Freedom Line Blog

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

Senik:  Running on Empty with a Full Tank: The Incoherence of Obama’s Energy Policies
Lee:  2012: Electoral Map Tighter Than One Might Assume
Ellis:  Obama’s Proposed Tax Increases Wage War on Civil Society

Freedom Minute Video:  The Case for Conservative Optimism
Podcast:  SCOTUS: The Walmart Suit and Other Pending Cases
Jester’s Courtroom:  It’s a Litigious World After All

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

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Bloomberg reports that the rumored $33 billion in cuts being negotiated by House Speaker John Boehner (R-OH) and Senate Majority Leader Harry Reid (D-NV) is looking like the key number both sides are working towards.  For perspective, that’s $28 billion less than the House of Representatives passed a few weeks ago, and $67 billion less than Republicans promised during last year’s mid-term elections.

When the $61 billion cut was passed, Tea Party-backed legislators accepted the reduction under the assumption that half a loaf is better than nothing at all.  Now, the loaf is down to a third, and activists are having none of it.

Whatever sum gets approved, it’s a sure bet the Tea Party and the members of Congress friendly to it won’t forget the importance of starting the cut threshold even higher next time.  At this rate, don’t be surprised if the 2012 battle cry is, “$500 Billion in Cuts or Fight!”

Indiana Republicans are expected to pass major school choice legislation in the next few days, allowing a family of four with incomes as high as $60,000 the opportunity to spend their tax dollars on the kind of education they want.

Here’s a perfect summary of the argument for public school vouchers from one Hoosier supporter:

“We fund education for a reason — to give individual children the skills they need to compete in life,” said Luke Messer, former executive director of the Indiana Republican Party who now heads School Choice Indiana. “If the money follows the child, parents ought to have the right to put their child in whatever opportunity they think would best serve their family.”

Vouchers put power into the hands of those most affected by choices about schools: families of students.  Let’s hope Indiana Republicans go to the mat for this one.

CFIF Senior Fellow Troy Senik takes President Barack Obama to task in a column for The Daily Caller today, arguing that the commander-in-chief has the power to bring down gas prices, but won’t.  Instead, Obama would rather enrich a semi-socialist state like Brazil while America’s economy sputters.

In fact, gas prices are up 67 percent since President Obama took office a little more than two years ago. Lest you think this analysis one-sided, during the same period in President Bush’s tenure gas prices increased by only seven percent.

Yet that doesn’t seem to bother President Obama much. Earlier this month, he said that we can’t drill our way out of our energy problems. That is like suggesting you can’t medicate yourself out of an illness.

Read the entire article here.

In this week’s Freedom Minute, CFIF’s Renee Giachino discusses the national debt crisis, Congress’ addiction to excessive spending and the Democrat’s budget plan.  Giachino warns that without serious and immediate action to right the nation’s fiscal ship, America is destined to a future of higher taxes, greater inflation and a lower standard of living.

At the rate Senator Claire McCaskill’s (D-MO) is having to write checks to cover her growing tax fraud scandal, it may be time for her supporters to organize a fundraiser or two for the rainy days ahead.

Only days after announcing she owed $287,000 in back property taxes for a private plane she owns with her husband, McCaskill now says she really owes $320,000.

It’s amazing to see such a quick escalation.

Less than a week ago McCaskill went from one contested $1,200 political flight to refunding the U.S. Treasury for $88,000 in suspect trips.  Now the hit on her bank account is over $400,000 with seemingly no end in sight.

In this week’s Freedom Minute, CFIF’s Renee Giachino explains how President Obama’s energy policy – namely, his opposition to opening up America’s vast domestic resources – amounts to a massive energy tax at a time when prices at the pump are soaring ever higher.

Not so fast, says Fox News columnist Chris Stirewalt.  An important difference between the 1995 shutdown that empowered President Bill Clinton was the lack of public anxiety over the $4.97 trillion debt.  Now, it’s $14 trillion plus, “a sum equal to the size of our entire economy.”

If Democrats in Washington make the same miscalculation as Democrats in Wisconsin, they will suffer brutally at the next election.  Shutting down the government in favor of public employee unions or unsustainable federal spending is a fool’s strategy.  With President Barack Obama and party leaders like Senator Chuck Schumer (D-NY) daring House Republicans to stand firm on budget cuts, expect to see thousands of pro-shutdown protestors flood Washington if government buildings go dark.

If dormant long enough, perhaps some of those buildings – and the agencies that house them – will never be revived.  The debt and spending issues are more important now than in 1995.  If Democrats fail to realize that, they may help hasten a reduction in government overall.

Last month, we noted with alarm that the Congressional Budget Office forecast a record $1.5 trillion federal budget deficit for fiscal 2011.

It’s apparently even worse than that.  Today, the Obama Administration unveils its proposed budget, projecting that this year’s deficit will actually reach $1.6 trillion.  So after telling Americans during his 2008 campaign that he was going to go through the budget “line-by-line” and reduce the deficit, Obama has given us deficits of $1.4 trillion, $1.3 trillion and now a record $1.6 trillion.  And what to show for it?  Unemployment remains at or above 9% for a post-World War II record 21st consecutive month, despite Obama’s promises that it would top out at 8% in October 2009 and decline to between 6% and 7% today.

As for those who continue their mindless “Blame Bush” rationalization crusade, they must explain how three years into the Age of Obama, the deficit is increasing, not decreasing, from $1.3 trillion to $1.6 trillion (an almost 25% increase).

Florida Republican Governor Rick Scott unveiled his much-anticipated budget proposal on Monday in front of a crowd teeming with Tea Party activists.  Slashing $4.6 billion from last year’s budget, Scott takes aim at many sacred cows.  AOL News lists the five most controversial:

(1)   10% cut in education spending

(2)   Eliminating 1,690 jobs from the Department of Corrections

(3)   An 8,700 overall reduction in the state government workforce

(4)   Tax cuts worth $4 billion

(5)   A $4 billion Medicaid reform

None of these changes, however, may be as consequential as Scott’s proposal to require state public employees to start contributing 5% of their paychecks to their pensions.  If state retirement funds are ever to become solvent the employees who benefit from them will have to put some money in the kitty.  Scott also wants to put new state hires into a 401(k)-type retirement system, a shift that would move the state toward a pension system of defined contributions instead of defined benefits.

If Scott is successful in Florida other states might follow suit.  For the sake of taxpayers in the Sunshine State and beyond, let’s hope he prevails.

Since a majority of the smart people in Washington, D.C., agree that the nation’s astronomically high $14.3 trillion debt ceiling, chattering class consensus says all the “sane” members of Congress will stand together and once again extend America’s line of credit.  With that in mind, GOP budget cutters are proposing to get deep spending cuts in return for raising the debt ceiling.

Not so fast, says Federal Reserve Chairman Ben Bernanke.  Playing his faux apolitical persona to the hilt yesterday, Bernanke said House Republicans should “not play around” with the debt ceiling vote to extract any spending concessions.  That would make a fiscal issue too political.  Instead, they should treat spending and tax issues separately; exactly the unconditional debt raising approach espoused by the Obama Administration.

But the logic of the Republicans’ negotiating tactic is clear: get spending cuts now so that the debt limit becomes a true ceiling once more instead of a temporary marker.  Having a limit on one’s credit card does not require the user to treat it as a goal.  It’s an emergency option, not a default.  Because fiscally conservative House and Senate members are the only public officials actually trying to get control of the budget, demanding concessions from the debt ceiling vote may be the only way to make progress in a fractured government.

If Bernanke is too partisan to see that, he should at least recognize that politics isn’t just an exercise in means; it’s the attainment of principled ends as well.

Surprisingly, former Governor Mike Huckabee (R-AR) comfortably leads all other likely Republican contenders for the party’s 2012 presidential nomination.  Though the lead is of dubious predictive value, the Other Man From Hope, Arkansas continues to be a genuine political force attractive to millions of Americans.  He did, after all, win the 2008 Iowa caucuses and come within a hair’s breath of winning Missouri’s primary.  Had he won the latter, the nomination fight would have boiled down to him and Senator John McCain (R-AZ), with favorable odds for an eventual Huckabee win.

So far, Huckabee says he won’t make a final decision on running until this summer.  The reason being his distaste for an 18-month campaign; a distaste shared by many voters.  Though Huckabee ran afoul of some fiscal conservative groups for some infrastructure spending increases he implemented as governor, he rightly pointed out that all of them were either mandated by federal judicial rulings, or popularly approved by Arkansas voters.

From all accounts Huckabee is probably the most normal person likely to run for president this cycle.  That alone may explain his widespread appeal.  Time will tell if it is enough to get him the nomination this time.

H/T: Political Wire

At The Daily Beast, Leslie Gelb discusses the other January 1961 presidential speech that should get more attention from Americans today.  It was delivered by outgoing President Dwight Eisenhower.

Here are the Gelbian nuggets:

(1)   Put the national interest ahead of politics

(2)   There are no quick fixes to crises

(3)   Balance is the best strategy

(4)   Beware of spending beyond our means

(5)   Guard against the power of special interests

The fifth point is best remembered as the warning against the military-industrial complex.  The fourth point seems especially pertinent today with a $14 trillion debt that will surely “mortgage the material assets of our grandchildren (while) risking the loss also of their political and spiritual heritage.”

The entirety of Ike’s farewell address can be found here.

Following up on a previous diagnosis of all that ails California, CFIF Senior Fellow Troy Senik is out today with a prescription for the Golden State to get back on the road to recovery.

Senik’s piece in City Journal doesn’t hold out much hope for newly elected Governor Jerry Brown, but the author does shed light on one proposal that might garner enough votes for a simplified tax code:

California would therefore do well to take the advice of economist Arthur Laffer, not just because of his status as one of the authors of Reaganomics but because he is an example of the state’s woes, having packed up his California-based fund-management business in 2006 and relocated to Tennessee. By Laffer’s estimates, if California abandoned its current, highly progressive income-tax system in favor of a statewide flat tax of no more than 6 percent on personal income and net business sales, it could completely abolish all property taxes, state gas taxes, and state payroll taxes, as well as all current state and local sales taxes, without losing revenue. And that’s without factoring in the increased economic activity that such a dramatic change to the tax code would almost certainly generate. This change would once again require the support of a two-thirds majority in the legislature, but its appeal just might be broad enough to attract such a coalition.

Read the entire article here.

The nation’s capital is abuzz today over President Obama’s Wall Street Journal commentary, “Toward a 21st Century Regulatory System.” Astonishingly, Obama actually praises America’s free market system as “the greatest force for prosperity the world has ever known” while promising regulatory reform:

I am signing an executive order that makes clear that this is the operating principle of our government.  This order requires that federal agencies ensure that regulations protect our safety, health and environment while promoting economic growth.  And it orders a government-wide review of the rules already on the books to remove outdated regulations that stifle job creation and make our economy less competitive.  It’s a review that will help bring order to regulations that have become a patchwork of overlapping rules, the result of tinkering by administrations and legislators of both parties and the influence of special interests in Washington over decades.”

Whether Obama speaks honestly, or simply seeks to deceive the electorate in anticipation of 2012, lies beyond our powers of divination.  The available evidence, however, justifies extreme skepticism.

One cause for doubt stands out immediately.  In identifying examples of the federal regulatory state run amok, the best Obama can do is point to saccharine, saying that the Food and Drug Administration (FDA) permits it for consumption in coffee while his Environmental Protection Agency (EPA) labels it a “dangerous chemical.”  That’s it?  That’s the best example he can cite?

Just one month ago, Obama’s own Federal Communications Commission (FCC) flagrantly defied two-to-one public opposition, a unanimous Court of Appeals and a bipartisan group of 300 members of Congress by voting to regulate the Internet via “Net Neutrality.” Obama claims in his column that he aims to prevent “regulations that stifle job creation and make our economy less competitive,” but that’s exactly what “Net Neutrality” will do.  The FCC seeks to regulate an Internet sector that has thrived over the past two decades precisely because the federal government has refrained from interfering with regulations such as this.  The result will be fewer incentives for continued Internet investment, expansion and innovation, as well as declining service as capacity fails to keep pace with demand.

Additionally, Obama’s Labor Department seeks to impose “card check,” which will end secret ballot voting in union elections, and his EPA seeks to impose global warming carbon cap-and-tax regulations.  Both of those agenda items failed miserably in Congress even when controlled by Democratic supermajorities, but Obama’s regulatory agencies now seek to impose them anyway.

So Obama talks a good game in today’s op/ed.  But unless he issues an immediate cease-and-desist order on “Net Neutrality,” card check and cap-and-tax, his words will prove just as meaningless as his other broken promises.

This week, the Heritage Foundation and The Wall Street Journal released the 2011 edition of their Index of Economic Freedom.

Once again, the facts speak for themselves:  Economic freedom means not only more prosperity, but also greater overall wellbeing.  In calculating economic freedom and ranking the world’s economies, the Index examines 10 criteria:  business freedom, trade freedom, fiscal freedom, government spending, monetary freedom, investment freedom, financial freedom, property rights, freedom from corruption and labor freedom.  The correlation between economic freedom and living standards is once again made clear:

Despite varying degrees of economic freedom across the regions, the relationship between economic freedom and prosperity remains constant within the regions.  Per capita incomes are much higher in countries that are economically free.  Not surprisingly, overall human development also thrives in an environment that is economically free…  Higher economic freedom induces greater overall human development as measured by the United Nations Human Development Index, which assesses the combined progress of life expectancy, literacy, education, and the standard of living.”

The good news is that 117 of the world’s economies improved over the past year, whereas only 58 declined.  For Americans, the bad news is that we fell from 8th to 9th.  On that front, note the Index’s comments about the  importance of reducing government spending:

Countries that reduced government spending had economic growth rates almost two percentage points higher in 2009 than countries whose government spending scores worsened, and countries with the highest rates of government spending had gross domestic product (GDP) growth rates 4.5 percentage points lower on average than countries where government spending was best contained.”

Will the new 112th Congress help reverse that decline?  As we approach the 2012 elections, that will prove a critical question.

That’s the question Reason’s Nick Gillespie puts to the Cato Institute’s Chris Edwards, as they look at which governors have been the best friends of lower taxes and lower spending in the past two years:

According to a blogger at the Huffington Post California just inaugurated a “Right-Wing Republican” as governor.  He’s referring to Jerry Brown, aka ‘Governor Moonbeam’ and the man proposing sharp cuts, tax increases, and budget raids to balance the state’s deficit-ridden balance sheet.   In HuffPo world, that combination merits being tarred and feathered as the second coming of another rock-ribbed fiscal conservative, outgoing governor Arnold Schwarzenegger.

Please.  If Brown’s budget proposal looks suspiciously similar to Schwarzenegger’s it’s because there are precious few options for governors of any party to try.  Sure, nobody thinks they’ll actually solve the problems, but that’s because actually solving California’s budget woes will take some serious undoing of cherished political prizes.

Republicans want to hang onto the 2/3 requirement for passing a budget and maintaining Prop. 13’s cap on property taxes, while Democrats act as though rich (i.e. working) people will pay any price to live within a 100 miles of a beach and subsidize a green welfare state.  Neither party is serious about making investments in the state’s infrastructure (e.g. road, power, and water grids), a precondition for economic and social improvement.

The only way California heals its self-inflicted budget wounds is if it repeals all of the constitutional amendments mandating budget appropriations.   To do that, Republicans will likely have to agree to end Prop. 13’s property cap, a move that would likely increase property taxes.  Though unpalatable to many, removing the cap would return discretion to counties and cities (historically better than Sacramento at balancing budgets) while giving voters an outlet for their displeasure with the next Election Day.

None of this will be easy or popular.  Then again, neither is California politics.

In October 2003, tough-talking optimist Arnold Schwarzenegger unseated bland public union yes-man Gray Davis as Governor of California in a revolutionary special recall election.  Today, Schwarzenegger departs with a depressed 22% approval rating that serves as a warning for Republican newcomers in Congress and across the 50 states against the perils of go-along-to-get-along “bipartisanship.”

During his first two years in office, Schwarzenegger maintained a confrontational demeanor that California desperately needed as it hurtled toward its current disastrous state.  In March 2004, for instance, he famously ridiculed California’s milquetoast political class as “girlie-men.”

Unfortunately, four common-sense and ultimately necessary ballot initiatives that he supported failed in November 2005.  Instead of sticking to principles, Schwarzenegger opted for “bipartisan” political expediency and personal survival.  What followed was a shameful litany of global warming bills, ObamaCare-like proposals, lack of leadership and tax hikes.  His capitulation provided a short-term payoff via reelection in 2006, but ultimately proved disastrous for himself and the state.  Today, despite Schwarzenegger’s early promise, California is in even worse shape than when he entered office.  And jaded voters witnessed yet another sad example of a politician who promised to change the political culture, only to allow the political culture to change him.

Schwarzenegger’s failure, however, provides a helpful cautionary guide for incoming Republicans this new year.  Namely, sacrificing the principles that got you elected at the tempting altar of “bipartisanship” will only deepen our nation’s current difficulties and eventually doom you politically.

The folks over at Reason TV never miss a chance to make complex public policy simultaneously comprehensible and funny (how else to explain their decision to augment Nick Gillespie’s Ian Malcolm look with a chef’s hat?). Take a look at their new video on how to balance the federal budget and then visit the link where they explain their plan in detail. As a comprehensive look at how Congress could get the deficit mess under control without raising taxes, it’s a logical compliment to CFIF’s One More Vote campaign.