Freedom Line Blog

So let’s review:

The Internet revolution has brought us a level of innovation and prosperity unprecedented in human history.

Throughout two decades spanning both the Clinton and Bush administrations, deregulation has provided the fertile ground for private investment and productivity measured not in the billions, or even hundreds of billions, but in the trillions.

On that basis, the public opposes federal Internet regulation by a two-to-one margin.

Further, a unanimous D.C. Court of Appeals rejected Federal Communications Commission (FCC) authority to impose “Net Neutrality” just eight months ago.

Finally, a rare bipartisan coalition of 300 members of the House and Senate have admonished the FCC against its rogue “Net Neutrality” scheme.

So what does the unelected FCC do?  Learning nothing from the Administration’s ObamaCare fiasco, it moves full speed ahead with its hyperpartisan “Net Neutrality” agenda by a party-line 3-2 vote anyway.  As dissenting (i.e., sober) FCC Commissioner Meredith Attwell Baker summarizes, the FCC’s intervention threatens the future of the Internet:

The rules will give government, for the first time, a substantive role in how the Internet will be operated and managed, how broadband services will be priced and structured, and potentially how broadband networks will be financed.  By replacing market forces and technological solutions with bureaucratic oversight, we may see an Internet future not quite as bright as we need, with less investment, less innovation and more congestion.  Discouragingly, the FCC is intervening to regulate the Internet because it wants to, not because it needs to.”

The FCC’s reckless effort to regulate Internet traffic will now begin a slow death march to ultimate defeat from legal challenges and Congressional action.  In the meantime, unfortunately, the cost will be even more uncertainty at a time when our economy cannot afford it.

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.

It was embarrassing enough when the Government Accountability Office (GAO)  recently withdrew its defective “undercover study” issued last summer as part of the Obama Education Department’s campaign against for-profit colleges.  Readers will recall how the GAO sent undercover “students” to several schools to capture information as evidence for the Education Department and a Senate committee.  This was all part of their larger effort to justify the proposed “Gainful Employment” rule targeting for-profit career colleges that provide critical training and education to struggling Americans.  Worse, this came on the heels of a letter from Senators Tom Coburn (R – Oklahoma) and Richard Burr (R – North Carolina) seeking investigation into allegations of insider trading within the Education Department relating to its campaign to cripple career colleges.

Now comes a report providing greater detail on just how malignant that the defective GAO “undercover” report was.  According to Frederick Hess and Andrew Kelly, fully 16 of the report’s 28 findings required revision.  Tellingly, every single one of those “findings” skewed the same direction – casting for-profit career colleges negatively.  The statistical likelihood of all 16 randomly tilting the same way, according to Mr. Hess and Mr. Kelly, is 1 in 65,536.

That doesn’t suggest extreme coincidence.  It suggests intentional malfeasance.

Amid persistent unemployment and intense global competition, for-profit colleges provide important alternatives for education and job skills.  That is why CFIF has formally petitioned Chairman-Elect Darrell Issa (R – California) of the House Committee on Oversight and Government Reform  to investigate this matter.  It is also important that supporters and activists across the nation contact their Senators and Representatives to help stop the Obama Administration’s unjustifiable scheme.

On this date in 1773, Samuel Adams and his Sons of Liberty hosted their original tea party in Boston Harbor.  Two hundred thirty-six years later, CNBC’s Rick Santelli refreshed the movement from the floor of the Chicago Board of Trade, and its momentum continues.  So happy birthday, Tea Party – federal judge Henry Hudson provided a fitting gift by declaring ObamaCare’s core mandate unconstitutional based on your underlying principles.

Below is two-time Pulitzer Prize-winner Michael Ramirez’s take on yesterday’s federal court ruling that Congress exceeded its authority by mandating all individuals buy health insurance in ObamaCare.

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

In his opinion declaring ObamaCare’s central provision (the individual mandate) unconstitutional, United States District Judge Henry Hudson today vindicated the core concept of individual freedom that provides the foundation of our constitutional republic.  More than that, however, Judge Hudson provided a refreshing break from that loathsome parade of shameless judges who have insulted Americans’ intelligence through recent decades by mangling the English language beyond any logical recognition.

Namely, Judge Hudson rejected the Obama Administration’s central argument that economic inactivity somehow amounts to “economic activity.”  On Page 11 of his ruling, Judge Hudson neatly summarized the Administration’s core logic: “Critical to the Secretary’s argument is the notion that an individual’s notion not to purchase health insurance is in effect ‘economic activity.'”  Just as neatly, he rejected that Orwellian illogic in terms that should be etched permanently as a reminder on Obama’s teleprompter:  “This broad definition of the economic activity subject to Congressional regulation lacks logical limitation and is unsupported by Commerce Clause jurisprudence.”

Individual freedom and linguistic logic won a historic victory today.  For if inactivity was somehow contorted to constitute “commerce,” then there is no limit whatsoever to Congress’s reach.

The fight continues, but we should also stop to savor this important moment.

This week, CFIF formally petitioned House Committee on Oversight and Government Reform Chairman-Elect Darrell Issa (R – California) to investigate the Obama Education Department’s continuing campaign against for-profit colleges.

Career colleges have flourished because of their ability to nimbly respond to our evolving economy, offer an education focusing on hands-on occupational training, and excel at serving non-traditional students who often have children, are working, are typically older and are more diverse than their peers at traditional schools.  This is particularly important during the current period of job scarcity and worldwide economic competition.  The Obama Education Department, however, seeks to foist a proposed “Gainful Employment” rule that would declare academic programs ineligible for federal aid if some specified proportion of their graduates failed to meet an arbitrary income-to-loan payment ratio.

The natural consequence of such a rule:  vital for-profit career colleges would be eliminated.

The need for Congressional investigation became even more obvious this week.  The Government Accountability Office (GAO) withdrew, then revised and republished a defective study originally released last summer in which it sent undercover “students” to several schools to capture information on recruiting policies, promises of post-graduation pay, federal and other funds for tuition and expenses, and more.  That GAO report had been cited as vital evidence for the Education Department and a Senate committee as they prepare to promulgate the Gainful Employment rule, and even the Washington Post (whose parent company owns one of the largest for-profit schools) ran an article exposing that defective report.  The GAO’s numerous revisions are all clearly slanted in one direction – the original report inaccurately cast career colleges in an unfavorable light, while the revisions indicate that the GAO’s undercover students may have intended to entrap career college admissions personnel.  By the GAO’s own estimate, only 1 percent of reports are corrected, so an inquiry into the reasons behind this particular revision – with its original report clearly biased – is justified.

That news comes on the heels of allegations that Education Department officials communicated with short-sellers to inform them of their intentions, providing certain traders with inside information potentially allowing for illegal financial advantage.  The cooperation, however, was allegedly a two-way street.  According to media accounts, these same short-sellers may have concocted elaborate schemes to cast a negative light on career colleges, helping them rationalize the proposed rule.   These allegations are sufficiently serious that Senators Tom Coburn (R – Oklahoma) and Richard Burr (R – North Carolina) have formally sought an investigation.

At a minimum, an alarming pattern has emerged that points to the Department of Education specifically working to inflict economic harm upon career colleges, while possibly collaborating in the shadows with the very short-sellers on Wall Street who would most likely benefit from such activity.

Remember how ObamaCare was furiously crafted behind locked doors, despite Obama’s assurances it would be “on C-Span?”  The public revolted against those tactics, but Obama’s Federal Communications Commission (FCC) apparently thought it all went pretty well.  Look no further than its secrecy in concocting its latest “Net Neutrality” draft, despite FCC Commissioner Julius Genachowski’s own promises of “transparency.”

In this way, “Net Neutrality” imitates ObamaCare beyond the broader fact that it seeks to commandeer 1/6 of the American economy.  Like ObamaCare, it is strongly opposed by the public and judicially suspect, and proponents know that exposing its manufacturing process to the sunlight would only help doom it.  Accordingly, Chairman Genachowski appears intent on concealing his “Net Neutrality” proposal as long as possible before dumping it on the public later this month.

Why all the secrecy?  What do Chairman Genachowski and “Net Neutrality” proponents fear so much?  Instead of secrecy, they should follow Commissioner Meredith Attwell Baker’s call to immediately make the draft public.  Apply the same “openness” that you claim to desire for the Internet, Chairman Genachowski.

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.

Moments ago, the Labor Department announced that the nation’s unemployment rate, which had stagnated at 9.6% for three consecutive months, actually rose to 9.8%.

Alarmingly, this means that unemployment has now stood above 9% for 19 consecutive months, a post-World War II record.  Analysts had predicted 150,000 new jobs for October, but it turned out that only 39,000 were added, far below the number necessary to reduce the unemployment rate.

No American should take pleasure in others’ blight, but we simply must face the fact that the Obama-Reid-Pelosi Keynesian economic agenda has failed, and a course correction is critical.  In the 20 months since Obama signed the budget-busting $1 trillion “stimulus,” unemployment has only risen from 8.4% to 9.8%.  In contrast, in the 20 months following the effective date of the Reagan tax cuts, unemployment plummeted from 10.4% to 7.3%.  The facts speak for themselves.  It’s time for remedial free market action.

Former White House Chief of Staff Rahm Emanuel famously said that we mustn’t allow a “crisis to go to waste” in foisting such things as ObamaCare upon an unwilling nation.  But what if there’s no “crisis” in the first place?

This month, Gallup released a scientific survey that is a critical component in any health care policy discussion.  In what must come as a devastating shock for those who defend ObamaCare, an astonishing 82% of Americans rate their health care as “good” or “excellent.”  Some 40% place their health care in the “excellent” category, which exceeds the previous high of 38% and the long-term average of 34%.  Even those who don’t possess health insurance (which must be distinguished from actual health care) rate their health care “good” or “excellent” by a 53% majority.

Clearly, there is no health care “crisis,” only a lot of ObamaCare “waste.”

Sign of the times from today’s New York Daily News:  “Federal Workers Rage Over President Obama’s Two-Year Wage Freeze.”

Let’s see…  Federal employment has grown 17% since 2007, and federal employees’ total compensation has risen 37% in the past decade (compared to 9% for private sector employees), according to The Wall Street Journal and USA Today.  Further, average federal employee compensation reached $123,000 in 2009, more than twice the $61,000 earned by the average private employee.

So in what moral universe are federal workers justified in reacting to a very modest two-year wage freeze proposal with “rage” and by labeling it a “slap” when they haven’t faced the brutal layoffs, salary reductions and cuts in health coverage their private counterparts must endure?  A majority of Americans surveyed favor federal workforce reductions and salary cuts, so perhaps they should behave less like spoiled Greek, French and English rioters and instead express gratitude to American taxpayers who continue to subsidize their relative good fortune.

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.

For-profit colleges provide an invaluable tool for everyday Americans to climb the ladder and improve their skills, particularly during a period of high unemployment when every little advantage matters.  That’s one reason why, according to estimates, enrollment at for-profit colleges has increased over 20% even since the recession began.  Despite this, such colleges find themselves in the crosshairs of the Obama Administration, whose Education Department seeks to impose suffocating restrictions on loans to students who wish to attend them.

Stop for a moment and imagine the outcry if the Bush Administration had pursued such targeted restrictions, which hit poorer and minority enrollees disproportionately hard.

Now, however, there’s even more disturbing news.  Senators Tom Coburn (R – Oklahoma) and Richard Burr (R – North Carolina) sent a letter to the Education Department last week citing public documents indicating that it “may have leaked the proposed regulations to parties supporting the Administration’s position and investors who stand to benefit from the failure of the proprietary school sector.”  The Senators’ letter comes on the heels of a lawsuit whose evidence includes emails between Education Department advisers and short-sellers.

The Obama Administration’s mindless attack against these important colleges for working Americans is bad enough, but allegations of corruption and insider trading obviously exacerbate that looming disaster.  We’ll be following these alarming developments in coming days, as should anyone who cares about the American workforce maintaining its edge amid fierce global competition.

By a two-to-one margin, Americans reject “Net Neutrality” Internet regulation efforts.  A unanimous Court of Appeals has rejected the FCC’s claim to authority to impose it.  Bipartisan groups of Congressional Democrats and Republicans have written letters to the FCC explicitly opposing it.

So how does Obama’s FCC react in the face of these unequivocal signals?  Apparently, by steering full-speed ahead to impose it anyway.

For those still unfamiliar with “Net Neutrality,” it is very simply a far-left effort to regulate Internet service.  Yes, the same Internet that has prospered to date and revolutionized our lives precisely because of the absence of big-government regulatory interference allegedly needs to be “fixed” by “Net Neutrality” regulation.  One need only consider the forces that favor “Net Neutrality” to recognize its destructiveness.  Chief among those activist forces is Free Press, whose founder Robert McChesney unapologetically advocated a government takeover of the Internet to something called the “Socialist Project“:

What we want to have in the U.S. and in every society is an Internet that is not private property, but a public utility.  We want an Internet where you don’t have to have a password, and that you don’t have to pay a penny to use.  It is your right to use the Internet.”

Simply put, “Net Neutrality” is ObamaCare for the Internet.  Please take a moment to contact your Representative and Senators to demand that they stop the rogue FCC from suffocating private Internet investment and innovation with its toxic “Net Neutrality” agenda.

In this week’s Freedom Minute, CFIF’s Renee Giachino discusses Democrats’ response to the midterm elections and the current state of denial of Party leaders about the message sent by voters on November 2.

Every so often, someone captures the proverbial lightning in a bottle.  Today, it was Wall Street Journal columnist Bret Stephens and his commentary entitled “Obama’s Air Guitar.” Stephens’s weekly commentaries are always a must-read, but today’s perfectly portrays the growing sense among the American electorate, more sober observers and now world leaders that Barack Obama is simply in over his head:

His administration has now been chastised or belittled by everyone from the Supreme Leader of Iran to the finance minister of Germany to the president of France to the dictator of Syria.  What does it mean for global order when the world figures out that the U.S. president is someone who’s willing to take no for an answer?  The answer is that the United States becomes Europe.  Except on a handful of topics, like trade and foreign aid, the foreign policy of the European Union, and that of most of its constituent states, amounts to a kind of diplomatic air guitar: furious motion, considerable imagination, but neither sound nor effect.  When a European leader issues a stern demarche toward, say, Burma or Russia, nobody notices. And nobody cares.”

Since he first began flirting with a White House campaign, Obama has long created the impression that he considers the presidency a video game, or a pickup game of hoops with himself at point guard taking a three-pointer on every possession.  But now we have a description that perhaps captures the Age of Obama better than any other to date:  Obama as air guitarist.

Our Liberty Update, CFIF’s weekly e-newsletter, this week includes the commentary “A Balanced Budget Amendment Doesn’t Have to Mean Higher Taxes – CFIF’s ‘One More Vote’ Proposal Doesn’t.” In that column, we note that the White House deficit commission’s fundamental flaw is that it takes for granted 2010 federal spending levels as its baseline:

The overriding problem with the commission’s plan is that it accepts the 2010 fiscal year as its spending base, thereby locking in the alarming spending increases of the Obama-Pelosi-Reid regime.  That includes the failed “stimulus” that attempted to spend our way to prosperity, the bailouts, the pet projects and everything else they’ve heaped into our budget.  Since 2008, federal spending has surged from approximately $25,000 per household to $30,000 per household, and jumped during that two-year span from its historical average of 20% of gross domestic product (GDP) to approximately 25% of GDP.  Richard Rahn points out that, “Federal government spending and revenues in 1968 as a percentage of gross domestic product (GDP) were almost identical to the levels in 2008.”

Unfortunately, it’s actually even worse than that.  The commission also leaves in place ObamaCare, which is already driving up healthcare costs and adding to the deficit (despite promises that it would have the opposite effect).  As James Capretta from National Review Online observes, we shouldn’t be surprised given the commission’s composition:

None of this is all that surprising, given how the commission was formulated.  It’s not really a bipartisan commission at all; it’s an Obama commission.  It was created by the president and stacked with Democratic appointees.  Two-thirds of the 18 members were picked by the president or Democratic congressional leaders. Only six were appointed by Rep. John Boehner and Sen. Mitch McConnell.  The president says the public doesn’t want to “re-litigate” the health care war.  He’s wrong.  As last Tuesday’s exit polls make clear, a strong plurality wants exactly that.  The American people know that the ill-advised law was railroaded through Congress and is a colossal mistake.   The fundamental problem here is that it is not possible build a bipartisan budget framework on a foundation that includes a partisan health-care plan with sweeping implications for future spending levels.

Americans cannot be asked to accept the commission’s findings when they take as a given current spending levels and an ObamaCare atrocity that must be replaced.

The Wall Street Journal is among the news sources carrying coverage of the preliminary recommendations being produced by President Obama’s much-feted debt reduction panel. According to the Journal’s synopsis:

Among the controversial proposals, the plan in its current form would end or cap a wide range of breaks relied on by the middle class, including the deduction for home-mortgage interest. It would tax capital gains and dividends at the higher rates now levied on wage income. To compensate, one version of the plan would dramatically lower and simplify individual rates, to 9%, 15% and 24%.

For businesses, the plan would significantly lower the corporate tax rate—from a current top rate of 35% to as low as 26%—but also eliminate a number of deductions. It would make permanent the research and development tax credit. Overall, the plan would cut the federal deficit by $3.8 trillion by 2020.

… On Social Security, the plan would gradually raise the retirement age to 68 around 2050 and 69 by 2075. It would combine a cut in benefits with a rise in taxes on wealthier people’s incomes. It would also seek to rein in federal spending on health care beyond what’s called for in the recently passed health-care overhaul. This would be achieved by introducing further changes, including reform of medical-malpractice law, and by seeking to slow the growth of the Medicare program.

The plan would make significant cuts on spending over which Congress has direct control, beyond entitlements such as Medicare. It identifies $410 billion in discretionary spending cuts by 2015. It proposes cutting the federal work force 10%, at a further savings of $13.2 billion by 2015.

Congressional earmarks—provisions inserted into legislation for lawmakers’ pet projects—would be banned permanently, saving $16 billion.

This a surprisingly market-friendly recommendation, much of which — though politically very tough — is admirable. Hopefully, low-tax advocates will train their fire on the unnecessary increases in capital gains and dividend rates, as well as what looks to be a proposed increase on Social Security and Medicare taxes for the wealthy. While we don’t know what deductions are on the chopping block, if the home mortgage example is representative there’s actually a strong free-market case to be made in favor of the eliminations. By giving economic preference to activities like home purchases, these deductions lead to economic inefficiency (they either direct consumers to make choices that wouldn’t be rational without the deduction or subsidize purchases that would have been made regardless).

Elsewhere in the WSJ piece, the authors refer to the fact that the current recommendations rely about 75 percent on spending cuts and 25 percent on tax increases. Good, but not great. A recognition that taxes always hamper economic activity means that tax increases should never be considered instead of spending cuts unless (A) government is only doing the things that are its rightful responsibility and (b) it is doing all those things at maximum efficiency. At some point, the exigencies of politics may require compromising short of that ideal, but I’d like to see a comprehensive examination of spending in the executive branch before tax hikes are even considered.

Let’s consider the cabinet departments. The Departments of Justice, Defense, Treasury, and State are the originals and unquestionably justified under our scheme of federal government. There are others that have probably grown into necessary organs in years since. We’ll need Health and Human Services as long as we have a federal welfare state, Interior as long as we have public lands and a National Park system, Transportation at least for the interstate highway system and air travel and, though its probably in need of some pruning, Homeland Security. Veterans Affairs seems like it could be folded into either Defense or HHS. As for the Departments of Education, Housing & Urban Development, Energy, Agriculture, Commerce, and Labor (apart from its statistical work), I’m at a loss for what useful purpose (or more importantly, results) justifies their existence. I’d be more than willing to scrap each of them, keep the few parts we still need, and re-check the ledger before considering higher taxes for even a single American.

We have illustrated the dramatic difference between the pro-growth Reagan Recovery and the ongoing Obama Malaise, which a side-by-side comparison of economic data makes clear.  In addition to the lopsided data differential, the uninspiring and self-pitying rhetoric to which Obama treats us provides another sad contrast.  Consider the following exchange from Obama’s “60 Minutes” interview this week:

STEVE KROFT: Do you get discouraged? Are you discouraged now?

OBAMA: I do get discouraged. I mean, there are times where I thought the economy would’ve gotten better by now. One of the things I think you understand as president is, you’re held responsible for everything. But you don’t always have control of everything, especially an economy this big. There are limited tools to encourage the kind of job growth that we need.

Such “woe is me” dejection can be self-fulfilling (see, e.g., Jimmy Carter’s “Malaise Speech”), and would have been unimaginable coming from Reagan, who faced even higher unemployment rates, interest rates and inflation than Obama.  But here’s a tip, Mr. President:  nobody wants or expects you to “have control of everything.”  You do, and that is the problem.  As shown by your more optimistic predecessors, getting yourself out of the way would be the best first step toward “the kind of job growth that we need.”