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InsiderOnline Blog: December 2010

The Census Speaks

Judging from the results of the latest reapportionment of congressional seats, announced by the Census Bureau yesterday, lower taxes and less government spending is the formula for success for states that want to attract new residents. The average top personal income tax rate of the eight states gaining representation is only 2.8 percent, while the average top rate for the 10 states losing seats is 6.05 percent. Per capita government spending in the eight gainers is $4,008, while the figure for the ten losers is $5,117.

These results, by the way, also correlate strongly with the strength of unions. Seven out of the eight gaining states have right to work laws, while only two out of the 10 losing states have right to work laws.

[Source: “Lower Taxes, Less Government in States Gaining Congressional Seats,” by Joshua Culling, Americans for Tax Reform, December 21, 2010.]

Posted on 12/22/10 03:08 PM by Alex Adrianson

Make Libertarian Films with Reason.tv

If you have an interest in libertarian ideas and in video journalism, then you should look into the Searle Film Fellowship at Reason.tv. Reason is looking for producers, videographers, editors, researchers, and marketing professionals. The fellowship is a year-long, full-time paid position that gives aspiring video journalists an opportunity create their own video content on libertarian themes. Applicants of all experience levels will be considered, and the training will be tailored to experience. The deadline for application is January 15, 2011.

For more details on this opportunity, see the fellowship description at Reason.org.

Posted on 12/21/10 05:15 PM by Alex Adrianson

Defining Wealthy Down

According to Senator Bernie Sanders, the difference between the Democrats’ estate tax plan with a 55 percent top rate and the Republican/White House estate tax plan with a 35 percent top rate amounts to a difference in principle, and he cites Teddy Roosevelt’s arguments for a progressive estate tax as support for the Democrat plan.

Here’s a reality check, from Kenneth Gould, writing at The American:

The president and Republicans’ proposal is closer to Theodore Roosevelt’s principle than that of the Democrats, since it has a higher exemption and therefore affects only wealthier estates. But it starts the top tax rate at only 172 times average income, while the 1916 structure put the top bracket at more than 3,500 times average income. And it places the top rate at 3.5 times that of the 1916 structure. Further, this proposal does not impose its graduated tax schedule only for the truly large fortunes that Theodore and Franklin Roosevelt stressed.

But the Democrats’ proposal is even farther from the Roosevelt principle. It starts its high tax rate at only 156 times average income, versus the 3,000 times of 1916 or the 38,000 times of Franklin Roosevelt’s pre-WWII policy. And its top rate, while only 58 percent of the peak of 77 percent for Franklin Roosevelt, is 4.5 times the 1916 level. Taken as a whole, the Democrats’ proposed structure is far more regressive than either the 1916 structure or that of Franklin Roosevelt. And, like the president and the Republicans’ proposal, the Democrats’ proposal also does not impose its graduated tax schedule only on truly large fortunes.

Posted on 12/20/10 05:58 PM by Alex Adrianson

What’s the P/E Ratio for Higher Education?

If you calculated a price/earnings ratio for higher education, it would come out to around 100, making it not a very attractive investment, says finance writer Jerry Bowyer. It’s a sign that, much like what happened in housing, subsidies and favorable tax treatment have produced a bubble in higher education.

Posted on 12/17/10 12:26 PM by Alex Adrianson

“Liberty” in Books

Hmmm …

These results are from Google labs Book Ngram Viewer (via Marginal Revolution).

Posted on 12/17/10 11:43 AM by Alex Adrianson

Right on Crime

Before 1996, the country’s welfare system was set up to give states more money when their welfare rolls grew. The program thus gave welfare bureaucrats an incentive to keep folks dependent on welfare. Fixing those bad incentives was one of the major purposes of the 1996 welfare reform law.

Now a group of conservatives has launched a project to bring that same focus to state criminal justice systems. It’s called “Right on Crime,” and it was founded by Marc Levin, Director of the Center for Effective Justice at the Texas Public Policy Foundation. Mike Klein of the Georgia Public Policy Foundation recently interviewed Levin about the project:

“The thing that keeps standing out to me is the broader question of accountability and results,” Levin said. “It seems to me that with criminal justice systems, at every stage funding expands based on the number of inmates and people on probation. We know how many people are in the system, but what is the recidivism rate?”

Levin pointed to the obvious but disturbing statistic that criminal justice system state and local spending grows when inmate rehabilitation fails. More prisoners result in more spending. More people return to prison when they have not been rehabilitated, which requires more spending.

“By in large, front line people are trying to do their best but I think we have a system in place that doesn’t really reward results,” Levin said. “If you look at education, conservatives pushed merit pay and accountability but I see criminal justice being way behind education. I really think there is a great need for conservatives to bring the same scrutiny to criminal justice.”

Numerous conservative leaders, including Newt Gingrich, Grover Norquist, Edwin Meese III, and William Bennett, have endorsed the project. Visit the Right on Crime Web site to read the project’s statement of principles.

Posted on 12/17/10 11:19 AM by Alex Adrianson

A List of Christmas Lists

Books make great Christmas gifts, and some of our favorite conservatives have some recommendations:

At National Review, Thomas Sowell likes Burton Folsom’s New Deal or Raw Deal for its thorough research and plain language account of President Franklin Roosevelt’s economic policies. Another pick from Sowell is Inside the Nixon Administration: The Secret Diary of Arthur Burns, 1969-1974, which he says reveals “what it means to have a very strange man as President of the United States – something that is all too relevant to our own times.”

National Review Online also has a separate symposium featuring NRO regular contributors giving their gift suggestions. There’s more fiction there than you might get from other political magazines. One of John Miller suggestions caught our eye: Defiance of the Patriots, by Benjamin Carp, is a history of the Boston Tea Party; it might make a great gift for the Tea Party activist on your list.

The Claremont Institute’s list—A Merry Claremont Christmas—provides enough gift suggestions to keep your family in reading material until reading goes out of style. Heck, the list itself would make a good read for a long plane ride. As you might expect from Claremont, the list offers plenty of history and political philosophy; you can also find some fiction, a few books on social media, a book on cocktails, and a book on wine. The Claremont list is a good source of inspiration if your interests run to previous millennia (Wodehouse, anyone?).

Also, The Heritage Foundation offers a Christmas book list compiled from its weekly New Common Sense newsletter. This list is a good source if you have family members who are interested in learning about the history and the ideas of the American Founding. While you’re at it, sign up for New Common Sense, too.

Posted on 12/16/10 11:39 AM by Alex Adrianson

Could the Government Order You to Purchase a Gun?

Never before in our history has the federal government ordered Americans to buy a product under the guise of regulating commerce. Imagine if this bill were that in order to protect our communities and homeland security, every American had to buy a gun. Can you imagine the reaction across the country to that? Well, the truth of the matter is, the same legal power is at stake in ordering us to buy health insurance …

That’s Virginia Attorney General Ken Cuccinelli on why Obamacare is unconstitutional. U.S. District Court Judge Henry Hudson agreed with Cuccinelli on Monday, ruling that the law’s mandate that individuals purchase health insurance “exceeds the Commerce Clause powers vested in Congress under Article I.”

Posted on 12/15/10 10:55 AM by Alex Adrianson

Tax Code Getting More and More Temporary

“In the late 1990s,” reports the Wall Street Journal, “there were typically fewer than a dozen tax provisions that had just a limited lease on life and needed to be renewed every year or so. Today there are 141.”

The tax deal negotiated by the White House and Republican leaders replaces some of those temporary provisions with other temporary provisions—a two-year extension of personal income tax rates, a new two-year rate for the estate tax that was to expire—and adds some new ones, such as a one-year cut in the payroll tax.

Many economists believe that uncertainty over tax provisions is making it hard for businesses to make plans for expansion.

Posted on 12/14/10 03:30 PM by Alex Adrianson

Obamacare Decision Affirms Limits on Commerce Clause Powers

Congress’s power to regulate interstate commerce does not include the power to require people to purchase a particular product as a condition of residing in the United States. That’s what the U.S. District Court for the Eastern District of Virginia said today in its ruling on Virginia’s lawsuit against Obamacare. Specifically, the court held that the law’s mandate on individuals to purchase health insurance is unconstitutional. The court also said that Congress’s general power to tax does not allow it evade the limits of the Commerce Clause by calling a penalty against non-purchase a tax. From Judge Henry E. Hudson’s decision:

The power of Congress to regulate a class of activities that in the aggregate has a substantial and direct effect on interstate commerce is well settled. This even extends to noneconomic activity closely connected to the intended market. But these regulatory powers are triggered by some type of self-initiated action. Neither the Supreme Court nor any federal circuit court of appeals has extended Commerce Clause powers to compel an individual to involuntarily enter the stream of commerce by purchasing a commodity in the private market. In doing so, enactment of the Minimum Essential Coverage Provision exceeds the Commerce Clause powers vested in Congress under Article I.

A thorough survey of pertinent constitutional case law has yielded no reported decisions from any federal appellate courts extending the Commerce Clause or General Welfare Clause to encompass regulation of a person’s decision not to purchase a product, notwithstanding its effect on interstate commerce or role in a global regulatory scheme. The unchecked expansion of congressional power to the limits suggested by the Minimum Essential Coverage Provision would invite unbridled exercise of federal police powers. At its core, this dispute is not simply about regulating the business of insurance—or crafting a scheme of universal health insurance coverage—it’s about an individual’s right to choose to participate. [Internal citations omitted.]

Posted on 12/13/10 05:49 PM by Alex Adrianson

No Major Treaties Have Ever Been Ratified by a Lame-Duck Congress

President Obama wants the Senate, currently in a lame-duck session, to ratify the New Strategic Arms Reduction Treaty. But, according to cross-checking by Heritage Foundation researchers, no major treaty has ever been ratified during a lame-duck session of the Senate. See “Treaty Ratifications During Lame-Duck Sessions,” by Matthew Spalding and Anna Leutheuser.

Posted on 12/10/10 05:24 PM by Alex Adrianson

Poll of Doctors Finds the Laws of Supply and Demand Still Work

Obamacare was supposed to make health care more affordable, but it may end up making it unavailable. Many doctors across the country anticipate that Obamacare will reduce doctor’s compensation so much as to threaten the viability of private practice. Nearly 40 percent of them said they would “retire, seek a nonclinical job in health care, or seek a job or business unrelated to health care” over the next three years as the overhaul is phased in, according to a recent Merritt Hawkins survey.

The survey of 2,379 practicing physicians also found that 28 percent of those who plan to retire are 55 or younger. And 74 percent said they plan to make “one or more significant changes in their practices in the next one to three years.” Among the changes these doctors are considering, in addition to retiring, are working part time, closing practices to new patients, cutting back on the number of patients, and switching to a cash or concierge model.

A poll conducted by Investor’s Business Daily last year found that four in nine doctors would consider retiring early if Obamacare became law.

Posted on 12/10/10 12:37 PM by Alex Adrianson

From Where Did the Ideas of the American Revolution Come?

Garrett Sheldon, professor at the University of Virginia’s College at Wise, explains how three distinct traditions inspired America’s Founders: classical republicanism, British liberalism, and Christianity:

Posted on 12/10/10 10:50 AM by Alex Adrianson

What Kind of Limits on Government Growth Actually Limit Government Growth?

Do formal rules that aim to limit government growth by some formula, codified in constitutions or statues, really work?

It depends, says Matthew Mitchell of the Mercatus Institute. Mitchell looked at 30-plus years of state Tax and Expenditure (TEL) laws and found several characteristics of TELs that have succeeded in controlling government growth. “These include,” he writes, “constitutional (as opposed to statutory) codification, a focus on spending rather than on revenue, a provision that automatically and immediately refunds surpluses, and—of particular importance—a provision that requires either a supermajority vote or a public vote for override.”

Mitchell’s paper is “T.E.L. It Like It Is: Do State Tax and Expenditure Limits Actually Limit Spending?” published by the Mercatus Institute, December 10, 2010.

Posted on 12/10/10 10:44 AM by Alex Adrianson

When Governments Manipulate Money

Benn Steil, giving a lecture upon receiving the 2010 Hayek Award from the Manhattan Institute, says that QE2 and other monetary interventions are leading to a replay of the monetary mischief of the 1920s and 1930s. Steil and Manuel Hinds won the Hayek award for their book, Money, Markets, and Sovereignty. Here’s snippet of Steil’s lecture:

Everyone today knows about the stock market boom and subsequent crash in 1929. But few are aware of just how pervasive the credit bubble was. From 1997-2007 we witnessed here in the United States “a constructional boom of previously unheard-of dimensions. A real estate boom developed, first in Florida, but soon was transferred to the urban real estate market on a nation-wide scale.” But I actually took this quote from a book written in 1937, by three economists writing about the mid-1920s.

There was also a critical international dimension to the American credit bubble and crash which has precise parallels today.

Consider first how the United States and China would interact under a classical gold standard. If the United States sent a dollar to China, China would have to redeem that dollar for American gold. A fall in the U.S. gold stock would necessitate a rise in U.S. interest rates, which would reduce credit growth, reduce prices, and reduce the trade deficit. This is the mechanism by which the gold standard automatically corrected global imbalances.

Compare this with today’s actual monetary structure. When the United States sends a dollar to China, China immediately returns it in the form of a low-interest-rate loan. That dollar is then recycled through the U.S. financial system, causing further credit growth and, critically, no countervailing Federal Reserve action.

The bubbles and imbalances that have marked the past decade—as they did the 1920s—are features of a monetary regime which operates in precisely the opposite fashion as the one which operated during the great globalization of the late nineteenth century. America is not, as Fed chairman Ben Bernanke would have it, a passive victim of “a global savings glut.” It should not, therefore, be surprising that bubbles will continue to emerge in one asset market after another, and will continue to burst with damaging consequences.

Posted on 12/10/10 10:19 AM by Alex Adrianson

Second Amendment Rights Still Taking Shape

The city of Chicago requires residents who want to get a gun permit to be certified as trained in gun use at a gun range. At the same time, Chicago bans gun ranges from opening up inside the city.

That’s one example of how the city has responded to the Supreme Court striking down its ban on gun ownership in the case of McDonald v. Chicago. Fortunately, the lawyer who won that case vindicating Chicagoans’ Second Amendment rights is still on the job: Alan Gura has filed a lawsuit challenging the city over this set of regulations: “Chicago cannot ban something it mandates as a condition of exercising a fundamental right” he says.

That case, Ezell v. Chicago, is working its way through the courts now. Brian Doherty has more on Gura’s new lawsuit at Reason.com.

Posted on 12/09/10 05:47 PM by Alex Adrianson

Earmarks Still In Demand

Congressional Republicans say they are swearing off earmarks entirely. Meanwhile, Democrats in Congress claim they’ve already reformed earmarking substantially. But this week the first ever database of earmark requests was launched, and it shows that members of Congress still aren’t exactly afraid to ask for special projects for their home districts or states. According to the database, for 2011 House members requested nearly $53 billion in earmarks, while Senators requested nearly $78 billion worth of earmarks. These figures represent earmarks requested but not yet approved by legislation. In recent years, Congress has approved about $16 billion in earmarks annually.

Three groups—Taxpayers Against Earmarks, Taxpayers for Common Sense, and WashingtonWatch.com—culled the earmark information from disclosures on Congressional Web sites. The database shows that members have requested a total of 39,294 earmarks for 2011. Republican members are responsible for requesting over $23 billion worth of earmarks, while Democrat members have tallied over $106 billion requests.

Posted on 12/09/10 03:22 PM by Alex Adrianson

Tax Deal Could Have Been Better

The American taxpayer won’t see an increase in individual income tax rates for another two years. That’s the good news in the tax deal reached by the GOP and the White House this week. According to The Heritage Foundation’s Center for Data Analysis, the President’s complete wish list of tax increases would have cost the economy 693,000 jobs per year, while reducing gross domestic product by $1.1 trillion cumulatively over the period 2011-2020.

But some higher taxes will hit in 2011, notably the estate tax, which was zero in 2010 but scheduled to rise to 55 percent in 2011. The GOP-White House deal pegs the rate at 35 percent instead. To understand the problems with the estate tax, read Curtis Dubay’s paper “The Economic Case Against the Death Tax.” As Dubay points out, the death tax is a tax on capital, and its very existence encourages people to consume instead of invest, which reduces job creation and suppresses productivityand therefore wages. Keeping the death tax at zero could produce up to 1.5 million additional jobs.

Beyond that, the main problem with the deal is that its temporary nature preserves uncertainty about future tax rates, and it is that very uncertainty to which many folks attribute the sluggishness of economic recovery. Dan Mitchell of the Cato Institute even worries that the temporary nature of the package will make low taxes seem ineffective at boosting the economy and thereby undermine the case for lower taxes.

(Heritage Foundation intern John Vajas wrote this post.)

Posted on 12/08/10 05:43 PM by Alex Adrianson

Privatize the Roads?

Private roads are more common than most people think, and the traveling public would be even better off if even more roads were privatized, says economist Bruce Benson:

Posted on 12/07/10 05:51 PM by Alex Adrianson

Spending Can Be Cut Now

The federal government could save $98 billion per year if it would just stop making erroneous payments. For 11 other ideas on how federal spending can be cut immediately, check out Brian Riedl’s new article at National Review: “What to Cut.”

Posted on 12/06/10 04:23 PM by Alex Adrianson

Expect Job Losses if Taxes Go Up

Between 2013 and 2019, the higher taxes envisioned by President Obama would cost the economy nearly 800,000 jobs, according to the IHS Global Insight U.S. Macroeconomic Model. (See “Obama Tax Hikes: The Economic and Fiscal Effects,” by William Beach, et al., The Heritage Foundation, September 20, 2010.) But how will particular states be affected? You can find breakdowns for each state at Heritage.org. You can also find handy brochures that can be printed out and distributed to friends and family who want to know what to expect in their state.

Posted on 12/03/10 01:43 PM by Alex Adrianson

Do Our Rights Have to Be Enumerated?

It might surprise some to learn that one of the most important debates going over the Constitution is not between the originalists and the judicial activists, but rather among those who seek fidelity to the Constitution’s words. Such was on display in arguments in the Chicago gun control case (McDonald v. Chicago) decided earlier this year by the Supreme Court. The vexing question there was whether the Constitution—and specifically the Privileges and Immunities clause of the 14th Amendment—protects unenumerated rights. To some in the originalist camp, trying to identify unenumerated rights protected by the Constitution will lead to just the sort of judge-made law that subverts democratic government. For those reasons, Justice Alito’s opinion for the Court affirmed that the Second Amendment applies to the states as well as to the federal government, but did so via the 14th’s Due Process clause rather than the Privileges and Immunities clause. The Court thus declined to revisit the 1873 Slaughter-House Cases in which the Court essentially read Privileges and Immunities out of the amendment.

But, says Claremont McKenna College professor George Thomas, sticking by Slaughter-House is a move aimed at limiting judicial discretion more than adhering to the original meaning of the 14th amendment. Thomas’s article in the recent issue of the Hoover Institution’s Policy Review will certainly provoke adherents of Justice Scalia’s thinking, for it raises the question of whether too much judicial modesty can also be a form of judicial activism. It is also well worth reading for its detailed discussion of how the 14th Amendment came to be and its relation to the overall structure of the Constitution. As Thomas points out, a Constitution that limits government’s powers by enumerating them necessarily implies that the people possess rights that are antecedant to the Constitution. Thomas’s conclusion, in part:

[T]urning to the original meaning of the Privileges or Immunities Clause is not an invitation for the judiciary to create rights. As is evident from a quick look at the history of the Fourteenth Amendment, there are a fairly clear set of rights that were understood as part of the “privileges and immunities” of citizenship. Turning to a historical understanding of “privileges and immunities,” in fact, is not so different from Scalia’s insistence that rights rooted in history and tradition might qualify as fundamental rights under due process analysis. The rub is that such an understanding would almost certainly include rights that Scalia, having digested the New Deal telling of history, is skeptical of – liberty of contract, for instance. Yet such “economic” rights were at the heart of the Fourteenth Amendment.

See: “Who’s Afraid of Original Meaning,” by George Thomas, Policy Review, December 1, 2010.

Posted on 12/03/10 01:20 PM by Alex Adrianson

What Spain Teaches about Green Jobs

Green energy costs more than fossil fuels, and that’s why Spain’s efforts to promote it was such a job loser, explains this Institute for Energy Research video:

Posted on 12/02/10 05:44 PM by Alex Adrianson

Libertad.org

The Heritage Foundation has launched a Spanish-language site. Libertad.org will provide much of the same great research found at Heritage.org plus other content of interest to audiences that are more comfortable getting their news and information primarily in Spanish. Mike Gonzalez, Heritage Vice President of Communications, explains that site aims to take the conservative message to new audiences:

The progressives’ appeal to Hispanics is clear, if ham-fisted and pernicious. They offer a basic quid pro quo that boils down to ‘you are victims in this unfair, racist society and have no hope to get ahead without government handouts. Join our coalition, help us grow government, and we’ll make sure that you, too, become a protected group.’ It’s a bargain that would only consign Hispanics to permanent underclass status and contribute to making the country they immigrated to more like the one that they left.

President Obama was not shy about these designs in the weeks leading up to the recent midterm elections, when he pleaded with Hispanics to “punish our enemies”—a comment so maladroit that he had to apologize for it almost immediately.

It is for this reason that we at Heritage will make sure that Hispanics who read their news in Spanish will hear the other side of the argument. In Libertad.org, Spanish-speakers will be able to read the opposite of the progressives’ message of gloom and doom. It is called Libertad.org as Liberty is what our country offers and cannot be taken away.

This site will not be designed to pander, but to share and educate. It will offer some of the same cutting-edge research and analysis available on Heritage.org with additional resources for a new readership. Libertad.org will not reinforce the idea that cultural assimilation is a bad thing; on the contrary, our success as a unified country depends on it. We offer these perspectives in Spanish, because we simply want Heritage to be accessible to all citizens.

Posted on 12/02/10 02:08 PM by Alex Adrianson

Striking Back at the Tyranny of Zoning Officials

If you are in the mood for a fairly ridiculous story of a government official abusing her authority, check out the latest lawsuit filed by the Institute for Justice. Apparently, officials in Arlington Country, Va., don’t understand what the First Amendment means.

IJ is representing Kim Houghton in a lawsuit against the county. Houghton recently started a business called Wag More Dogs, which provides daycare and boarding services for dogs. Before opening, Houghton commissioned a mural to be painted on the back of her facility, which borders a community dog park. Naturally, the mural depicted dogs at play. If the mural had just depicted dinosaurs at play, the county would have been OK with this artistic enhancement of the neighborhood. But, because the mural portrayed dogs and Houghton’s business was dogs, one county zoning official decided that the mural constituted a commercial sign and that it ran afoul of the county’s regulations on commercial signs. The official told Houghton she would get neither a business permit nor a certificate of occupancy until she covered up the mural.

Houghton had the guts to follow her passion for dogs and start a business. But rather than thank her for adding to the economy, the county government has asked her to trade away her constitutional right of free speech. Writing in the Washington Times, Houghton says: “If it weren't for IJ, I would have had to give in because zoning officials are that intimidating and that powerful. Arlington County officials have the power to close my doors forever at their whim, and they have shown they are not shy about using that power.”

Hopefully, with IJ’s help, Houghton will be able to tear down the ugly blue tarp that the county forced her to put over her mural. For more on the case, check out IJ’s video on it.

Posted on 12/02/10 11:26 AM by Alex Adrianson

Did Anybody Remember There Was a Blue Level?

Dropping the color-coded terror alerts, which is what the Department of Homeland Security wants to do, would be a good idea, says Heritage Fellow James Carafano:

According to some estimates, every time the national threat level is raised to orange, the federal government incurs an expense of $1 billion per week. Factoring in the additional costs incurred by state and local governments—and the potential economic losses from reductions in consumer confidence, travel, and tourism—only makes the cost of this imperfect system more exorbitant. Yet the current advisory system ratchets up concern throughout the nation regardless of whether the nature of the risk warrants it. Without specific information as to the nature of the threat, states and localities are forced to decide between piling on expensive (and potentially unnecessary) layers of security and doing nothing at all.

A better system, says Carafano, would be one with fewer threat levels, that issued regional alerts instead of national ones, and that gave the public better information about how to respond to changes in threat levels.

Posted on 12/01/10 06:02 PM by Alex Adrianson

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