Tuesday, April 28, 2009
Obama's sins of omission
...But however much Obama may differ from Bush on particulars, he appears intent on sustaining the essentials on which the Bush policies were grounded. Put simply, Obama's pragmatism poses no threat to the reigning national security consensus. Consistent with the tradition of American liberalism, he appears intent on salvaging that consensus.
For decades now, that consensus has centered on what we might call the Sacred Trinity of global power projection, global military presence, and global activism - the concrete expression of what politicians commonly refer to as "American global leadership." The United States configures its armed forces not for defense but for overseas "contingencies." To facilitate the deployment of these forces it maintains a vast network of foreign bases, complemented by various access and overflight agreements. Capabilities and bases mesh with and foster a penchant for meddling in the affairs of others, sometimes revealed to the public, but often concealed.
Bush did not invent the Sacred Trinity. He merely inherited it and then abused it, thereby reviving the conviction entertained by critics of American globalism, progressives and conservatives alike, that the principles underlying this trinity are pernicious and should be scrapped. Most of these progressives and at least some conservatives voted for Obama with expectations that, if elected, he would do just that. Based on what he has said and done over the past three months, however, the president appears intent instead on shielding the Sacred Trinity from serious scrutiny.
What the president is doing and saying matters less than what he has not done. The sins of omission are telling: There is no indication that Obama will pose basic questions about the purpose of the US military; on the contrary, he has implicitly endorsed the proposition that keeping America safe is best accomplished by maintaining in instant readiness forces geared up to punish distant adversaries or invade distant countries. Nor is there any indication that Obama intends to shrink the military's global footprint or curb the appetite for intervention that has become a signature of US policy. Despite lip service to the wonders of soft power, Pentagon spending, which exploded during the Bush era, continues to increase....
Riders on the storm
...On the last weekend of September the FDIC conducted a forced auction for Wachovia, with Citigroup and Wells Fargo as the two bidders. Citi won that round, agreeing to pay $2 billion for Wachovia's banking franchise, with the government guaranteeing a portion of the losses Citi would assume. Wells thought it could pay more, so after two days, with Kovacevich in Manhattan negotiating with regulators and Stumpf in San Francisco leading a team of 300 numbers crunchers, Wells offered to pay $15.4 billion for all of Wachovia - without any help from Washington. Or so they thought.
Two weeks later, on Oct. 13, Kovacevich was sitting at a long conference table with eight other bank chiefs in Washington, listening to Treasury Secretary Hank Paulson tell them why they should take the government's money. Kovacevich says he protested, telling Paulson that compelling banks to accept TARP funds would lead to unintended consequences. It would erode confidence in the banking sector by making investors question the healthiest banks rather than instilling confidence in the neediest. Other industries undoubtedly would come to expect a bailout themselves. Still, Kovacevich took the money.
His displeasure leaked to the public, but what hasn't been reported is exactly how Paulson flipped the seasoned banker so quickly. In what an observer in the room describes as a "true Godfather moment," Paulson told all the assembled bankers, "Your regulator is sitting right there" - actually the industry's two biggest overlords were in attendance: John Dugan, comptroller of the currency, and FDIC chairwoman Sheila Bair - "and you're going to get a call tomorrow telling you you're undercapitalized and that you won't be able to raise money in the private markets."
For Kovacevich this broadside was the horse's head on his pillow. He and his bank were in an unfamiliar position of vulnerability. Wells had just agreed to buy Wachovia, a bank it had coveted for years, and it needed the government's approval - and, critically, the ability to raise money - to complete the deal. Reflecting on the episode with righteous indignation, Kovacevich points out that each of his warnings to Paulson was later validated. Yet he turns sheepish in explaining his decision. "You want to do what your country and your regulators want," he says quietly in his office, decorated with miniature replicas of Wells Fargo's iconic stagecoaches. "There was no ambiguity," he says, as to what was expected of him. ...
Busting Bank of America
...Mr. Lewis has told investigators for New York Attorney General Andrew Cuomo that in December Mr. Paulson threatened him not to cancel a deal to buy Merrill Lynch. BofA had discovered billions of dollars in undisclosed Merrill losses, and Mr. Lewis was considering invoking his rights under a material adverse condition clause to kill the merger. But Washington decided that America's financial system couldn't withstand a Merrill failure, and that BofA had to risk its own solvency to save it. So then-Treasury Secretary Paulson, who says he was acting at the direction of Federal Reserve Chairman Bernanke, told Mr. Lewis that the feds would fire him and his board if they didn't complete the deal.
Mr. Paulson told Mr. Lewis that the government would provide cash from the Troubled Asset Relief Program (TARP) to help BofA swallow Merrill. But since the government didn't want to reveal this new federal investment until after the merger closed, Messrs. Paulson and Bernanke rejected Mr. Lewis's request to get their commitment in writing.
"We do not want a disclosable event," Mr. Lewis says Mr. Paulson told him. "We do not want a public disclosure." Imagine what would happen to a CEO who said that.
After getting the approval of his board, Mr. Lewis executed the Paulson-Bernanke order without informing his shareholders of the material events taking place at Merrill. The merger closed on January 1. But investors and taxpayers had to wait weeks to learn that the government had invested another $20 billion plus loan portfolio insurance in BofA, and that Merrill had lost a staggering $15 billion in the last three months of 2008.
This was the second time in three months that Washington had forced Bank of America to take federal money. In his testimony to the New York AG's office, Mr. Lewis noted that an earlier TARP investment in his bank had a "dilutive effect" on existing shareholders and was not requested by BofA. "We had not sought any funds. We were taking 15 [billion dollars] at the request of Hank [Paulson] and others," Mr. Lewis testified....
Barack Obama wants to use the recession to remake the U.S. economy.
"Painful crisis also provides us with an opportunity to transform our economy to improve the lives of ordinary people," Obama said (http://tinyurl.com/67x8ec).
His designated chief of staff, Rahm Emanuel, is more direct: "You never want a serious crisis to go to waste" (http://tinyurl.com/5n8u58).
So they will "transform our economy." Obama's nearly trillion-dollar plan will not merely repair bridges, fill potholes and fix up schools; it will also impose a utopian vision based on the belief that an economy is a thing to be planned from above. But this is an arrogant conceit. No one can possibly know enough to redesign something as complex as "an economy," which really is people engaging in exchanges to achieve their goals. Planning it means planning them....
The Politics of Liberal Amnesia
Nancy Pelosi is "pushing back" against charges that she was aware of -- and acquiesced in -- the CIA's harsh interrogations of terrorist detainees nearly from the moment the practice began, reports the Politico Web site. Maybe she's suffering from amnesia.
Maybe, for instance, the speaker doesn't remember that in September 2002, as ranking member of the House Intelligence Committee, she was one of four members of Congress who were briefed by the CIA about the interrogation methods the agency was using on leading detainees. "For more than an hour," the Washington Post reported in 2007, "the bipartisan group . . . was given a virtual tour of the CIA's overseas detention sites and the harsh techniques interrogators had devised to try to make their prisoners talk.
"Among the techniques described," the story continued, "was waterboarding, a practice that years later would be condemned as torture by Democrats and some Republicans on Capitol Hill. But on that day, no objections were raised. Instead, at least two lawmakers in the room asked the CIA to push harder."...
New Riverside Church pastor says his raise was Lord-approved
The incoming pastor of Riverside Church broke his silence over his massive pay package Saturday, saying God was behind him as he took the reins of the iconic Manhattan sanctuary.
"God told me all week, 'I got you.'" the Rev. Brad Braxton said to thunderous applause.
Braxton was installed as senior pastor despite some parishioners filing a lawsuit to trim his $600,000 in salary and perks. ...
Saturday, April 25, 2009
Prohibition Spawns Drug Violence
...Politicians gave us prohibition and created the conditions in which violence pays. This doesn't excuse those who commit it, but the fact remains that a legal drug market would be as peaceful as the beer, wine and whiskey markets. When alcohol prohibition, which spawned large-scale organized crime, ended in 1933, there was a brief upsurge in drinking, but America became a more peaceful and less corrupt place.
We should learn from that, but we haven't. American politicians are largely responsible for the atrocities now taking place.
That's not what they want to hear, of course, so they blame others. Their "solution" to increasing violence is to crack down even more on production and distribution of some drugs. This has never worked before, and it won't work now.
Black-market profits are abnormally high because of the risk premiums and limited competition, so plenty of people will want to enter the business. Wipe out one cartel, and another is waiting to take its place. The high profit margins leave plenty of cash to bribe judges, cops and border guards. Even in America.
When American politicians scapegoat drug consumers, they bring the court system to a standstill and clog prisons with nonviolent offenders who are stigmatized for life. Minorities bear the brunt of any crackdown....
...Another aspect of this issue has been overlooked, especially by conservative supporters of the drug war: President Obama and Secretary of State Clinton have promised the Mexican government they will stop the southern flow of American guns said to be used by the drug cartels. A war on drugs inevitably becomes a war on guns. Yet conservative Second Amendment advocates refuse to see the connection.
Obama's drug warriors are happy to link the issues. The president says, "More than 90 percent of the guns recovered in Mexico come from the United States, many from gun shops that line our shared border, and that's why we're ramping up the number of law enforcement personnel on our border" (http://tinyurl.com/dk7hh3).
That 90 percent figure has been repeated many times, but FactCheck.org says it's bogus....
Save the Humans!
...It's not going to be easy. Climate change is the cause of—and caused by—everything. Reputable news pieces regularly allege, without any evidence, that climate change is the culprit in hundreds of dreadful events. From the decline of outdoor youth hockey to the scourge of teenage drinking to the massacre in Darfur, you guessed it; global warming is often the boogeyman.
Who knew that a shift of 0.04 degrees Celsius in a decade could be so terrible?
What's worse than the EPA grabbing power over CO2? Well, leading Luddite and congressman Henry Waxman is worse. His proposal sets carbon reduction goals of 20 percent by 2020, 42 percent by 2030 and 83 percent by 2050 and, with cap and trade, effectively nationalizes energy.
This incremental destruction of prosperity is probably going to have to be modified as soon as citizens get a taste of reality. But how could any reasonable or responsible legislator suggest an 83 percent cut in emissions without any practical or wide-scale alternative to replace it or any plan to pay for it all?...
...I suspect that few of them will mention the recent report from the nonpartisan Tax Foundation on cap and trade policy that illustrates all American households would face an annual cost of nearly $144.8 billion per year—"disproportionately borne by low-income households, those under age 25 and over 75 years ... and single parents with dependent children."..
in the Violence Policy Center's own words (from 1988)
...the issue of handgun restriction consistently remains a non-issue with the vast majority of legislators, the press, and public. The reasons for this vary: the power of the gun lobby; the tendency of both sides of the issue to resort to sloganeering and pre-packaged arguments when discussing the issue; the fact that until an individual is affected by handgun violence he or she is unlikely to work for handgun restrictions; the view that handgun violence is an "unsolvable" problem; the inability of the handgun restriction movement to organize itself into an effective electoral threat; and the fact that until someone famous is shot, or something truly horrible happens, handgun restriction is simply not viewed as a priority. Assault weapons — just like armor-piercing bullets, machine guns, and plastic firearms — are a new topic. The weapons' menacing looks, coupled with the public's confusion over fully automatic machine guns versus semi-automatic assault weapons — anything that looks like a machine gun is assumed to be a machine gun — can only increase the chance of public support for restrictions on these weapons. In addition, few people can envision a practical use for these weapons.......
Summoning the Ghosts of Blue State Federalism
...But the discussion also reminds me of the encouraging pro-federalism chatter we heard from the left shortly after the Democrats were trounced in the 2004 election. For all the heat he’s taking, Texas Gov. Rick Perry might want to consult with MSNBC analyst and former West Wing writer and producer Lawrence O’Donnell, for example, who favorably used the word secede on the McLaughlin Group back in November of ‘04. O’Donnell helpfully pointed out that secession needn’t necessarily be violent, explaining that, “You can secede without firing a shot.”...
The Case for a Federalism Amendment
...One simple proposal would be to repeal the 16th Amendment enacted in 1913 that authorized a federal income tax. This single change would strike at the heart of unlimited federal power and end the costly and intrusive tax code. Congress could then replace the income tax with a "uniform" national sales or "excise" tax (as stated in Article I, section 8) that would be paid by everyone residing in the country as they consumed, and would automatically render savings and capital appreciation free of tax. There is precedent for repealing an amendment. In 1933, the 21st Amendment repealed the 18th Amendment that had empowered Congress to prohibit the sale of alcohol...
Friday, April 24, 2009
Global Warming Overreach
...Add in the fact that a number of these Democrats hail from districts that could just as easily be in Republicans' hands. They aren't eager to explain to their blue-collar constituents the costs of indulging Mrs. Pelosi's San Francisco environmentalists. Remember 1993, when President Bill Clinton proposed an energy tax on BTUs? The House swallowed hard and passed the legislation, only to have Senate Democrats kill it; a year later, Newt Gingrich was in charge. With Senate Democrats already backing away from the Obama cap-and-trade plans, at least a few House Dems are reluctant to walk the plank....
Reported Suicide Is Latest Shock at Freddie Mac
...Mr. Kellermann, who spent more than 16 years at Freddie Mac and saw his stock and options decline precipitously last year, was at the intersection of some of the most difficult issues facing the company. Last month the company’s chief executive, David M. Moffett, resigned in part, he said, because federal regulators were using Freddie Mac to carry out economic policy at the expense of nursing the publicly held company back to financial health. The company has not had a president since 2007.
Freddie Mac and Fannie Mae, which together own or back more than half of the home mortgages in the country, have been hobbled by skyrocketing loan defaults and have received a total of $60 billion in federal aid since they were taken over last fall.
Mr. Kellermann was also working in a poisonous political atmosphere. In addition to taking criticism over the bonuses, he was recently involved in tense conversations with the company’s federal regulator over its routine financial disclosures, according to people close to those discussions who also spoke on condition of anonymity. Freddie Mac executives wanted to emphasize to investors that they believed the company was being run to benefit the government, rather than shareholders. The company’s regulator, the Federal Housing Finance Authority, had pushed to play down that language. Freddie Mac reported to the Securities and Exchange Commission that changes it had made in practices to help the government “have increased our expenses or caused us to forgo revenue opportunities.”...
Monday, April 20, 2009
The Public Pension Shakedown
...But Mr. Rattner's high profile is nonetheless useful in drawing attention to the real story here, which is the growing evidence of corruption by officials who use their power over public pension funds to shake down private companies. This is the same political class that has been blaming banks for "greed" in the financial crisis. The pension fund scandal exposes the myth of the superior virtue of the public and nonprofit worlds. Greed is universal. And the opportunity for corruption is enormous when political discretion is tied to vast sums of public money.
New York Attorney General Andrew Cuomo and the Securities and Exchange Commission allege that investment firms paid politically connected "placement agents" in return for a piece of New York's $122 billion pension fund. The AG has indicted three politicos for kickbacks, but the media have focused on the private firms that hired some of these political agents. Thus the attention on Mr. Rattner, who as co-founder of the Quadrangle investment firm met with a consultant about paying a finder's fee for pension cash.
The motive and knowledge of these private investors need to be explored, but the main culprits are the public officials and their agents. Former New York Comptroller Alan Hevesi resigned in 2006 after pleading guilty to unrelated charges of defrauding the government. But his office served as exclusive manager for the pension fund that is one of the world's biggest institutional investors. What the New York scam is laying bare is the extent to which officials allegedly leveraged those taxpayer dollars to enrich themselves and increase their political power....
Antarctic ice is growing, not melting away
ICE is expanding in much of Antarctica, contrary to the widespread public belief that global warming is melting the continental ice cap.
The results of ice-core drilling and sea ice monitoring indicate there is no large-scale melting of ice over most of Antarctica, although experts are concerned at ice losses on the continent's western coast.
Antarctica has 90 per cent of the Earth's ice and 80 per cent of its fresh water, The Australian reports. Extensive melting of Antarctic ice sheets would be required to raise sea levels substantially, and ice is melting in parts of west Antarctica. The destabilisation of the Wilkins ice shelf generated international headlines this month.
However, the picture is very different in east Antarctica, which includes the territory claimed by Australia.
East Antarctica is four times the size of west Antarctica and parts of it are cooling. The Scientific Committee on Antarctic Research report prepared for last week's meeting of Antarctic Treaty nations in Washington noted the South Pole had shown "significant cooling in recent decades". ...
Saturday, April 18, 2009
Racing Past the Constitution
Rampant redistribution of wealth by government is now the norm. So is this: This redistribution inflames government's natural rapaciousness and subverts the rule of law. This degeneration of governance is illustrated by the Illinois legislature's transfer of income from some disfavored riverboat casinos to racetracks. ...
...What is to prevent legislators from taking revenue from Wal-Mart and giving it to local retailers? Or from chain drugstores to local pharmacies? Not the tattered remnant of the Constitution's takings clause.
The Fifth Amendment says that private property shall not "be taken for public use without just compensation" (emphasis added). Fifty state constitutions also stipulate taking only for public uses. But the Illinois Supreme Court ignored the public-use question. Instead, the court said it is "well settled" that the takings clause applies only to government's exercise of its eminent domain power regarding land, buildings and other tangible or intellectual property -- but not money. ...
...In 2005, however, in a 5 to 4 decision, the court radically attenuated the "public use" restriction on takings, saying that promoting "economic development" is a sufficient public use. The court upheld the New London, Conn., city government's decision to seize an unblighted middle-class neighborhood for the purpose of turning the land over to private businesses which, being wealthier than the previous owners, would be a richer source of tax revenue. So now government takings need have only some anticipated public benefit, however indirect and derivative, at the end of some chain of causation hypothesized by the government doing the taking and benefiting from it. ...
Obama's Economic Mirage
...What Obama proposes is a "post-material economy." He would de-emphasize the production of ever-more private goods and services, harnessing the economy to achieve broad social goals. In the process, he sets aside the standard logic of economic progress.
Since the dawn of the Industrial Age, this has been simple: produce more with less. ("Productivity," in economic jargon.) Mass markets developed for clothes, cars, computers and much more because declining costs expanded production. Living standards rose. By contrast, the logic of the "post-material economy" is just the opposite: Spend more and get less. ...
...What defines the "post-material economy" is a growing willingness to sacrifice money income for psychic income -- "feeling good." Some people may gladly pay higher energy prices if they think they're "saving the planet" from global warming. Some may accept higher taxes if they think they're improving the health or education of the poor. Unfortunately, these psychic benefits may be based on fantasies. What if U.S. cuts in greenhouse gases are offset by Chinese increases? What if more health insurance produces only modest gains in people's health?
Obama and his allies have glossed over these questions. They've left the impression that somehow magical technological breakthroughs will produce clean energy that is also cheap. Perhaps that will happen; it hasn't yet. They've talked so often about the need to control wasteful health spending that they've implied they've actually found a way of doing so. Perhaps they will, but they haven't yet. ...
Too Few Regulations? No, Just Ineffective Ones
THERE is a misconception that President Bush's years in office have been characterized by a hands-off approach to regulation. In large part, this myth stems from the rhetoric of the president and his appointees, who have emphasized the costly burdens that regulation places on business.
But the reality has been very different: continuing heavy regulation, with a growing loss of accountability and effectiveness. That's dysfunctional governance, not laissez-faire.
When it comes to financial regulation, for example, until the crisis of the last few months, the administration did little to alter a regulatory structure that was built over many decades. Banks continue to be governed by a hodgepodge of rules and agencies including the Office of the Comptroller of the Currency, the international Basel accords on capital standards, state authorities, the Federal Reserve and the Federal Deposit Insurance Corporation. Publicly traded banks, like other corporations, are subject to the Sarbanes-Oxley Act.
And legislation that has been on the books for years -- like the Home Mortgage Disclosure Act and the Community Reinvestment Act -- helped to encourage the proliferation of high-risk mortgage loans. Perhaps the biggest long-term distortion in the housing market came from the tax code: the longstanding deduction for mortgage interest, which encouraged overinvestment in real estate.
In short, there was plenty of regulation -- yet much of it made the problem worse. These laws and institutions should have reined in bank risk while encouraging financial transparency, but did not. This deficiency -- not a conscientious laissez-faire policy -- is where the Bush administration went wrong....
...Still, the Bush administration's many critiques of regulation are belied by the numbers, which demonstrate a strong interest in continued and, indeed, expanded regulation. This is the lesson of a recent study, ''Regulatory Agency Spending Reaches New Height,'' by Veronique de Rugy, senior research fellow at the Mercatus Center at George Mason University, and Melinda Warren, director of the Weidenbaum Center Forum at Washington University. (Disclosure: Ms. de Rugy's participation in this study was under my supervision.) For the proposed 2009 fiscal budget, spending by regulatory agencies is to grow by 6.4 percent, similar to the growth rate for last year, and continuing a long-term expansionary trend.
For the regulatory category of finance and banking, inflation-adjusted expenditures have risen 43.5 percent from 1990 to 2008. It is not unusual for the Federal Register to publish 70,000 or more pages of new regulations each year....
...The U.S. government has heavily regulated the financial sector since the 1930s. (Banking has been under the government’s thumb at some level since the founding.) Yes, some regulations have been tweaked over the years. In 1999 — under Bill Clinton — the New Deal’s Glass-Steagall Act, which had separated investment and commercial banking, was repealed. But those regulatory changes were in response to specific problems caused by the regulations themselves. Separating commercial and investment banking was an arbitrary, artificial, and unnecessary decision by government officials, and it prevented banks from having the flexibility through diversification to better serve their customers in a competitive global economy. The changes were not part of any laissez-faire program, unless President Clinton was really a secret free-market advocate.
There was no general banking deregulation during the Bush years. On the contrary, the administration proposed to revamp regulatory oversight of the government-sponsored enterprises (GSEs) known as Fannie Mae and Freddie Mac, which were key agents in a decades-long effort to subsidize the housing industry by making it easy for low-income people with bad credit to get mortgages. These privileged corporations, by underwriting mortgages with an implicit government guarantee and selling bundles of them to investors around the world, put the financial system on shaky ground. In 2005 some Republicans tried to create an “independent” regulator to replace the one at the Department of Housing and Urban Development (HUD), but Republicans and Democrats who feared that that might rein in their beloved GSEs blocked the effort. Both sides were wrong. Fannie and Freddie did pose a threat to economic well-being — as we can see now — but new regulation wasn’t the answer. Abolition was. ...
...Moreover, as Cowen points out, it has been long-standing government policy to make it easier for non-creditworthy people to get mortgages: “legislation that has been on the books for years — like the Home Mortgage Disclosure Act and the Community Reinvestment Act — helped to encourage the proliferation of high-risk mortgage loans.” In fact, banks could be penalized for appearing to avoid lending money to people with poor prospects for repayment, that is, for “red-lining.” The passionate advocates of this social-welfare policy now call such bank loans “predatory lending” and condemn the banks for the practice. Damned if you lend, damned if you don’t.
For years government policy has encouraged and even required lax lending standards. As housing values increased, HUD made possible insured, no-money-down mortgages. In this environment banks did little income verification and would even lend more than 100 percent of the value of the home. What, them worry? Before the ink was dry, they would sell the dubious mortgages to Fannie, Freddie, or a bank operating in the secondary mortgage market created by the GSEs. The promise of a government bailout hovered overhead all along, destroying the natural market discipline that would have checked such recklessness. Nothing concentrates the business mind like the threat of bankruptcy. Remove that threat and, as Ayn Rand would say, it’s deuces wild. (A similar thing happened in the S&L collapse.) ...
A Not So Happy Anniversary for the “Massachusetts Model”
Three years ago yesterday, then-Governor Mitt Romney signed into law the most far reaching state health care reform plan to date. At the time, we warned that the plan, with its individual and employer mandates, new regulatory bureaucracy (the Connector), and middle-class subsidies would result in “a slow but steady spiral downward toward a government-run health care system.” Sadly, three years later, those predictions appear to be coming true....
A New Frontier for Title IX: Science
Until recently, the impact of Title IX, the law forbidding sexual discrimination in education, has been limited mostly to sports. But now, under pressure from Congress, some federal agencies have quietly picked a new target: science....
...So far, these Title IX compliance reviews haven’t had much visible impact on campuses beyond inspiring a few complaints from faculty members. (The journal Science quoted Amber Miller, a physicist at Columbia, as calling her interview “a complete waste of time.”) But some critics fear that the process could lead to a quota system that could seriously hurt scientific research and do more harm than good for women....
Building castles of sand
BANKERS, frauds, predatory insurers: there has been a stampede to punish the villains of the global meltdown. Yet one culprit is not only rarely seen as an offender, but is also being cosseted and protected. Governments’ obsession about home ownership has contributed as much to the meltdown as any moustache-twirling financier.
The bust began in America’s housing market and soon spread to government-sponsored institutions created to increase home ownership, Fannie Mae and Freddie Mac. Part of the problem came about because of policy. In most rich countries the state subsidises private housing. Some places (America, Ireland and Spain) give tax relief on mortgage-interest payments. Others, such as Britain, eliminate or lower the tax on capital gains from sales of someone’s main house. Still others use state-backed outfits to direct credit to housing or to make it easier for first-time buyers or the poor to buy their own homes. Subsidies are not to blame for everything—the housing bubble affected a range of markets regardless of how much they were subsidised—but the distortions aggravated the boom and bust by making housing artificially attractive....
Wednesday, April 15, 2009
Federal Authority Over the Internet? The Cybersecurity Act of 2009
There's a new bill working its way through Congress that is cause for some alarm: the Cybersecurity Act of 2009 (PDF summary here), introduced by Senators Jay Rockefeller (D-WV) and Olympia Snowe (R-ME). The bill as it exists now risks giving the federal government unprecedented power over the Internet without necessarily improving security in the ways that matter most. It should be opposed or radically amended.
Essentially, the Act would federalize critical infrastructure security. Since many of our critical infrastructure systems (banks, telecommunications, energy) are in the hands of the private sector, the bill would create a major shift of power away from users and companies to the federal government. This is a potentially dangerous approach that favors the dramatic over the sober response.
One proposed provision gives the President unfettered authority to shut down Internet traffic in an emergency and disconnect critical infrastructure systems on national security grounds goes too far. Certainly there are times when a network owner must block harmful traffic, but the bill gives no guidance on when or how the President could responsibly pull the kill switch on privately-owned and operated networks....
...In other words, the bill would give the Commerce Department absolute, non-emergency access to “all relevant data” without any privacy safeguards like standards or judicial review. The broad scope of this provision could eviscerate statutory protections for private information, such as the Electronic Communications Privacy Act, the Privacy Protection Act, or financial privacy regulations. Even worse, it isn’t clear whether this provision would require systems to be designed to enable access, essentially a back door for the Secretary of Commerce that would also establish a primrose path for any bad guy to merrily skip down as well. If the drafters meant to create a clearinghouse for system vulnerability information along the lines of a US/CERT mailing list, that could be useful, but that’s not what the bill’s current language does....
Monday, April 13, 2009
The End of Private Health Insurance
Above every other health-care goal, Democrats this year want to institute a "public option" -- an insurance program financed by taxpayers, managed by government and open to everyone, much like Medicare. This new middle-class entitlement is the most important debate in Congress this year, because it really is the last stand for anything resembling private health insurance....
...A public program won't compete in a way that any normal business would recognize. As an entitlement, Congress's creation will enjoy potentially unlimited access to the Treasury, without incurring the risks or hedging against losses that private carriers do. As people gravitate to "free" or heavily subsidized care, the inevitably explosive costs will be covered in part with increased outlays to keep premiums artificially low or even offer extra benefits. Lacking such taxpayer cash, private insurance rates will escalate.
Much like Medicare, overall spending in the public option will be controlled over time by paying less for medical services, drugs and technology. With its monopsony purchasing power, below-market fees will be dictated on a take-it-or-leave-it basis -- an offer hospitals and physicians won't be able to refuse. Medicare's current reimbursement policies pay hospitals only 71% of private rates, and doctors 81%, according to the Lewin Group.
In a recent analysis, Lewin estimates that enrollment in the public option will reach 131 million people if it is open to everyone and pays Medicare rates. Fully 119 million people will shift out of -- or lose -- private coverage. ...
...If President Obama had embraced the principles of a republic (which cares about injustice) instead of the arrogance of empire (which admires swagger), neither the habeas corpus nor state-secrets litigation would have been necessary. In the former case, four detainees held at Bagram for six years or more filed petitions in the United States District Court for the District of Columbia assailing the legality of their incarcerations based solely on the president's assertion that they were "enemy combatants." That concept—as defined by President Obama—sweeps far beyond persons accused of directly aiding or participating in hostilities against the United States. It includes persons who "supported hostilities in aid of enemy forces," which might encompass the provision of food, medicines, or trousers. The detainees had been captured in Tunisia, Thailand, Dubai, and an unknown location outside Afghanistan. One was an Afghan citizen, two were Yemenis, and one was Tunisian....
...President Obama pledged to restore the rule of law. But the state-secrets-privilege wars with that promise. It encourages torture, kidnappings, inhumane treatment, and similar abuses, all carried out in the name of fighting international terrorism. That encouragement is compounded by the president's adamant opposition to criminal prosecution of former or current government officials for open and notorious abuses—for example, water-boarding or illegal surveillance. His stances on habeas corpus and state secrets flout twin verities of Justice Louis D. Brandeis: Sunshine is the best disinfectant; and, when the government becomes a lawbreaker, it invites every man to become a law unto himself.
Saturday, April 11, 2009
Unmasked blogger blames First Baptist, Sheriff's Office
A blogger critical of First Baptist Church Pastor Mac Brunson wants to know why his Web site was investigated by a police detective who is also a member of the minister’s security detail.
Thomas A. Rich also wants the Jacksonville Sheriff’s Office to explain what suspected crimes led Detective Robert Hinson to open the probe into his once-anonymous Web site.
Rich also wants to know why Hinson revealed his name to the church despite finding no wrongdoing. Hinson obtained a subpoena from the State Attorney’s Office requiring Google Inc. to reveal the author of the blog.
Rich’s unmasking led to an eventual trespass warning banning the longtime member and his wife from First Baptist, despite the fact that Brunson and a top church administrator conceded the blog never threatened violence....
...The U.S. Congress' deception was, and continues to be, a major player in our financial meltdown. In congressional hearings, before the meltdown, on the soundness of Fannie Mae and Freddie Mac, Rep. Maxine Waters said, "Through nearly a dozen hearings, we were frankly trying to fix something that wasn't broke. Mr. Chairman, we do not have a crisis at Freddie Mac, and particularly at Fannie Mae, under the outstanding leadership of Franklin Raines." Rep. Barney Frank, the ranking Democrat on the Financial Services Committee, said, "These two entities -- Fannie Mae and Freddie Mac -- are not facing any kind of financial crisis. The more people exaggerate these problems, the more pressure there is on these companies, the less we will see in terms of affordable housing." Other congressmen gave similar assurances. Unfortunately for our nation, the forces pushing for "affordable" housing won the day and saddled us with today's unprecedented financial disaster. How stupid is it of us to ask those who brought us "affordable" housing to now turn their attention to bringing us "affordable" health care?...
Government opts for secrecy in wiretap suit
The Obama administration is again invoking government secrecy in defending the Bush administration's wiretapping program, this time against a lawsuit by AT&T customers who claim federal agents illegally intercepted their phone calls and gained access to their records.
Disclosure of the information sought by the customers, "which concerns how the United States seeks to detect and prevent terrorist attacks, would cause exceptionally grave harm to national security," Justice Department lawyers said in papers filed Friday in San Francisco.
Kevin Bankston of the Electronic Frontier Foundation, a lawyer for the customers, said Monday the filing was disappointing in light of the Obama presidential campaign's "unceasing criticism of Bush-era secrecy and promise for more transparency."...
New and worse secrecy and immunity claims from the Obama DOJ
...Taking them at their word, EFF -- which was the lead counsel in the lawsuits against the telecoms -- thereafter filed suit, in October, 2008, against the Bush administration and various Bush officials for illegally spying on the communications of Americans. They were seeking to make good on the promise made by Congressional Democrats: namely, that even though lawsuits against telecoms for illegal spying will not be allowed any longer, government officials who broke the law can still be held accountable.
But late Friday afternoon, the Obama DOJ filed the government's first response to EFF's lawsuit (.pdf), the first of its kind to seek damages against government officials under FISA, the Wiretap Act and other statutes, arising out of Bush's NSA program. But the Obama DOJ demanded dismissal of the entire lawsuit based on (1) its Bush-mimicking claim that the "state secrets" privilege bars any lawsuits against the Bush administration for illegal spying, and (2) a brand new "sovereign immunity" claim of breathtaking scope -- never before advanced even by the Bush administration -- that the Patriot Act bars any lawsuits of any kind for illegal government surveillance unless there is "willful disclosure" of the illegally intercepted communications.
In other words, beyond even the outrageously broad "state secrets" privilege invented by the Bush administration and now embraced fully by the Obama administration, the Obama DOJ has now invented a brand new claim of government immunity, one which literally asserts that the U.S. Government is free to intercept all of your communications (calls, emails and the like) and -- even if what they're doing is blatantly illegal and they know it's illegal -- you are barred from suing them unless they "willfully disclose" to the public what they have learned....
...Equally difficult to overstate is how identical the Obama DOJ now is to the Bush DOJ when it comes to its claims of executive secrecy -- not merely in substance but also tone and rhetoric (at least in the area of secrecy; there are still important differences -- no sweeping Article II lawbreaking powers and the like -- which shouldn't be overlooked). I defy anyone to read the Obama DOJ's brief here and identify even a single difference between what it says and what the Bush DOJ routinely said in the era of Cheney/Addington (other than the fact that Bush used to rely on secret claims of national security harm from Michael McConnell whereas Obama relies on secret claims filed by Dennis Blair). Even for those most cynical about what Obama was likely to do or not do in the civil liberties realm, reading this brief from the Obama DOJ is so striking -- and more than a little depressing -- given how indistinguishable it is from everything that poured out of the Bush DOJ regarding secrecy powers in order to evade all legal accountability...
Comments on Criticism of Cato Ad
...Everyone (well probably almost everyone…there are some real people who don’t believe it is right) pretty much agrees that there are two periods of warming, 1910-45 and 1977-98, with a slight cooling in between and no trend after. If that’s not “episodic”, I don’t know what is....
...Finally we state that “the computer models forecasting rapid temperature change abjectly fail to explain recent climate behavior”, citing Douglas et al., International Journal of Climatology, 2007, which showed the major disparity between forecasts of the upper tropospheric tropical “warm spot”, a hallmark of greenhouse projections, and observations in the radiosonde record....
Redistibutionists tend to be Angry and to Plot Revenge
...Contrary to the prevailing view of political psychologists, those who support capitalism and oppose income redistribution do not express traditionally racist or intolerant attitudes. Indeed, they tend to express views that are slightly less racist and intolerant than other Americans. The Von Mises thesis posits that redistributionists are driven by envy for the property of others and a frustration with one’s lot in a capitalist system. If that were true, one would expect redistributionists to express more unhappiness, anger, and a desire for revenge—and they do. In General Social Surveys, both redistributionists and anti-capitalists express significantly lower satisfaction with their financial situations and with their jobs or housework. Indeed, they report that they are less happy overall and have less happy marriages. ...
The State Lawsuit Racket
State Attorneys General regularly hire private plaintiffs lawyers on a contingency-fee basis to prosecute cases. The trial bar returns the favor with campaign donations to state office holders. And despite the inherent conflicts of interest and questionable ethics of the practice, corporate defendants have rarely challenged such arrangements. Which is why a motion pending before the Pennsylvania Supreme Court is so remarkable -- and deserves more public attention....
...Rather, what's at issue is the fact that the civil action against Janssen is being prosecuted on behalf of the state by Bailey, Perrin & Bailey, a Houston law firm. And it turns out that Pennsylvania Governor Ed Rendell's Office of General Counsel was negotiating this potentially lucrative no-bid contingency fee contract with Bailey Perrin at the same time that the firm's founding partner, F. Kenneth Bailey, was making repeated campaign contributions totaling more than $90,000 to the Democratic Governor's 2006 re-election bid....
The End of Christian America
...There it was, an old term with new urgency: post-Christian. This is not to say that the Christian God is dead, but that he is less of a force in American politics and culture than at any other time in recent memory. To the surprise of liberals who fear the advent of an evangelical theocracy and to the dismay of religious conservatives who long to see their faith more fully expressed in public life, Christians are now making up a declining percentage of the American population.
According to the American Religious Identification Survey that got Mohler's attention, the percentage of self-identified Christians has fallen 10 percentage points since 1990, from 86 to 76 percent. The Jewish population is 1.2 percent; the Muslim, 0.6 percent. A separate Pew Forum poll echoed the ARIS finding, reporting that the percentage of people who say they are unaffiliated with any particular faith has doubled in recent years, to 16 percent; in terms of voting, this group grew from 5 percent in 1988 to 12 percent in 2008—roughly the same percentage of the electorate as African-Americans. (Seventy-five percent of unaffiliated voters chose Barack Obama, a Christian.) Meanwhile, the number of people willing to describe themselves as atheist or agnostic has increased about fourfold from 1990 to 2009, from 1 million to about 3.6 million. (That is about double the number of, say, Episcopalians in the United States.)...
Sunday, April 05, 2009
Published on Sunday, January 22, 2006 by the International Herald Tribune
Wayward Christian Soldiers
In the past several years, American evangelicals - and I am one of them - have amassed greater political power than at any time in our history. But at what cost to our witness and the integrity of our message?
Recently, I took a few days to reread the war sermons delivered by influential evangelical ministers during the lead up to the Iraq war.
In that period, from the fall of 2002 through the spring of 2003, many of the most respected voices in American evangelical circles blessed President George W. Bush's war plans, even when doing so required them to recast Christian doctrine.
Charles Stanley, pastor of the First Baptist Church of Atlanta, whose weekly sermons are seen by millions of television viewers, led the charge with particular fervor. "We should offer to serve the war effort in any way possible," said Stanley, a former president of the Southern Baptist Convention. "God battles with people who oppose him, who fight against him and his followers."
In an article carried by the convention's Baptist Press news service, a missionary wrote that "American foreign policy and military might have opened an opportunity for the Gospel in the land of Abraham, Isaac and Jacob." Both Franklin Graham, the son of Billy Graham, and Marvin Olasky, the editor of the conservative World magazine and a former advisor to Bush on faith-based policy, echoed these sentiments, claiming that the American invasion of Iraq would create exciting new prospects for proselytizing Muslims.
Tim LaHaye, the co-author of the hugely popular "Left Behind" series, spoke of Iraq as "a focal point of end-time events," whose special role in the earth's final days will become clear after invasion, conquest and reconstruction. Jerry Falwell declared that "God is pro-war" in the title of an essay he wrote in 2004.
The war sermons rallied the evangelical congregations behind the invasion of Iraq. An astonishing 87 percent of all white evangelical Christians in the United States supported the president's decision in April 2003....
Saturday, April 04, 2009
David Gratzer: The truth about health care 'truths'
... This much is true: Americans live fewer years than people in Canada, Britain and France. But how long a person lives isn't simply about access to health care but reflects various factors: tobacco and alcohol use, genetics, diet, crime rates. Economist Robert Ohsfeldt and John Schneider observe that deaths from accidents and homicides in America are much higher than in any other developed country. Exclude these unintentional deaths from the statistics, and Americans come out on top in life expectancy.
If we measure a health care system by how well patients are treated, American health care excels – besting the European systems in 13 of 16 cancers and boasting better survival post-transplantations. ..
With or Without You
...The prospect of an ever-increasing supply of tax dollars is leading parties with auto industry contracts — unions, bondholders, dealers and others — to play a game of chicken. No one wants to renegotiate a contract when they think the government will come in with more money to cover the losses. And the Obama administration, as with AIG, does not have the power of a bankruptcy court to discharge debt.
Allowing the companies to go into bankruptcy is what should have been done from the start. As with multiple businesses such as airlines that have succesfully emerged from Chapter 11 bankruptcy, debts could be discharged and the companies could be restructured in bankruptcy court.
To say that consumers would be discouraged at buying a car in bankruptcy misses the point. Consumers might be more likely to buy a car from a company restructured by a bankruptcy court, as they buy tickets from once-bankrupt airlines, than to buy a vehicle from zombie companies dependent on the next government bailout. This delay likely hurts “satellite” companies like auto parts makers more than a bankruptcy would...
Bailing Out of the Constitution
It is high time Americans heard an argument that might turn a vague national uneasiness into a vivid awareness of something going very wrong. The argument is that the Emergency Economic Stabilization Act of 2008 (EESA) is unconstitutional.
By enacting it, Congress did not in any meaningful sense make a law. Rather, it made executive branch officials into legislators. Congress said to the executive branch, in effect: "Here is $700 billion. You say you will use some of it to buy up banks' 'troubled assets.' But if you prefer to do anything else with the money -- even, say, subsidize automobile companies -- well, whatever."
FreedomWorks, a Washington-based libertarian advocacy organization, argues that EESA violates "the nondelegation doctrine." Although the text does not spell it out, the Constitution's logic and structure -- particularly the separation of powers -- imply limits on the size and kind of discretion that Congress may confer on the executive branch.
The Vesting Clause of Article I says, "All legislative powers herein granted shall be vested in" Congress. All. Therefore, none shall be vested elsewhere. ...
Climate-Change Defense, The
...In September, a British jury shook up the world of green politics when it accepted a lawful-excuse defense for property damaged with the intention of averting even greater damage from climate change. In an effort to draw public attention to government support for new coal-fired electricity projects, six Greenpeace activists painted Prime Minister Gordon Brown’s last name on a smokestack at the Kingsnorth power plant in Kent. The plant’s owner, the energy company E.ON, claimed that the paint cost more than $50,000 to remove.
With supporting testimony from the NASA climate-change expert James Hansen and a representative of the Inuit community of Greenland (who described watching villages “eroding into the sea”), the protesters convinced the jury that the threat posed by Kingsnorth carbon was not only real but also immediate enough to justify their high-profile graffiti. What’s more, they claimed, by halting the plant’s carbon-dioxide emissions for a day, they averted more than $1.5 million worth of damage to human health and wealth around the globe. ..
How the New Deal Soaked the Rich, Middle Class, and Poor
The New Deal was paid for mainly by the middle class and the poor. This was because excise taxes were the biggest revenue generators for the federal government. They applied to beer, liquor, cigarettes, chewing gum and other cheap pleasures enjoyed disproportionately by the middle class and the poor. Until 1936, excise taxes generated more revenue than the federal personal income tax and the federal corporate income tax combined. Not until 1942 — in the middle of World War II — did the federal personal income tax become the biggest revenue generator for the federal government. ...
...Accordingly, FDR proposed raising the top rate to 75 percent, compared with Hoover’s top rate of 63 percent. In addition, FDR declared, “Great accumulations of wealth cannot be justified…. I recommend, therefore, that in addition to the present estate taxes, there should be levied an inheritance, succession, and legacy tax.”
The Revenue Act of 1935 didn’t prove to be very effective at raising federal revenue or redistributing the wealth. But it did send a clear signal to employers and investors that they were under attack. Such taxes encouraged them to conclude that they would be foolish to put their money at risk.
Then in 1936 FDR signed into law a graduated undistributed profits tax that penalized companies for building up savings essential for investment. Companies that retained 1 percent of their net income would see 10 percent of it taxed away. Companies that retained 70 percent of their net income would see 73.91 percent of it go to the government. Internal Revenue Service Commissioner Guy Helvering described the purpose of undistributed profits tax rather delicately: “the Federal government shall not be unreasonably and inequitably deprived of necessary revenues.” ...
...FDR demonized investors and employers as “economic royalists” and “privileged princes.” Opinion surveys of private sector employers suggested widespread fear of the federal government because of FDR’s policies. An American Institute of Public Opinion poll reported that a majority of employers anticipated more government control of the economy in the future. In a November 1941 Fortune poll, 93 percent of employers said they expected their property rights to be undermined, and there could be a dictatorship. ...
Cheap Political Theater
Death threats to executives at AIG, because of the bonuses they received, are one more sign of the utter degeneration of politics in our time.
Congressman Barney Frank has threatened to summon these executives before his committee and force them to reveal their home addresses-- which would of course put their wives and children at the mercy of whatever kooks might want to literally take a shot at them.
Whatever the political or economic issues involved, this is not the way such issues should be resolved in America. We are not yet a banana republic, though that is the direction in which some of our politicians are taking us-- especially those politicians who make a lot of noise about "compassion" and "social justice."
What makes this all the more painfully ironic is that it is precisely those members of Congress who have had the most to do with creating the risks that led to the current economic crisis who are making the most noise against others, and summoning people before their committee to be browbeaten and humiliated on nationwide television. ...
False Solutions and Real Problems
...What was the problem that didn't exist? It was a national problem of unaffordable housing. The political crusade for affordable housing got into high gear in the 1990s and led to all kinds of changes in mortgage lending practices, which in turn led to a housing boom and bust that has left us in the mess we are now trying to dig out of. ...
...But, vast areas of the country in between-- "flyover country" to the east coast and west coast elites-- had housing prices that took no larger share of the average American's income than in the decade before the affordable housing crusade got under way. ...
...Almost invariably, these severe local problems had local causes-- usually severe local restrictions on building homes. These restrictions had a variety of politically attractive names, ranging from "open space" laws and "smart growth" policies to "environmental protection" and "farmland preservation."
Like most wonderful-sounding political slogans, none of these lofty goals was discussed in terms of that one four-letter word that people do not use in polite political society-- "cost."
No one asked how many hundreds of thousands of dollars would be added to the cost of an average home by "open space" laws, for example. Yet empirical studies have shown that land-use restrictions added at least a hundred thousand dollars to the average home price in dozens of places around the country.
In some places, such as coastal California, these restrictions added several hundred thousand dollars to the price of the average home.
In other words, where the problem was real, local politicians were the cause. National politicians then tried to depict this as a national problem that they would solve.
How would they solve it? By pressuring banks and other lenders to lower their requirements for making mortgage loans, so that more people could buy houses. The Department of Housing and Urban Development gave the government-sponsored enterprise Fannie Mae quotas for how many mortgages it should buy that were made out for people for low to moderate incomes. ...
Sweden's Government Health Care
Government health care advocates used to sing the praises of Britain's National Health Service (NHS). That's until its poor delivery of health care services became known. A recent study by David Green and Laura Casper, "Delay, Denial and Dilution," written for the London-based Institute of Economic Affairs, concludes that the NHS health care services are just about the worst in the developed world. The head of the World Health Organization calculated that Britain has as many as 25,000 unnecessary cancer deaths a year because of under-provision of care. Twelve percent of specialists surveyed admitted refusing kidney dialysis to patients suffering from kidney failure because of limits on cash. Waiting lists for medical treatment have become so long that there are now "waiting lists" for the waiting list. ...
... "OK, Williams," you say, "Sweden is the world's socialist wonder." Sven R. Larson tells about some of Sweden's problems in "Lesson from Sweden's Universal Health System: Tales from the Health-care Crypt," published in the Journal of American Physicians and Surgeons (Spring 2008). Mr. D., a Gothenburg multiple sclerosis patient, was prescribed a new drug. His doctor's request was denied because the drug was 33 percent more expensive than the older medicine. Mr. D. offered to pay for the medicine himself but was prevented from doing so. The bureaucrats said it would set a bad precedent and lead to unequal access to medicine.
Malmo, with its 280,000 residents, is Sweden's third-largest city. To see a physician, a patient must go to one of two local clinics before they can see a specialist. The clinics have security guards to keep patients from getting unruly as they wait hours to see a doctor. The guards also prevent new patients from entering the clinic when the waiting room is considered full. Uppsala, a city with 200,000 people, has only one specialist in mammography. Sweden's National Cancer Foundation reports that in a few years most Swedish women will not have access to mammography.
Dr. Olle Stendahl, a professor of medicine at Linkoping University, pointed out a side effect of government-run medicine: its impact on innovation. He said, "In our budget-government health care there is no room for curious, young physicians and other professionals to challenge established views. New knowledge is not attractive but typically considered a problem (that brings) increased costs and disturbances in today's slimmed-down health care." ...