Archive for September, 2011
September 23rd, 2011 at 2:07 pm
Free Trade, Worker Aid Bills Show Policy Differences

Bloomberg News reports the latest ultimatum from House Speaker John Boehner (R-OH) to President Barack Obama:

“We await the president’s submission of the three trade agreements sitting on his desk so the House can consider them in tandem” with the aid and preference programs, Boehner, an Ohio Republican, said in a statement yesterday. “If the president submits these agreements promptly, I’m confident that all four bills can be signed into law by mid-October.”

Apart from Rep. Paul Ryan’s budget resolution and the president’s deficit reduction proposal, there may be no better example of how different is each party’s idea of sound economic policy.

Boehner wants Obama to release three trade treaties negotiated by the Bush Administration so that Americans and their counterparts in Columbia, South Korea and Panama can start enjoying the benefits of free trade.

For his part, Obama wants to force Republicans into funding another round of unemployment benefits, this time for workers displaced by the yet-to-be-ratified agreements.  That’s right: the president wants to spend money on people who may never be fired.

First of all, it’s fallacious to assume that businesses operating at historically low worker levels will fire employees; especially since increased trade opportunities are more likely to lead to hiring increases.  Moreover, Obama fails to recognize the cost of not enacting the three free trade agreements.  For instance, the U.S. Chamber of Commerce estimates that failure to ratify the agreements will cost 380,000 jobs due to missed business opportunities.

At the heart of this dispute is the focus of each party.  Boehner and the Republicans want to spur economic growth.  Obama and the Democrats want to lock-in the growth of the entitlement state.

Boehner is right to demand action on both free trade and worker aid at the same time.  If Obama cries foul, it’s only because his childish attempt to spend more and get less was called out.

September 23rd, 2011 at 12:42 pm
This Week’s Liberty Update

Center For Individual Freedom - Liberty Update

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

Lee:  LightSquared Imbroglio – “Fast and Furious” Doesn’t Just Describe One Obama Administration Scandal Anymore
Senik:  Debt Ceiling Defense Cuts Are Ticking Time Bomb for American National Security
Hillyer:  Keller, NYT: Blinkered Obama Love
Ellis:  Corporate Jet Tax Will Kill Manufacturing Jobs

Freedom Minute Video:  Government Stupidity! Where’s the App for That?
Podcast:  Interview with Professor John Yoo: “Confronting Terror”
Jester’s Courtroom:  Unkempt Lawn Grows Lawsuit

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.

September 23rd, 2011 at 11:41 am
Podcast: “Confronting Terror: 9/11 and the Future of American National Security”
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In an interview with CFIF, John Yoo, law professor at the University of California Berkeley and former Justice Department official, discusses a new book that he co-edited: “Confronting Terror: 9/11 and the Future of American National Security.”  The book is a collection of essays by 22 nationally known legal and policy experts and scholars examining the law and policy of the War on Terror, including President Obama’s response to 9/11 and U.S. policy on interrogation methods. 

Listen to the interview here.

September 23rd, 2011 at 10:39 am

A new coalition of major corporate executives has formed to push for a lower corporate income tax rate. Called RATE (Reducing America’s Taxes Equitably), the group has been rather vague about how much to cut the corporate rate, but the fact that an influential group is organizing at all is good news. As I have argued in person for four years and in print for at least 3 1/2 years, I think there is actually a good case to be made for not just reducing, but completely eliminating, the corporate income tax. Presidential candidate Rick Santorum, to his credit, goes almost as far, calling for cutting the rate in half in general, and completely eliminating it for manufacturers.  Megan McArdle at The Atlantic agrees with me that the whole thing should go.

But back to RATE, which isn’t so bold, but still is a valuable step in the right direction…. It really merits a full column, and will receive one here in the coming weeks. But as RATE notes at its web site, there really is no good political reason not to cut corporate rates, because leaders throughout the political spectrum have agreed it should be cut.  The problem, I think, is that they keep holding it in abeyance, wanting to include the corporate rate cut in some “grand bargain” that includes all sorts of other taxing and spending changes.

This is the wrong way to go about it. Grand bargains are almost always the wrong way to go about things. Better to do things cafeteria style selection by selection. If everybody agrees on something, go with it — especially if it is good policy. Good policies shouldn’t wait on extraneous matters.

Anyway, again, there is far more to be said for RATE. But for now, we should welcome this group to the table and thank it for coming. It’s a coalition that could do some real good.

September 23rd, 2011 at 10:00 am
Poll: Majority of Americans Now Blame Obama for Economic Conditions
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According to a new Gallup poll, a majority of Americans now blame President Obama for the current state of the U.S. economy.  By a 53% to 47% margin, surveyed adults say that Obama shares a “great deal/moderate amount” of blame, while they also believe that George W. Bush continues to share blame by a 69% to 30% margin.  But notice something interesting.  For all the talk of hyper-partisanship from Republicans, the primary reason Bush’s numbers look worse is that Republican survey respondents split 50% to 50% on whether Bush shares some blame.  Democrats, in contrast, were far less willing to admit that their guy Obama shares blame, disagreeing by a 75% to 25% margin.  Independents by a 60% to 40% margin say that Obama shares some blame.

Here’s another noteworthy fact.  For all of Obama’s talk that he and his wasteful trillions of “stimulus” spending saved our economy from “the next Great Depression,” government economic figures show that we actually began our cyclical recovery before Bush had left office.  That’s a point that must be highlighted to voters as we approach a pivotal 2012 election in which Americans must choose between two governmental philosophies.  But in the meantime, at least most of us now recognize Obama’s role in our continuing economic struggles.

September 23rd, 2011 at 8:53 am
Video: Government Stupidity! Where’s the App for That?
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In this week’s Freedom Minute, CFIF’s Renee Giachino comments on the U.S. Department of Labor’s new smart phone app, designed to help outdoor workers prevent heat illness by informing them of… well… the temperature outside.  The Labor Department is not yet able to calculate its costs to taxpayers.  “Yes, that’s your government at work,” says Giachino. “They can tell you what temperature it is outside, but not how much it cost them to tell you. Maybe there should be an app for that.”


September 21st, 2011 at 8:45 pm
Bernanke’s Fed: ‘Twist’ing in the Wind
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It was less than a month ago that the Federal Reserve wrapped up its annual economic symposium in Jackson Hole, Wyoming with all signs pointing to the prospect that the nation’s central bank was going to cool it on the “quantitative easing” (dumping new currency into the markets) for a while. Though the insanity has (at least temporarily) abated, the central bank is still making mischief.

As Politico reports:

The nation’s central bankers dusted off a 1960s-era plan in hopes of rousing the sluggish economy Wednesday, taking the unusual step of shifting $400 billion into longer-term bonds in hopes of slashing interest rates further.

The Federal Reserve’s Open Market Committee voted 7-3 to embark on what’s informally called “Operation Twist,” a move first used during the heyday of Chubby Checker and named for his song of the same name.

The policy is mostly inert, as it won’t actually result in a monetary injection ala quantitative easing. The early consensus is that it won’t have much effect one way or the other. But the possible rationale, if true, is revolting:

Exerting political pressure on Bernanke may have rallied the Fed to act, since the committee likely found “this political meddling repugnant,” wrote JPMorgan Chase economist Michael Feroli in a client note.

Let’s be clear about this: the Fed already operates independent of “political meddling.” Various members of Congress and candidates for president may have been carping about Bernanke’s leadership (a point on which they’re certainly justified), but their influence was limited to the range of their voices. Nothing they said could actually effect policy.

If something so immaterial to the Fed’s work could drive monetary decisions, then this may be the most petulant institution in the federal government. At a time when the economy teeters on the brink of another devastating downturn, making market decisions in response to slights real and imagined shows a staggering lack of seriousness. If this is Mr. Bernanke’s swipe at Governor Perry, he should note that he’s only strengthening the governor’s argument.

September 21st, 2011 at 1:01 pm
Dissolve Supercommittee, Hire Deloitte

The Canadian Press reports that its government will hire consultants from Deloitte Inc. to devise ways to reduce annual spending by $4 billion by next March.  Cost of the contract: $19.8 million.

Here’s the Conservative government’s response to those badgering it for spending $90,000 a day to reduce spending:

A spokeswoman for Clement defended the contract, saying Ottawa needs the best advice available for reducing costs.

“Engaging private sector advisers who have been successful with cost-saving operational reviews will better enable ministers and deputy heads not only to compile their individual cost-savings proposals but also to provide practical advice on what to look for and how to execute their plans,” press secretary Heather Hume said in an email.

“As always, our government is committed to maintaining an open, fair and transparent procurement process while obtaining the best possible value for Canadians.”

If President Barack Obama and Congress are so willing to set aside the normal constitutional processes for writing budgets and tax policies (as evidenced by the creation of the congressional ‘supercommittee’ charged with finding $1.5 trillion in savings by Thanksgiving), why not go all the way and let experts in the private sector scrub the books and find the savings?

September 21st, 2011 at 12:40 pm
Issa: No Overpayment by USPS Exists

Hat tip to Rep. Darrell Issa (R-CA) and his staff at the House Committee on Government Oversight for sharing this “Myth v. Fact” explanation via email of the USPS’s alleged overpayment into the federal retirement system.

Myth: The Postal Service has overpaid by $50-$75 billion into the Civil Service Retirement System and Congress owes this money back.

Fact: There is no Postal Service overpayment.

The United States Postal Service was created in 1971 from the old Post Office Department in order to provide better mail delivery and let it act more like a business. In 1974, the Postal Service agreed to a formula to share the retiree costs of individuals who worked for both the Post Office Department and the Postal Service, calling it “proper, as a matter of principle.” Now, with revenues declining, the Postal Service argues that that formula is unfair. The Postal Service argues that if a formula it considers to be fair had been used instead, then it would be owed $50-$75 billion by the US Treasury.  This is an attempt to rewrite history. The original formula was instituted as part of a broader set of decisions concerning the creation of USPS.  For instance, those decisions included not charging any fee to USPS in return for the postal monopoly it was granted.  Another reason why it makes little sense to speak of an overpayment due to USPS is that the Postal Service had a clear requirement from 1971 until 2006 to raise postage rates to cover all costs, including its cost of retirement funding.  If a different formula had been used all these years that had resulted in lower annual payments by USPS for its federal employee retirement costs, those savings would have been used to lower the cost of postage rates.

Issa’s postal reform bill is up for consideration in a congressional subcommittee today.  You can get more information on his version of postal reform at this website.

September 21st, 2011 at 12:25 pm
Obama’s Watergate Now Has Tapes

The ATF’s “Project Gunrunner” and “Operation Fast and Furious” scandals continue show a cover-up by high-ranking officials in Eric Holder’s Department of Justice.  The most recent revelation was the emergence of tapes secretly recorded by an Arizona gun dealer who grew suspicious of ATF’s ability to intercept guns deliberately sold to Mexican drug cartels.

Howard made the tapes in March 2011 after a meeting he and his attorneys held with federal officials. In that meeting, Assistant U.S. Attorney Emory Hurley continued to insist the guns Lone Wolf sold were stopped and seized before reaching Mexico.

But ATF officials are quoted in a Washington Post article and the Spanish language daily La Opinion saying just the opposite — blaming Lone Wolf for “selling guns to the cartels” with no mention that Howard was operating under the federal government’s direction, encouragement and approval.

In related news, the Mexican government is seething because ATF brass and supervisors at Justice chose not to inform relevant officials of the gun-walking program.  After learning of the operation from news reports following Border Agent Brian Terry’s murder, the Mexican Attorney General said, “In no way would we have allowed [the selling of guns to drug cartels], because it is an attack on the safety of Mexicans.”

And an affront to American integrity as well.

September 20th, 2011 at 10:27 pm
Warren Buffett: Bad at Math?
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Warren Buffett has enjoyed a fair bit of celebrity over the last few weeks, acting as the iconic symbol of President Obama’s proposal for tax hikes by ubiquitously making it known that he hasn’t been debited enough by the feds. Buffett’s rhetorical trope of choice is to invoke the fact that he pays lower taxes than his secretary. That’s because most of Buffett’s income comes in the form of capital gains from his investment empire, which are taxed at 15 percent, not earned income like his assistant’s paycheck, which is likely taxed at a federal rate of either 25 percent or 28 percent, depending on whether her annual salary is above $83,600.

This sounds unjust at first blush — until you consider the fact that the capital gains tax is essentially double-dipping. That is, the money you have to invest is what’s left over after your earned income is taxed. In other words, the investment money on which Buffett is paying the cap gains tax was already skimmed by Washington when he earned it in the first place. If his assistant was investing, she’d be paying the same rate as Buffett. As pointed out by S.A. Miller in the New York Post:

Buffett actually was taxed twice on his investment income.

First, Buffett had to make the money he invested. Those earnings were taxed as corporate income, at about a 35-percent rate.

Then, Uncle Sam took another cut when Buffett invested the money and earned a profit. That’s when Buffett paid the 15 percent capital-gains tax rate.

All told, after combining corporate taxes and capital gains taxes, Buffett forked over about 45 percent of his earnings.

We’ll put Buffett in the same category as Albert Einstein and Noam Chomsky: experts in their field who should have never been given automatic credibility when it comes to politics.

September 20th, 2011 at 5:42 pm
FBI’s Latest Figures Refute Myth That Poverty Is the Root Cause of Crime
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Two federal government reports released within the past week again refute the toxic, persistent myth that poverty is the root cause of crime.

Last week, the Census Bureau announced that the nation’s poverty level jumped from 14.3% in 2009 to 15.1% for 2010, the highest rate since we emerged from the Jimmy Carter hangover in 1983.  The overall number of poor Americans rose to 46.2 million, the highest total since poverty estimates began 52 years ago.  Those numbers justify Newt Gingrich’s observation that Barack Obama is the “Food Stamp President.”

Now this week, the Federal Bureau of Investigation (FBI) announced that crime rates continued to plummet last year.  Violent crime rates declined for the fourth consecutive year, while property crimes declined for the eighth consecutive year, even as the nation’s economic malaise deepened.  Moreover, the lower crime rates occurred amid local budget reductions that have affected police departments.

These statistics confirm the timeless reality that criminality is not some sort of involuntary act to which helpless souls are driven by economic adversity.  Rather, criminality is a voluntary choice on the part of the culpable criminal.  The latest data won’t stop the political left from repeating their discredited dogma, but the facts as usual refute them.

September 20th, 2011 at 11:48 am
Ramirez Cartoon: Crony Socialism
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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.

September 19th, 2011 at 8:10 pm
The Chinese Have Their Economic Problems Too

NBC News reports a breath of fresh air for ailing U.S. manufacturing workers: Companies that once outsourced jobs to China are starting to bring some of them back.  Some of the reasons:

Labor costs are soaring by 40 percent a year, as migrant workers are becoming pickier, since there are more job opportunities at home. Also China’s one-child policy means there is no longer such a huge pool of young, dexterous workers. Bank lending is tightening and China’s currency is also appreciating by around 6 percent a year against the U.S. dollar, not quickly enough for US and European policymakers, but sufficient for factories on low margins to feel the pain.

Of course, slapping a new tax on USA-based job creators will stifle any trend towards manufacturing growth China’s growth might enable.

Mr. President, have pity on the working man

September 19th, 2011 at 5:03 pm
New Mexico Governor Battles Illegal Drivers’ Licenses

When it was passed back in 2003, New Mexico’s law allowing illegal immigrants to receive state drivers’ licenses was billed as a way to make the roads safer by requiring illegals to pass a driving test and carry insurance.

For all the hoopla, a recent study showed that New Mexico is second in the nation for percentage of uninsured drivers on the road at 25.7 percent.  As for making New Mexico safer, a different reality has emerged:

The unintended consequence has been an eruption in criminal rings assisting illegal immigrants in obtaining New Mexico driver’s licenses. In the past year, the state has indicted members of at least seven operations on fraud charges.

The consequence may have been unintended, but it was foreseeable.  Extending a legal privilege to a person whose very existence breaks the law of the country encourages more law-breaking.

It’s a good thing for New Mexico that newly elected Governor Susana Martinez is a former prosecutor.  Too bad for America that President Barack Obama isn’t.

September 19th, 2011 at 3:17 pm
Solyndra’s Not the Disease, It’s Just a Symptom
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The bad news about the Obama Administration’s more than half a billion dollar investment in Solyndra — the California solar energy company that has gone bankrupt and laid off approximately 1,100 employees — keeps piling up. In addition to being a waste of taxpayer money, there are also issues about whether or not the federal loan guarantees were properly vetted, about private investors getting to jump in front of the taxpayers as secured creditors, and about why Solyndra received dramatically lower interest rates than similarly situated firms.

While all those issues are both troubling and relevant, the proliferation of trees runs the risk of obscuring the forest here. That’s why this passage from Matthew Continetti’s new piece in the Weekly Standard is so valuable:

In today’s economy, risks are socialized while profit is privatized. The government uses deficit spending to shape investment decisions and support markets that otherwise wouldn’t exist. Political connections determine the recipients of government largesse. Rentiers conceal their self-interest behind the organic hemp cloak of environmentalism and global “competitiveness.” The illusion can be maintained for a time, but in the end the bill comes due. There’s no money left. And everything disappears.

Ably stated. There’s a reason they’re starting to call it “venture socialism”.

September 19th, 2011 at 11:19 am
TODAY’S RADIO SHOW LINEUP: CFIF’s Renee Giachino Hosts “Your Turn” on WEBY Radio 1330 AM
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Join CFIF Corporate Counsel and Senior Vice President Renee Giachino today from 4:00 p.m. CST to 6:00 p.m. CST (that’s 5:00 p.m. to 7:00 p.m. EST) on Northwest Florida’s 1330 AM WEBY, as she hosts her radio show, “Your Turn: Meeting Nonsense with Commonsense.”  Today’s guest lineup includes:

5:00 pm (EDT):  Professor John Yoo, Confronting Terror: 9/11 and the Future of American Security

5:30 pm (EDT):  Jason Stverak, President of the Franklin Center for Government and Public Integrity, Citizen Journalists and Investigative Reporting

6:00 pm (EDT): Robert Knight, Senior Fellow American Civil Rights Union, ACLU’s “Don’t Filter Me” Campaign

6:30 pm (EDT):  Tim Wyrosdick, Superintendent of Schools Santa Rosa County, Race to the Top, Teacher Bonuses based on Student Performance, and Secretary Duncan’s Digital Promise to our Nation’s Children

Listen live on the Internet here.   Call in to share your comments or ask questions of today’s guests at (850) 623-1330.

September 16th, 2011 at 4:20 pm
Kotkin, Palin, and the Coming Middle Class Revolt

An interesting critique is starting to surface: Big Government and Big Business are conspiring to enrich themselves at the expense of job and wealth creation for the middle and lower classes.  Demographer Joel Kotkin is noticing it.  So too, is potential GOP presidential candidate Sarah Palin.

As Kotkin notes, grassroots Democrats are noticing that President Barack Obama’s neglect of job creation is costing their members dearly.  (Just ask California Democrat Maxine Waters.)  Republican presidential frontrunner Rick Perry is weakest on the issue of crony capitalism.  Palin’s critique of the Big Business-Big Government axis could expand a core Tea Party theme into a viable national campaign.

Of course, this argument may fizzle, but it’s interesting to see quite different commentators coming out with the same idea.

September 16th, 2011 at 3:37 pm
WSJ: Fed Loan Ruined Solyndra

While congressional investigators continue to probe into whether the Obama Administration broke federal laws in awarding a $535 million loan to now-bankrupt Solyndra, the Wall Street Journal details how crony capitalism prolonged a series of bad decisions by the solar company’s management.

Here’s the money paragraph:

In mid-2009, Solyndra had a choice: It could hunker down with its existing factory and try to slash costs to meet competition, drawing on additional private capital as needed, according to the people familiar with the company. Or, with a loan from Uncle Sam, it could gamble and build a brand-new, bigger factory in a bid to gain economies of scale and dominate the market.

Choosing to gamble, Solyndra overbuilt its manufacturing capacity, and continued rushing to market a product that was not marketed – or priced – correctly.

As the WSJ article makes clear, not all of Solyndra’s problems were the result of inept management.  An unexpected drop in the price of a competing product turned Solyndra’s profitability upside down.  The market was sending Solyndra’s management a message to rethink their strategies.  The Obama Administration bypassed that all-important-process with huge amounts of money to continue pursuing failure.

Come to think of it, that pretty much sums up the president’s thinking when it comes to government spending.  No wonder his new jobs plan is dead on arrival.

September 16th, 2011 at 3:05 pm
House GOP Votes to Rein-in NLRB

Yesterday was a victory of sorts for those of us who want Congress to clip the wings of the regulatory state.  In a near-perfect party-line vote the House of Representatives passed a measure prohibiting the National Labor Relations Board (NLRB) from harassing businesses like Boeing for moving to business friendly states.

Earlier this year, the liberal majority on the NLRB sued Boeing for opening up a new factory in South Carolina – a right-to-work state – instead of expanding its existing manufacturing presence in Washington state, a union shop state.  For the first time in its history, NLRB interpreted its congressionally delegated authority to include the power to punish a private business for relocating some of its operations to more profitable climes.

Congress now has an opportunity to correct NLRB’s overly broad interpretation.

NRLB’s unprecedented decision merits a brush back response like the one the GOP-controlled House delivered yesterday.  Though the measure is likely to die in the Democrat-controlled Senate, the Boeing-NLRB tussle should be some Republican presidential candidate’s Exhibit A on the regulatory overreach of Obama’s federal government.

Unions can only grow if businesses grow first.  It’s time for the liberals at the NLRB and elsewhere to remember that simple truth.

H/T: Washington Times