the private sector fell by 0.1 percent to 1.3 percent in the third quarter—down from 1.4 percent in the second quarter.

But the private sector, we remind you, “is doing just fine.”

Just in time for Election Day, House Majority Leader Eric Cantor has released a report entitled “The Imperial Presidency,” which serves as an exhaustive chronicle of all the ways in which President Obama has undermined — or outright ignored — the rule of law. It covers everything from regulatory overreach to ignoring the traditional “advise and consent” process to abusing the waiver process, and it’s well worth a read.

As we approach November 6, it’s important to remember that these offenses aren’t just abstract violations of the constitutional order — they’re also ingredients for economic decline. As Conn Carroll notes today in the Washington Examiner:

Conservatives are not the only ones who have documented Obama’s assault on the rule of law and its impact on the U.S. economy. Every year, the World Economic Forum issues a Global Competitiveness Report, ranking more than 100 countries on a number of key economic indicators. When Obama was sworn into office, the United States was ranked as the best country in the world to do business. After just four years under Obama, the U.S. has dropped to seventh. The report specifically cites the collapse in the rule of law in explaining this decline.

Before Obama was president, the U.S. ranked 40th in “favoritism in decisions of government officials.” Today, the U.S. ranks 59th, a fall of 19 places. Before Obama was president, the U.S. ranked 50th for lowest “burden of government regulation.” Today, the U.S. ranks 76th, a fall of 26 places. Before Obama was president, the U.S. ranked 28th in “transparency of government policy making.” Today, the U.S. ranks 56th, a fall of 28 places.

Care to venture a guess as to where those rankings would be after another four years of Obama?

The American Enterprise Institute’s Kevin Hassett and Aparna Mathur have an important (and devastating) piece in today’s Wall Street Journal breaking down the misleading facets of the left’s argument that the U.S. is currently suffering through a crisis of economic inequality. Here’s a particularly eye-opening excerpt:

In the first place, studies that measure income inequality largely focus on pretax incomes while ignoring the transfer payments and spending from unemployment insurance, food stamps, Medicaid and other safety-net programs. Politicians who rest their demands for more redistribution on studies of income inequality but leave out the existing safety net are putting their thumb on the scale.

Second and more important, it is well known that people’s earnings in general rise over their working lifetime. And so, for example, a person who decides to invest more in education may experience a lengthy period of low income while studying, followed by significantly higher income later on. Snapshot measures of income inequality can be misleading.

Thomas Sowell frequently makes a point complimentary to Hassett and Mathur’s second observation above: that measuring income inequality over time tends to be deeply misleading because membership in any given income bracket is highly fluid, with people’s income often shifting dramatically over time. Thus, someone who’s in the bottom quintile of income in today’s measurements may be in the second quintile from the top in 15 years’ time. But we tend to analyze these groups as if their composition is static.

Hassett and Mathur’s first point, however, is the one that always bowls me over. If the point of a safety net is to remove people from the perils of indigence, yet the government refuses to factor those provisions into measurements of income, we end up with a perpetually imperiled underclass that only exists on paper. As Mark Twain said (supposedly quoting Disraeli), there are three kinds of lies: “Lies, damned lies, and statistics.”

No, I’m not talking about the abortion dustup in Indiana’s U.S. Senate race , where I’m not sure the Republican candidate is as embattled as the media thinks (reason #1: members of the coastal media and members of the Indiana electorate might as well be from different species).

Rather, I’m referring to the U.S. Senate contest in Arizona, where Democrat Richard Carmona — a former Surgeon General in the administration of George W. Bush — has managed to run surprisingly close against Congressman Jeff Flake, a laudable champion of limited government. There’s been some mud thrown by both sides in recent weeks, but the newest development is a self-inflicted wound from Carmona. From a blog entry by Daniel Halper at The Weekly Standard:

“Obesity is the terror within,” Carmona told a University of South Carolina audience in early 2006, according to a wire report from then. “Unless we do something about it, the magnitude of the dilemma will dwarf 9-11 or any other terrorist attempt.”

Will Arizona — the state that gave us Barry Goldwater — really send a man to the U.S. Senate who regards the ice cream freezer of your local grocery store as more menacing than an Al Qaeda training camp? Count me skeptical.

In keeping with my recent focus on the fruits of federalism — the divergence between states based on public policy — I thought I’d pass along the Tax Foundation’s newest numbers on state and local tax burdens. Here are the 10 most confiscatory locales in the nation (as reported by CNS News), represented in terms of the tax burden as a percentage of state income:

New York, 12.8 percent

New Jersey, 12.4 percent

Connecticut, 12.3 percent

California, 11.2 percent

Wisconsin, 11.1 percent

Rhode Island, 10.9 percent

Minnesota, 10.8 percent

Massachusetts, 10.4 percent

Maine, 10.3 percent

. Pennsylvania, 10.2 percent

And here are the 10 lowest:

Alaska, 7.0 percent

South Dakota, 7.6 percent

Tennessee, 7.7 percent

Louisiana, 7.8 percent

Wyoming, 7.8 percent

Texas, 7.9 percent

New Hampshire, 8.1 percent

Alabama, 8.2 percent

Nevada, 8.2 percent

. South Carolina, 8.4 percent

Notice a trend? All of the top 10 high-tax states are consistently blue (Wisconsin and — less likely — Pennsylvania may be in play this year, but those are exceptions to the historical trend). Meanwhile, all of the top 10 low-tax states are reliably red, with the two exceptions of New Hampshire and Nevada, both of which are in play this year, but both of which, regardless of party affiliations, also boast very libertarian political cultures.

The upshot: if you want to increase your take-home pay, move to a red state.

Take it from this Californian — the Golden State is no longer the destination du jour for starry-eyed dreamers looking to turn ambition into fortune. The rest of the west, however, looks pretty good. From the Daily Caller:

If you are looking to start a new business, Wyoming might be a place to consider moving. According to the Tax Foundation’s annual State Business Tax Climate report, Wyoming ranks first among the fifty states for most business-friendly tax code.

Behind Wyoming are South Dakota, Nevada, Alaska, and Florida. Washington, New Hampshire, Montana, Texas and Utah rank in the top ten.

For those of you keeping score at home, that’s eight of the top ten states for business located in the West. And if a pro-energy candidate wins the White House, expect the numbers from those states to become even more impressive, given the tremendous amount of resources in the region.

California has chosen gilded decline and reaped economic disaster. The rest of the west, however, has chosen freedom. And prosperity is following closely behind.

From today’s installment of Ben Domenech’s The Transom:

The Gallup likely voter screen now has Mitt Romney leading President Obama 51-45.  No candidate who’s had a majority in the Gallup LV poll at this point has lost the election. Which means that if Romney does become the first to lose, it will be due to a late-breaking October surprise, or because Obama’s team outworks them on the ground in key swing states.

Buckle your seat belts, folks. The next few weeks are going to get very exciting.

I have a slightly different take on last night’s debate than Quin. Like my colleague, I thought that Romney’s performance was serviceable, though I won’t go so far as to say he ‘won.’ Truth be told, I don’t think either candidate did much to improve their standing with the small slice of the electorate that still remains undecided, as that group tends to prize style over substance and the constant sniping between the two candidates probably left the swing voters cold to the political process as a whole (that tendency also worked at cross-purposes with both campaigns’ efforts to win over female voters, who are notoriously averse to that kind of incivility).

I also saw a missed opportunity last night, but it wasn’t Obamacare (where I think Romney is unavoidably uncomfortable); it was Libya, where he completely botched an opportunity to call Obama out on his administration’s meandering, thumbless response to the attack in Benghazi (damage that was compounded by moderator Candy Crowley inappropriately — and incorrectly — intervening to agree with Obama that he had framed the assault as a terrorist attack from the beginning).

After the first debate, sources inside the Romney campaign made it known that they had encouraged the candidate to speak in a natural tone — as if he were addressing a group of investors — rather than memorizing sound bites and talking points. It worked for Romney as long as the topic was the economy, where he is in his element. But I hope that the team in Boston encourages a little more thoughtful planning as we head towards Monday night’s foreign policy debate.

Romney has never shown a particularly deep interest in — or understanding of — foreign policy, a trait which I’ve noted in the past could be a potential liability (though his instincts are, of course, far preferable to Obama’s). While I think next week’s debate will easily be the least consequential of the three (both because it’s last chronologically, and because foreign policy will not be a central issue of this campaign), Romney still can’t afford to be as lost at sea as he was at the end of last night’s town hall. Time to hit the briefing books.

Remember Darden Restaurants? As I blogged last year, they’re the parent company of Red Lobster, Olive Garden, and LongHorn Steakhouse that decided to codify Michelle Obama’s recommendations about nutrition in the menus of their franchises. But their latest change in corporate policy has far more ominous implications for 1600 Pennsylvania Avenue. From the Orlando Sentinel:

In an experiment apparently aimed at keeping down the cost of health-care reform, Orlando-based Darden Restaurants has stopped offering full-time schedules to many hourly workers in at least a few Olive Gardens, Red Lobsters and LongHorn Steakhouses.

Darden said the test is taking place in “a select number” of restaurants in four markets, including Central Florida, but would not give details. The company said there has been no decision made about expanding it.

In an emailed statement, Darden said staffing changes are “just one of the many things we are evaluating to help us address the cost implications health care reform will have on our business. There are still many unanswered questions regarding the health care regulations and we simply do not have enough information to make any decisions at this time.”

Analysts say many other companies, including the White Castle hamburger chain, are considering employing fewer full-timers because of key features of the Affordable Care Act scheduled to go into effect in 2014. Under that law, large companies must provide affordable health insurance to employees working an average of at least 30 hours per week.

If they do not, the companies can face fines of up to $3,000 for each employee who then turns to an exchange — an online marketplace— for insurance.

So in the course of a year, the Obama Administration has cost me my Olive Garden breadsticks and Darden employees a sizable chunk of their livelihood. I’ll be honest: the first one verges on an impeachable offense in my book. But the second one is inexcusable. It’s underemployment by legislative fiat.

So remember this fact when you hear Barack Obama tout himself as a champion of the middle class in tonight’s debate: the Darden example is representative — working Americans without healthcare and with smaller paychecks.

Der Spiegel today carries a chilling profile of General Mohammad Ali Jafari, Commander of the Iranian Revolutionary Guard Corps, that includes this provocative piece of intelligence:

… [Amongst Iranian hardliners] Jafari, 55, is seen being particularly unyielding. In 2009, for example, he declared that Iran would fire missiles at Israel’s nuclear research center in Dimona if the Israelis attacked Iran’s nuclear facilities — knowing full well that such an attack would result in several thousand deaths on both sides.

Now Jafari and his supporters are allegedly preparing new potential horrors. Western intelligence agencies have acquired a plan marked “top secret” and code-named “Murky Water.” Together with Ali Fadawi, an admiral in the Pasdaran, Jafari is thought to have proposed a senseless act of sabotage: to intentionally cause an environmental catastrophe in the Strait of Hormuz.

The goal of the plan seems to be that of contaminating the strait so as to temporarily close the important shipping route for international oil tankers, thereby “punishing” the Arab countries that are hostile to Iran and forcing the West to join Iran in a large-scale cleanup operation — one that might require the temporary suspension of sanctions against Tehran.

I don’t know which is the more disturbing thought: that a senior official in the Iranian military would be willing to consider such gratuitous environmental destruction — or that it might be the only thing that gets the left interested in the evils of the Iranian regime.

The Cato Institute came out this week with its Fiscal Policy Report Card on America’s Governors and the results are very good for Tea Partiers. The nation’s top five chief executives in terms of fiscal stewardship are virtually all proud limited government advocates who have followed through on their promises of reining in government:

1 (tie) — Sam Brownback (R-Kansas); Rick Scott (R-Florida)

3 (tie) — Paul LePage (R-Maine); Tom Corbett (R-Pennsylvania)

5 (3-way tie) — Bobby Jindal (R-Louisiana); Jack Dalrymple (R-North Dakota); John Lynch (D-New Hampshire)

Lynch deserves some credit for being the sole Democrat to crack the top of the list, but not nearly as much as the Republicans who swept to huge majorities in the Granite State’s legislature and forced the governor to abide by New Hampshire’s “live free or die” ethos.

And the nation’s worst fiscal leaders? Is it any surprise that it’s a cadre of blue state liberals?:

46. Christine Gregoire (D-Washington)

47. Neil Abercrombie (D-Hawaii)

48. Mark Dayton (D-Minnesota)

49. Dan Malloy (D-Connecticut)

50, Pat Quinn (D-Illinois)

The full report is here.

It’s not an overstatement to say that the Heritage Foundation has done the nation a service with its new video chronicling the Obama Administration’s deceit and incompetence regarding the fatal attack on our consulate in Benghazi:

I’d love to see this turned into an ad aired during the presidential debate on foreign policy at the end of this month.

Over at Ricochet, I have my take on the growing meme that President Obama doesn’t really want a second term. My take is different: he wants it all right, but his appetite for prestige and power is tempered by his disdain for the mechanics of the job:

Obama considers it an affront when people fail to accept his brilliance as a given. The man has simply never had to win on the merits. Like most professionals who manage to trade exclusively on personality, he has rocketed to the level of his incompetence. And now, when people actually question him, the sense of righteousness that has calcified around an unchallenged ideology has left him at a loss to construct a rejoinder: how, after all, do you debate someone trapped in false consciousness? Barack is still trying to figure out how to tell us that we’re only staring at shadows on the cave wall.

Read the whole thing here.

I’ll have more thoughts about this evening’s debate in my column this week, but for now let me just say this: At the rate this one went, I expected it to end with Romney handing Obama a sword and saying “you know what to do.”

Over the last 20 years or so, the conservative movement has undergone a renaissance in its posture towards the news media. The right has become more aggressive about flagging bias when it sees it, and the proliferation of cable and online news sources has created the market conditions for conservatives to counterprogram big media’s overwhelmingly liberal agenda.

During that time, many of us have developed a pretty thick skin for media malpractice. We know it’s there and we try to get it the public shaming it deserves, but we also take it is a given. But even those of us anesthetized to the practice have been taken aback by how badly the mainstream media has dropped the ball on foreign policy coverage over the past month or so — a practice exemplified by the press’s obsession with Mitt Romney’s (totally justified) reaction to the violence in the Middle East, even while the Obama Administration was proving itself to be at best clueless — and at worst, intentionally dishonest — about what was happening in the region.

Through that prism, it’s all the more remarkable that it took the Washington Free Beacon, a relatively new conservative investigative outlet to unearth this story:

Hackers linked to China’s government broke into one of the U.S. government’s most sensitive computer networks, breaching a system used by the White House Military Office for nuclear commands, according to defense and intelligence officials familiar with the incident.

One official said the cyber breach was one of Beijing’s most brazen cyber attacks against the United States and highlights a failure of the Obama administration to press China on its persistent cyber attacks.

…

According to the former official, the secrets held within the WHMO include data on the so-called “nuclear football,” the nuclear command and control suitcase used by the president to be in constant communication with strategic nuclear forces commanders for launching nuclear missiles or bombers.

The office also is in charge of sensitive continuity-of-government operations in wartime or crises.

The former official said if China were to obtain details of this sensitive information, it could use it during a future conflict to intercept presidential communications, locate the president for targeting purposes, or disrupt strategic command and control by the president to U.S. forces in both the United States and abroad.

Pretty jarring, right? But this ought to soothe your nerves:

… Officials said President Barack Obama was not notified about the cyber attack—which was traced to China when it was first discovered—but was informed about the incident later.

… [White House Press Secretary Jay Carney] sought to play down the significance of the incident and declined to provide specifics when asked if the attacked computer network was located within the White House Military Office. That office is in charge of presidential communications, travel, and the nuclear command and control suitcase known as the “football.”

“Let’s be clear: this is an unclassified network,” Carney said. “These types of attacks are not infrequent, and we have mitigation measures in place.”

“In this instance, the attack was identified, the system was isolated, and there is no indication whatsoever that any exfiltration of data took place,” he said, adding that the attack “never [had] any impact or attempted breach of any classified system.”

So no worries — the Chinese military was just trying to break into our most sensitive computer systems. They didn’t actually get anything.

Sleep tight, America.

Interesting new data from Open Secrets, which tallies the top donors to the presidential candidates (note: these are not corporate donations, but money from PACs, as well as from individuals and their families associated with these institutions). Here are Barack Obama’s top five contributors:

1.    University of California — $703,781

2.    Microsoft — $544,445

3.    Google Inc — $526,009

4.    Harvard University — $431,860

5.    U.S. Government — $396,550

Peruse the top 20 and this trend holds. In addition to Harvard and the University of California system, schools like Stanford, Columbia, the University of Chicago, and the University of Michigan also populate the list. On the tech side, Microsoft and Google are joined by IBM (there are also a few big media companies — Time Warner and Comcast). And in government, the State Department alone is responsible for over $200,000 in contributions.

Higher ed and the permanent governing class in Washington are so thoroughly suffused with liberalism that their inclinations should be taken as a given. But conservatives would be foolish to give up on Silicon Valley, where the regnant mores are sufficiently libertarian for Republicans to win converts through a sustained emphasis on free markets (it’s no coincidence that Ron Paul was a huge hit there).

The tech industry’s lifeblood is freedom: freedom to experiment, collaborate, and innovate — which means sooner or later they should realize that the party of 2,000 page laws and dictatorial bureaucracy is not for them. But should doesn’t necessarily mean will. One need only look to African-American voters to realize that political parties can win demographics they consistently neglect if the other side doesn’t even bother competing. The GOP (quite literally) can’t afford to let that happen in Silicon Valley.

Here’s a story that will restore your faith in the next generation — and the power of civil society.

Students and teachers throughout the nation are bridling at school nutritional requirements imposed by the Healthy, Hunger-Free Kids Act, a piece of legislation passed by Congress and signed into law by President Obama in 2010 (it barely merits mentioning that the bill’s head cheerleader was First Lady Michelle Obama). So what could possibly go wrong with some well-intentioned efforts at keeping kids fit? Well, plenty. Here’s Suzanne Perez Tobias, writing for the Wichita Eagle:

The major sticking point: a new federal rule that sets calorie maximums for school lunches — 650 calories for elementary-schoolers, 700 for middle-schoolers and 850 for high-schoolers.

Protesters in Kansas and elsewhere say 850 calories isn’t enough for some high-schoolers, particularly athletes who can burn calories by the thousands.

The students’ reaction? Well, at one Kansas school they created a nice little bit of satire set to the tune of the hit song “We Are Young” — and so far it’s generated more than half a million views. Watch and try not to admire the pluck:

Since we’ve all formed a little cottage industry around providing unsolicited advice to the Romney campaign, I thought it worthwhile to pass along this recommendation from my friend and Ricochet colleague Ben Domenech, writing in today’s installment of his news digest, The Transom (probably the best daily rundown in the nation).

Ben notes the conventional wisdom that the presidential debates (the first of which takes place a week from today) are likely Romney’s last chance to change the trajectory of the race and devises a helpful bit of jiu-jitsu for Mitt to employ:

Romney’s style as a debater is aggressive and that may serve him well – in debates, the first person to appear thin-skinned usually loses – and he’ll have an opportunity to bring that out in response to Obama’s woe-is-me talk, blaming Bush and the Republican Congress for everything under the sun, saying something along the lines of:

“In the private sector, one of the things I did was invest in companies. I learned a lot about how jobs are created, but I also learned a lot about leadership. One of the things I had to do when we got involved with a company was evaluate its leadership and see if it needed a change. And let me tell you, if I got involved with a company that was losing money and jobs hand over fist and piling up debt like there was no tomorrow, and I found out the CEO had been in the job four years and still spent most of his time blaming his predecessor and his co-workers, I’d fire him and get somebody in there who could get results.”

A response like this, besides being one virtually guaranteed to tick off Obama, makes the whining look petty and small. But it would also do something else, too: workers of all types, but particularly blue-collar workers, resent the idea of the incompetent senior management which survives pain while they bear the brunt of it. Romney should do his utmost to speak for those who demand accountability and turn his negative role as one of the suits into an advantage.

Mitt Romney: corner office hero of the working man? If he employed Ben’s tactic, he just might be able to pull it off.

In my column last week, I noted how preposterous it was that the Obama Administration continued to bend over backwards to distance itself from the video (falsely) claimed to have ignited the recent round of violence in the Middle East:

Speaking shortly after the attacks, Secretary of State Hillary Clinton pronounced, “that the United States government had absolutely nothing to do with this video. We absolutely reject its content and message… to me personally, this video is disgusting and reprehensible. It appears to have a deeply cynical purpose: to denigrate a great religion and to provoke rage.”

Let’s assume for a moment that Clinton is right and that the film was made for the express purpose of working global Islam into a lather. Even taking that as a given, should the apology come from the nation of 300 million where one man produced some two-bit agritprop or from the part of the world where thousands took to the streets in violence because of a bit of inert satire tamer (and, remarkably, less coherent) than the average “Saturday Night Live” episode?

Speaking earlier today at the United Nations General Assembly, President Obama prolonged the inanity:

That [violence and intolerance] is what we saw play out the last two weeks, as a crude and disgusting video sparked outrage throughout the Muslim world. I have made it clear that the United States government had nothing to do with this video, and I believe its message must be rejected by all who respect our common humanity. It is an insult not only to Muslims, but to America as well – for as the city outside these walls makes clear, we are a country that has welcomed people of every race and religion. We are home to Muslims who worship across our country. We not only respect the freedom of religion – we have laws that protect individuals from being harmed because of how they look or what they believe. We understand why people take offense to this video because millions of our citizens are among them.

I know there are some who ask why we don’t just ban such a video. The answer is enshrined in our laws: our Constitution protects the right to practice free speech.

Contra the president, this video doesn’t demonstrate “intolerance.” Stupidity? Yes. Bad filmmaking? Yes. Garden variety prejudice? Maybe. But being critical of the beliefs of others, even to the point of gratuitious rabble-rousing, is not the same thing as “intolerance.” The filmmakers were tolerating Islam; they weren’t advocating that anyone be silenced or harmed. By contrast, Islamists who engaged in violence to the point of cold-blooded murder ostensibly because of a YouTube video were the intolerant ones.

The cherry on top of this whole debacle was the President’s statement on the video to the ladies(?) of The View. As reported by the Weekly Standard:

In the age of the Internet, and you know, the way that any knucklehead who says something can post it up and suddenly it travels all around the world, you know, every country has to recognize that, you know, the best way to marginalize that kind of speech is to ignore it.

Not a terrible idea. And you know what’s a great way to begin implementing this strategy? Not devoting paragraphs to this film at the U.N. when we know that it wasn’t the catalyst for the recent blood lust.

From Fox News:

Small government and free-market capitalism are about to get put to the test in Honduras, where the government has agreed to let an investment group build an experimental city with no taxes on income, capital gains or sales.

Proponents say the tiny, as-yet unnamed town will become a Central American beacon of job creation and investment, by combining secure property rights with minimal government interference.

“Once we provide a sound legal system within which to do business, the whole job creation machine – the miracle of capitalism – will get going,” Michael Strong,  CEO of the MKG Group, which will build the city and set its laws, told FoxNews.com.

Strong said that the agreement with the Honduran government states that the only tax will be on property.

“Our goal is to be the most economically free entity on Earth,” Strong said.

It’s a fascinating experiment, though we can’t quite call it a novel one — this is, after all, a more extreme version of what Hong Kong does on a larger scale. And therein lies the rub. While there are a few minor shortcomings in the mechanics of this project (there’s already some protectionism in the new city’s labor laws, for instance, with businesses forced to meet quotas for native-born Honduran employees), the bigger concern is that it will be a lonely success.

Hong Kong, for instance, is consistently deemed the freest economy in the world, a trait that has led to it having a higher per capita GDP than the United States. Were this simply an argument on the merits over whether free markets work, the jury would be in. But this is no academic seminar. In less economically free nations, ideology may inform some of the hostility to capitalism, but the bigger issue is that opening up markets takes the power to select winners and losers away from government — a bridge too far for many politicians. Embracing economic freedom in the fashion of the Honduras experiment is laudable. But the hard work is not in allowing capitalism to succeed; it’s in convincing politicians to give it the chance to do so. That’s the biggest accomplishment here.