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Doug Bandow

While the Obama administration lectures Europe about the latter’s fiscal policies, Washington continues to run deficits. The problem is bipartisan. When George W. Bush took office, the national debt was $5.8 trillion. When Barack Obama took over, it was $11.9 trillion. Now it is $18.2 trillion.

These numbers will look like the “good ole’ days” when the entitlement tsunami hits in coming years. Economist Laurence Kotlikoff figures total unfunded liabilities today run about $200 trillion.

It long has been obvious that the American political system is biased toward spending. Public choice economics explains how government agencies have interests and why spending lobbies so often prevail over the public.

Congress demonstrates a “culture of spending” in which members tend to back higher expenditures the longer they serve. Washington richly rewards legislators for “growing” in office and joining the bipartisan Big Government coalition.

Some analysts still hope that electing the “right people” will fix the system. But without creating some institutional barriers to political plunder the system will continue to produce the same overall results, despite slight differences in exactly how much is spent on whom and when.

The late William Niskanen proposed a measure that was simple and impossible to game. Niskanen, acting Chairman of the Council of Economic Advisers under President Ronald Reagan, left that position to become Chairman of the Cato Institute.

Two decades ago Niskanen proposed a simple 125-word amendment requiring a three-fifths vote to increase the debt limit or raise taxes and federal compensation to states and localities for any mandates. These provisions would be suspended in the event of a declaration of war. “Nothing has changed in the interim to render Niskanen’s proposal obsolete or impractical,” noted Lawrence Hunter of the Social Security Institute in a new study for the Carleson Center for Welfare Reform.

The measure would put taxing and borrowing on a level playing field, eliminating the current bias for piling up debt. Moreover, the three-fifths requirement would make it easier for legislators to reconsider outlays than to collect more money to waste. This would create a useful corrective for the pervasive pro-spending bias built into the system today.

However, it has become evident that the Senate filibuster, with a three-fifths rule, has proved to be only a limited impediment to the growth of government. Thus, the required super-majority should be two-thirds. Wrote Hunter, experience makes clear that the three-fifths requirement is “not sufficiently stringent to overcome the enormous bias in the legislative process.”

Moreover, Hunter noted that Congress has subverted the debt limit by effectively setting a floating number “suspended” to accommodate whatever amount Congress ends up spending. Thus, he proposed that the Niskanen Amendment be updated to explicitly restrict any suspension to no more than 30 days per Congress, and require the same super-majority vote to suspend the limit.

Finally, Hunter proposed prioritizing spending in the event that borrowing hits the debt ceiling. Hunter would set repayment of the national debt, both principal and interest, as the top priority to eliminate any possibility of default. Then Washington would repay Social Security recipients to prevent big spenders from threatening retirees’ livelihoods.

Congress must again address the debt limit by the Ides of March. It would be a good time to push the Niskanen Amendment. Equally important, any debt increase should include language prioritizing payments with existing funds. Let President Barack Obama threaten to veto a debt measure because it includes language requiring him to pay the most important claims first.

While it would be hard to reject a debt limit increase for spending already approved, congressional Republicans should begin preparing for the next debt fight. As I point out in American Spectator online: “The only hope for reducing the growth in federal debt is to create institutional barriers to its growth. Otherwise the red ink likely will rise until Uncle Sam is both insolvent and bankrupt.”

Neal McCluskey

In a Washington Post op-ed laying out his thoughts on the federal role in education, Gov. Jeb Bush wrote, “We are long overdue in setting the lines of authority so clearly.” Alas, the lines he offered would furnish just the sort of “clarity” that has led to nearly limitless federal control over schooling without any meaningful evidence of lasting improvement.

The true heart of what Bush wrote was not his declaration about setting lines, but the three justifications he offered for federal intervention. Washington, he wrote:

should work to create transparency so that parents can see how their local schools measure up; it should support policies that have a proven record; and it should make sure states can’t ignore students who need extra help.

All of this is what has gotten us to the de facto state of federal control we are currently in:

  • “Transparency” has come to mean federally driven tests and curriculum standards – the Common Core – because under No Child Left Behind states had been defining “proficiency” for themselves, and it wasn’t sufficiently “transparent” for some people whether “proficient” kids in Mississippi were as educated as those in Massachusetts. Of course, you can’t have much more complete federal control than Washington deciding what students are taught.
  • Supporting policies with “a proven record” opens the door for any policies politicians declare “proven.” See, for instance, the rhetoric vs. the reality of pre-K education programs.
  • Making sure states “can’t ignore students who need extra help” has also been used to justify national standards and tests. Indeed, it underlies everything Washington does. Sayeth federal politicians, “Some groups aren’t doing so well, and since we spend money to end that we’d better dictate terms. So let’s connect to all that money to school nutrition guidelines, teacher evaluations, English and math content, school opening times…”

Quite simply, in setting his lines, Gov. Bush set no lines. Thankfully for him, lines of federal authority have already been drawn. Indeed, they were set centuries ago: the Constitution gives the federal government no authority to impose transparency, offer help, or anything other than prohibit discrimination by state and local governments and govern federal lands.

As I’ve noted before, obeying the Constitution would save folks like Gov. Bush a lot of reinventing work. More importantly, it would save everyone else expensive, ineffectual trouble.

Kat Murti

Somewhere between 30 and 40 million Americans hold libertarian views. Are you one of them? Take this quiz — excerpted from David Boaz’s new book The Libertarian Mind: A Manifesto for Freedom — and find out just how libertarian you really are! 

The quiz launched just over a week ago and almost 30,000 people have already taken it. Have you? Use #LibertarianMind to share your results on social media, tag your friends, and see how they measure up!

Of course, the quiz represents a very simplified version of libertarian principles and very few people will have “perfect scores” in any one direction, but it’s a great way to open up a discussion with friends and family.  If that discussion leads to more curiosity about libertarianism and its principles, point them in our direction…or give them a their very own copy of The Libertarian Mind!

Haven’t had a chance to read The Libertarian Mind yet? We have a limited number of copies to give away. Take the quiz to learn the details! You can also follow The Libertarian Mind on Facebook for news on the book, media appearances, and more. 

Steve H. Hanke

In my misery index, I calculate a ranking for all countries where suitable data exist. The misery index — a simple sum of inflation, lending rates, and unemployment rates, minus year-on-year per capita GDP growth — is used to construct a ranking for 108 countries. The table below is a sub-index of all Middle East and North African (MENA) countries presented in the world misery index.

A higher score in the misery index means that the country, and its constituents, are more miserable. Indeed, this is a table where you do not want to be first.

Syria and Iran were the most miserable in the region. War and sanctions have taken their toll. Bahrain and Kuwait are at the other end of the spectrum, with low (read: good) misery index scores.

Two points worth noting are somewhat related. First, the majority of countries in MENA have elevated misery index scores – scores above twenty. These poor scores indicate structural problems that require serious economic reforms. The second point, as indicated in the notes to the table, is that the governments in eight MENA countries were not even capable of producing the basic data required to calculate a misery index score. This represents government failure and suggests a lack of capacity to implement structural economic reforms.

Ilya Shapiro

Two years ago in United States v. Windsor, the Supreme Court held that the Constitution forbids the federal government from treating same-sex marriages differently than opposite-sex marriages. The Court’s majority, writing through Justice Anthony Kennedy, recognized that discriminating against lawfully wed same-sex couples violates the Fifth Amendment’s “prohibition against denying to any person the equal protection of the laws,” a prohibition which the “equal protection guarantee of the Fourteenth Amendment makes … all the more specific and all the better understood and preserved.” Because Windsor challenged only the federal Defense of Marriage Act, no state marriage laws were directly affected.

Given the Court’s broad language, however—especially its direct reference to the Equal Protection Clause—many (including Justice Antonin Scalia in dissent) predicted that the opinion’s reasoning would eventually be used to strike down state laws and constitutional provisions that deny marriage licenses to same-sex couples. They were right. Windsor served as the basis for dozens of challenges to marriage laws across the country, initially resulting in an unbroken series of victories for marriage equality in federal courts, which the Supreme Court declined to review.

Finally, the U.S. Court of Appeals for the Sixth Circuit (which covers Kentucky, Michigan, Ohio, and Tennessee) issued a contrary ruling, holding that “the people who adopted the Fourteenth Amendment understood it to require the States to change the definition of marriage.” The Supreme Court could thus no longer delay taking up the marriage debate.

Cato has accordingly filed what will almost certainly be our final brief on this issue. Joining with noted originalist scholar (and Federalist Society co-founder) Steven Calabresi and Yale law professor William Eskridge—one of the leading experts on American legal history—we urge the Court to reverse the Sixth Circuit’s decision and finally fulfill the Constitution’s promise of equal protection under law to millions of gay Americans and their children.

We argue that the lower court’s ruling was inconsistent with the original meaning of the Fourteenth Amendment’s Equal Protection Clause. The fact that the provision’s ratifiers didn’t automatically or explicitly understand that it would eventually require states to recognize same-sex marriages is irrelevant; all that matters is what it meant in 1868 for a state to “deny to any person within its jurisdiction the equal protection of the laws.” As our brief shows, this language was based on similar language in state constitutions and was widely (and properly) understood as prohibiting the states from passing what’s known as “caste” legislation—laws that create “second-class” citizens with inferior legal rights. While some jurists and academics have argued that the Equal Protection Clause only prohibits discrimination on the basis of race—and not, say, gender, religion, national origin, or sexual orientation—this is an ahistorical view that ignores mountains of evidence to the contrary.

The framers of the Fourteenth Amendment explicitly rejected earlier versions of the clause that would have restricted it to prohibiting race-based discrimination. Instead, they adopted language that “establishes equality before the law, and … gives to the humblest, the poorest, and most despised … the same rights and the same protection before the law as it gives to the most powerful, the most wealthy, or the most haughty” and “abolishes all class legislation in the States and does away with the injustice of subjecting one caste of persons to a code not applicable to another.”

Essentially, the Equal Protection Clause means, in 1868 as in 2015, exactly what it says: states cannot have one set of laws for the rich and another for the poor, separate schools for white and black students, or marriage licenses only for opposite-sex couples.

The Supreme Court will hear the consolidated marriage cases under the name Obergefell v. Hodges on April 28, with a ruling expected by the end of June.

Tim Lynch

Over at Cato’s Police Misconduct website, we have identified the worst case for the month of February.

Back on July 4, 2013, San Antonio Police Department Officer Daniel Lopez held his own wife and children at gunpoint, striking his wife in the head with his gun, and had a 20-minute standoff with police before surrendering. Last month, his case finally went to court, where a deal with prosecutors resulted in him pleading no contest to a misdemeanor charge of “disorderly conduct.” For the offense, he was sentenced to just one day of probation and ordered to pay a $100 fine. 

According to one news report, “The plea deal struck out any reference to a gun or family violence.” As a result, Lopez will retain his peace officer’s license whether or not the San Antonio Police Department terminates his employment. 

Are police officers treated the same as everyone else, or are they accorded special treatment? Read the news story and decide for yourself. 

Doug Bandow

Russian President Vladimir Putin has reached out to one of the poorest and least predictable states on earth: North Korea. So far, the new Moscow-Pyongyang axis matters little. But the effort demonstrates that Russia can make Washington pay for confronting Moscow over Ukraine.

The United States and the Soviet Union divided the Korean peninsula at the end of World War II. Moscow’s zone became the Democratic People’s Republic of Korea, better known as North Korea, while the U.S. zone became the Republic of Korea, better known as South Korea. But North Korea denounced Moscow in 1991 after it recognized South Korea. Since then, Russo-North Korean relations have been minimal.

In contrast, Seoul provided investment and trade in abundance. After President Vladimir Putin held a summit with South Korean President Park, Russia leaned toward Seoul in denouncing the North’s missile and nuclear programs.

However, Moscow is rebalancing its position. Last year North Korea and Russia exchanged high-level visitors and inked a number of economic agreements. Russia indicated its willingness to host a summit. Both governments talked of “deepening” economic and political ties.

Although Russia’s North Korea initiatives are new, the interests being promoting are old: regional stability, denuclearization, improved transportation links, expanded commercial and energy activities, and enhanced diplomatic clout.

So far Moscow has invested little. There is no aid. Last year the Russian government formally wrote off $11 billion in Soviet-era loans, which were never going to be repaid.

As for security, the Putin government is focused elsewhere. Joint military maneuvers with North Korea are planned for later this year, but no one imagines the two countries will ever fight together. Pyongyang wants to purchase Moscow’s best fighter, the Su-35, but has little money to do so.

Pyongyang desires to diversify its international relationships and find a counterweight to Beijing. The Chinese have grown increasingly irritated with North Korea’s determination to build nuclear weapons and refusal to adopt meaningful economic reforms.

Thus, North Korea hopes for Russian investment and trade. The North would welcome another friend on the United Nations Security Council whenever nuclear and human rights issues arise.

For Moscow, North Korea offers some economic possibilities, but the latter’s poverty and unpredictability reduce its attractiveness as a market. Instead, Russia’s chief economic interest in the North is as a transit route—rail, gas, and electricity—to South Korea. In this way the Putin government is interested in north Korea, not North Korea.

As U.S.-Russia relations have deteriorated, especially after events in Ukraine over the last year, Moscow has been looking for other fields to compete with the United States. Pressing for resumption of the Six-Party Talks, intended to peacefully resolve concerns about North Korea’s nuclear ambitions, raises Moscow’s diplomatic profile and applies pressure to the United States.

Russia is also applying subtle pressure on Seoul, encouraging it to distance itself from U.S. policy toward Moscow. The Putin government does not expect the South to formally break with America, but would benefit from a less enthusiastic application of U.S.-led sanctions.

Russia also is interfering with Washington’s attempt to isolate and pressure the North. Enhanced economic ties between Moscow and Pyongyang would reduce the effects of existing sanctions and make Moscow less receptive to new U.S. proposals to tighten controls on North Korea.

The Putin government could do more to upend the Korean balance. However, so far the Russo-North Korean performance is largely international Kabuki theater. Greater Russian interest in North Korea will hinder Washington’s efforts to force North Korea to relent. But China was not going to allow that to happen and the Kim regime was not planning to negotiate away its nuclear weapons.

However, as I point out in the National Interest, “Russia’s attention to Pyongyang should remind Washington that Moscow matters to the U.S. Ukraine is of little security interest to America, but Russia may respond to U.S. pressure there by targeting more serious Washington interests elsewhere, such as Iran, Afghanistan, and Korea.”

So far, Moscow has exacted only a small price for U.S. opposition. But the expense could grow. The Obama administration should carefully consider the costs before engaging in a new Cold War with Russia.

Charles Hughes

As previous Cato work has shown, our current welfare system fails us in a number of ways. It is both overly complex and inefficient: over 100 different programs spend roughly $1 trillion each year yet do relatively little to actually lift people out of poverty. In some cases, the overlapping programs can create “poverty traps” that make it harder for people to climb the economic ladder.

Despite many warnings about the welfare system’s underwhelming performance, reform remains elusive. While there are encouraging signs that some policymakers are taking the issue seriously, reform ideas have not yet gained significant traction or translated into concrete policy change.

Each year of inaction comes with a heavy price tag: another trillion dollars spent with very little to show for it. After the relatively successful welfare reform of 1996, the welfare system in the United States has largely been on autopilot. Annual spending continues to increase with few efforts to address or even identify the many problems still present.

In contrast, in Australia a new comprehensive review of its welfare system shows the country is earnestly grappling with this issue and seeking real solutions. Their efforts are an encouraging sign that broad, substantive welfare reform is still possible.

Last week, Australian Social Services Minister Scott Morrison released the final report from a group commissioned to provide an in-depth review of Australia’s welfare system. The authors identify many of the same problems found in the antipoverty programs in the United States. The ad hoc development of the dozens of programs that make up a “patchwork quilt” welfare system leads to “unintended complexities, inconsistencies and incoherencies” and “does not provide clear rewards for work.”

Too often, beneficiaries who can work do not, either because doing so would disqualify them from disability programs or because the welfare system creates perverse incentives where additional earnings actually leave them worse off. As more beneficiaries are relegated to the economic sidelines, their likelihood of long-term dependency increases, exacerbating the fiscal burden of the welfare system. Welfare expenditures already account for a significant portion of government spending in Australia, and will only increase in the future barring substantive change. Those realizations have lent a sense of urgency to reform efforts in Australia that hasn’t been seen in this country in the 21st century.

Recognizing the Australian welfare system’s pressing problems, the report’s authors recommend making welfare simpler, the rewards to work easier to understand, and the transition from welfare to work smoother. They propose consolidating the 20 income support payment types and 55 supplementary payments that Australia offers to just five payment streams. Able-bodied working-age adults would only be eligible for two. Beneficiaries with disabilities would be able to work to their fullest capacity without being disqualified.

The authors also propose a new major initiative, the Passport to Work, that would support beneficiaries in their transition to work by making it “clear to recipients how their income support package would be affected when moving into work or increasing hours and what would happen if work reduces or ends.”

This in-depth review identifies the many significant problems with the “patchwork quilt” welfare system in Australia and offers a way forward that would make it more efficient and improve the lives of its beneficiaries.

Whether these recommendations lead to real reform remains to be seen. But the government’s decision to commission this report signals a willingness to address these many problems, and the recommendations have a substantial amount of support among policymakers like the social services minister. The Australian experience so far shows that they are facing up to the serious shortcomings of their welfare system and trying to address them in a comprehensive way, which could serve as a valuable lesson for the United States.

Jeffrey Miron

Since 2009, the federal government has spent about $30 billion to encourage the adoption of Electronic Medical Records. So how is that working out? This story from NPR sheds some light:

Technology entrepreneur Jonathan Bush says he was recently watching a patient move from a hospital to a nursing home. The patient’s information was in an electronic medical record, or EMR. And getting the patient’s records from the hospital to the nursing home, Bush says, wasn’t exactly drag and drop.

“These two guys then type—I kid you not—the printout from the brand new EMR into their EMR, so that their fax server can fax it to the bloody nursing home,” Bush says.

In an era when most industries easily share big, complicated digital files, health care still leans hard on paper printouts and fax machines. The American taxpayer has funded the installation of electronic records systems in hospitals and doctors’ offices—to the tune of$30 billion since 2009. While those systems are supposed to make health care better and more efficient, most of them can’t talk to each other.

Bush lays a lot of blame for that at the feet of this federal financing.

“I called it the ‘Cash for Clunkers’ bill,” he says. “It gave $30 billion to buy the very pre-internet systems that all of the doctors and hospitals had already looked at and rejected,” he says. “And the vendors of those systems were about to die. And then they got put on life support by this bill that pays you billions of dollars, and didn’t get you any coordination of information!”

The story illustrates a classic difference betwen interventionists and libertarians. Interventionists think, “EMRs are good, so we should subsidize or mandate them.” Libertarians think, “EMRs appear to be good; if so, the market will adopt them on its own.”

The federal government’s response is truly disheartening. According to Dr. Karen DeSalvo, acting assistant secretary for health at the U.S. Department of Health and Human Services,

“The time of letting a thousand flowers bloom, and having a set of standards that are quite variable, should come to an end… We should be working off the same set of standards.”

It is plausible that a common standard will facilitate communication between different medical providers, but the question is how we get there: via the “wisdom” of government or the wisdom of the market. The EMR saga suggests a clear answer.

Michael F. Cannon

During oral arguments in King v. Burwell yesterday, Justice Anthony Kennedy expressed skepticism about the government’s claim that the Supreme Court should defer to the IRS’s interpretation of the Patient Protection and Affordable Care Act as allowing certain taxes and subsidies in all states, when the statute authorizes those measures only in states that have an “Exchange established by the State.” Specifically, Kennedy expressed skepticism that the IRS interpretation was eligible for so-called Chevron deference, telling Solicitor General Donald Verrilli:

And it seems to me a little odd that the director of Internal Revenue didn’t identify this problem if it’s ambiguous and advise Congress it was.

Actually, the IRS commissioner did tell Congress the statute was ambiguous.

IRS Commissioner Douglas Shulman

In August 2012, IRS commissioner Douglas Shulman testified before Congress. The hearing was largely devoted to the very IRS rule now before the Supreme Court. Rep. Scott DesJarlais (R-Tenn.) interrogated Shulman, in relevant part:

Dr. DESJARLAIS. Do you agree that when authorizing these premium assistance tax credits the Internal Revenue Code, Section 36B, explicitly refers to health insurance exchanges established by the States under Section 1311?

Mr. SHULMAN. I think 36B has some contradictory language in it.

[…]

Mr. SHULMAN. I very much agree with you that there is some contradictory language…

Dr. DESJARLAIS. You are not agreeing with me. I don’t think it is ambiguous, sir. I don’t think it is ambiguous. I think it is very clear.

This is notable for a few reasons.

First, the head of the IRS testified to Congress that there is in fact language in the Act that contradicts government’s argument before the Supreme Court in King v. Burwell that the statute unambiguously authorizes the disputed taxes and subsidies in states with federal Exchanges.

Second, neither the IRS’s the proposed rule nor its final rule claimed the statute was either clear or ambiguous on this question.

Third, the proposed and final rules identified no statutory support at all for the IRS’s interpretation.

Fourth, the IRS commissioner made this concession before the IRS rule had been challenged in court. The hearing was in August 2012, and the first challenge was filed in September 2012.

Fifth and consequent(ial)ly, this evidence further demonstrates the government’s arguments in King are post-hoc rationalizations for a rule promulgated without reasoned decision-making.

Ilya Shapiro and Julio Colomba

Sue Evenwel is a citizen of the United States and of the state of Texas. She is a registered voter in Titus County and regularly votes in local and state elections. How is it, then, that Ms. Evenwel’s vote in a Texas state senate race is worth only about half that of certain other voters? The answer lies somewhere at the intersection of bad law and even worse politics that the modern Voting Rights Act has become. 

The VRA, as you may recall, was the heroic civil rights legislation that finally put a stop to the most blatant and invidious forms of racial discrimination impairing the fundamental right of racial minorities to vote. It has been several decades now since this important and proud work but now, sadly, the heroic VRA has lived long enough to see itself become a villain. As Cato has warned before—in our amicus briefs in Perry v. Perez and Shelby County v. Holder—the courts are at a “bloody crossroads” when interpreting what have become the conflicting mandates of the VRA.  To give one example, the courts have found that Section 2 requires race-based redistricting to prevent loss of minority voting power, while at the same time, the Fifteenth Amendment (and the currently inoperable VRA Section 5) prohibits discrimination in voting on the basis of race.

The conflicts go on: as Ms. Evenwel’s case demonstrates, Section 2’s requirements clash with the Fourteenth Amendment’s equal-protection guarantee. In response to the pressures of satisfying Section 2, Texas adopted a court-drawn, interim redistricting plan for state senate districts. To ensure that racial minorities’ voting power isn’t diluted, however, the plan instead dilutes the voting power of rural voters by equalizing “total population” among districts instead of using the “citizens of voting age population” (CVAP) metric. The result of this choice is that the high number of non-voting-eligible immigrants—whether legal or illegal—in Texas’s urban centers wildly inflates the voting power of the relatively fewer eligible voters who also reside in those urban districts.

This is not just a distortion of American democracy; it’s a distortion of the “One Person, One Vote” principle inherent in the Fourteenth Amendment Equal Protection Clause. The Supreme Court has said before that voting districts should be as close in voting population as is feasible to protect the equal right to vote. Thanks to outmoded judicial interpretations of the VRA, the Court should now have another chance to explain what that means.

Evenwel and other Texas voters whose votes have been rendered “less equal” by Texas’s districting plan are standing up for their rights by appealing an unfavorable district court (special panel) ruling to the Supreme Court. Cato and the Reason Foundation have filed an amicus brief supporting their appeal. At this stage, the Court only needs to find that the plaintiffs have presented a substantial question for review, so our brief explains why the question presented is such an important one for the Court to decide. We explain: (1) how Section 2 and the Fourteenth Amendment’s “One Person, One Vote” principle are in conflict, (2) that recent immigration patterns have made it constitutionally problematic to use “total population” and not CVAP, and (3) that it’s inappropriate for courts to defer the choice of population metric when that choice jeopardizes the fundamental right of every citizen to an equal vote.

The Supreme Court will decide whether to take the case of Evenwel v. Abbott at some point before it breaks for the summer.

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

The Current Wisdom is a series of monthly articles in which Patrick J. Michaels, director of the Center for the Study of Science, reviews interesting items on global warming in the scientific literature that may not have received the media attention that they deserved, or have been misinterpreted in the popular press.

Did human-caused climate change lead to war in Syria?

Based only on the mainstream press headlines, you almost certainly would think so.

Reading further into the articles where the case is laid out, a few caveats appear, but the chain of events seems strong.

The mechanism? An extreme drought in the Fertile Crescent region—one that a new study finds was made worse by human greenhouse gas emissions—added a spark to the tinderbox of tensions that had been amassing in Syria for a number of years under the Assad regime (including poor water management policies).

It is not until you dig pretty deep into the technical scientific literature, that you find out that the anthropogenic climate change impact on drought conditions in the Fertile Crescent is extremely minimal and tenuous—so much so that it is debatable as to whether it is detectable at all.

This is not to say that a strong and prolonged drought didn’t play some role in the Syria’s pre-war unrest—perhaps it did, perhaps it didn’t (a debate we leave up to folks much more qualified than we are on the topic)—but that the human-influenced climate change impact on the drought conditions was almost certainly too small to have mattered.

In other words, the violence would almost certainly have occurred anyway.

Several tidbits buried in the scientific literature are relevant to assessing the human impact on the meteorology behind recent drought conditions there.

It is true that climate models do project a general drying trend in the Mediterranean region (including the Fertile Crescent region in the Eastern Mediterranean) as the climate warms under increasing greenhouse gas concentrations.  There are two components to the projected drying. The first is a northward expansion of the subtropical high pressure system that typically dominates the southern portion of the region. This poleward expansion of the high pressure system would act to shunt wintertime storm systems northward, increasing precipitation over Europe but decreasing precipitation across the Mediterranean.  The second component is an increase in the temperature which would lead to increased evaporation and enhanced drying.

Our analysis will show that the connection between this drought and human-induced climate change is tenuous at best,  and tendentious at worst.

An analysis in the new headline-generating paper by Colin Kelley and colleagues that just appeared in the Proceeding of the National Academy of Sciences shows the observed trend in the sea level pressure across the eastern Mediterranean as well as the trend projected to have taken place there by a collection of climate models. We reproduce this graphic as Figure 1.  If the subtropical high is expanding northward over the region, the sea level pressure ought to be on the rise. Indeed, the climate models (bottom panel) project a rise in the surface pressure over the 20th century (blue portion of the curve) and predict even more of a rise into the future (red portion of the curve). However, the observations (top panel, green line) do not corroborate the model hypothesis under the normative rules of science. Ignoring the confusing horizontal lines included by the authors, several things are obvious. First, the level of natural variability is such that no overall trend is readily apparent.

[Note: The authors identify an upwards trend in the observations and describe it as being “marginally significant (P < 0.14)”. In  nobody’s book  (except, we guess, these authors) is a P-value of 0.14 “marginally significant”—it is widely accepted in the scientific literature that P-values must be less than 0.05 for them to be considered statistically significant (i.e., there is a less than 1 in 20 chance that chance alone would produce a similar result). That’s normative science. We’ve seen some rather rare cases where authors attached the term “marginally” significant to P-values up to 0.10, but 0.14 (about a 1 in 7 chance that chance didn’t produce it) is taking things a bit far, hence our previous usage of the word “tendentious.”]

Whether  or not there is an identifiable overall upwards trend, the barometric pressure in  the region during the last decade of the record (when the Syrian drought took place) is not at all unusual when compared to other periods  in the region’s pressure history—including periods that took place long before large-scale greenhouse gas emissions were taking place.

Consequently,  there is little in the pressure record to lend credence to the notion that human-induced climate change played a significant role in the region’s recent drought.

 

 

Figure 1. Observed (top) and modeled (bottom) sea level pressure for the Eastern Mediterranean region (figure adapted from Kelley et al., 2015).

Another clue that the human impact on the recent drought was minimal (at best) comes from a 2012 paper in the Journal of Climate by Martin Hoerling and colleagues. In that paper, Hoerling et al. concluded that about half of the trend towards late-20th century dry conditions in the Mediterranean region was potentially attributable to human emissions of greenhouse gases and aerosols.   They found that climate models run with increasing concentrations of greenhouse gases and aerosols produce drying across the Mediterranean region in general. However, the subregional patterns of the drying are sensitive to the patterns of sea surface temperature (SST) variability and change. Alas, the patterns of SST changes are quite different in reality than they were projected to be by the climate models. Hoerling et al. describe the differences this way “In general, the observed SST differences have stronger meridional [North-South] contrast between the tropics and NH extratropics and also a stronger zonal [East-West] contrast between the Indian Ocean and the tropical Pacific Ocean.”

Figure 2 shows visually what Hoerling was describing—the observed SST change (top) along with the model projected changes (bottom) for the period 1971-2010 minus 1902-1970. Note the complexity that accompanies reality. 

 

Figure 2. Cold season (November–April) sea surface temperature departures (°C) for the period 1971–2010 minus 1902–70: (top) observed and (bottom) mean from climate model projections (from Hoerling et al., 2012).

Hoerling et al. show that in the Fertile Crescent region, the drying produced by climate models is particularly enhanced (by some 2-3 times) if the observed patterns of sea surface temperatures are incorporated into the models rather than patterns that would otherwise be projected by the models (i.e., the top portion of Figure 2 is used to drive the model output rather than the bottom portion).

Let’s be clear here.  The models were unable to accurately reproduce the patterns of SST that have been observed as greenhouse gas concentrations increased.  So the observed data were substituted for the predicted value, and then that was used to generate forecasts of changed rainfall.  We can’t emphasize this enough: what was not supposed to happen from climate change was forced into the models that then synthesized rainfall.

Figure 3 shows these results and Figure 4 shows what has been observed. Note that even using the prescribed SST, the model predicted changes in Figure 3 (lower panel) are only about half as much as has been observed to have taken place in the region around Syria (Figure 4, note scale difference). This leaves the other half of the moisture decline largely unexplained.  From Figure 3 (top), you can also see that only about 10mm out of more than 60mm of observed precipitation decline around Syria during the cold season is “consistent with” human-caused climate change as predicted by climate models left to their own devices.

Nor does “consistent with” mean “caused by” it.

Figure 3. Simulated change in cold season precipitation (mm) over the Mediterranean region based on the ensemble average (top) of 22 IPCC models run with observed emissions of greenhouse gases and aerosols and (bottom) of 40 models run with observed emissions of greenhouse gases and aerosols with prescribed sea surface temperatures. The difference plots in the panels are for the period 1971–2010 minus 1902–70 (source: Hoerling et al., 2012).

For comparative purposes, according to the University of East Anglia climate history, the average cold-season rainfall in Syria is 261mm (10.28 inches).  Climate models, when left to their own devices,  predict a decline averaging about 10mm, or 3.8 per cent of the total.  When “prescribed” (some would use the word “fudged”) sea surface temperatures are substituted for their wrong numbers, the decline in rainfall goes up to a whopping 24mm, or 9.1 per cent of the total.  For additional comparative purposes, population has roughly tripled in the last three decades.

 

Figure 4. Observed change in cold season precipitation for the period 1971–2010 minus 1902–70. Anomalies (mm) are relative to the 1902–2010 (source: Hoerling et al., 2012).

So what you are left with after carefully comparing the patterns of observed changes in the meteorology and climatology of Syria and the Fertile Crescent region to those produced by climate models, is that the lion’s share of the observed changes are left unexplained by the models run with increasing greenhouse gases. Lacking a better explanation, these unexplained changes get chalked up to “natural variability”—and natural variability dominates the observed climate history.

You wouldn’t come to this conclusion from the cursory treatment of climate that is afforded in the mainstream press.  It requires an examination of scientific literature and a good background and understanding of the rather technical research being discussed. Like all issues related to climate change, the devil is in the details, and, in the haste to produce attention grabbing headlines, the details often get glossed over or dismissed.

Our bottom line: the identifiable influence of human-caused climate change on recent drought conditions in the Fertile Crescent was almost certainly not the so-called straw that broke the camel’s back and led to the outbreak of conflict in Syria. The pre-existing (political) climate in the region was plenty hot enough for a conflict to ignite, perhaps partly fuelled by recent drought conditions—conditions which are part and parcel of the region climate and the intensity and frequency of which remain dominated by natural variability, even in this era of increasing greenhouse gas emissions  from human activities.

References:

Hoerling, M., et al., 2012. On the increased frequency of Mediterranean drought. Journal of Climate, 25, 2146-2161.

Kelley, C. P., et al., 2015. Climate change in the Fertile Crescent and implications of the recent Syrian drought. Proceedings of the National Academy of Sciences, doi:10.1073/pnas.1421533112

Walter Olson

Confirming expectations, the U.S. Department of Justice has announced that it will not file federal civil rights charges against the police officer who shot Michael Brown following a confrontation on the streets of Ferguson, Mo. Contrary to a visual theme repeated before countless news cameras through weeks of protests, “no, Michael Brown’s hands probably were not up” at the time of the shooting. In the end, “Hands Up — Don’t Shoot” 2014’s iconic protest gesture, was founded in the self-serving, oft-repeated eyewitness account of Brown chum/soon-established-robbery-accomplice Dorrian Johnson. And he was credible why?

At the same time, the report released yesterday by the U.S. Department of Justice makes clear that the Ferguson, Mo. police department was up to its hip in bad practices, ranging from the rights-violative (knowingly baseless arrests and stops, arresting persons for recording police actions) to the cynical (“revenue policing” aimed at squeezing money out of the populace over subjective/petty offenses that include “manner of walking.”)

Whether these bad local police practices are a suitable subject for federal oversight, and where the actually existing U.S. Department of Justice gets off complaining about high-handed and revenue-driven law enforcement given its own sorry track record, are other questions. But any view of Ferguson’s troubles in the back-view mirror should now acknowledge two things: 1) many people rushed to assume Officer Darren Wilson’s guilt who should have known better; 2) even so, there was much to protest in Ferguson law enforcement.

In recent months, libertarians who took an interest in the Ferguson events and sympathetically noted the grievances of local residents have been sniped at from a few quarters as insufficiently supportive of the legitimate role of the police. While I can’t speak for all libertarians, I’d say that at groups like Cato, most of us were careful not to prejudge the specifics of the Wilson/Brown encounter before the facts were in, but were not afraid to be critical of the underlying patterns that soon became clear in on-the-scene reporting from Ferguson (escalatory tactics, revenue-driven policing and municipal court practices, pervasive disrespect for citizens’ rights in street encounters, and so forth). After yesterday’s release of the DoJ report, I continue to believe that ours has been the right approach. 

[cross-posted from Overlawyered and expanded with a new final paragraph]

Ilya Shapiro

All across the globe, people see the United States as a land of opportunity and dream of making their way here to work hard and enjoy the prosperity that our system of laws helps provide. Cindy Vong made that dream a reality by emigrating from Vietnam, becoming a U.S. citizen, and starting her own nail salon in Gilbert, Arizona. Thanks to a state occupational-licensing scheme, however, Ms. Vong may no longer be free to pursue her vision of happiness.

The Arizona Board of Cosmetology—yes, that’s an actual entity—got wind that Ms. Vong’s spa offered a treatment that uses small fish to exfoliate dead skin from the feet. This is a perfectly safe practice popular in East Asia and the Middle East. Learning that the Board intended to apply its exfoliation-instrument sterilization standards to her fish—how does one sterilize a fish?—Ms. Vong volunteered her spa as a test project until the Board was able to revise its existing rules to address this increasingly popular treatment. Without so much as bothering to evaluate whether the fish treatment is unsafe—there is no such evidence anywhere—the Board ignored her request and, summarily concluding the treatment unsafe, shut down Ms. Vong’s business. So much for “Land of the Free.”

Represented by our friends at the Goldwater Institute, Ms. Vong fought back, bringing a constitutional challenge against the Board’s action all the way to Arizona’s high court. Unfortunately, that court deferred to the Board’s “safety” concerns, finding there to be a “reasonably conceivable state of facts that could provide a rational basis” for the regulation. In other words, because a state-empowered group of Ms. Vong’s competitors offered a better-than-completely-ridiculous pretext for telling her how to run her business, the court would entertain no legal challenge.

Ms. Vong has now filed a petition asking the U.S. Supreme Court to hear her case and vindicate her right to earn an honest living. Cato and North Carolina’s Civitas Institute have filed a brief supporting her petition. We argue first that the Court should take the case to clarify that lower courts need not be willfully blind to the actual motives of state economic regulations. Second, this case offers the Court an opportunity to resolve a pressing circuit split regarding the use of total bans on certain kinds of economic activity. Finally, occupational licensure may deserve heightened scrutiny under the infamous Footnote Four of the New Deal case of Carolene Products (1938), which aims to protect against laws that rig the political process. Occupational licensing regulations rig the system by monopolizing state-licensed businesses, leaving no realistic political redress for individual entrepreneurs who go against the grain.

Indeed, occupational licensure is a rapidly growing phenomenon, and for a very understandable reason: it allows established business concerns to tell newcomers and outsiders how to do business and manage their own competition. This is often done in the name of “safety,” “consumer welfare,” or some other pretextual veil beyond which courts are loath to look solely because the individual freedoms implicated are economic. Yet these economic liberties make up a big part of individual autonomy and are a big reason why immigrants come to the United States—in turn strengthening our economy with their entrepreneurial spirit.

Just last week in North Carolina Board of Dental Examiners v. FTC—a case in which we also filed a brief—the Supreme Court showed that it isn’t totally blind to the damage occupational licensing can cause (albeit there it was in an antitrust context). We hope that the justices take this case and share with the lower courts what they themselves are starting to figure out: that occupational licensing is killing the American Dream.

The Supreme Court will decide this spring whether to take the case of Vong v. Aune.

Ted Galen Carpenter

Alliances tend to entangle America in confrontations that have little or no relevance to the security and liberty of the republic.  A prime example of that problem is the ongoing, bitter dispute between Japan and South Korea over some largely uninhabited rocks and the waters surrounding them.  Tokyo and Seoul cannot even agree on the correct name of the islands or the body of water.  Japanese call the islands Takeshima, while South Koreans insist on the name Dokdo.  For Japanese (and most of the world), the spits of rock are located in the Sea of Japan, but South Koreans hate that name and instead call it the East Sea.

As I discuss in a recent National Interest Online article, outsiders might be tempted to snicker at such a parochial feud, but it has significant policy implications.  U.S. officials are seeking to strengthen Washington’s alliances with both Japan and South Korea to counter China’s growing power in East Asia.  A key component of that strategy is to encourage closer bilateral military cooperation between Tokyo and Seoul.  The Takeshima/Dokdo dispute is a major impediment to such cooperation.  Beijing has been quick to take advantage of the animosity by actively courting South Korea.  

Japanese and South Korean leaders also pressure Washington to take sides in the controversy.  Such efforts should be rebuffed firmly.  Which country has sovereignty over the islands and the surrounding fishing waters should be a matter of profound indifference to all Americans.

There is a larger lesson in this petty territorial dispute.  As my colleague Doug Bandow has correctly observed, Washington collects allies with less thought and discrimination than most people collect Facebook friends.  In doing so, we also collect all of the disputes and feuds that those “friends” wage with other parties.  That is an unnecessary and unwise policy for a superpower.

Steve H. Hanke

Senator Rand Paul (R-KY) introduced a bill (S.264) which is popularly known as “Audit the Fed” (ATF). The bill picked up 30 initial co-sponsors. Although the Fed is already extensively audited in the accounting sense of the term, the ATF bill would expand the scope and scale of Fed auditing. Indeed, monetary policy decisions, which have been exempt from any sort of “auditing” since 1978, would see their auditing exemption lifted if the bill becomes law.

There is popular support for the idea that the Fed should be audited. More than three-quarters of registered voters would give the general idea of auditing the Fed a green light. It’s no surprise, then, that there has been bipartisan support for similar proposals in the past. However, none of these have become law because the push-back from Fed officials and other “experts” has been strong. Today is no different, with the Fed and the Obama White House all singing the same tune: “It’s Dangerous.” 

The real issue at stake is whether the Fed should be independent. The opponents of the ATF bill naturally think that the law would imperil the Fed’s autonomy and that this would be objectionable.

What would Milton Friedman say? Well, we don’t know for certain because unfortunately he is unable to read S.264. That said, Friedman weighed in on the issue of central bank independence on several occasions. Indeed, an essay he penned in 1962 was titled “Should there be an Independent Monetary Authority?” (In: In Search of a Monetary Constitution, edited by Leland B. Yeager, Harvard University Press). Friedman concluded that “The case against a fully independent central bank is strong indeed.”

Milton Friedman’s position on this issue was quite clear at the time. There is little doubt as to whether he would see the situation at hand any differently. 

Roger Pilon

Among the countless analyses now going on of today’s 84 minutes of oral argument before the Supreme Court in King v. Burwell, perhaps none is more perceptive than that offered by SCOTUSblog’s Lyle Denniston, the dean of Supreme Court reporters. As many of us feared, however, it appears that the focus of several of the justices, perhaps a majority, was less on the law than on the “dire consequences” that would follow if the Court decided that the law was clear and that, accordingly, the government should lose. (See here for background on the case.)

Here’s Denniston:

From the time that the Supreme Court agreed in November to hear the challenge to subsidies on the thirty-four insurance exchanges set up by the federal government instead of by the states, the Obama administration and its supporters have talked darkly about the collapse of the entire ACA if that challenge succeeded. … The uncertain thing, as the hearing approached, was whether that message would get through to the nine members of the Court who would be the deciders.  If there was one dominant theme at the actual hearing, aside from how to read a complex federal statute, it was that a victory for the challengers would come at perhaps a serious loss—perhaps a constitutional loss, but at least a human and social loss in the end of the most ambitious (and audacious) health care plan ever enacted in America.

The point should not be missed. For “the Obama administration and its supporters,” the question was not whether the challengers should succeed on the law—but what will happen if they do. In a court of law, no less, the Obama team wants policy to trump law.

Denniston reports that it looks like the government has the Court’s more liberal members in its pocket, while Justices Scalia, Thomas, and Alito are likely with the challengers. Chief Justice Roberts said relatively little. That leaves Justice Kennedy, not surprisingly, who “sort of leaned toward the idea that the language of the ACA” was clear and thus the government should lose. “But in a broader sense,” Denniston continues, Kennedy was concerned with “a difficult constitutional question”: “that Congress should ordinarily not be allowed to coerce the states into doing something that Congress wants,” which arguably it did when it told the states to create exchanges or their citizens would be ineligible for federal tax credits for their health insurance, which would “send the insurance market into a death spiral.”

But what follows from that “difficult constitutional question,” sounding in federalism? Scalia put his finger on it, asking rhetorically, Denniston writes, “whether, if a correct reading of a law creates a constitutional problem, the Court has the authority to rewrite it.” In other words, is the Court simply one more legislative branch, to which the government turns when Congress has botched its job (“We need to pass the law to find out what’s in it,” the lady said.”)? Or is it a court of law, charged with saying what the law is, even when Congress has made a mess of things and should, by rights, face the music of the people for having done so? If consequences are indeed our concern, let’s focus on the most fundamental of them, starting with those that follow from abandoning the rule of law.

Jason Bedrick

Maryland is on the verge of enacting a trailblazing expansion of educational freedom.

The Maryland Education Tax Credit would grant tax credits worth 60 percent of donations to nonprofit scholarship organizations that help low-income families cover certain educational expenses. Were it to become law, Maryland would become the second state, following New Hampshire, to allow families to use tax-credit scholarship funds on a wide variety of educational expenses beyond tuition, such as tutoring, books, education-related technology, transportation, and special-needs services. The legislation has some flaws–for example, eligible schools cannot charge tuition higher than the statewide average per pupil expenditure at district schools–but it still represents a significant step in the right direction.

Unfortunately, the proposal might not get an up-or-down vote in the legislature. Today, the Baltimore Sun reports that Maryland Speaker of the House Michael E. Busch opposes the school choice proposal because Maryland’s assigned schools are not “fully funded”:

“It’s hard for the legislature to fund private religious schools when Governor Hogan fails to fully fund the public education system,” said Busch, an Anne Arundel County Democrat.

There are numerous mistaken assumptions in that statement–tax credits are not government appropriations;  parents can use the scholarships at religious or secular schools; scholarship tax credits generally produce fiscal savings by reducing expenditures more than tax revenue,  etc.–but the claim that Maryland’s district schools are not fully funded raises the question: what does “fully funded” mean?

Sadly, it appears that the reporter did not ask Mr. Busch what he meant by that, but the answer generally seems to be “more than we are spending right now.” That, in turn, raises the question: how much is Maryland spending on public education right now?

According to the latest figures from the National Center for Education Statistics, Maryland spends more than $15,500 per pupil, about 30 percent more than the national average of $12,048 that year, which puts it in the top ten nationwide for per-pupil spending.

But, of course, the focus on how much the government is spending on district schools carries the implicit assumption that more funding equals better results. However, the evidence for that assumption is scant. As I noted in a recent post for the Friedman Foundation:

Schools obviously require resources to operate, but there’s no strong correlation between resources and results. If resources were what drove performance, then at about $30,000 per pupil, Washington, D.C.’s district schools would be among the best in the nation instead of the worst (though they have made significant gains since the advent of school choice laws in the city).

In 2012, education policy experts Eric Hanushek of Stanford University, Paul Peterson of Harvard University, and Ludger Woessmann of the University of Munich released a report on international and state trends in student achievement. They found that “Just about as many high-spending states showed relatively small gains as showed large ones…. And many states defied the theory [that spending drives performance] by showing gains even when they did not commit much in the way of additional resources.” They concluded: “It is true that on average, an additional $1,000 in per-pupil spending is associated with an annual gain in achievement of one-tenth of 1 percent of a standard deviation. But that trivial amount is of no statistical or substantive significance.”

Like the claim that we can’t expect school performance to improve until we end poverty (good luck), the claim that we can’t expand school choice until we “fully fund” district schools is not an argument so much as an excuse.

Live Free and Learn: Scholarship Tax Credits in New Hampshire

Simon Lester

This is from the White House blog, explaining that the Trans Pacific Partnership (TPP) will be “the most progressive trade agreement in history”:

They further explain:

If we don’t secure this trade agreement, Americans will be forced to accept the status quo – which is bad for small businesses, bad for American workers, and bad for our future leadership. 

Here’s why: 

We would fail to secure strong labor and environmental standards for trade in the world’s fastest-growing region: 

  • There’d be no enforceable rules ensuring countries set a minimum wage, end child labor, or enforce workplace safety.

So should those of us who are skeptical about the benefits of a minimum wage law panic here?  Will the TPP spread and promote minimum wage laws around the world?

My sense is that the answer is no (although no one has seen the full text of the TPP yet, so I suppose there could be some surprises). Instead, I think the TPP will say that countries have to enforce their own labor laws.  Thus, if you have a minimum wage law on your books, you have to enforce it (with credit to my colleague Bill Watson for this explanation).  That’s a lot less scary (but still a little scary).

At the same time, the whole idea of marketing trade agreements as “progressive” and making reference to minimum wage laws seems like an attempt to garner support from liberals (unlikely) that will quite possibly scare off free market conservatives.  I’m not sure exactly what the White House has in mind; this may very well backfire on them.

Daniel J. Mitchell

In my 2012 primer on fundamental tax reform, I explained that the three biggest warts in the current system:

  1. High tax rates that penalize productive behavior.
  2. Pervasive double taxation that discourages saving and investment.
  3. Corrupt loopholes and cronyism that bribe people to make less productive choices.

These problems all need to be addressed, but I also acknowledged additional concerns with the internal revenue code, such as worldwide taxation and erosion of constitutional freedoms an civil liberties.

In a perfect world, we would shrink government to such a small size that there was no need for any sort of broad-based tax (remember, the United States prospered greatly for most of our history when there was no income tax).

In a good world, we could at least replace the corrupt internal revenue code with a simple and fair flat tax.

In today’s Washington, the best we can hope for is incremental reform.

But some incremental reforms can be very positive, and that’s the best way of describing the “Economic Growth and Family Fairness Tax Reform Plan” unveiled today by Senator Marco Rubio of Florida and Senator Mike Lee of Utah.

The two GOP senators have a column in today’s Wall Street Journal, and you can read a more detailed description of their plan by clicking here.

But here are the relevant details.

What’s wrong with Rubio-Lee

In the interest of fairness, I’ll start with the most disappointing feature of the plan. The top tax rate will be 35 percent, only a few percentage points lower than the 39.6 percent top rate that Obama imposed as a result of the fiscal cliff.

Even more troubling, that 35 percent top tax rate will be imposed on any taxable income above $75,000 for single taxpayers and $150,000 for married taxpayers.

Since the 35 percent and 39.6 percent tax rates currently apply only when income climbs above $400,000, that means a significant number of taxpayers will face higher marginal tax rates.

That’s a very disappointing feature in any tax plan, but it’s especially unfortunate in a proposal put forth by lawmakers who wrote in their WSJ column that they want to “lower rates for families and individuals.”

What’s right with Rubio-Lee

This will be a much longer section because there are several very attractive features of the Rubio-Lee plan.

Some households, for instance, will enjoy lower marginal tax rates under the new bracket structure, particularly if those households have lots of children (there’s a very big child tax credit).

But the really attractive features of the Rubio-Lee plan are those that deal with business taxation, double taxation, and international competitiveness.

Here’s a list of the most pro-growth elements of the plan.

  • A 25 percent tax rate on all business income – This means that the corporate tax rate is being reduced from 35 percent (the highest in the world), but also that there will be a 25 percent maximum rate on all small businesses that file using Schedule C as part of a 1040 tax return.
  • Sweeping reductions in double taxation – The Rubio-Lee plans eliminates the capital gains tax, the double tax on dividends, and the second layer of tax on interest.
  • Full expensing of business investment – The proposal gets rid of punitive “depreciation” rules that force businesses to overstate their income in ways that discourage new business investment.
  • Territorial taxation – Businesses no longer will have to pay a second layer of tax on income that is earned – and already subject to tax – in other nations.
  • No death tax – Income should not be subject to yet another layer of tax simply because someone dies. The Rubio-Lee plan eliminates this morally offensive form of double taxation.

In addition, it’s worth noting that the Rubio-Lee plan eliminate the state and local tax deduction, which is a perverse part of the tax code that enables higher taxes in states like New York and California.

Many years ago, while working at the Heritage Foundation, I created a matrix to grade competing tax reform plans. I updated that matrix last year to assess the proposal put forth by Congressman Dave Camp, the former Chairman of the House Ways & Means Committee.

Here’s another version of that matrix, this time including the Rubio-Lee plan.

As you can see, the Rubio-Lee plan gets top scores for “saving and investment” and “international competitiveness.”

And since these components have big implications for growth, the proposal would – if enacted – generate big benefits. The economy would grow faster, more jobs would be created, workers would enjoy higher wages, and American companies would be far more competitive.

By the way, if there was (and there probably should be) a “tax burden” grade in my matrix, the Rubio-Lee plan almost surely would get an “A+” score because the overall proposal is a substantial tax cut based on static scoring.

And even with dynamic scoring, this plan will reduce the amount of money going to Washington in the near future.

Of course, faster future growth will lead to more taxable income, so there will be revenue feedback. So the size of the tax cut will shrink over time, but even a curmudgeon like me doesn’t get that upset if politicians get more revenue because more Americans are working and earning higher wages.

That simply means another opportunity to push for more tax relief!

What’s missing in Rubio-Lee

There are a few features of the tax code that aren’t addressed in the plan.

The health care exclusion is left untouched, largely because the two lawmakers understand that phasing out that preference is best handled as part of a combined tax reform/health reform proposal.

Some itemized deductions are left untouched, or simply tweaked.

And I’m not aware of any changes that would strengthen the legal rights of taxpayers when dealing with the IRS.

Let’s close with a reminder of what very good tax policy looks like.

To their credit, Rubio and Lee would move the tax code in the direction of a flat tax, though sometimes in a haphazard fashion.

 

 

P.S.: There is a big debate on the degree to which the tax code should provide large child credits. As I wrote in the Wall Street Journal last year, I much prefer lower tax rates since faster growth is the most effective long-run way to bolster the economic status of families.

But even the flat tax has a generous family-based allowance, so it’s largely a political judgement on how much tax relief should be dedicated to kids and how much should be used to lower tax rates.

That being said, I think the so-called reform conservatives undermine their case when they argue child-oriented tax relief is good because it might subsidize the creation of future taxpayers to prop up entitlement programs. We need to reform those programs, not give them more money.

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