Freedom Line Blog

America’s technology sector can provide a wellspring of economic dynamism and new employment.  As long as government doesn’t poison that potentially abundant font, that is.

At a seminar today entitled “Technology and Economic Recovery” hosted by Americans for Technology Leadership, panelists Shahin Kohan, Dr. Joseph Fuhr and Karen Kerrigan explained that our information technology (IT) sector offers a much-needed vehicle by which we can overcome economic stagnation.  Dr. Fuhr explained that IT spending is expected to grow 2.3% per year between today and 2013, compared to expected gross domestic product (GDP) growth of just 0.5% during that span, and that employment in the IT industry will grow by over 1 million jobs compared to expected employment shrinkage in other fields.

For her part, Ms. Kerrigan, who serves as President and CEO of the Small Business & Entrepreneurship Council and founded Women Entrepreneurs, explained the destructive consequences of federal overregulation and taxation for small enterprises that create most new jobs in America.  Ms. Kerrigan pointed out that the prospect of even more suffocating regulations and taxation on small business and technology entrepreneurs only discourages innovation, expansion and hiring.  Mr. Kohan, an apparel entrepreneur from Los Angeles who is CEO of Focal Technology Solutions, Inc., illustrated ways in which new technology can assist creative entrepreneurs in a highly competitive worldwide market, along with terrifying examples of how state, local and federal bureaucracy can destroy American jobs and businesses.

The message was simple:  give technology enterprises freedom, and innovation, and critical job growth will soon follow.

Of the 18 bills proposed by Britain’s Coalition Government of Conservatives and Liberal Democrats none may be as immediately consequential as the Academies Bill.  Filed in May just days after the Coalition took power, the Academies Bill allows any public school rated as “outstanding” by the central government to be approved automatically for privatization.  The stated goal is to move authority for running the school from local bureaucrats to private individuals; be they groups of parents, charities, or religious institutions.

The schools are allowed to use whatever methods necessary to meet the national testing requirements, but they can only charge the amount of the voucher each student gets from the central government.  If the school can deliver the desired results for less than the voucher, they get to keep the money left over.  Oh, by the way; this nationwide program starts this September.

The Coalition’s motivation for this and other decentralizing initiatives results from two realities: cutting spending to reduce the deficit, and giving more power to everyday citizens.

As conservative presidential contenders start to ramp-up their 2012 campaigns, I hope they are paying close attention to these striking policy developments.  The economic crisis coupled with the incompetency of our own overgrown governments may be just the combination necessary to mark a new birth of freedom in America.

Even though the ink is barely dry on the Justice Department’s lawsuit against Arizona’s new illegal immigration law, Attorney General Eric Holder is already speculating about what to do if (i.e. when) his challenge fails: play the race card.

In legal terms, the Justice Department’s current lawsuit is a “facial” challenge, meaning that the DOJ alleges Arizona’s SB 1070 is unconstitutional “on its face,” or by its own terms.  Since SB 1070 mirrors federal law, only the most liberal application of the preemption doctrine would consider identical versions of the same statute to be in conflict, thus requiring federal law to preempt SB 1070.

Because Arizona’s the law is valid on its face the DOJ’s current lawsuit will lose, and SB 1070 will be allowed to go into effect.  Then Arizona law enforcement will be able to ask a person about their immigration status if the person is stopped because of reasonable suspicion she is engaged in criminal activity.  According to Holder, a few months after implementation the DOJ would then challenge SB 1070 “as applied” by law enforcement because officers would allegedly ask for immigration papers from a person because of his race – even though SB 1070 explicitly prohibits the officer from doing that.

But in order to get enough empirical evidence to prove systematic racial profiling, the DOJ will have to closely monitor the situations where Arizona officers apply SB 1070.  To do that will require Immigration and Customs Enforcement (ICE)to cooperate with Arizona officers checking a suspect’s immigration status; something the ICE chief is loathe to do.  Moreover, since nearly all of the illegal immigrants in Arizona are Hispanic, nearly all of the suspects questioned and verified will be Hispanic.  Does the near universal application of SB 1070 to these suspects prove racial profiling?  Or, on the other hand, does it prove merely that a particular subset of the Arizona population contains a statistically outrageous number of illegal immigrants?

Both the current lawsuit and this new proposal by the Attorney General are fools’ errands in sloppy litigation.  Eric Holder is 0-for-Everything as the nation’s top prosecutor.  Hopefully, President Barack Obama will let him get back where he belongs: challenging valid laws for the sake of liberal causes as a private attorney.

The United Nations, that vast reservoir of righteousness and international justice, has once again defined absurdity downward.

In March, North Korea sank the South Korean Navy ship Cheonan, killing 46 in a bald and remorseless act of international aggression.  The U.N.’s reaction?  On Friday, the Security Council expressed “deep concern” without even bothering to name the attacking party, and urged “appropriate and peaceful measures to be taken against those responsible.”  North Korea naturally and rightfully labeled that U.N. evasion “our great diplomatic victory.”  In other words, the U.N. lamented the murder without daring to name the murderer.  In contrast, Israel was labeled “murderous” and “guilty” by U.N. officials earlier this year, and remains the most condemned target of the U.N. collection of dictators and kleptocrats.  Israel’s transgression?  Commandos firing in self-defense when attacked by knives, steel pipes and even guns taken by the mob from the commandos themselves.

The Obama Administration and liberals continue to dismiss the U.N.’s malfeasance as harmless, but the fact is that it isolates Israel, emboldens murderous dictators and only encourages similar future behavior.  Sadly, the U.N. continues to more closely resemble its failed predecessor, the League of Nations.

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

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

In a shameless attempt to post a Chris Christie item before CFIF Senior Fellow Troy Senik (whose recent ruminations on the possible tax advantages for LeBron James of signing with the Miami Heat no doubt swayed the King to move to South Beach), I submit this news item on the sweeping privatization proposal by the New Jersey governor’s deficit reduction task force.  According to its calculations, the commission claims it can save Garden State taxpayers $210 million per year if services like state parks, psychiatric hospitals and turnpike toll booths were run by private vendors.

Can you imagine either of President Barack Obama’s deficit reduction commission co-chairs echoing their New Jersey peer Richard Zimmer with, “The question has to be, ‘Why do you continue to operate in a manner that’s more costly and less effective?’ rather than, ‘Why change?”

Chris Christie: Change You Can Invest In.

Never underestimate the power of positive thinking.  With a level of spin only a well-heeled campaign operative could rival the IRS is trying to allay small business owners’ fears of an “avalanche” of new1099 reporting requirements that life under the new rules won’t be so bad.

With an assist from CNN, here’s IRS Commissioner Douglas Shulman’s attempt to slather lipstick on a pig:

The IRS will have broad leeway to interpret the rules — and it’s already showing signs that it will look for ways to staunch the paperwork flood.

In a late May speech before the two payroll industry trade group, IRS Commissioner Douglas Shulman announced a major exception to the new rules: The IRS plans to exempt transactions made through credit and debit cards. A separate reporting requirement kicks in next year that will cover card transactions and help the IRS spot unreported payments made through those channels, “so there is no need for businesses to report them as well,” Shulman said. “Whenever a business uses a credit or debit card, there will be no new burden under the new law.”

Geez, Doug, I can’t tell you how much better I feel knowing that no matter when and where I swipe my business card I don’t have to report it because you already know about it.  What a relief!  Now that you can spot every single transaction I make, I’m sure the helpful agents at the IRS won’t hold it against me if I forget to include one of those payments on my tax return; right?

I mean, you’re trying to help small business owners by relentlessly monitoring all of our electronic transactions; aren’t you?  After all, you’ve got “broad leeway” in interpreting your new powers…

After watching and listening to the John Fund segment below, ask yourself when it becomes appropriate for many of the Democrats to be impeached for the way they’re systematically destroying the legislative process.

Noting that the health care reform measure passed earlier this year “doubles down on every problem the nation currently faces,” CFIF’s Renee Giachino in this week’s Freedom Minute discusses the effort to repeal ObamaCare in Congress and what you can do to help.

This week’s edition of the Liberty Update, CFIF’s weekly e-newsletter, is out.  Below is a summary of its contents:

Senik:  20 Questions for the Obama Regime
Ellis:  Eric Holder’s Department of Injustice
Lee:  World to Obama: No, You Just Don’t Get It

Freedom Minute Video:  Repeal ObamaCare Before It’s Too Late
Podcast:  Interview with Megan Brown of Wiley Rein LLP on the Recent Supreme Court Term
Jester’s Courtroom:  Student Debt Relief Plan: Sue Dad

Editorial Cartoons:  Latest Cartoons of Michael Ramirez
Quiz:  Question of the Week
Notable Quotes:  Quotes of the Week

If you are not already signed up to receive CFIF’s Liberty Update by e-mail, sign up here.

There is a strange element of humor when an international bureaucracy attempts to instruct the most prosperous and powerful nation in human history how to boost its economy.  The United States, after all, reached its status by maximizing economic freedom, not by following dynamism-sapping international norms.

Ignoring this reality, the International Monetary Fund (IMF) issued a statement yesterday instructing the U.S. to – you guessed it – raise taxes.  The IMF statement rightfully expressed concern over the nation’s debt that Obama is growing like a gigantic Chia Pet.  Unsurprisingly, however, the IMF failed to recognize this as an overspending problem, not an undertaxation problem.  More specifically, the IMF suggested “cuts in deductions, particularly for mortgage interest; higher taxes on energy; a national consumption tax; or a financial activities tax.”

Note how closely the IMF’s growth-killing prescription matches the Obama-Pelosi-Reid agenda, although at least the IMF didn’t take their “all of the above” position.  Regardless, the IMF (just like liberals in this country) apparently remains oblivious to the fact that incoming federal revenues actually reached their all-time high following the 2003 tax cuts, since lower taxes trigger economic growth, which in turn paradoxically increases revenues.  This is obviously a lesson that the “international community” still needs to learn along with Obama, Reid and Pelosi, but this episode provides yet another illustration why America is better off when it decides to be less like, rather than more like, the rest of the world.

In an interview with CFIF, Megan Brown, a Litigation and Appellate attorney at Washington, D.C.-based Wiley Rein LLP, discusses the U.S. Supreme Court’s recent term and Supreme Court nominee Elena Kagan’s confirmation hearings.

Listen to the interview here.

Yes, he CAN!  President Barack Obama managed to pull off a rare feat this week: convincing conservative Americans to voluntarily contribute more money than they owe to the government to help it fund a program.  The problem for the president is that thousands of Americans from all 50 states were sending the checks to Arizona to fight the Obama Justice Department’s legal challenge to SB 1070, the state’s new illegal immigration law.

Most of the donations were between $10 and $100; precisely the types of contributions that propelled Obama to victory while giving his campaign team reason to brag that his support was wide and potentially very deep.  Faced with a similar kind of widespread movement arrayed against him, will Obama see the nationwide backlash he’s loping towards before it’s too late? 

Do conservatives want him to?

Any reader familiar with Supreme Court Justice Antonin Scalia knows his professional reputation is etched with the cuts of (seemingly) a thousand harshly worded dissents.  In fact, they are so clear and compelling there’s a book called Scalia Dissents that catalogues some of his most pointed opinions.

Justice Clarence Thomas takes a different approach.  His most intriguing opinions usually come in the form of concurrences, agreeing with the conservative majority’s result, but not its process.  The most recent example was his unchallenged concurrence to the Chicago gun rights case (McDonald v. City of Chicago).  In it, the Court’s clearest thinking – and best writing – justice observed that “due process” of the 14^th Amendment guarantees nothing more than the process due a person before taking his life, liberty or property.

In other words, the government can deprive a person of any one or all three, it just needs to establish a scheme for doing so.

Thus, if it’s true that there are certain fundamental rights – like the 2^nd Amendment’s guarantee to carry a weapon for self-defense – that cannot be infringed by states and localities, conservatives and liberals will have to look somewhere other than the due process clause to protect them. Justice Thomas found the mechanism in the 14 Amendment’s privileges or immunities clause.  Not only does it fit with the intent of the amendment’s framers, it boasts the honor of not confusing the process of depriving rights with the substance of those rights.

All lawyers should strive to be so helpful.

The United States Supreme Court’s recently-completed term provided those who treasure individual freedom with much reason to celebrate, including the affirmation of Second Amendment protections against state infringement in McDonald v. City of Chicago.

Another 5-4 decision announced the same day as McDonald received less celebration, but not because it was any less worthy.  In Rent-a-Center, Inc. v. Jackson, the Court dealt a justified and much-needed blow against the hyper-litigious trial lawyer industry in America.   At issue in Jackson was whether the threshold question of enforceability of voluntary alternative dispute resolution agreements could be decided by arbitrators, or instead by already-overburdened courts.

Naturally, trial lawyers loathe alternative dispute resolution agreements because they reduce the likelihood of runaway “jackpot jury” awards and reduce the oppressive costs of litigation, thereby lowering settlement value.  Although the trial lawyers’ bar dishonestly claims that alternative dispute resolution “deprives plaintiffs of their day in court,” that is simply not true.  Arbitrators who decide such cases are typically experienced judges rather than random jurors off the street, and the full array of discovery and remedies are typically available to plaintiffs who have truly suffered.  The deciding arbitrator is also agreed upon mutually by the parties beforehand, thus ensuring an unbiased decisionmaker.  But because the chance of a runaway jury award is reduced, ambulance chasers absolutely loathe them.  And had the Supreme Court ruled that overburdened courts must determine threshold questions of enforceability of such agreements, trial lawyers would have reason to cheer.

Fortunately, the Supreme Court ruled correctly, albeit by only a frightening 5-4 margin.  Writing for the majority, Justice Antonin Scalia noted that plaintiff Jackson signed the alternative dispute resolution voluntarily, and it made no sense to distinguish enforceability questions from other matters on which disputes center.  For the dissenting minority, Justice John Paul Stevens claimed that the result was “unfair,” as if the plaintiff had no ability to walk away from the agreement when it was offered to him.

Alternative dispute resolution is an underappreciated way to reduce outrageous “jackpot justice” awards in a fair, speedy, inexpensive way, which is why trial lawyers detest them.  Come to think of it, trial lawyers’ hysterical opposition to alternative dispute resolution is evidence enough of their value.  A hearty “bravo” to the Supreme Court.

The first step to recovery is admitting that you have a problem. Here it goes: my name is Troy and I geek out at the intersection of sports and economics.

Today’s example — catnip for conservatives — comes from NBA superstar LeBron James’s much-anticipated announcement of where he’ll be playing next season now that he’s a free agent.

Apart from the option of staying in Cleveland (which won’t be habitable until the folks at Reason are through with it), Lebron’s two most prominent options look to be the New York Knicks or the Miami Heat. But even if both teams offer him identical contracts, his take-home pay will look dramatically different. As a New York Post blog posting notes:

If LeBron James goes to the Miami Heat instead of the Knicks, blame our dysfunctional lawmakers in Albany, who have saddled top-earning New Yorkers with the highest state and city income taxes in the nation, soon to be 12.85 percent on top of the IRS bite. There is no state income tax in Florida.

Total state taxes on a 5-year, $96 million contract? $12.34 million in New York; $0 in Florida.

If LeBron ends up in Miami (and the influence of joining Dwyane Wade and Chris Bosh in the Heat’s starting lineup shouldn’t be underemphasized), this blogger may be one of the only sports fans in America who traces the development to a rather obscure, short-lived economist from the Eisenhower era.

Charles Tiebout’s greatest contributions to economics was the “Tiebout Hypothesis” — which in essence stated that federalism matters because citizens vote with their feet. If a state wants productive people (and make no mistake, LeBron is an economic dynamo), they create the conditions that will bring them there. Thus, Florida has a recipe for fostering entrepreneurship, while New York has a recipe for disaster.

Of course, there are mitigating factors. Kobe Bryant stays in Los Angeles despite California’s confiscatory tax rates because of the prestige of playing with a successful legacy franchise like the Lakers. But for those of us with a more conventional cut to our jibs, the calculation is simpler.

If you have a business you can run from anywhere, would you rather do it at New York’ s 12.85% rate or for free in one of the nine states that don’t have income taxes (Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming — just in case you’re looking to flee blue state insanity).

By the way, take a look at the business climates in these states and you’ll notice which model works and which model doesn’t.

As we mentioned earlier today, Dr. Donald Berwick has received a recess appointment from President Obama to head the Centers for Medicare and Medicaid Services. You’ll hear a lot in the next few days from the conservative press about Berwick’s radical affection for rationing and his distaste for the free market system. Lest you think any of it hyperbolic, let the man tell you for himself:

The Associated Press reports:

Bypassing Republicans eager to grill an administration official over the new health care law, President Barack Obama is planning to appoint the head of Medicare and Medicaid without Senate hearings.

“Obama intends to use a so-called recess appointment to put Dr. Donald Berwick in charge of the Centers for Medicare and Medicaid Services, a White House official said Tuesday night.”

As Freedom Line readers are aware, Dr. Berwick is a self-proclaimed health care rationing enthusiast who openly supports wealth redistribution schemes and a completely government-run single payer health care system. 

Indeed, in an interview just last year Berwick said, “The decision is not whether or not we will ration care — the decision is whether we will ration with our eyes open.”  And in 2002, Dr. Berwick wrote, “most people who have serious pain do not need advanced methods – they just need the morphine and counseling that have been available for centuries.”

Seniors beware.  This is the guy who is now in charge of your health care.

Hypocrisy in a president is shameful enough.  But combining that hypocrisy with outright dishonesty is inexcusable.

Compare a front-page headline from today’s Wall Street Journal versus President Obama’s speech from the Oval Office regarding the Gulf oil spill.  In his June 15 speech, Obama descended into his usual habit of scapegoating the allegedly “deregulatory” Bush administration and falsely attempting to distinguish his own:

Over the last decade, [the federal Minerals Management Service] has become emblematic of a failed philosophy that views all regulation with hostility — a philosophy that says corporations should be allowed to play by their own rules and police themselves…  When Ken Salazar became my Secretary of the Interior, one of his very first acts was to clean up the worst of the corruption at this agency.  But it’s now clear that the problem there ran much deeper, and the pace of reform was just too slow.  And so Secretary Salazar and I are bringing in new leadership at the agency…  So one of the lessons we’ve learned from this spill is that we need better regulations, better safety standards, and better enforcement when it comes to offshore drilling.  But a larger lesson is that no matter how much we improve our regulation of the industry, drilling for oil these days entails greater risk.”

But that’s not true.  According to a front-page report from today’s Wall Street Journal entitled “Obama Decried, Then Used, Some Bush Drilling Policies,” the Obama White House urged a federal court of appeals to reverse its environmental risk analysis and allow Gulf oil drilling to proceed:

Less than four months after President Barack Obama took office, his new administration received a forceful warning about the dangers of offshore drilling.  The alarm was rung by a federal appeals court in Washington, D.C., which found that the government was unprepared for a major spill at sea…  Despite its pro-environment pledges, the Obama administration urged the court to revisit the decision.”

The appellate court did reverse its previous ruling, allowing more Gulf drilling to proceed.  That includes BP’s well.

Obama’s halting leadership style sows economic uncertainty at home and international menace abroad.  His increasing dishonesty, however, creates an even more disturbing spectre haunting the nation.

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

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