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K. William Watson

The United States has finally ended a ban on long haul truck deliveries from Mexico.  The U.S. government promised to lift the ban twenty years ago as part of the North American Free Trade Agreement, but caved in to pressure from the Teamsters union claiming that Mexican trucks would be a safety hazard on U.S. roads.  Twenty years of data and two pilot programs seem to have been enough to convince your government that, in this case at least, Mexicans are just as good at doing things as other people.

But surely, you protest, the complaint could not have been that Mexicans are incompetent, but that Mexican safety standards and regulations are overly lax or poorly enforced.  To be fair, the Teamsters union has claimed that Mexican trucks are subject to inadequate regulation and that their drivers are poorly trained.  This argument would perhaps be meaningful if it weren’t so inexcusably misleading.  The fact is that all Mexican trucks operating in the United States have to get permits that require prescreening and regular inspections. 

In short, Mexican trucks operating in the United States are regulated by the U.S. government.  The only difference is the nationality of the truck’s driver and owner.

What makes the Mexican truck saga so bizarre is that opponents have baldly used xenophobia as a “cover” for a more self-serving agenda.  Of course the Teamsters union wants to keep Mexican truckers off the roads because of the competition those non-union drivers bring with them.  The official list of concerns offered by the union includes “job loss, border security, [and] highway safety,” each trumpeted loudly at appropriate moments.  Usually when protectionists want to obscure their intentions, they pick a less unsavory cover that doesn’t play so openly on negative stereotypes or mistrust of foreigners.

With the ban now ended, this embarrassing moment in U.S. political history is thankfully behind us.  I can only hope that from now special interests will feel compelled by decency to mask their rent-seeking ventures behind less absurd and offensive arguments.

Daniel J. Ikenson

With the Trans-Pacific Partnership (TPP) negotiations reported to be nearing completion and the Transatlantic Trade and Investment Partnership (TTIP) talks kicking into higher gear, Congress is expected to turn its attention to Trade Promotion Authority (TPA) legislation in the weeks ahead.

That’s where opponents of trade – mostly from the Left, but some from the Right – have decided to wage the next battle in their war against trade liberalization. Tactically, that makes some sense because, if they succeed, the TPP and the TTIP will be sidelined indefinitely. But, as observed by the Greek Tragedians and countless times in the millennia since, truth is the first casualty of war.

Trade opponents characterize TPA as an executive power-grab, a legislative capitulation, and a blank check from Congress that entitles the president to negotiate trade deals in secret without any congressional input except the right to vote “yea” or “nay” on an unalterable, unamendable, completed and signed agreement. But the truth is that TPA does not cede any authority from one branch to the other, but makes exercise of that authority more practicable for both branches.

Under the Constitution, Article I, Section 8, Congress is given the authority to “regulate commerce with foreign nations” and to “lay and collect taxes, duties, imposts, and excises.” While the president has no specific constitutional authority over trade, Article II grants the president power to make treaties with the advice and consent of the Senate. Accordingly, the formulation, negotiation, and implementation of trade agreements require the involvement and cooperation of both branches.

TPA allows the executive branch to negotiate trade deals with foreign governments on the basis of guidance from Congress, to be approved or not, under expedited legislative procedure by a subsequent up-or-down congressional vote on legislation to implement the agreement after it has been completed. That guidance includes articulation of Congress’s trade policy objectives, specific parameters, and other conditions that it expects the executive branch to meet in order for completed trade deals to receive the fast-track treatment of guaranteed, timely, up-or-down votes in both chambers without scope for amendments or filibusters. In other words, Congress does not relinquish its authority. It reiterates its authority by setting boundaries for the president.

Absent a grant of TPA, the executive branch would have difficulty concluding trade negotiations because foreign governments would be unlikely to put their best offers on the table without assurances that the agreement wouldn’t be unraveled by Congress. Put another way, TPA gives the president additional negotiating leverage by assuring trade partners that any agreement reached is final.

Every U.S. president since 1974 (when TPA was born as “Fast Track Negotiating Authority”) has been granted this authority by Congress to negotiate agreements to expand trade with other nations. Questions about whether this compact is proper and constitutional have been raised and answered affirmatively over the years by legal scholars. In 2002, former Attorney General Edwin Meese III and a colleague authored a legal memorandum for the Heritage Foundation, which found that TPA was “clearly constitutional” because:

Congress retains its authority to approve or reject all future trade agreements.  It might be unconstitutional if Congress tried to delegate its authority to approve the final deal, but that is not at issue.  Congress may always kill any future international trade agreement by withholding its final approval.

(More background on practical, legal, and constitutional matter here and here.)

In July 2013, President Obama requested that Congress reauthorize TPA, which elapsed six year earlier during the Bush administration. In January 2014, legislation to renew TPA—the Bipartisan Congressional Trade Priorities Act of 2014—was introduced in the House and Senate, but Congress did not act upon it, so new legislation will be required in the 114th Congress.

Although support for renewal of TPA is stronger in the 114th Congress, there is likely going to be considerable debate about which congressional objectives, conditions, and parameters to include, and what shortcomings might trigger removal of an agreement from fast track consideration. That all makes for healthy and appropriate debate.

David Boaz

On NPR’s “Morning Edition,” Peter Overby discusses the way lobbyists are adjusting to the new Republican Congress. Some are hiring former Republican lawmakers and congressional staff. Some are reminding clients that there are still two parties, as in this nice ad for superlobbyist Heather Podesta, former sister-in-law of White House eminence John Podesta:

OVERBY: Even in a Republican Congress, lobbyists will need to court Democrats, too. Heather Podesta is happy to point that out. She runs her own small Democratic firm.

HEATHER PODESTA: The power of the Congressional Black Caucus has really grown.

OVERBY: In fact, she says CBC members are expected to be the top-ranking Democrats on 17 House committees and subcommittees.

PODESTA: Corporate America has to have entree into those offices. And we’re very fortunate to have the former executive director of the Congressional Black Caucus as part of our team.

After every election, the lobbyists and the spending interests never rest. The challenge for the tea party and for groups such as the National Taxpayers Union is to keep taxpayers even a fraction as engaged as the tax consumers.

In the last analysis, as I’ve written many times before – and in my forthcoming book The Libertarian Mind – the only way to reduce the influence of lobbyists is to shrink the size of government. 

As Craig Holman of the Nader-founded Public Citizen told Marketplace Radio, “the amount spent on lobbying … is related entirely to how much the federal government intervenes in the private economy.” Marketplace’s Ronni Radbill noted then, “In other words, the more active the government, the more the private sector will spend to have its say…. With the White House injecting billions of dollars into the economy, lobbyists say interest groups are paying a lot more attention to Washington than they have in a very long time.”

Big government means big lobbying. When you lay out a picnic, you get ants. And today’s federal budget is the biggest picnic in history.

 

 

Walter Olson

Yesterday’s lethal smoke episode in a tunnel near the L’Enfant Plaza station of Washington’s Metro system was like one of the disaster scenes in Atlas Shrugged, from the controllers’ instructions (eventually disobeyed) to riders not to evacuate the eight-car Yellow Line train even as it rapidly filled with smoke, to a spokesperson’s insistence that there were “no casualties in the traditional sense” even as workers above ground were seen hustling unconscious persons on stretchers into emergency vehicles. One person was killed and more than eighty taken to hospitals; the National Transportation Safety Board, ironically itself located at L’Enfant Plaza, says an “electrical arcing event” caused the smoke. Track fires have become common in recent years in the WMATA (Washington Metropolitan Area Transit Authority) rail system, as have train breakdowns, escalator closures, delays, and other disruptions. In 2009 a crash on the Red Line between Takoma Park and Fort Totten killed nine and injured 80. 

While the commuters who keep the nation’s capital running see Metro’s problems every day, elected officials in the region tend to show less sense of urgency. Last March, in an interview with DCist, then-mayoral candidate Muriel Bowser spent 450 words responding to a question on the state of the Metro system. All 450 were on the topic of how to get WMATA to hire more D.C. residents/voters. Because that’s obviously the key problem with Metro these days, right? (To be fair to the now-Mayor, who took office recently, it was the interviewer who’d introduced Metro as a topic that way; she merely gave no hint in her long response of seeing riders as an equally vital constituency.) 

At any rate, Metro’s wretched governance long predates the election of any current official, and there’s plenty of blame to spread around for it, especially in its division of responsibility among appointees from multiple local jurisdictions, who are not answerable to each other or to most of the system’s users. (In a city like Chicago, voters can punish poor subway management by changing mayors.) Still, there’s a question here. If the cream of the nation’s political class, living within a 50 mile radius in Virginia, Maryland, and D.C., cannot arrange to obtain competence from their elected local officials in delivering a public service that’s vital to their daily work lives, what does that tell us about their pretensions to improve through federal action the delivery of local government services – fire and police, water supply and schooling, road maintenance and, yes, transit itself – in the rest of the country?

Patrick J. Michaels

Secretary of State John Kerry is currently in India as advance guard for President Obama’s visit later this month. The president is going there to try and get some commitment from India (or the illusion of a commitment) to reduce its emissions of dreaded greenhouse gases. Until now, India, along with China, has resisted calls for major reductions, effectively blocking any global treaty limiting fossil fuel use. The president is very keen on changing this before this December’s United Nations confab in Paris, where such a treaty is supposed to be inked. 

Kerry’s mission is to get India ready for the president. Speaking at a trade conference in the state of Gujarat, Kerry said, “Global climate change is already violently affecting communities, not just across India but around the world. It is disrupting commerce, development and economic growth. It’s costing farmers crops.”

In reality, global climate change is exerting no detectable effect on India’s main crop production. 

As shown below the jump, the rate of increase in wheat yields has been constant since records began in the mid-1950s, and the rate of increase in rice yields is actually higher in the last three decades than it was at the start of the record.

Further, if Kerry was saying that climate change is reducing crop yields around the world, that’s wrong too. The increase in global yields has also been constant for decades.

Ilya Shapiro

The Atlanta-based U.S. Court of Appeals for the Eleventh Circuit has issued another landmark opinion that protects student rights against the arbitrary diktats of university officials. In a case that has wound up and down the federal judiciary several times, the court today again ruled for Valdosta State University student Thomas Hayden Barnes, who had been placed on administrative leave without a hearing after he had peacefully protested the construction of a parking garage.

As I described in summarizing the last brief Cato filed in this case, the Eleventh Circuit had previously affirmed the denial of qualified immunity against university president Ronald Zaccari, restating that malicious public officials aren’t entitled to special protections when they clearly violate the rights of another. On remand, the district court inexplicably let the defendants off on the student’s claim that Zaccari and others retaliated against him for exercising his First Amendment rights—he had already won on other claims regarding his due process rights—then applied a severe across-the-board reduction of attorney’s fees awarded to Barnes, and even granted reverse attorney’s fees for the defendants who were held not liable, going so far as calling those claims frivolous solely because they were unsuccessful.

The Eleventh Circuit has now reversed the lower court yet again, on all these points, asking the district court to reconsider the First Amendment claim and recalculate the attorney’s fees. The decision is pretty technical with no really quotable passages, but the workmanlike slap-down of the district court is notable.

Students who stand up for their constitutional rights are rare, and imposing unfavorable fee awards will only make it more difficult for them to secure strong representation. (Barnes’s counsel is the renowned First Amendment lawyer and Cato adjunct scholar Bob Corn-Revere.) The district court, while acknowledging that some rights were violated, only offered half-measures as a remedy. The Eleventh Circuit has now corrected that mistake, sending university officials the loud, clear message that constitutional protections don’t stop at the edge of campus.

Michael F. Cannon

According to U.S. News & World Report

[B]rokers say they do hear from clients who are eligible for subsidies – which are based on household income and not assets – but want no part of them. Health officials have been boasting that 6.6 million people have enrolled in health coverage through state or federal marketplaces created under the Affordable Care Act, but in sharp contrast stands a small group of Americans who say they want nothing to do with the plans, even if they would save money. Their reasons vary: Some are protesting Obamacare, while others simply feel it’s unethical to accept taxpayer dollars to pay for health insurance…

For [Kansas City resident Grace] Brewer, buying a plan on her own would mean she would not have enough to pay for housing, she says, so she chose not to be insured this year and will have to pay a penalty in her 2016 tax filing that is likely to be 2 percent of her income. She has no dependents, is healthy, does not use prescriptions and says she has been careful about her health choices, not overusing medical care.

“I am frustrated. I am angry. And I say ‘no’ to the exchanges,” she says.

Some people are turning down the subsidies because they don’t need them:

Complicating the ethical question is that some people who qualify for subsidies based on their income could afford to pay their own way. “There is no question that we are enrolling people through these programs who would otherwise be considered middle-class or even affluent,” says Ed Haislmaier, a senior research fellow for health policy studies at the right-leaning Heritage Foundation think tank. “We are seeing people with enrollment in these programs that have significant assets, but for whatever reason – usually a temporary reason – fall below the income line.” 

Those reasons could range from early retirement to a midcareer job change. But whatever the case, some of those who are turning down subsidies are aware others are gaming the system, and they think it’s wrong.

“I won’t be a part of it,” Brewer says. “I don’t think it’s right. I don’t think it’s ethical, but the system has gotten so complicated that people can take advantage of those things.”…

The fact that the subsidies are causing controversy among the very people they’re intended to help is “evidence that the government doesn’t do charity very well,” says Michael Cannon, director of health policy studies at the libertarian Cato Institute think tank. 

“Prior to Obamacare, the federal government was subsidizing all sorts of people who did not need health insurance subsidies,” he adds, referring to services like the Children’s Health Insurance Program, Medicaid and Medicare, the government’s health program for seniors. “With Obamacare, we are subsidizing even more people who don’t need assistance.”

Something to keep in mind when contemplating the impact of King v. Burwell.

Doug Bandow

When I was growing up, the draft was an ugly rite of passage for young men.  But when I turned 18 no “Uncle Sam wants you” notice arrived in the mail. 

America had shifted to a volunteer military.  At the time I didn’t know who to thank for the freedom to choose my future.  But I later met the man responsible while attending Stanford Law School.

Martin Carl Anderson, who died a few days ago, then was in residence at the Hoover Institution.  I thought our encounter was happenstance, but years later Anderson told me that he had been reading my articles in the Stanford Daily and elsewhere and wanted to meet me.

Anderson left to help set up the Ronald Reagan campaign operation in March 1979.  As I approached graduation he asked me to join the campaign. 

Anderson was a stellar example of an intellectual able to translate detailed academic research into policy ammunition.  He received his PhD in 1962.  Five years later he began advising Richard Nixon, ending up as a special assistant to President Nixon before joining the Hoover Institution in 1971.

As I wrote in American Spectator online:  “Anderson had many interests, but one overriding philosophy:  He believed in individual liberty.”  He began his policy career with an explosive attack on urban renewal, through which slums would be cleared and new communities created. No surprise, the effort was extraordinarily expensive and socially destructive.  In 1967 the MIT Press published The Federal Bulldozer:  A Critical Analysis of Urban Renewal, 1949-1962

Anderson was a draftee who turned his intellect and energy to ending conscription.  He seamlessly joined policy research and political maneuver, selling Nixon on the virtues of a volunteer military. 

Anderson left the Nixon administration before its ugly implosion, but returned to government with Reagan to address the AVF’s deficiencies, an effort in which I was involved as his assistant.  However, Anderson’s most important work for Reagan was shaping the economic agenda. 

Although Anderson was loyal to those he served—he never published a kiss-and-tell memoir—he did not let personalities get in the way of principle.  When Nixon proposed essentially a negative income tax in the guise of the Family Assistance Plan, Anderson brought his accustomed skills into opposition.  In 1978 Hoover published Anderson’s Welfare:  The Political Economy of Welfare Reform in the United States

Anderson’s most important work after leaving the Reagan administration was explaining and amplifying President Reagan’s legacy.  In 1988 Anderson published Revolution:  The Reagan Legacy, a wonderfully readable account of what Reagan’s success and presidency meant.  In 2001 Anderson and his wife Annelise joined historian Kiron K. Skinner to produce Reagan, in His Own Hand:  The Writings of Ronald Reagan that Reveal His Revolutionary Vision for America

Like most everyone in or seeking high political office Reagan employed ghost-writers on occasion.  But the Andersons found a treasure trove of the articles and scripts in Reagan’s own hand.  The latter wrote the vast majority his material from start to finish.  Two years later the two Andersons along with Skinner released Reagan:  A Life in Letters, revealing fascinating glimpses of the former president’s life through the letters he wrote.

Even more significant was Reagan’s Secret War:  The Untold Story of his Fight to Save the World from Nuclear Disaster, written by both Andersons.  Declassified documents demonstrated Reagan’s determination to eliminate the threat of nuclear war.  Reagan abhorred what he called the Evil Empire for all the right reasons, but worked with Mikhail Gorbachev to end the Cold War.

Although Anderson operated at the pinnacle of the American political system, he was an ideas man uncomfortable with typical bureaucratic infighting.  He left the Reagan administration after little more than a year and then concentrated on offering advice as an outsider.

In recent years Marty, as I will always know him, and I only talked occasionally, and not nearly enough.  But he fought the good fight until the end.  We are all better off because of his manifold efforts.  Marty, RIP.

Simon Lester

Some libertarians have been expressing concern about particular aspects of trade negotiations, often focusing on provisions relating to intellectual property. Here’s Jesse Walker of Reason:

“Free trade” agreements frequently include details that don’t have anything to do with freeing trade. When intellectual property enters the picture, the rules typically make trade more rather than less restrictive. That certainly seems to be the case with the TPP: Provisions in the leaked drafts would extend copyright terms, impose DMCA-style restrictions on circumventing copy protection, and otherwise take a maximalist approach to intellectual property. There are efforts to add tighter IP regulations to the Transatlantic Trade and Investment Partnership too.

I already tend to be skeptical about trade agreements as a path to freer trade, but I recognize and respect the argument that they do more good than harm. That argument is much harder to maintain, though, when the deals are loaded down with provisions like these. If fast-track authority makes such rules easier to pass, then fast-track authority is something I’m happy to do without.

I get what he is saying about intellectual property, and I have criticized this aspect of trade talks myself. But as my colleague Dan Ikenson says, we should consider whether these deals are “net liberalizing.”  In this regard, I think trade deals have the potential to do a lot of good, in ways that people may not be aware of.  Here’s an example from the negotiations between the U.S. and EU.  The EU has proposed new disciplines on government subsidies, in which it states:

subsidies given to support insolvent or ailing companies without a credible restructuring plan belong to some of the most harmful types of subsidies and have the potential to have an adverse effect on trade and investment relations.

Now, translating such sentiments into concrete rules can be difficult, but I like the idea of pushing for limits on subsidies. I can’t guarantee that anything will come out of the EU proposal, but I’m glad they are pursuing it.  To me, a trade agreement that offers additional disciplines on subsidies is something of great value.

(Some of you might be thinking, wait, how come the EU is proposing constraints on subsidies?  Aren’t they the worst abusers, with their farm subsidies, Airbus subsidies, etc.?  Here’s my sense of what is going on:  In addition to the concerns about bailout-type subsidies mentioned in the quoted text, the EU has some pretty strict internal rules governing when its member states can provide subsidies.  As a result, the Europeans get annoyed at subsidies offered by U.S. states, and are looking for ways to impose constraints on these and other U.S. subsidies).

Doug Bandow

The slaughter at the French magazine Charlie Hebdo brought hundreds of thousands of marchers and scores of world leaders onto the streets of Paris.  The killings demonstrate how the destructive phenomenon of religious persecution is spreading from Third World dictatorships to First World democracies. 

Religious minorities long have faced murder and prison around the world.  Now the freedom not to believe by majorities in Western democracies is under attack.

As I write in Forbes online:  “Free expression goes to the very essence of the human person.  While good judgment tells us not to express every thought we have, as moral agents responsible for our actions we must be free to assess the world and express ourselves in vibrant public debate.  For religion there is no greater affront than to inhibit people’s search for the transcendent and liberty to respond, yay or nay, to God’s call.” 

Western governments must protect the liberties of their peoples.  Members of no group, Muslim or other, should be treated as enemies.  However, the problem of violent religious intolerance is almost uniquely Muslim. 

Christians finally learned to stop killing over spiritual differences.  Today in most countries in which Muslims constitute a majority religious minorities suffer discrimination and persecution. 

There is no disguising reality.  If you are a Baha’i, Jew, Ahmadi, Christian, Yazidi, Hindu, wrong kind of Muslim, or atheist you likely will find life always difficult and often threatening in Iran, Iraq, Pakistan, Saudi Arabia, Somalia, Afghanistan, Libya, Egypt, Indonesia, Brunei, Malaysia, Sudan, Yemen, Maldives, Syria, and others. 

Some Muslims point to blowback from promiscuous U.S. intervention.  Washington has supported dictators, harmed innocents, and wrecked societies throughout the Islamic world.  However, these are acts of a nation state, not a religious faith.  And while that behavior might explain (though not justify, since nothing warrants the murder of civilians) attacks on U.S. targets, it does not illuminate why, say, Pakistani mobs burn to death Pakistani Christians.

The thugs who cut down a dozen Charlie Hebdo are the international cousins of those who murder alleged blasphemers and apostates in Muslim nations.  Earlier this year the U.S. Commission on International Religious Freedom reported that victims of the ongoing attack on free expression include people from Bangladesh, Egypt, Indonesia, Iran, Kazakhstan, Pakistan, Saudi Arabia, Tunisia, and Turkey.  Nowhere are blasphemy laws more used and abused than in Pakistan. 

In its study on the issue USCIRF explained how the law encourages abuse:  “The so-called crime carries the death penalty or life in prison, does not require proof of intent or evidence to be presented after allegations are made, and does not include penalties for false allegations.”  Judges prefer not to hear evidence, since doing so could be construed as blasphemy.  A claim usually is sufficient to send someone to prison, making the law a common weapon in personal and business disputes.

Non-Muslims are peculiarly vulnerable.  Many people do not reach trial:  mobs have killed more than 50 people charged with the offense.  And thugs like those who gunned down the Charlie Hebdo staffers have murdered judges who acquitted defendants, attorneys who represented those accused, and politicians who proposed reforming the laws.

There isn’t much Washington can do to protect liberty in other countries, but the U.S. government must insist that the liberties of Americans are non-negotiable and will be defended.  More broadly, the Charlie Hebdo murders should remind policymakers that religious liberty is not an afterthought. 

A government which refuses to protect individuals in exploring the transcendent is more likely to leave other essential liberties unprotected.  People in Muslim-majority nations, where religious persecution today is at its worst, must come to peacefully accept those who believe differently both at home and abroad.

Chris Edwards

Another day, another news article supportive of raising the federal gas tax. This time it’s the Wall Street Journal. The article notes that there is strong public opposition to raising gas taxes, but then proceeds to give us the arguments in favor of it, but none against. So for the next reporter writing about raising the gas tax, here are some policy reasons against it.

Let me zero in on two points made by the Journal story.

First, it says, “elected officials from both parties are treading into the debate cautiously, framing the issue around improving highway safety and local economies by repairing a growing backlog of troubled roads and bridges.”

I don’t think that’s true about a “growing backlog.” In fact, our highways and bridges appear to be improving, not getting more “troubled.” Federal Highway Administration (FHWA) data show that of the nation’s 600,000 bridges, the share that is “structurally deficient” has fallen from 22 percent in 1992 to 10 percent in 2013. The share that is “functionally obsolete” has also fallen.

Meanwhile, the surface quality of the interstate highways has steadily improved. A study by Federal Reserve economists examining FHWA data found that “since the mid-1990s, our nation’s interstate highways have become indisputably smoother and less deteriorated.” And they concluded that the Interstate system is “in good shape relative to its past condition.”

The Journal says, “The federal levy … has stood at 18.4 cents a gallon since the first year of the Clinton administration, despite multiple proposals over the years to raise it. Over the past decade, Congress has approved higher spending for highway construction but hasn’t raised the tax to pay for it, creating periodic funding crises.”

It’s true that Congress has not raised the gas tax recently, but that’s because the American people have been consistently against it in polls. The problem is that Congress has gone ahead and jacked up spending anyway. So we don’t have a “funding” crisis, but a “spending” crisis.

Gas tax supporters say that it is time to raise the tax because it has not been raised in two decades. What they leave out of the story is that the gas tax rate more than quadrupled between 1982 and 1994 from 4 cents per gallon to 18.4 cents, as shown in the chart below the jump. Thus, looking at the whole period since 1982, federal gas tax revenues have risen at a robust annual average rate of 6.1 percent (based on Tax Foundation data). So, again, we have a spending crisis, not a funding crisis.

Jason Bedrick

Last month, the Orthodox Union, a prominent Jewish organization, launched a campaign advocating for private school choice policies. That raised hackles from Americans United for Separation of Church and State (AU), which condemned the chutzpah of the Orthodox Union to work for equal funding for children in their community:

“It [the campaign] will require us to stop being timid,” [Orthodox Union executive vice president Allen Fagin] said. “We pay our taxes, and our kids are also entitled not to be left behind.”

That statement, of course, is only half-true: Fagin’s constituents do pay their taxes, and their children are indeed entitled to an education. But that’s exactly what public schools are for. OU’s campaign relies on the same faulty logic we’ve seen from advocates of voucher programs: Because parents pay taxes, they should be able to ask every other taxpayer in the state to subsidize their child’s religious education. It’s a clear constitutional violation. […]

It’s unconscionable (and exceptionally brazen) for OU to demand that further funds be siphoned away from public schools intended to serve entire communities in order to promote their private religious agenda. If Orthodox parents want to place their children in religious schools, that’s their right. And it’s their responsibility to pay for it.

In reality though, it’s the idea that so-called “public” schools are actually “public” that is only half-true. District schools are technically open to any student whose parents can afford to live in the district, but they are certainly not “intended to serve entire communities.” For example, they are not intended to serve Orthodox Jews or others like them who have a different vision of education. When everyone is forced to pay for one school system and decisions about education are made via a political process, there will be winners and losers.

Let’s consider an imaginary “public” school district where there are three groups of people: Hobbits, Ewoks, and Terrans. Each groups has very different and passionately held views about what should be taught in school and how it should be taught. All three groups are required to pay taxes to support the district school, which is ostensibly nonpartisan, nondenominational, and open to all. However, the majority of the district is Terran so the school reflects the Terran preferences. When the Hobbits and Ewoks open their own schools and seek equal per-pupil support from the local government, the indignant Terrans respond that the district school is meant for everyone. “It’s your right to open your own schools,” explain the Terrans, “but it’s your responsibility to pay for them.” Thus the majority brazenly forces minority groups either to abandon their values or to pay for two school systems. And lower-income minorities may have no choice at all.

Sadly, this is far from hypothetical. Indeed, it’s the unconscionable status quo that the AU defends. As my colleague Neal McCluskey has observed, “Public schooling politics is a zero-sum game: all people pay in, but only those with political power get control.”

Familiarizing oneself with the history of American education makes clear just how divisive public schooling has been. For instance, see the Philadelphia “Bible Riots” or the textbook war in Kanawha County, WV. And just because something is local- or state-controlled doesn’t free it from conflict. Cato’s still-under-construction public schooling “battle map” pinpoints well over 800—and growing—contemporary battles over basic values and rights fought at the school, district, and state levels. And that doesn’t include constant combat over budgets, teacher evaluations, school start times, math curricula, and on and on.

Ultimately, understanding why public schools are the source of unceasing conflict—and why it worsens the more that control is centralized—requires the simplest of logic: One government school system cannot possibly serve all, diverse people equally.

The voucher system that AU maligns is actually a solution to the social strife and unfairness inherent in government schooling. When students who opt out of the district school receive vouchers to attend the school of their choice, no family is forced to send their child to a school that does not reflect their values. Parents are therefore not forced into conflict with each other over what the schools should teach, nor are minority groups expected to fund schools that are anathema to them while paying for their own schools. Fortunately, contrary to AU’s claims, the U.S. Supreme Court found that school voucher systems are in harmony with the U.S. Constitution.

Nevertheless, the AU still has a legitimate concern about coercion. Why should everyone be forced to fund schools that teach values that some find abhorrent? As Thomas Jefferson argued, “to compel a man to furnish contributions of money for the propagation of opinions which he disbelieves and abhors, is sinful and tyrannical.” The AU has a point when they object to forcing atheists to pay for religious schools, or forcing members of one religion to pay for schools run by members of another denomination.

Of course, if the AU is truly concerned about coercion, they should also be concerned about the coercion inherent in government-run district schools. Why should the Hobbits and Ewoks be forced to fund “public” schools that teach Terran values? And why should devout Christians, observant Jews, or pious Muslims be forced to subsidize district schools that teach values they might abhor?

A voucher system is superior to a government-run school system because vouchers reduce social conflict and empower parents to choose schools aligned with their values. But they fail to eliminate coercion. An education system that truly cherishes fairness and respects diversity would empower parents to choose the schools their children attend while also respecting the freedom of conscience of taxpayers. Fortunately, more than a dozen states have moved in that direction by adopting scholarship tax credit laws, which grant tax credits to donors to scholarship organizations that aid families who opt out of the district school system. As Andrew J. Coulson has explained:

Unlike the funding of public schools, which is compulsory for all taxpayers, participation in [a scholarship] tax credit program is voluntary. If an individual chooses not to donate to [a scholarship organization], his taxes are collected just as they have always been, and those dollars cannot be used for any sectarian purpose. Furthermore, if a taxpayer does choose to make a donation, he is free to select the [scholarship organization] most consistent with his own values.

Sadly, Americans United has repeatedly opposed scholarship tax credit laws in the court of public opinion and courts of law. We hope that someday they will realize that scholarship tax credits are the best policy to achieve their pluralistic goals.

Patrick J. Michaels and Paul C. "Chip" Knappenberger

You Ought to Have a Look is a feature from the Center for the Study of Science posted by Patrick J. Michaels and Paul C. (“Chip”) Knappenberger. While this section will feature all of the areas of interest that we are emphasizing, the prominence of the climate issue is driving a tremendous amount of web traffic. Here we post a few of the best in recent days, along with our color commentary.

As you may have guessed from the title of this post, this week we call attention to a few articles around the web examining the common sense behind a tax on carbon. It turns out there is none.

From time to time, there is a pitch made to conservatives that a “revenue neutral” carbon tax would be a win-win for everyone. It would help mitigate climate change while at the same time spur economic activity. Even if you don’t care about the former, you’re bound to like the latter. Or vice versa.

To try to win some new carbon tax recruits in the incoming Republican-led Congress, two recent high profile articles—one in the Washington Post by one-time Obama economic adviser Larry Summer and the other on National Review Online by the Hudson Institute’s Irwin Stelzer—make that argument, with embellishments.

If a carbon tax sounds too good to be true, then your intuition is correct.

Robert Murphy, an economist for the Institute for Energy Research, provides the technical details, collected from the economic literature, as to why the economic gains don’t actually come along with a carbon tax as they are being promised. In his National Review Online article “Taxing Carbon Won’t Help the Economy,” Murphy rebuts many of Stelzer’s claims. Ultimately, he delivers this sage advice:

Far from offering something for everyone, a revenue-neutral carbon tax advances the policy agenda of the environmental Left at the expense of the American people. The economic theory of a carbon tax is unmoored from political reality. In practice, carbon-tax supporters have shown that they would rather spend the revenue on pet projects than reduce taxes, thereby hindering economic growth. Conservatives should resist the temptation to give central planners in Washington more money to waste and more control over our economic affairs.

Another take on the carbon tax is offered by our good friend, the always insightful Marlo Lewis, from the Competitive Enterprise Institute. Marlo takes on Summers’ “Oil Swoon Creates the Opening for a Carbon Tax” with his own “Oil ‘Swoon’ Is Not an Argument for Carbon Taxes” over at the blog for Globalwarming.org.

Marlo leads off with this bit of depressing (yet predictable) news,

It was inevitable. As soon as consumers and the economy start to enjoy significant relief from a decade of pain at the pump, the political class clamors for higher gas taxes and new carbon taxes.

Marlo then takes us through the long list of supposed “benefits” of a carbon tax, tearing each one down along the way. From “Is carbon energy a tax haven?” to “Do we overuse fossil fuels?” to “Would a carbon tax make energy markets more efficient?” Marlo’s answer is always the same, “No.”  He summarizes:

Summers makes a clear, concise, but unpersuasive case for a carbon tax. The holes in the argument are not his doing but rather arise from the thesis he propounds. The case for a carbon tax fails because:

  • American energy is not undertaxed or under-regulated.
  • An underperforming economy and anti-market policies already restrict oil consumption.
  • Policymakers do not know the sign (positive or negative), much less the monetary impact, of an incremental ton of CO2, so even a small carbon tax could do more harm than good.
  • Carbon taxes are regressive and would be piled on top of existing taxes and regulations rather than replace them.
  • Even a very aggressive carbon tax imposing trillion-dollar costs on the economy would have no discernible climate impact for decades to come.
  • Consumers are finally getting a break from high gasoline prices. Having endured years of energy-price windfall losses, they should now be allowed to enjoy windfall gains.

Also adding to the anti-carbon tax sentiment is Heritage Foundation economist Nicolas Loris. Loris highlights the results of an economic analysis of a carbon tax that the Heritage Foundation recently conducted. According to Loris:

Using the same model as the Energy Information Administration, we modeled what a carbon tax equivalent to the federal government’s social cost of carbon estimate would do to the economy between 2015 and 2030 and found:

  • An average employment shortfall of nearly 300,000 jobs,
  • A peak employment shortfall of more than 1 million jobs,
  • 500,000 jobs lost in manufacturing,
  • Destruction of more than 45 percent of coal-mining jobs,
  • An aggregate GDP loss of more than $2.5 trillion (inflation-adjusted), and
  • A total income loss of more than $7,000 per person

Loris has this most useful suggestion:

Here’s a better deal: Let’s cut the taxes we don’t like and in turn everyone will get more economic growth, more jobs with higher wages and a better standard of living for all Americans. Such a policy will provide the world with more wealth and resources to tackle the problems of the future, whether they’re climate-related or not.

These are three good counters to arguments for a carbon tax that everyone should be familiar with. So, to stay in the know, you ought to have a look!

Walter Olson

At my Cato blog Overlawyered I’ve been pulling together month-by-month highlights of stories from last year. I’m currently up to October in the series. Here’s a small sampling of my favorites: 

Read the whole series here.

Paul C. "Chip" Knappenberger

Today, the Nebraska Supreme Court overturned a lower court ruling and held that the power to approve a route for the Keystone XL pipeline through the state lay with the governor. Nebraska Gov. Dave Heineman had previously approved the pipeline’s route, but his authority was challenged by a group of landowners (pipeline opponents) who claimed the authoritative power was held by the state’s Public Service Commission rather than the governor.

President Obama repeatedly referred to this pending decision as the reason why he could not made a final decision on whether to approve or deny the pipeline. As recently as earlier this week, when indicating the president would veto a measure to approve the pipeline that is currently making its way through Congress, Obama press secretary Josh Earnest referred to a  “well-established process in place” for making such decisions. The Nebraska case was the last remaining part of that process, as the State Department has already given the pipeline a clean bill of environmental health.

As for the president himself, in delivering his Climate Action Plan back in the summer of 2013, he said:

I do want to be clear: Allowing the Keystone pipeline to be built requires a finding that doing so would be in our nation’s interest. And our national interest will be served only if this project does not significantly exacerbate the problem of carbon pollution. The net effects of the pipeline’s impact on our climate will be absolutely critical to determining whether this project is allowed to go forward. It’s relevant.

Odd that he should say that in June of 2013 when a month earlier, in May of 2013, I testified before Congress as to that climate math of the Keystone XL pipeline and found its effect on our climate was inconsequential, resulting in less than 1/100th of a degree of warming by the end of this century. Case closed.

Before the Nebraska decision, Congress was preparing to send legislation to the president’s desk that would wrest the decision from the State Department. But now that the Nebraska court decision has been handed down, Obama can steal the thunder for himself and simply grant approval to the pipeline.

And, who knows, with today’s oil economics, perhaps the pipeline will not be built, and the president can have his cake and eat it too.

Mark A. Calabria

According to a White House release, the Federal Housing Administration (FHA), which insures lenders’ against borrower default, will be lowering its annual premiums. While I believe this to be a reckless move in the wrong direction, I am the first to say that setting the appropriate premium is a lot harder than it looks.

The fundamental problem facing any insurer, like the FHA, is that the risk profile of borrowers is influenced by the premium rates they are charged. Obviously a rate that is set too low will not cover losses and the insurance fund will lose money. But a rate set too high will drive away low-risk borrowers and leave the insurer covering only high risk borrowers (and likely also losing money). An insurance fund can easily find itself in a position where it needs to raise rates to cover losses from risky borrowers, but each rate increase only drives out the good borrowers, making the risk composition of the pool ever worse. If you want to see this spelled out with a lot of fancy math, I refer you to Joe Stiglitz and Andrew Weiss’s classic paper on the topic (which builds upon earlier work by Dwight Jaffee).

Figure 3 from Stiglitz and Weiss (below the jump) illustrates this tension. If you want to attract both low- and high-risk borrowers, you need to have a much lower rate than if you only want to attract high-risk borrowers. In fact, one of the rationales I often hear from advocates of expanding the FHA is that doing so will improve the health of the fund by attracting better quality borrowers.

The problem with this is that President Obama is quite explicit that his desire is to lower the credit quality of FHA borrowers. From the White House fact sheet: “FHA premium reduction will help hundreds of thousands of additional families own a home for the first time.” This initiative is targeted at first-time buyers, those who have not been able to get a loan previously. First-time buyers who have been previously “waiting on the sidelines” are likely to be younger and hence have lower credit scores on average, or else be older buyers who have had trouble finding credit because they are high-risk.

Such is also borne out in the FHA’s most recent origination report, which shows average FICO scores (a measure of creditworthiness) declining over recent years. Almost 60 percent of recent FHA borrowers have FICOs below 680. Almost 75 percent made a down-payment of less than 5 percent. If they would need to sell their homes within a few years of purchase, then given the transactions costs they’d need to bring cash to the table. This is not a high-quality book of business. 

As I wrote almost three years ago, if the FHA is serious about rebuilding its financial health and protecting the taxpayer, it needs to move in the direction of reducing its lending to higher-risk borrowers. If the agency is unwilling to do so, which appears to be the case, then any change in premiums should be up not down.

 

Neal McCluskey

Word came out last night that in a speech in Tennessee today President Obama will propose that two years of community college be made free to all “responsible” students, primarily funded by federal taxpayers. But one look at either community college outcomes or labor market outlooks reveals this to be educational folly.

The fact of the matter, according to the federal government’s own data, is that community college completion rates are atrocious. The federal Digest of Education Statistics reports that a mere 19.5 percent of first-time, full-time community college students complete their programs within 150 percent of the time they are supposed to take. So less than 20 percent finish a two-year degree within three years, or a 10-month certificate program within 15 months. And that rate has been dropping almost every year since the cohort of students that started in 2000, which saw 23.6 percent complete. Moreover, as I itemize in a post at SeeThruEDU.com, even when you add transfers to four-year schools, the numbers don’t improve very much. Meanwhile, interestingly, the for-profit sector that has been so heavily demonized by the administration has an almost 63 percent completion rate at two-year institutions, and that has been rising steadily since the 2000 cohort.

The other huge problem is that the large majority of job categories expected to grow the most in the coming years do not require postsecondary training. Of the 30 occupations that the U.S. Department of Labor projects to see the greatest total growth by 2022, only 10 typically need some sort of postsecondary education, and several of those require less than an associate’s degree. Most of the new jobs will require a high school diploma or less.

Of course, one of the biggest problems in higher ed is that for so much of it, someone other than the student is paying the bill, tamping down students’ incentives to seriously consider whether they should go to college and what they should study if they do. This proposal would only exacerbate that problem, essentially encouraging people to spend two years in community college fully on the taxpayer dime while they dabble in things they may or may not want to do—and as they maintain a pretty low 2.5 GPA—then maybe focusing a little more when the two years is up and they have to pay something themselves.

Unfortunately, there is no way to look at this proposal (at least as it has been spelled out so far), investigate the reality of community college, and conclude anything other than it is a terrible idea.

Nicole Kaeding

The House of Representatives voted this week to establish rules for the 114th Congress. One rule change requires that the Congressional Budget Office (CBO) and Joint Committee on Taxation (JCT) dynamically score legislation. The change is a much-needed reform to the federal budgeting process.

The current legislative scoring process completed by CBO and JCT is generally called static scoring. It currently incorporates some microeconomic behaviorial responses to projected changes in federal spending and taxes.

But static scoring misses a big piece of the puzzle. It assumes that the size of the economy is constant. It does not include an analysis of the economy-wide responses to  policy changes. By constrast, dynamic scoring  acknowledges the obvious fact that actions of Congress could effect gross domestic product (GDP). 

Consider a hypothetical income tax increase from 35 to 40 percent. The tax increase may cause  individuals to work fewer hours and businesses to reduce their capital investment. Those sorts of decisions will be made by millions of individuals and businesses in response to tax changes. In aggregate, these responses would affect GDP. Dynamic scoring includes these macroeconomic responses.

Contrary to some opponents, dynamic scoring is not new to CBO. CBO has used dynamic scoring before. The large immigration bill in 2013 was dynamically scored to show how less stringent immigration policy could foster economic growth. CBO estimated the economic growth effects of the 2009 stimulus. And CBO’s long run spending projections include supplementary forecasts that include the effects of future spending, taxes, and deficits on economic growth. The House rule change requires that CBO and JCT use dynamic scoring on all  legislative cost estimates above a certain magnitude.

Dynamic scoring is not perfect. Its results are influenced by the assumptions made by the models used to produce the results. For this reason, CBO should make its models, assumptions, and data available to outside experts so it can receive feedback from scholars and improve its methods. But static scoring is even less perfect than dynamic scoring. Its assumption of constant GDP leads to results that are biased against policies that lead to economic growth, such as tax rate reductions.

Dynamic scoring will not be a cure-all, but it will be a helpful tool so policymakers can better weigh  policy options. Providing Congress with the best information available on policies to help grow the economy seems like a no-brainer. Congress should understand how its actions affect economic output. This rule change starts the new Congress off on the right foot.

K. William Watson

Some of the most vocal criticism of the Transatlantic Trade and Investment Partnership, a proposed trade agreement between the European Union and the United States, is coming from Europeans worried that the agreement will liberalize parts of their economy that it actually won’t.  This is a very frustrating situation, because supporters of the agreement are then forced to assure critics that the TTIP will not, in fact, do this particular good thing they don’t want it to do.

For example, people have claimed angrily that the TTIP will require the UK to privatize its National Health Service and then prevent the government from “renationalizing” it—that would be great, but it’s not true.  At most, the UK would be required to allow U.S. companies to participate if the government chose to privatize parts of the NHS and then compensate them in any future taking, as it would surely do anyway.  If the UK ever reforms its health system, it won’t be because of TTIP.

Now a new boogieman has emerged, with European news media fretting this week that the TTIP could require Europe to relax protections for geographical indications on cheese and meat products.

As reported in the Financial Times:

Christian Schmidt, Germany’s agriculture minister, said in an interview with Der Spiegel: “If we want to seize the opportunities of free trade with the enormous American market then we can’t carry on protecting every sausage and cheese speciality.”

Food producers, politicians and campaigners against the trade deal seized on his remarks as evidence that the protection of regional brands would be sacrificed to globalisation.

[But] Daniel Rosario, spokesman for the EU, insisted that TTIP would not undermine European food brands or weaken intellectual property safeguards.

“On the EU side, we have made clear to our American counterparts that geographical indications are one of our main priorities and we have not agreed and will not agree to reduce the protection of our geographical indications in Europe,” he said.

Despite what a German official may have said, the EU is not only committed to maintaining its GI protection scheme but is intent on spreading it internationally.  If the TTIP does impact the use of geographical indications it will likely be to require the United States to recognize and protect European GIs in the U.S. market.

That’s a real shame, because Europe’s method for protecting GIs is bad for European consumers.  U.S. policymakers should avoid imitating it.

Sometimes when a product uses the name of a place, it’s to indicate origin.  For example, any consumer that purchased  Napa Valley wine, Wisconsin cheese, or Florida orange juice expects that some or all of the product was produced in those locations.  On the other hand, lots of place names are generic indicators of a product’s characteristics.  For example, no one thinks Philly cheesesteak, Boston cream pie, or Texas toast have to be made only in those places.

The proper way to distinguish between these different uses of place names is to gauge consumer expectation.  However, many countries in Europe, and the EU itself, protect GIs not to prevent consumer confusion but to secure advantages for traditional producers.  They use restrictions on language in order to prevent names from becoming generic, and are trying to claw back names that have already become generic in foreign markets.

Americans would be surprised to learn how many of the foods they eat have names that Europe thinks are GIs in need of protection.  The most well-known example of a term that is generic to Americans but not Europeans is champagne, which to most Americans simply means wine with bubbles.  But cheeses like asiago, parmesan, and gorgonzola are also regulated geographically in Europe as well as countless other descriptive terms like Cornish pasty and Greek yogurt.

The result for Europe is a market where quality and geography are legally tied together.  This system pleases local producers and politicians, but it also kills innovation and prevents the development of efficient supply chains.  Consumers may know just where their cheese came from, but without competition, they will have to pay more for it and it probably won’t taste as good.

David Boaz

Through Tammany Hall, the New York City Democratic political machine in the late 19th century, “Boss” William M. Tweed essentially controlled the city’s government and much of the state’s. Like most political leaders he never felt entirely secure, and he tried to bully his opponents, including journalists. He is famously reported to have been especially outraged by cartoonists such as Thomas Nast, and to have roared to his associates,

Let’s stop them damn pictures. I don’t care so much what the papers write about—my constituents can’t read—but damn it, they can see pictures.

It seems that Islamic extremists may feel the same way. Theo van Gogh was murdered after producing a film about Islam. The publication of cartoons about Muhammad in the Danish newspaper Jyllands-Posten generated much outrage and numerous death threats. And now we have the brutal murders of cartoonists and other journalists from the French newspaper Charlie Hebdo. At least Boss Tweed just used bribery and corrupt politics to ruin his enemies.

Walter Olson wrote eloquently in Time magazine yesterday about the Charlie Hebdo murders and the challenge they present to liberal society:

There is no middle ground, no soft compromise available to keep everyone happy–not after the murders at the satirical newspaper Charlie Hebdo. Either we resolve to defend the liberty of all who write, draw, type, and think–not just even when they deny the truth of a religion or poke fun at it, but especially then–or that liberty will endure only at the sufferance of fanatical Islamists in our midst. And this dark moment for the cause of intellectual freedom will be followed by many more.

Flemming Rose, the editor who commissioned the Jyllands-Posten cartoons, writes about threats to free speech in his book The Tyranny of Silence, published recently by the Cato Institute, and in various articles and interviews.

And herewith my favorite Thomas Nast cartoon, not primarily about Boss Tweed’s corruption, but about “Peace with a War Measure” – peace and liberty shackled by the income tax.

 

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