Freedom Line Blog

Below is the latest from Pulitzer Prize-winning cartoonist Michael Ramirez.

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

The individual health care mandate contained in the so-called Baucus Bill will hit low-income taxpayers, according to the Congressional Budget Office (CBO).

The CBO recently released a chart to the public which illustrated that those making $30,000 to $40,000 (100% to 200% of the federal poverty level) would pay over $200 million in fines for failing to obtain government-approved health care.  This $200 million projection represents 26% of all fines to be paid to the federal government.

In contrast, individuals making close to $100,000 would pay around $100 million in fines, or only about 9% of all fines.

Click here for the chart.

Politico – White House Created Corporate-Backed Health Care Pitch
Washington Post – The Perils of Governing
Political Wire – New Jersey Gov. Race a Toss Up
WSJ Editorial – Barney Frank, Predatory Lender

PC World – Companies, Lawmakers Tell FCC to Dump Net Neutrality
The Hill – Rep. Mike Pence for President?
NY Times – ACORN and Democrats
National Review Online – Laws of the Universe vs. ObamaCare

Federal Debt: $11.911 trillion

Eliot Spitzer doesn’t know when to quit. Laboring on the sidelines of political combat, the former New York Governor is out today with a plan to destroy the U.S. Chamber of Commerce. Why? Because the corporate executives in its ranks disagree with Spitzer’s views on deregulation, tax and fiscal policy, global warming and environmental enforcement, consumer protection, health care reform, and probably just about everything else.

Of course, it would be one thing if Spitzer was just vying for a hyperlink to The Huffington Post with a screed against Wall Street. Unfortunately, he’s a got a plan to silence corporate America’s voice in Washington. Spitzer’s litigation strategy runs like this. The members of the Chamber are corporations (usually) owned by the public. Some of the most influential public stockholders are state government pension funds controlled by a state’s comptroller. In an effort to get publicly owned companies “out of politics,” Spitzer advises that when a state comptroller concludes that “the Chamber of Commerce has a distorted view of both economic and political policy” the comptroller should demand that every company in which the pension fund owns stock drop its membership in the Chamber. And if the CEO doesn’t agree? Pressure the board to drop the Chamber membership.

Just one problem. With the economy in a recession, and state pension funds trying to deliver on outrageous union contracts, does Spitzer really believe that an elected official like a comptroller would “demand” a series of actions specifically designed to weaken a corporation’s ability to make money? Surely Spitzer realizes that the primary motivation for most of the Chamber of Commerce’s policy positions is a desire to increase profits, and thereby dividends? No doubt there is at least one state elected official willing to apply Spitzer’s litigation strategy to grab headlines and perhaps a higher political perch. As usual, though, the people worst effected by such a move would be the same folks for whom Spitzer claims he’s suing to empower.

I didn’t think I’d spend so much of this week blogging about the economics of professional football, but such is the gift bestowed this morning by my home state of California.

The Los Angeles Times carries a story today about the California State Senate’s vote to exempt a new football stadium in a Los Angeles suburb (intended to bring in a new NFL squad) from the state’s onerous environmental regulations.

On balance, this is probably a good thing. Most of California’s environmental regulations are designed to satisfy a radical environmental fringe and enrich attorneys. Obviously, there is a need for some measure of regulation, but California has probably exceeded that threshold by a factor of 10.

What’s troubling about this is how much it reveals about the politics of dysfunctional regulation. The Golden State went through a similar process 15 years ago, when it waived the regulatory process to rebuild Southern California’s devastated freeway system in the aftermath of the Northridge Earthquake. The result? A repair effort that was supposed to take 26 months was completed in 66 days.

In California, as in the rest of the country, we tolerate government incompetence as long as we don’t see it. The freeway system and the effort to end L.A.’s continued pro football drought have practical and emotional resonance. In the case of the NFL, there are also a lot of well-heeled interests backing the cause. But in a state with double-digit unemployment and massive budget deficits, wouldn’t it make just as much sense to relieve the regulatory burden on the millions of everyday Californians who — through the aggregation of their enterprise — provide the backbone of the state’s economy? If this scale of regulation is intolerable for huge corporations, why is it an acceptable burden on small business?

Sane observers knew instantly that Barack Obama and his substance-free diplomacy were undeserving of this week’s Nobel Peace Prize.  But who knew that the award’s absurdity would be confirmed this quickly?

This week, in a double shot to the Obama Administration’s chin, both the Russians and Chinese undermined calls for tough new sanctions against Iran.  This is particularly embarrassing for Obama because it comes on the heels of revelations that Iran has been completing additional secret enrichment facilities, as well as the supposed “breakthrough” meeting last week between American and Iranian diplomats on the issue.  Dumping icewater on Obama’s unfounded optimism, however, Russian Prime Minister Vladimir Putin flatly stated yesterday that it is “premature” to threaten Iran with sanctions.  And now, China has announced that it is strengthening, not reducing, its cooperation with Iran.

Russia and China constitute two of the United Nations Security Council’s permanent members, meaning that any substantive penalty against Iran for its continuing mendacity and misbehavior is unlikely.  Perhaps another Nobel Peace Prize next year will do the trick, though…

Last week, two Americans were awarded the Nobel Prize for Economics.  Thanks to our friend Paul Krugman, it was recently revealed that one of the winners, Elinor Ostrom, received a massive amount of federal funds during her career, in addition to her $167,018 salary at Indiana University.

The National Science Foundation (NSF), an organization tasked with promoting the progress of science, has given over $16.7 million in inflation-adjusted grants to Professor Ostrom.  This figure includes a hefty $9.8 million (inflation-adjusted) grant in 1971, when Professor Ostrom was just six years removed from her Ph.D.

Obviously, given her recognition and achievements in the fields of political science and economics, she put this $16.7 million to good use, but with that much money one could only imagine what else could have been achieved.

With lobbying heavyweights like the National Education Association and the American Federation of Teachers, there are plenty of voices lobbying for more education funding.  Everyone is trying to get a piece of the $3.6 trillion federal pie, and these groups are effective at ensuring more federal dollars go toward education funding.

Senator Tom Coburn has seized on NSF funding and has recommended the elimination of political science grants.  With over $147.7 billion in endowment wealth for the top ten Universities alone, there is plenty of higher education money available.  If Harvard dedicated just 1% of its endowment to research funding, it could provide life-time grants to 22  “Elinor Ostrom’s” every year (over $365 million in total).

Senator Coburn often likes to make the point that you don’t practice charity through the federal government.  You practice politics and favoritism.  With so much private wealth already accumulated in the nation’s universities and other foundations dedicated to promoting education, has the market really failed to invest in education?  If universities are as esteemed as they are in this country, couldn’t they afford a small investment in research grants?

WSJ – Republicans Attack Deficit
Washington Post – Harry Reid and Dynastic Politics
The Hill – Limbaugh v. Rep. Jackson Lee
Politico – No Snowementum: Centrists Not Sold on Health Care
The Hill – Reid Faces Tough Battle in Nevada

National Review Online – Dow Hits 10,000 as Storm Gathers
WSJ Editorial – Dangers of a Value-Added Tax
Washington Times – Tort Reform Savings
Washington Times Commentary – Another Metro Approach

Federal Debt: $11.924 trillion

The kerfuffle over Rush Limbaugh’s expulsion from the group attempting to buy the Saint Louis Rams has garnered a lot of press coverage today — most of it from those embracing the politics of partisan indignation.

As a man of the right, I take no small umbrage at politics intruding where it doesn’t belong, and professional sports is one of those areas. As a matter of principle, Rush’s bid for the Rams shouldn’t matter any more than it would if Al Franken was trying to get a share of the Vikings or if Maureen Dowd wanted a piece of the Jets (which I would really, really like to see).

What’s getting lost in the shuffle, however, is how much the Limbaugh expulsion reflects that professional sports in general — and the NFL in particular — operates in an unfree market.

Remember that professional sports leagues are essentially cartels, restricting membership and raising bars to entry. Heck, Major League Baseball is even exempt from federal antitrust laws.

In the NFL, this empowers as few as nine of the 32 teams to block the sale of another. To have an atmosphere of such limited competition and to have your competitors empowered to veto your ownership wreaks of an inefficient and dysfunctional market.

Rush got the boot for essentially political reasons, but maybe it’s a blessing in disguise. Otherwise, that champion of capitalism would end up with equity in a system that essentially looks like a medieval guild.

No surprise here.  According to CBO chief Doug Elmendorf, “The net effect of that [climate change legislation] we think would likely be some decline in employment….  The fact that jobs turn up somewhere else for some people does not mean there aren’t substantial costs borne by people, communities, firms and affected industries.”

To think that drastically increasing the cost of carbon without any impact to labor in the energy sector is absurd.  Thankfully, the CBO agrees and is finally cautioning Congress against cap-and-trade proposals.  Click here for the full article.

The Dow Jones Industrial topped 10,000 during trading today.  This is the first time the Dow has hit 10,000 or above since October 7, 2008.

Last month, Federal Communications Commission Chairman Julius Genachowski laid out his plan to impose new “net neutrality” regulations on Internet service providers, a move which could severely restrict their ability to adequately manage the flow of data and information through their broadband and wireless networks.

CFIF and others have warned on numerous occasions (see here and here and here) that the imposition of strict “net neutrality” rules would stifle the very innovation that Internet and wireless consumers have grown to demand and expect of an industry that’s been able to rapidly evolve during a time when most other sectors of the economy continue to struggle. 

Even The Washington Post editorialized that Genachowski’s net neutrality regulations “will jeopardize [‘an unfettered platform for competition, creativity and entrepreneurial activity’] — and stifle further investments by ISPs — with attempts to micromanage what has been a vibrant and well-functioning marketplace.” 

Now, some Members of Congress are ramping up their opposition as well.

Questioning the necessity for and warning against the new rules, 18 Republican Senators, led by Senator Sam Brownback, sent a letter yesterday to Chairman Genachowski:

We fear that the proposals you announced during your September 21, 2009 speech will be counterproductive and risk harming the great advancements in broadband speed and deployment that we have witnessed in recent years and will limit the freedom of the Internet.”

The letter goes on to read:

You recognize that significant progress with respect to broadband deployment has been made ‘thanks to substantial investment and technological ingenuity.’  Broadband service providers have invested billions of dollars in building and upgrading their networks to better serve their customers.  However, burdensome regulations will have a chilling effect on further private sector investment, at a time when the U.S. economy can least afford such an impact.

“It is because of significant competition among broadband service providers that consumers have more choices and are enjoying the best online experience that has ever been available. … Mobile networks are getting faster, making such networks even stronger competitors to wireline networks.  Market-based solutions and competition is working.”

Read the full letter here (.pdf).

The FCC is scheduled to vote next week on whether to unveil the proposed regulations, which are reportedly still a work in progress, to the public.

Say you’re a career civil servant who’s looking for a way to package old wine in a new wine skin. You don’t have the budget for hiring hot marketing talent or revamping your website. What to do? Invite a flock of twitterers to tweet about your work. Of course, this strategy is probably a bit easier to implement if you’re a NASA scientist offering prime seating at a shuttle launch in exchange for good publicity in the form of electronic sentence fragments. If nothing else, it will probably be a better show than watching a delivery of supplies to the International Space Station.  To be sure, transparency in government is usually a good thing, but do we really need to spend taxpayer money sharing footage of the space equivalent of a trucker delivering goods to a grocery store?

There’s an old legal adage that ignorance of the law is not a defense. On the other hand, since the earliest days of our Republic the U.S. Supreme Court has refused repeated invitations to create crimes using so-called “federal common law.” The reasoning behind the Court’s reluctance goes like this. In a nation of laws – not men – people should have some kind of notice about what is and is not legally permissible. Punishing someone after the fact for an act that was legal (or, if you prefer, not illegal) at the time it was carried out is akin to the types of political prosecutions conducted under the Stuart kings of England. Allowing federal judges to apply broad principles of justice to specific facts alleged by the government to be criminal, even though there is no specific prohibition in print, is hardly an improvement. An example of how important this notice notion is to our civil order can be found in the Ex Post Facto Clause of the U.S. Constitution.

What’s the point? Today the U.S. Supreme Court agreed to hear its third appeal in the last year regarding the meaning (and in one case, perhaps the constitutionality) of the federal crime of “honest services” fraud. The Wall Street Journal’s Law Blog contains a quick synopsis of the appeals involving former Enron executive Jeffrey Skilling, Canadian newspaper mogul Conrad Black, and the class action law firm Milberg. A more extended discussion can be found at the Scotusblog website. Both are well worth the read.

In essence, critics of honest services fraud claim that it has been:

“…invoked to impose criminal penalties upon a staggeringly broad swath of behavior, including misconduct not only by public officials and employees but also by private employees and corporate fiduciaries…Without some coherent limiting principle to define what ‘intangible right of honest services’ is, whence it derives, and how it is violated, this expansive phrase invites abuse by headline-grabbing prosecutors in pursuit of local officials, state legislators, and corporate CEOs who engage in any manner of unappealing or ethically questionable conduct.”

And that’s just Justice Antonin Scalia’s view. For those interested in having readily available, clearly stated criminal laws, the Supreme Court’s decisions in these cases will be eagerly anticipated.

Congress almost enjoys wasting time and money.  When they’re not orchestrating a wholesale takeover of the health care industry, they’re naming post offices or introducing worthless bills.

Take H.R. 2811, introduced by Rep. Kendrick Meek (D-FL).  The legislation would “include constrictor snakes of the species Python genera as an injurious animal.”  This is not a joke.  Not only does Rep. Meek waste our money but he apparently enjoys making the Congressional Budget Office (CBO) suffer.  The CBO put a price tag on the bill and estimated that it will not significantly impact federal spending.  Hurray.

Maybe Rep. Meek saw this movie too many times?

Washington Times – Sen. Graham Endorses Climate Bill
Political Wire – Specter Staring at Fatal Re-Election Numbers
Washington Post – Health Care Winners and Losers
WSJ – Sen. Graham Puts Democrats on the Spot

The Hill – Health Care Fatigue Spreads on Hill
NY Times – The Battle in Virginia
Politico – Rangel Probe Taking its Toll
Washington Times – An Administration of Radicals

Federal Debt: $11.920 trillion

From the chatter on the Internet and in the newsrooms you’d think Maine Senator Olympia Snowe’s vote in favor of the Baucus health care “reform” bill out of committee is newsworthy. According to the Associated Press, Snowe’s “Yes” turns a starkly divided blue-red, 13-10 vote into a 14-9 “bi-partisan” shocker. To wit:

But Snowe’s decision gave the vote a significance that transcends partisan divisions. For months, congressional Republicans have been virtually unanimous in denouncing the Democratic bills as an unwarranted expansion of government influence.”

So, even though “for months” congressional Republicans have been “virtually unanimous” in criticizing Democrats’ plans to overhaul American health care, one Senate Republican voting “aye,” constitutes a landmark in bi-partisanship?  Hardly.  Even Snowe acknowledges that she’s only voting for this version of the health care bill, and remains undecided about the inevitable modified version(s) still to be written. 

The real story here is how Snowe managed to dominate an event that would have had exactly the same effect had she been fly fishing today. Snowe’s vote isn’t about switching sides in a policy debate, or answering history’s call. It’s about solidifying her standing as a moderate to be negotiated with when Democrats need Republican cover for passing liberal legislation. Although Baucus failed to get a true bi-partisan bill out his committee, he did succeed in snaring a token R. One hopes an enterprising reporter at one of the Washington dailies will keep a close eye on the next few Appropriations bills to see how much Maine just benefited from its Senator selling her (qualified) support.

The Senate Finance Committee just approved Sen. Max Baucus’ version of health care “reform.”  The vote was 14-9, with all Democrats voting for the bill.  The only Republican voting for the bill was Olympia Snow (R-ME).

The bill will now be reconciled with the Health, Education, Labor, & Pensions (HELP) Committee bill.

The New York Times carries a very interesting piece this morning on the influence that Secretary of State Hillary Clinton and Secretary of Defense Robert Gates have had on the Obama Administration’s foreign policy. In a nutshell, they’ve kept it from total insanity.

According to the Times’ Mark Landler and Thom Shanker, the dynamic duo were responsible for preventing the public release of further prisoner abuse photos, as well as for shepherding the decision to pursue a counterinsurgency strategy in Afghanistan. While the two are woefully behind the curve on Iran (as I noted of Gates here), they still represent the toughest line in the administration.

What’s troubling about all this, however, is the piece’s (unsourced) prognostication of where Clinton and Gates will end up on the current debate over Afghanistan:

Now, as President Obama leads yet another debate on whether to deploy tens of thousands of additional troops there, the secretary of state and the secretary of defense will once again constitute a critical voting bloc, the likely leaders of an argument for a middle ground between a huge influx of soldiers and a narrow focus aimed at killing terrorists from Al Qaeda, according to several administration officials.”

“That swing vote would put them at odds with the bare-bones approach still being pushed by Vice President Joseph R. Biden Jr., as well as the most aggressive military buildup recommended by the American commander in Afghanistan, Gen. Stanley A. McChrystal.”

On this one, Clinton and Gates are taking a dangerous turn. Playing for a tie in Afghanistan is the worst of all possible worlds. While the so-called “Biden Plan” mistakenly applies a counterterrorism strategy to a counterinsurgency problem, at least it doesn’t escalate without the resources necessary for victory. Clinton and Gates are looking for a middle way … but in Afghanistan the options are go big or go home.