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InsiderOnline Blog: August 2008

The Exit Tax

In the Cold War, the freedom of the West was so attractive that the Communists had to put up a wall to keep people from leaving East Germany. Today in California, an activist for higher taxes has astutely recognized that his plans to sock it to the rich can’t work without some barrier making it difficult to for people to leave the state. Thus, the exit tax, a part of Paul McCauley’s plan for a new wealth tax. McCauley is currently collecting signatures to put the plan on the ballot this fall. The plan imposes a new 17.5 percent surtax on individuals making over $250,000 (the tax will be applied to the taxpayer’s total income, not just the income above $250,000), and adds another 17.5 percent surtax on individuals making over $500,000.

The Tax Foundation calculates that an individual with an income of $1 million and a taxable income of $750,000 would face a tax increase of 74 percent under this plan. But if that person wants to escape to the lower-tax environs of Nevada, the plan would nail him with a 36.8 percent exit tax on both income and unrealized appreciation in asset values over $5 million. On top of that, the state would seize 55 percent of assets in excess of $20 million of Californians leaving the state.

As the Tax Foundation notes, the exit tax is probably unconstitutional, since it interferes with interstate Commerce.

Posted on 08/29/08 11:58 AM by Alex Adrianson

Another Great Episode of “Do as We Say, Not as We Do”

Posted on 08/29/08 10:43 AM by Alex Adrianson

Making Energy Scarce Is What Makes It a Weapon

Iain Murray of the Competitive Enterprise Institute explains how environmentalists are helping Vladimir Putin use energy as a weapon against Europe:

Natural gas, while cheap to burn and an efficient form of energy, is not the only source of electricity Western Europe has. Germany and Britain both possess abundant coal. France has based its energy profile on nuclear. Both could provide Russia-free energy across Western Europe, yet both are reviled by environmentalists. Wind power and renewables, beloved by environmentalists, are simply not up to the job.

It therefore seems that when faced with a choice between empowering Russia and annoying environmentalists, Western Europeans are less afraid of the former.

Let’s also remember that the Kyoto Protocol is designed to see large amounts of Western European money transferred to Russia as European nations purchase credits for emissions reductions banked by Russia following the collapse of communism. European nations can’t reduce emissions on their own, for the aforementioned reasons, so they need to buy credit from elsewhere. This was the central reason behind Russia’s ratification of the Kyoto Protocol. To put it bluntly, the Kyoto Protocol is subsidizing Putin’s military retrenchment. If supposed oil wealth funding madrassas is a problem, then this certainly is as well.

Posted on 08/29/08 10:33 AM by Alex Adrianson

Government Makes Health Insurance Unaffordable

As noted, the new Census numbers on the uninsured look great to fans of expanding the government’s role in health care. Enrollment in government programs is up, while private coverage is flat. So kudos to government programs for increasing coverage, right?

But, as Grace-Marie Turner of the Galen Institute points out, government policies are to blame for making private health insurance more expensive, which induces more people to go without coverage. In a Wall Street Journal article, she identifies four problems:

1. By federal law, it is illegal for consumers in the individual market to buy health insurance across state lines. That reduces competition among sellers of health insurance. More competition would mean lower prices, allowing more consumers to afford insurance.

Turner cites a study by University of Minnesota researchers Stephen Parente and Roger Feldman finding that getting rid of the prohibition would increase by 12 million the number of people covered by health insurance.

An additional problem with the prohibition against buying across state lines is that it insulates states against bad policy choices. If consumers can’t vote with their feet, then states have less reason to worry about screwing up their health insurance markets with too many regulations.

(See also, For Better Health Insurance, Let Consumers Buy Across State Lines” by J. Patrick Rooney and Dan Perrin, The Insider, Summer 2008.)

2. All states mandate that health insurance plans cover particular benefits, which makes those plans more expensive. Nationwide, there are 1,900 such mandates, which, according to the Council for Affordable Health Insurance, increase the cost of health insurance by between 20 percent and 50 percent.  

3. Other regulations make health insurance a bad bargain for healthy people. States require insurers to charge people similar rates regardless of their risks. At the same time, they require insurers to sell coverage to all applicants. The combined effect of these regulations is to encourage healthy people to avoid buying insurance until they are sick.

4. And of course, the tax code is biased toward employer-provided insurance, which introduces all sorts of bad incentives into the system. Extending health care tax credits to individuals, says Turner, would eliminate this bias and allow employees to keep their insurance when they leave their jobs.

If we want to decrease the number who lack health insurance, then we should eliminate government impediments in the private market.

Posted on 08/29/08 09:51 AM by Alex Adrianson

Pro-Liberty Groups to Gather in Tbilisi

The business of promoting liberty is too important to be interrupted by war!

In each of the past four years, the European Resource Bank has gathered together the best and the brightest think tankers for several days of sharing ideas on how to promote public policies based on liberty, free markets, and the rule of law in Europe. But when Russia invaded Georgia a few weeks ago, the plans for this year’s event in Tbilisi, Georgia, on October 9 – 12 were suddenly thrown into doubt. Russian tanks and troops began advancing into undisputed Georgian territory. Flights to Georgia through Russia were canceled. Even parts of Tbilisi came under fire.

The organizers wondered: Would it be logistically feasible to attempt to hold the event in Tbilisi? Would potential attendees be scared away? Should another venue be chosen?

Fortunately, Russia and Georgia, though not exactly at peace, have agreed to a cease-fire. The organizers of European Resource Bank 2008 have now decided to proceed as planned and hold the event in Tbilisi on October 9 – 12, 2008.

The host of this year’s European Resource Bank is the New Economic School, a free market think tank located in Tbilisi. Earlier this summer, the New Economic School hosted a successful six-day school on economic growth for 50 eager students of public policy. The program brought in noted economists from around the world to teach the classes, including Robert Lawson, (a co-author of the annual Economic Freedom of the World).

Right now, it’s hard to imagine a more appropriate venue for a gathering of pro-liberty organizations than Tbilisi, Georgia.

(Above: A session at the Summer School on Economic Growth, Tbilisi, Georgia.)

Posted on 08/28/08 08:40 PM by Alex Adrianson

The Flaw in Green Taxes

Britain’s TaxPayers’ Alliance has a new report illustrating one of the dangers of trying to harness the tax code in service of environmental objectives. In theory, tax rates can be adjusted to reflect the social costs of certain kinds of behaviors. For example, Britain tries to discourage greenhouse gas emissions by taxing the activities that produce those emissions. The difficulty is getting the tax rate right.

According to the TaxPayers’ Alliance’s new report, “The Burden of Green Taxes,” British taxpayers paid £24.2 billion in green taxes in 2007-2008. Yet, according to the estimates of the United Nation’s Intergovernmental Panel on Climate Change, the social cost of Britain’s greenhouse gas emissions in 2007-2008 was only £4.6 billion. That means Britain paid £19.6 billion too much in green taxes—£783.34 too much per household. Alternatively, using the British government’s estimate that the country’s greenhouse gas emissions inflicted a social cost of £16.3 billion, then green taxes still took £7.9 billion too much. Keep in mind that “green taxes” are just one layer of the taxes paid by Britons.

The problem is that rabid environmentalists, unlike most people, don’t think in terms of incremental trade offs. If reducing some carbon dioxide emissions is good, then, the environmental lobby reasons, reducing them more is better still and eliminating them entirely is the best of all worlds. To the ardent environmentalist, the purpose of a green tax isn’t to get the citizen to weigh the incremental cost of more emissions against the incremental benefit of whatever he was doing to produce those emissions. Rather, the point is to eliminate emissions. The politician, meanwhile, is only too happy to raise taxes further in order to obtain more of other people’s money to spend.

Pigouvian taxes, as they are called, are great in theory, but since they rely on politicians having to think economically, they might not be so great in practice.

Posted on 08/28/08 03:08 PM by Alex Adrianson

Fannie and Freddie, Act Two

Now that Congress has made explicit what everybody already assumed—that Fannie Mae and Freddie Mac are too big to be allowed to fail—the question for taxpayers is: How big will the final bill be?

The danger, as Peter Wallison makes clear in a new paper for the American Enterprise Institute, is that Congress will cling too long to the hope that Fannie and Freddie can be returned to business as usual. But that path was closed, says Wallison, when Congress made government backing explicit. Eventually, and in spite of itself, Congress will realize “the privatization of profit and the socialization of risk inherent in this new arrangement is politically untenable …”

Getting out of this set-up means either privatizing or nationalizing. Before that happens, there is the danger that the Secretary of the Treasury will actually use his new authority to extend credit to the two GSEs. Such a move merely gives Fannie and Freddie resources to take on new and greater risks in an effort to save themselves, ultimately increasing the costs to taxpayers.

The least problematic course, says Wallison, is to privatize Fannie and Freddie through receivership, but that option won’t be in play if Treasury’s lifeline has helped the entities survive as going concerns.

A further danger is that instead of privatizing Fannie and Freddie, Congress will opt to nationalize them, which will require taxpayers to buy Fannie and Freddie’s shares. There is little reason to believe that the mortgage market still needs a government-backed mortgage guarantor, yet for political reasons Congress may prefer the nationalizing option. Wallison writes:

The two enterprises have been the source of considerable campaign funding for their supporters in Congress, lucrative jobs for congressional staffers, and good publicity for incumbents in their districts and states. The Democratic Congress, in particular, will prefer continued intervention in the mortgage market so that they can continue to establish priorities that will benefit favored groups in the Democratic political coalition. In addition, the banks and other mortgage lenders that might be compelled to compete with Fannie and Freddie will certainly oppose privatization. Other groups—home builders, the securities industry, realtors, and other traditional allies who profit from the activities of Fannie and Freddie—will also be in opposition.

Posted on 08/28/08 12:45 PM by Alex Adrianson

Government Coverage Rises, Private Coverage Falls

The big health care news yesterday was that the official count of people without health insurance fell last year—the first time that had happened in seven years. According the Census Bureau, 45.7 million people lacked health insurance at some point during 2007, compared to 47 million in 2006.

The drop in the number lacking insurance is attributed primarily to an increase in enrollment in government-provided coverage. The Los Angeles Times reports:

Overall, the number of people covered by government programs rose to 83 million in 2007, up from 80.3 million in 2006. The number of people on Medicaid, the government health insurance program for low-income residents, increased to 39.6 million from 38.3 million. And the number of children without insurance dropped to 8.1 million from 8.7 million as those with public insurance rose by almost 1 million to 23 million.

Unambigously good news, right? To borrow Paul Harvey’s phrase, the rest of the story is that enrollment in private coverage was flat. In fact, as a percentage of the population, private coverage declined slightly, from 67.9 percent in 2006 to 67.5 percent last year. The employer-provided component of private coverage fell from 59.7 percent in 2006 to 59.3 percent last year.

So, it’s only good news if you think that government health care programs are preferable to private health insurance. It’s only good news if you want more doctors and hospitals responding to directions from the government instead of the wishes of their patients.

Still, we should not fret over the possible demise of employment-based insurance. That system, too, has its problems—namely fewer options and more expensive coverage compared to what consumers would choose in a functioning market for individual insurance.

The Census Bureau’s results provide further evidence of the need to move away from the employer-based health care system and create a more robust market for individual health insurance. As Greg D’Angelo has written, a good first step would be to eliminate the bias in the tax code against individually purchased health insurance. Health care tax credits would be one option.

Posted on 08/27/08 05:00 PM by Alex Adrianson

Free Countries Must Stand Together

Vasil Sikharulidze, Georgian Ambassador to the United States:

This is not about what Russia did to Georgia, but what Russia intends to do to Europe. I believe that the last few days have shown without a shadow of doubt that Russia is using this moment to project the message to the world that it is back as an imperial power and the free world is powerless to respond. But I do not believe that the West is powerless. Russian aggression can and must be resisted. Power of the free world requires unity. Otherwise if they sense weakness and disunity we will find ourselves in much dire circumstances very soon.

Ambassador Sikharulidze made these comments earlier this week at The Heritage Foundation. (You can view or listen to the entire event online.)

Posted on 08/22/08 12:26 PM by Alex Adrianson

Civil Society Under Siege in the Andes

Venezuelan strongman Hugo Chavez faces an election on November 23, and he’s wasting no time in further undermining civil society and consolidating his power. Jaime Daremblum of the Hudson Institute reports:

On July 22, the Venezuelan president arrived in Moscow to finalize a number of bilateral energy and military agreements, including several arms deals that (according to a Russian newspaper) are reportedly worth around $2 billion. (His previous weapons acquisitions from Russia total some $4.5 billion.) On July 31, he announced plans to nationalize the Spanish-owned Bank of Venezuela, his country’s third-largest bank. That same day—the last day of an 18-month period during which he could exercise extraordinary powers granted by Congress—Chávez enacted 26 new laws that expanded considerably his control over the economy, the armed forces, and national elections. A few days later, on August 3, he vowed to “accelerate the socialist revolution” after Venezuela’s November elections.

The Heritage Foundation’s Ray Walser and James Roberts provide some details on the decrees:

Several of these new decrees bring Venezuelan military policy into closer alignment with the Chavista nationalist ideology. The national army, for example, now becomes the Bolivarian army, ideological education is made compulsory, and an extensive Bolivarian militia, answering directly to the president, will act as watchdog and protector for the Chávez revolution. The new decrees also grant the government extensive authority to control the production, processing, and distribution of foodstuffs, including criminalization and jail terms for anyone violating price controls or interfering with food production and distribution. Other decrees authorize Chávez to siphon off earnings from state enterprises to fund social programs and grant him the authority to create a new layer of appointed officials to serve as regional vice presidents and agents of the central governments operating outside of electoral control. … Chávez’s agents have blacklisted 272 mostly opposition candidates accused—without trial or conviction—of corruption. Pivotal opposition figures like Leopoldo Lopez, a popular mayor in greater Caracas, are barred from running for office.

Some other ominous developments in the Andes:

• In Bolivia, Evo Morales, emboldened by a recent referendum, is expected to seek a new constitution that “redistribute[s] wealth from the country’s hydrocarbons industry, introduces land reforms, empowers indigenous backers in the Andean highlands, and opens the way for a run for a second presidential term.” (Walser/Roberts)

• In Ecuador, on July 24, the constituent assembly approved a new constitution that

… will permit left-leaning President Rafael Correa, elected in 2006, to dissolve the Congress, influence the high court system, and exercise extensive control over the formerly autonomous Central Bank. It will also allow Correa two consecutive four-year terms, opening the door for his retaining office until 2017. The new constitution contains numerous nationalist planks, such as the rejection of international arbitration of investment disputes and a prohibition against foreign military bases, a clause aimed at ending the presence of the U.S. forward-operating, anti-drug air base at Manta. (Walser/Roberts)

• And in Peru, Chavista front organizations called “ALBA houses” are attempting to undermine support for the center-Left government of Alan Garcia. These putatively charitable organizations, funded by Venezuelan oil wealth funneled through Bolivia, are indoctrinating Peru’s rural poor in radical Leftist ideology. (See “Fighting for Freedom in Rural Peru: ‘ALBA Houses’ Threaten Democracy,” by James Roberts and Edwar Enrique Escalante, The Heritage Foundation, August 18, 2008. Mr. Escalante is the Executive Director of ANDES LIBRES in Cuzco, Peru, an organization that provides a counter influence to the Chavista ALBA houses.)

Peru is but one example of a South American country with a center-Left government not under the sway of Chavez. Daremblum points out that these countries are friends of democracy and civil society:

… it should be clear by now that Chávez does not speak for the South American left. In 2003, a center-left Chilean government signed a free trade agreement with the United States. In Brazil, the center-left Lula government has pursued a sound, market-oriented economic agenda and worked with the Bush administration to promote ethanol production. Peru’s center-left president, Alan García, has embraced market reforms and free trade. In early 2007, the United States and Uruguay signed a “Trade and Investment Framework Agreement.” Uruguay, too, has a center-left government, led by President Tabaré Vázquez. In other words, Chávez is losing the ideological battle, and we should not inflate his stature or the extent of his influence.

As both Walser/Roberts and Daremblum argue, now is the time to show support for our democratic friends in Latin America. One positive step to help Colombia would be for Congress to pass the Colombia-U.S. free trade agreement.

Posted on 08/21/08 12:33 PM by Alex Adrianson

Did You Know You’re a Patron of the Arts?

Some federal priorities, as identified by the Senate Fiscal 2009 Transportation and Housing and Urban Development (THUD) Act (via Citizens Against Government Waste):

$700,000 by Sens. Christopher Dodd (D-Conn.) and Joseph Lieberman (I-Conn.) for waterproofing activities in basement-level storage areas at the Wadsworth Atheneum Museum of Art.  Considered to be one of the dozen greatest art museums in the country, the Wadsworth Atheneum reported a fund balance of $106 million at the end of 2006.

$200,000 by Sens. Edward Kennedy (D-Mass.) and John Kerry (D-Mass.) for renovation of the Berkshire Theatre Festival’s facilities and grounds.

Meanwhile, across the pond, the Spectator’s Fraser Nelson writes:

Great moment on the Today programme this morning when John Major – without irony – told James Naughtie how great the National Lottery was because an opera lover like him could benefit from the money poured into the Royal Opera House in Covent Garden. That deal was perhaps the most egregious example of cash transferred from poor people to rich people, but sadly typical of the regressive nature of arts funding.

Posted on 08/21/08 10:11 AM by Alex Adrianson

Tax Foundation Launches Campaign on Corporate Taxes

The Tax Foundation has launched a new campaign to educate the public about the negative impact of high corporate taxes on U.S. competitiveness. According to their new Web site CompeteUSA:

Just 20 years ago, the U.S. led the world in cutting business taxes to make our economy more conducive to job creation. Since then, every other industrialized country on Earth has cut its business taxes while we stood still.

Today, only Japan has a higher business tax rate than the U.S. Last year, 27 countries cut their business taxes to make their economies more competitive and attractive to investment. This year, more countries – such as Korea, Taiwan, Hong Kong, and South Africa – have announced that they will cut their corporate taxes, and even the Japanese have said that they will study the idea.

Among the important points one learns from visiting the site: We all pay corporate taxes, whether we own businesses or not. “… although corporate taxes are invisible to the average taxpayer, they quietly tap family pocketbooks for nearly $370 billion per year in the form of higher prices, lower wages and poorer returns on investments.”

Further:

New research from the U.S. Congressional Budget Office shows that in a global economy where capital is highly mobile but workers can’t easily move abroad—a good description of today’s economy—workers end up bearing the brunt of corporate taxes. In total, the poorest 20 percent of households pay more in corporate income taxes each year than they pay in individual income taxes to the IRS each April. Households earning under $23,700 in 2004 paid $271 in corporate income taxes, compared to just $171 in individual income taxes.

The site offers lots of other resources, including a ranking of state and national corporate taxes.

Posted on 08/20/08 10:24 PM by Alex Adrianson

Their Bubbles Bad, Our Bubbles Good

A new report from the National Association of Home Builders finds that housing is now more affordable than it has been since 2004. According to the report, 55 percent of homes sold from April through June were affordable for families earning the median U.S. income of $61,500. The figure was 53.8 percent in the first quarter of 2008.

The report is not surprising, given the collapse of housing prices over the past year. But it does make one wonder: If Congress wants to promote homeownership, then why is it trying to re-inflate the housing market with the bailout plan it recently passed and which the President signed?  

The fact is Washington, D.C., is schizophrenic when it comes to commodity prices. When oil prices skyrocketed, politicians rushed to blame greedy oil companies and speculators. They introduced legislation to regulate futures markets and are still considering windfall profits taxes on oil companies—never mind that such policies, too, hurt consumers. Consumers, no doubt, feel the pain of higher oil prices in the form of higher prices for gasoline and other knock-on effects on consumer prices.

But when housing prices collapsed, there was no “huzzah!” from the Beltway for the responsible renter who could now afford to buy a house. Instead, Washington rushed to provide taxpayer dollars to refinance mortgages in danger of foreclosure. To be sure, foreclosure is not pleasant. But while particular families may lose their house, there is no “housing crunch.” The houses, unless vandals have taken them apart, still exist. The banks that take possession of foreclosed houses will eventually resell them to other families on new, more affordable terms. Some of those new buyers, no doubt, will have previously been in a mortgage they could not afford.

Such adjustments must happen in a market economy, regardless of what politicians want. To the politician, it seems, all economic news is bad news. For consumers, it’s usually political news that’s bad news. Pumping more liquidity into the housing market may help some current homeowners, but it comes at the expense of everybody else who aspires to homeownership.

Posted on 08/20/08 05:22 PM by Alex Adrianson

More Government Revenues Are Not the Solution to Our Problems; They Are the Problem

Andrew Moylan of the National Taxpayers Union says a neglected argument for allowing more drilling for oil is that it will produce additional revenues for the government that could be used for tax cuts:

The Congressional Research Service recently estimated the potential federal revenue from Arctic National Wildlife Refuge (ANWR) oil development at $191 billion over 30 years – roughly $18.36 per barrel, based on projections of recoverable reserves. Applying that formula to the 107 billion-plus barrels of recoverable oil that federal agencies estimate is in ANWR, the nearby National Petroleum Reserve and offshore tells us that sensible drilling could yield nearly $2 trillion in overall revenue over 30 years, or an average of about $65.5 billion per year.

Meanwhile, the “cost” in lost tax collections of protecting 22 million families from the AMT this year stands at about $62 billion. That figure is sure to balloon in the future as more and more Americans are ensnared by the complex system. Tax-hungry politicians defend the AMT by pointing to all the federal revenue that would be lost by ending it. (Never mind the fact that AMT revenue is ill-gotten in the first place, or that the estimated “costs” of its repeal to the federal budget ignore the benefits to economic growth and resulting additional revenues.) While oil and gas development won’t fill government’s coffers overnight, it will provide a down payment in the near-term, and big windfalls in the out-years that can help deal with some of the most intractable tax problems we face.

We’re all for getting government out of the way of developing new sources of energy, wherever they might be. And we’re all for tax cuts. While agreeing that tax cuts should happen as a result of any new revenues, we’ll add the caveat that a windfall for the government creates accountability problems that should concern fiscal conservatives.

The primary argument for tax cuts is that the government doesn’t need the revenue. We know government has too much revenue because it spends money on things that benefit special interests at the expense of all other taxpayers. And because it spends money on things that taxpayers could better provide for themselves if they didn’t have to give their money to the government first.

If a tax cut is 100-percent financed with a sudden windfall for the government, then none of the current spending problems have gone away. Further, there is no guarantee that the government will devote any new revenues to tax cuts. Congress could do whatever it wanted with a windfall from oil leases, including make government bigger.

The impact of such a windfall on government accountability would be pretty much the same as if another country decided to shower the United States with billions of dollars of foreign aid. Conservatives don’t normally think that foreign aid is a good thing.

All this is by way of illustrating that the issue for those concerned about the size of government is the other way around: New revenues aren’t the solution to the problem of providing tax cuts. Rather, new tax cuts would be the solution to the danger that government will get bigger as a result of new revenue from oil leases. And if we really want to impinge on the ability of Congress to continue its culture of corruption, then we would need tax cuts that exceed any new revenues.

From the looks of things, conservatives and champions of smaller government have much work to do.

Posted on 08/19/08 12:35 PM by Alex Adrianson

Welfare Reform in Cuba?

Financial Times reports today some small signs that Cuba may be learning from the failures of its economic system. Cuba is thinking about makings its social welfare system a little bit less generous, says one government official. Alfredo Jam, head of macroeconomic analysis in the economy ministry, tells Financial Times “that Cubans had been ‘over-protected’ by a system that subsidised food costs and limited the amount people could earn, prompting labour shortages in important industries.” Jam says: “We can’t give people so much security with their income that it affects their willingness to work.”

Posted on 08/19/08 11:13 AM by Alex Adrianson

Freedom, Not Aid, Makes Other Countries Vote Like the United States

U.S. foreign aid does not induce support for U.S. policies at the United Nations, say Brett Schaefer and Anthony Kim. In a new paper for The Heritage Foundation, Schaefer and Kim find:

Of the 30 largest recipients of U.S. foreign aid that have voted during the past eight sessions, 28 countries voted against the U.S. a majority of the time on all non-consensus votes, and 24 voted against the U.S. a majority of the time on non-consensus important votes.

Both economic freedom and political freedom, say Schaefer and Kim are much better predictors of support for U.S. positions at the United Nations. For example, from 2000 to 2007, countries scoring 80 percent free or better (free) on the Heritage Foundation/Wall Street Journal Index of Economic Freedom voted with the United States 38.6 percent of the time, and countries scoring between 70 percent free and 79.9 percent free (mostly free) voted with the United States 38.9 percent of the time. By contrast, countries scoring below 50 percent free (repressed) voted with the United States only 17.7 percent of the time. (See chart.)

The lesson for U.S. policymakers, say Schaefer and Kim, is that if they want to use foreign aid to elicit more political support at the United Nations, then the aid should be targeted toward promoting economic freedom in recipient countries. Also, Schaefer and Kim recommend that the United States develop an Economic Freedom Caucus at the United Nations. Promoting economic freedom is not merely in the interests of the United States. It is also in the interests of other countries, because more economic freedom promotes faster economic growth—which, after all, is what a lot of foreign aid is supposed to do anyway.

Posted on 08/18/08 06:39 PM by Alex Adrianson

Poland’s Choice

If Vladimir Putin thought invading Georgia would induce servility among Russia’s neighbors, he was wrong, at least as far as Poland is concerned. Reuters reports today that a new poll shows that support among Poles for hosting a U.S. missile defense shield has risen to 50 percent. Previously, only 37 percent of Poles had supported the shield. Support for the shield has grown even though 77 percent of Poles believe that hosting it will worsen Poland’s relations with Russia. Last week, Poland and the United States reached a preliminary agreement on basing 10 ground-based interceptors in Poland.

Posted on 08/18/08 05:06 PM by Alex Adrianson

High Corporate Taxes Hurting U.S. Competitiveness

Around the world, corporate tax rates continue to fall as countries compete for businesses. It’s a trend that so far has passed the United States by.

Last year was the 17th consecutive year, according to data from the Organisation for Economic Cooperation and Development (via Tax Foundation), that corporate tax rates in non-U.S. countries fell. In the OECD, the average rate fell from 27.6 percent to 26.6 percent. In the United States meanwhile, the combined federal-state rate was virtually unchanged, at 39.25 percent.

According to a survey by KPMG, between 1992 and 2006 the average corporate tax rate in a sample of 86 countries fell from 38 percent to 27 percent (cited by The American).

Another OECD study, as summarized by the Wall Street Journal, finds

that “corporate taxes are most harmful for growth, followed by personal income taxes, and then consumption taxes.” The study adds that “investment is adversely affected by corporate taxation,” and that the most profitable and rapidly growing companies tend to be the most sensitive to high business tax rates.

Posted on 08/18/08 02:36 PM by Alex Adrianson

Health Care Consumers Vote with Their Feet

More and more, says Devon Herrick of the National Center for Policy Analysis, patients are traveling abroad for medical treatment and insurance companies are developing plans that cover these services. Why? Do foreign countries have some natural comparative advantage in delivering health care? Of course not. Public policies make health care more expensive in the United States. In particular, Herrick  notes:

In the United States, patients spend only 13 cents out of pocket for every dollar they spend on health care; insurers or government pay the rest. In countries with growing, entrepreneurial medical markets patients pay more out of pocket. For instance, local patients pay out of pocket for 51 percent of health care in Mexico and 78 percent in India. Consequently, providers must compete for patients based on price. 

That’s worth repeating: More patients paying with their own money makes health care cheaper. Also:

Malpractice litigation costs are lower outside the United States. American physicians in some specialties pay more than $100,000 annually for liability insurance, while a physician in Thailand spends about $5,000 per year.

Global competition in health care is good, because it gives consumers more options. But if enough health care consumers shop abroad, the main impact may be to undermine the ability of the United States to maintain bad health care policies.

Posted on 08/14/08 05:26 PM by Alex Adrianson

The Ethanol Blunder

reason.tv with Nick Gillespie reviews all the reasons that growing food for fuel has been a horrible idea:

Posted on 08/14/08 04:51 PM by Alex Adrianson

Still Work to Do for Gun Rights in D.C.

In D.C. v. Heller the Supreme Court held that the Second Amendment protects an individual right to keep and bear arms. Yet, according to Robert Levy and David Kopel of the Cato Institute, the District of Columbia is still putting obstacles in the way of a meaningful right to own guns for D.C. residents. Levy and Kopel identify four problems that need to be addressed through legislation in the U.S. Congress:

1. The District’s registration process requires numerous steps that can take months to complete. That should be replaced, say Levy and Kopel, with a more streamlined processed based on the National Instant Criminal Background Check, which is already required by federal law and usually takes but a few hours.

2. The District bans machine guns and improperly includes in that definition any gun that can fire more than 12 or more shots without reloading. As a result, only revolvers and single-shot handguns are considered legal. But, say Levy and Kopel, this ban on semi-automatic handguns “violates the Supreme Court’s rule in District of Columbia v. Heller against ‘prohibition of an entire class of “arms” that is overwhelmingly chosen by American society’ for lawful self-defense.”

3. The District requires that weapons in the home be unloaded and either disassembled, fitted with a trigger lock, or kept in a gun safe. Levy and Kopel say this provision of the law even prevents a homeowner from carrying a loaded weapon into her backyard to investigate suspicious sounds.

4. Federal law prohibits out-of-state purchases. And since there are not yet any licensed gun shops in the District of Columbia, residents there have no legal means of buying a gun. Levy and Kopel say Congress should amend federal law to allow D.C. residents to purchase guns in Maryland and Virginia.

Levy and Kopel conclude with a call for Congress to take the lead on protecting gun rights:

Over the years, our elected representatives have adopted a court-centric view of the Constitution – a view that decisions about constitutionality are properly left to the judiciary. But members of Congress also swear to uphold the Constitution. Congress can make good on that oath by restoring the right of Washington, D.C., residents to possess functional firearms in their homes.

Posted on 08/14/08 04:21 PM by Alex Adrianson

Needed: More Ideas, Fewer Pictures of Kittens

The theme of Web 2.0 tearing down the walls of authority predominates in many discussions of technology’s impact on politics. In today’s New York Sun, Amity Shlaes sounds a counter note in a profile of the National Bureau of Economic Research. It’s a place she describes as an anti-Wikipedia for its tradition of comity and emphasis on trying out ideas. By contrast, she says, the Web seems focused on finding “gotcha” moments. Here’s her assessment of the state of political debate:

Democrats furious at eight years of opposition leadership have resorted to personal invective. Instead of debating the White House on the income-tax rate, they have simply labeled President Bush stupid.

Republicans, too, have dumbed themselves down. As a publisher at HarperCollins, Adam Bellow, wrote recently of the post-Cold War decline in discourse, conservatives once talked about principles such as communism and free markets. But now, “metaphorically speaking, the Berlin Wall had been replaced by the Jersey Turnpike,”—topics such as John Edwards’s infidelity dominate.

It’s not all technology’s fault, of course, and Shlaes doesn’t say it is. Her point—well taken—is that Web-based media companies should look at the NBER model, because rigorous scholarly research should have its place in policy debates. Here, here!

Posted on 08/14/08 02:41 PM by Alex Adrianson

BAs? Who Needs ’Em?

In yesterday’s Wall Street Journal, Charles Murray writes:

Imagine that America had no system of post-secondary education, and you were a member of a task force assigned to create one from scratch. One of your colleagues submits this proposal:

First, we will set up a single goal to represent educational success, which will take four years to achieve no matter what is being taught. We will attach an economic reward to it that seldom has anything to do with what has been learned. We will urge large numbers of people who do not possess adequate ability to try to achieve the goal, wait until they have spent a lot of time and money, and then deny it to them. We will stigmatize everyone who doesn’t meet the goal. We will call the goal a “BA.”

You would conclude that your colleague was cruel, not to say insane. But that’s the system we have in place.

Murray proposes that instead of sending people to college for four years, we develop certification tests that measure the qualifications of those entering the job market. The tests, he says, would be modeled after the CPA. Those who are suspicious of testing probably won’t go for Murray’s idea, but it does have the advantage of shifting the responsibility for learning back to the student. Currently, too many people think of education as an entitlement to be provided, rather than something for the student to achieve.

For a great discussion of how the whole BA thing came to be, see George Leef’s essay “The Overselling of Higher Education,” which was adapted into a shorter article (“Education as an Entitlement”) for the Winter 2007 issue of The Insider.

Posted on 08/14/08 02:34 PM by Alex Adrianson

Who Protects Internet Users from the Government?

Journalists reporting from the Olympics have recently discovered the full extent to which the Chinese government blocks its people from receiving Internet content the government considers dangerous. Free speech advocates rightly criticize China for suppressing political speech. Yet in the United States, consumer advocates want to give the government more power over the Internet. They think that so-called net neutrality regulation will keep content free from corporate roadblocks on the information superhighway. Somebody should ask them: Who will protect Internet users from the government?

The Federal Communications Commission crossed a digital Rubicon on August 1 by announcing it had the authority to enforce network neutrality policies and that it intends to use that authority. The idea of network neutrality is essentially that Internet providers should not discriminate against specific content in providing access to their networks. Last year Internet provider Comcast was found to be blocking file sharing that used the BitTorrent file-sharing platform. The FCC’s August 1 finding ordered Comcast to stop blocking BitTorrent and other peer-to-peer file sharing and to disclose its traffic management practices to its customers.

The circumstances of the FCC’s finding raise a lot of questions, such as: Does the FCC actually have the authority to enforce net neutrality without a law establishing net neutrality as policy? And if the FCC does have the authority, is an ad hoc complaint-review procedure really the best way of promulgating a new regulatory regime? Was it really necessary for the FCC to step into the issue when Comcast had already reached an agreement with BitTorrent over access to its networks?

The fundamental question left unanswered by the FCC is: What traffic management techniques are acceptable? The Internet faces a basic problem about which economists have been teaching us for quite some time: scarcity. Scarcity is a basic fact of life that will never go away. No matter how much bandwidth we build, there will always be more that we want to do with it than we can do with it. We’ll always come up with new applications and new content that requires ever bigger Internet pipes.

Scarcity means that some uses of bandwidth must win out over other uses. How shall we decide which uses win? In a free market, those decisions are made impersonally and efficiently through prices. The uses that consumers value and for which they are willing to pay a higher price win out over other uses. But ISPs have been afraid to adopt metered pricing, for fear that it would drive customers to their competitors. An alternative to charging consumers for each bit they download would be to charge the content providers for the access, and to base the price on the popularity of the content/application—exactly what net neutrality proponents don’t want.

So in lieu of using prices to allocate scarce Internet bandwidth, service providers have resorted to technical means to manage traffic. That’s what Comcast was doing when its treatment of BitTorrent traffic became the cause celebre of net neutrality advocates. The fact is net neutrality proponents don’t want to face the problem of scarcity. They think all content should be free. But government regulation won’t make it so. Bandwidth will still have to be allocated. Getting the government involved just means introducing politics into the equation. Consumers today who are not happy with an Internet provider’s traffic management practices already have a check: they can drop the service and sign up with a competitor. Will they have such choices if the FCC continues to second-guess private Internet providers?

See also:Net Neutrality: A Fairness Doctrine for the Internet,” by Adam Thierer, Progress and Freedom Foundation, October 2007; and “FCC Commissioner: Return of Fairness Doctrine Could Control Web Content,” by Jeff Poor, Business and Media Institute, August 13, 2008.

Posted on 08/13/08 06:48 PM by Alex Adrianson

Transparency Moves Ahead in Washington State

Taxpayers and citizens in Washington state have a new resource for keeping their state government accountable. The state’s Office of Financial Management today launched its Government Performance and Results Web site, which gives visitors access to a variety of performance reports and other key data on how each agency is doing. The Washington Policy Center and the Evergreen Freedom Foundation helped make this new Web resource happen.

Later this year, Washington will also unveil a Web site giving taxpayers access to searchable database of government spending.

Posted on 08/13/08 04:58 PM by Alex Adrianson

Maryland’s Cigarette Taxes Provide Another Lesson in Unintended Consequences

Higher cigarette taxes have not yielded the additional revenues Maryland’s lawmakers had been expecting, notes the Wall Street Journal: “Last year the legislature doubled the cigarette tax to $2 a pack to pay for expanded health-care coverage. Eight months later, cigarette sales have plunged 25% and the state is in fiscal distress again.”

Foiling the forecasts, notes the Journal, is smokers’ habit of shopping where the taxes are lower: across state lines in Virginia. The Journal also notes that many other states have attempted to raise revenues through cigarette tax hikes, only to find that smokers, like those in Maryland, find tax-free sources, either across state lines or in black markets.

Aside from failing to deliver promised revenues, high cigarette taxes create incentives for smuggling and thus breed organized crime. Patrick Fleenor writes about this problem in a Tax Foundation paper published in May. Fleenor also sums up the argument against high cigarette taxes in a paper he wrote last year:

Cigarettes should be taxed according to the negative external costs they impose on society, and nothing more or less. However, nearly all studies conclude that the current federal tax rate of 39 cents raises enough revenue to offset those costs. … States have decided to pile on in recent years, exaggerating the costs of smoking to justify raising more revenue than their voters are willing to pay in general taxes. In effect, politicians are willing to impose taxes on the few, even though smokers are a small, low-income minority, so that they can provide free government benefits for the many.

As the Journal notes, this is a model Democrats in Congress seem intent on following to finance their plan to turn Medicaid into another middle-class entitlement. Hopefully, Congress will learn from the states that high cigarette taxes only encourage cigarette tax evasion.

(The Tax Foundation has written numerous reports on cigarette taxes that are essential reading for anyone interested in learning more about the issue.)

Posted on 08/11/08 05:34 PM by Alex Adrianson

GOPAC Summit Calls for Leadership on Energy

by Mark Kelly, Strategic Policy Outreach Manager

GOPAC is an organization celebrating a 30-year history of training political activists to win campaigns, from issue-based ballot initiatives to congressional races. Last week GOPAC Chairman Michael Steele hosted the organization’s inaugural State and Local Summit in Arlington, Virginia. GOPAC brought in a lineup of renowned speakers, including Former Speaker of the House Newt Gingrich, Minnesota Governor Tim Pawlenty, Counselor to the President Ed Gillespie, and Wall Street Journal columnist John Fund. (See the speaker videos.)

For me, an underlying theme emerged at the Summit: You have to know what you stand for in order to have an impact on public policy. Whether you are a candidate, an office holder, a conservative activist, or a concerned citizen, it is incumbent upon you to understand your values—to know what vision of America you believe is right for the country. You should also translate your values and vision into understanding which ideas make sense and which serious solutions will make this great country a better place for generations to come. Then, you must communicate those solutions to the people around you in a manner that they can in turn easily relate to and understand.

In attending the Summit, I also had the opportunity to discuss the front-burner issues with people from all across the United States, from Washington State to Georgia, from Maine to Arizona. Not surprisingly, energy topped the list. It was crystal clear that the American people want the United States to ensure that we have more energy available in the short term, and that we make investments now for our future needs. They do not want Congress to wait any longer to remove the legislative and regulatory hindrances preventing us from solving this problem. And they are sick of the partisanship surrounding the issue.

Former Virginia Governor and U.S. Senator George Allen was the keynote speaker at the 30th Anniversary Dinner. He echoed our frustrations when he said: “What’s missing in the energy debate is political leadership.” He confirmed what the American people want when he said: “There is no silver bullet to solving the energy crisis. What we need is silver buckshot.” On biofuels, Allen said: “Burning food for fuels is like busting up your furniture to heat your house in the winter.” And he summed up what conservatives believe when he said: “Americans aren’t addicted to oil; we’re addicted to freedom.”

Posted on 08/11/08 12:54 PM by Alex Adrianson

The Coming Week – Monday, August 11, 2008

Some events that caught our eye:

Thursday
GET a report on the situation in Iraq from recently returned veterans. Host: American Enterprise Institute.
EXPLORE the connection between the Judeo-Christian tradition and economic freedom. At the Acton institute, Jay Richards discusses Acton’s new documentary, The Birth of Freedom.

For more events, visit InsiderOnline’s Conservative Calendar.

Posted on 08/08/08 10:11 AM by Alex Adrianson

This Week at Heritage

It is essential to understand how effective leadership of a commander's staff can mean the difference between victory and failure.

Posted on 08/08/08 09:39 AM by Alex Adrianson

Minimum Wage Killing Jobs for Teens

Teenagers looking for work have a tougher time finding jobs than older workers, and the problem is getting worse. It’s a result that shouldn’t surprise anyone who understands basic economics.

Last July, Congress raised the federal minimum wage to $5.85 per hour, after leaving it pegged for a decade at $5.15 per hour. Last month, the minimum wage was raised again to $6.55 per hour. And next July, the rate is scheduled to go to $7.25 per hour.

Basic economics says that raising the price of something (in this case labor) will reduce the quantity that buyers (employers) demand. Employers generally won’t pay a worker $6.55 an hour, unless the worker can produce at least $6.55 worth of products per hour. Employees whose skills do not allow them to do that will be priced out of a job as a result of higher minimum wages.

According to Department of Labor data, that has already happened to many low-skilled teenagers. While overall unemployment rose .2 percentage points to 5.7 percent in July, the unemployment rate among teens rose 2.2 percentage points to 20.3 percent. And since last year, the disparity is even larger. The overall unemployment rate has increased by 1 percentage point, while teen unemployment has risen 5 percentage points.

If Congress wants to help teens find jobs, it needs to repeal the federal minimum wage.

See “Teenagers Right to Work,” by Diana Furchtgott-Roth, Hudson Institute, August 6, 2008 and “July Job Losses Lighter Than Expected,” by Rea S. Hederman Jr. and James Sherk, The Heritage Foundation, August 1, 2008.

Posted on 08/08/08 09:28 AM by Alex Adrianson

Accounting for Communism’s Crimes Is a Long-Term Project

Today in the Wall Street Journal, former Prime Minister of Estonia Mart Laar reviews all the reasons that Stalinism and Nazism were morally equivalent—namely that both rejected human liberty as the basis for a social order. The issue arises because in his proclamation on Captive Nations Week (July 20 – 26) President Bush had identified both Communism and Fascism as the great evils of the last century. The Russian government naturally objected to the comparison. But Laar rightly points out that Stalin and Hitler were allies before they were adversaries. And in any case: “If we find two gangsters fighting each other and one of them kills another, this does not make the first gangster less of a criminal.”

This idea that it matters whether the jackboots crushing free people are worn by Fascists or Communists is an old problem. The fact is Communism is not so disreputable that one can’t find images of Communist murderers adorning posters, apparel, and handbags in Western stores. A few years ago at Heritage, historian Alan Charles Kors gave a talk in which he argued that there has not yet been a full moral accounting of Communism’s crimes against humanity. This is exactly the problem that Lee Edwards and others aimed to fix when they created the Victims of Communism Memorial, unveiled last year here in Washington, D.C.

The memorial is just the first phase of the project to educate about the crimes of Communism. Next up, the Victims of Communism Memorial Foundation will produce an online Global Museum of Communism, scheduled to open in 2009. The Museum is collecting information for exhibits now. To suggest an exhibit or source of information to be shared, e-mail info@victimsofcommunism.org. A preview of the site can be seen right now.

Posted on 08/07/08 04:20 PM by Alex Adrianson

New Acton Campus: Red Brick, Ivy, and Innovation

The Austin American-Statesman today provides an update on the Acton School of Business, about which we featured an article in this summer’s issue of The Insider. The Statesman reports that the Acton school is starting its new academic year on its very own campus, after spending the past five years in temporary facilities.

Founded by Jeff Sandefer in 2003, the Acton School of Business is already recognized as one of the best business schools in the country. What makes the school stand out is its innovative approach to accountability and its emphasis on helping students find their calling in life.

We wish Jeff and the Acton School the best of luck in their new facilities.

Posted on 08/07/08 11:26 AM by Alex Adrianson

Television Educates About Government-Run Education

Have you ever noticed that governments usually don’t see things the same way citizens do? From the British show Yes, Prime Minister, a bit about school choice:

Hat tip: Taxing Tennessee via Club for Growth.

Posted on 08/06/08 05:14 PM by Alex Adrianson

Who Treats Cancer Better?

If government-run or government-financed health care is better than private health care, you wouldn’t know it from cancer survival data. A study published recently in Lancet Oncology finds that cancer patients do better in America’s mixed public/private system than do those in either Canada—where the government pays for all health care—or Great Britain—where the government provides a National Health Service. According to the study, five-year survival rates for breast, colon (both men and women), rectum (both men and women), and prostate cancer are greater in the United States than either Canada or Great Britain.

The differences in American and British survival rates are especially large. American women with breast cancer were 20 percent more likely to be alive after five years than are British women with breast cancer. For colon cancer, American women are 35 percent more likely than British women to survive for five years or longer. American men are 80 percent more likely than British men to survive prostate cancer for five years or more.

Hat tip: John Goodman’s Health Policy Blog.

Posted on 08/06/08 04:50 PM by Alex Adrianson

States, Not the Feds, Made the State Budget Mess

Projected shortfalls in state budgets are being called a crisis, but the shortfalls are more severe in some states than in others. Five states, notes Manhattan Institute’s Steven Malanga, account for two-thirds ($33 billion) of the total projected budget shortfalls facing state governments this year ($48 billion). Those states—California, Massachusetts, Michigan, New Jersey, and New York—are the five least-business friendly states in the country, according to a recent survey of corporate executives by Development Counsellors International. Among the factors cited for making a bad business climate are high taxes and excessive regulation.

While state tax revenues are up this year, they are not up by nearly as much as state legislators had hoped. Some want the federal government to help them fill the gap. But perhaps states should look at their own policies before asking all taxpayers for a bailout. States that are the most attractive to businesses in the DCI survey have only mild budget problems to work out. Of the five states that ranked most-business friendly in the DCI survey, Texas and North Carolina have no projected budget gaps, while Georgia, Florida, and Tennessee have a combined shortfall of about $4.1 billion—less than one-tenth of the states’ total.

Some perspective: According to data from the National Association of State Budget Officers, spending by the 50 states is projected to grow by only 1 percent in 2009. But that comes after growth in state spending of 6.5 percent in 2005, 8.7 percent in 2006, 9.3 percent in 2007, and 5.1 percent in 2008. As the Cato Institute’s Chris Edwards notes, the slowdown is “certainly no crisis after the orgy of budget expansion in recent years.”

Posted on 08/06/08 03:07 PM by Alex Adrianson

A Chance to Participate

The GOP protest over energy policy provides Americans with a unique opportunity to be a part of political history. For the rest of this month, House Republicans plan to continue speaking from the well of the House even though Congress is not in session. You can help out be joining the members on the floor—yes, the floor, not the gallery!

The goal is to pressure House leadership to call Congress back from its five-week paid vacation so that there can be a vote on an energy bill that actually helps increase energy supplies.

Heritage’s Rob Bluey has been following the action closely and he suggests three steps for anyone who is interested in sitting with members on the floor of the House as they speak out about Congress’s failure to address the issue. Here’s what you do:

1. Call your member of Congress (find a list here) or the Capitol switchboard (202-224-3121).

2. Tell your congressman that you want to visit the House floor to see the action. Regardless of political party, your member should accommodate you. (You cannot bring bags, cameras, video equipment or mobile phones on the floor.)

3. If for some reason your member of Congress is unwilling to help, you should call the Republican Whip’s Office at 202-225-0197.

Please note: You do not have to agree with the Republican energy policy to participate. If you want to be on the floor while members talk about the issue, you should take the opportunity to do so, regardless of your political views.

Posted on 08/06/08 11:27 AM by Alex Adrianson

Bastiat Prize Finalists Announced

The International Policy Network has named its finalists for the 2008 Bastiat Prize. The Bastiat prize is named after the 19th century French journalist, Frederic Bastiat. Every year, IPN awards the prize to “writers whose work clearly and wittily promotes the institutions of the free society.”

The finalists are:

Swaminathan S. Anklesaria Aiyar, Consulting Editor, Economic Times (India);
Tyler Cowen, Professor of Economics, George Mason University (United States);
A. Barton Hinkle, Deputy Op-Ed Editor, Richmond Times-Dispatch (United States);
Fraser Nelson, Political Editor, The Spectator (United Kingdom);
Ashutosh Tiwari, CEO, Himalmedia; Nepali Times Business Columnist; and
Daniel Weintraub, Public Affairs Columnist, Sacramento Bee (United States)

The winner will be announced at the Bastiat Prize Dinner in New York City on October 22, 2008.

Posted on 08/06/08 10:36 AM by Alex Adrianson

As Congress Fiddles, Energy Issue Still Burns in the Capitol

Even though the House of Representatives is officially adjourned, Republicans still took to the floor to talk about energy policy again today. Sitting with them was not their usual audience of fellow members of Congress. Rather, the floor was populated with citizen witnesses to an unusual proceeding. It is day three of the “guerrilla Congress.”

Here’s the backstory for those who haven’t been following:

On Friday, a number of Republicans had planned to deliver five-minute floor statements on what is certainly the most pressing topic of the moment: the failure of the House to schedule a vote on any bill that would address high gas prices. Nationwide, the price of gas stands at an average of $3.91 per gallon—down in recent weeks but still 37 percent higher than it was a year ago. The fall in the price of oil in recent weeks is attributed to expectations of an economic slowdown—not exactly a reason for Congress to be complacent. Republicans in the House have introduced a number of bills that seek to get government out of the way of efforts to expand supply—i.e., ending the moratorium on drilling in the outer continental shelf and the Alaskan National Wildlife Refuge.

Rather than allowing the five-minute floor statements to proceed, the Democrat leadership pulled a very un-democratic maneuver: They brought the motion to adjourn before allowing any floor statements. After the motion passed, they ordered the microphones turned off, CSPAN’s cameras turned off, and the lights turned off.

Republicans, led by representatives Mike Pence (Ind.), and Tom Price (Ga.) sensed a good teaching moment: Not only was House Speaker Pelosi refusing to allow a vote on more drilling, she was trying to shut down debate, too. What the Democrats forgot is that bloggers in the gallery need neither nor cameras nor microphones nor, for that matter, lights—what with their backlit laptops. Pence, Price, and many other Republicans remained behind to deliver their five-minute statements all day on Friday. The story hit the blogosphere, and Republicans were back at it yesterday and today.

Minority Leader John Boehner’s office welcomed Heritage’s weekly Conservative Bloggers Briefing to the Capitol today to view the proceedings. Rep. Pence told the bloggers that the ultimate goal is to force Speaker Nancy Pelosi to call Congress back into session to hold a vote on expanding domestic energy supplies. Rep. Jeb Hensarling (Texas) said dozens of members are currently on their way back to Washington, D.C., to contribute to the effort on the House floor.

Here’s hoping they succeed. Shutting down debate and refusing to have a vote is neither the way to win an argument, nor solve a policy problem.

Posted on 08/05/08 06:27 PM by Alex Adrianson

A Political Contrivance?

A problem with Barack Obama’s plan to impose windfall profits taxes on oil companies—other than the fact that it will both discourage production and increase fuel prices—is that oil company profits are not excessive compared to other companies and industries. Per the Wall Street Journal:

Exxon’s profit margin stood at 10% for 2007, which is hardly out of line with the oil and gas industry average of 8.3%, or the 8.9% for U.S. manufacturing (excluding the sputtering auto makers).

If that’s what constitutes windfall profits, most of corporate America would qualify. Take aerospace or machinery – both 8.2% in 2007. Chemicals had an average margin of 12.7%. Computers: 13.7%. Electronics and appliances: 14.5%. Pharmaceuticals (18.4%) and beverages and tobacco (19.1%) round out the Census Bureau’s industry rankings. The latter two double the returns of Big Oil, though of course government has already became a tacit shareholder in Big Tobacco through the various legal settlements that guarantee a revenue stream for years to come.

Or consider Google, which earned a mere $4.2 billion but at a whopping 25.3% margin. Google earns far more from each of its sales dollars than does Exxon, but why doesn’t Mr. Obama consider its advertising-search windfall worthy of special taxation?

Posted on 08/05/08 10:42 AM by Alex Adrianson

This Week in Washington: Progress in Iraq, Energy Policy

Posted on 08/04/08 11:19 AM by Alex Adrianson

The Coming Week

Some events that caught our eye:

Monday
EXAMINE the historical significance of military chiefs of staff, from the Napoleonic wars to Vietnam. Host: Heritage Foundation.

Wednesday
• SEE the State Policy Network’s new offices at the group’s open house event.
• EXPLORE options for the future of the World Trade Organization after the latest failure of the Doha round. Host: American Enterprise Institute.  

For more events, see InsiderOnline’s Conservative Calendar.

Posted on 08/01/08 02:19 PM by Alex Adrianson

This Week at Heritage

At least 86 congressional committees and subcommittees exercise oversight over the Department of Homeland Security—in spite of recommendations by the 9/11 Commission to consolidate oversight into one committee. … Senator Arlen Spector (R-Pa.) has a bill that would reverse the Department of Justice’s depredations against the attorney-client privilege. … The United States and Taiwan have opportunities to reaffirm their alliance as well as ease tensions in the Taiwan Strait. … The prospect of a new political direction in Great Britain has grown tremendously in recent months. … Familiar Cold War guidelines are a manifestly imprudent basis for U.S. strategy today. 

Posted on 08/01/08 02:18 PM by Alex Adrianson

EPA’s Plan to Take Over the United States Economy

Posted on 08/01/08 02:13 PM by Alex Adrianson

The Insider, Summer 2008

The new issue of The Insider is out. Here is the rundown from the editor’s note:

William F. Buckley Jr. was truly a conservative hero—and an American hero. We are honored to publish in this issue a tribute to Buckley by Dan Oliver, a friend and compatriot to Bill Buckley for over 40 years. Since Buckley did so much to create and nurture the American conservative movement, it’s fitting to ask where the movement will go now that he is gone. The Buckleyesque position, says Oliver, would be for conservatives to create more opposition to the welfare state, “which if it remains unchecked will swallow up the golden eggs, the goose, and all her goslings.”

Few areas of policy better illustrate the uncertain and temporary nature of conservative accomplishment than taxes. In spurts of reform, rates have been lowered only to rise again. Tax laws have been simplified, only to remain fertile ground for adding special interest provisions. And in spite of all reforms, the share of gross domestic product claimed by federal taxes continues to grow. Ryan Ellis of Americans for Tax Reform reviews these and other challenges to making the U.S. tax code suitable for a growing economy.

Health insurance, we hear, has become so expensive that 47 million Americans cannot afford it. No doubt, some can afford it, but simply choose not to buy it. But even that caveat indicates a problem. How is it that health insurance just keeps getting more and more expensive while the prices of other goods and services fall over time (in the long run, anyway)? Unlike most goods and services, there is no national market for health insurance. Wouldn’t expanding competition by allowing consumers to shop across state lines help lower prices? J. Patrick Rooney and Dan Perrin think so and explore that idea further in our pages.

In other articles, Jamie Self of the Georgia Family Foundation tells the story of how Georgia has embraced school choice ideas, Bryan O’Keefe shows how entrepreneurship has come to, of all places, the business degree, and John Blundell distills lessons for nonprofits from the new book Forces for Good.

Posted on 08/01/08 02:08 PM by Alex Adrianson

Drill Soon!

Congress can’t seem to agree that the nation needs more oil. Doing nothing, however, isn’t the worst thing Congress could do, since the moratorium on offshore drilling for oil expires automatically at the end of this fiscal year. Not a moment too soon.

(If you want to put this widget on your Web site, you can get the embedding code by clicking the Share button inside the widget.)

Posted on 08/01/08 01:59 PM by Alex Adrianson

Less Drilling Does Not Equal More Environmental Protection

Preventing the development of U.S. oil resources, such as those in the Outer Continental Shelf and the Alaskan National Wildlife Refuge, doesn’t necessarily help the environment. In fact, it will probably hurt the environment since higher oil prices increase the incentives for more drilling elsewhere in the world. Charles Krauthammer writes that less drilling in the United States means more drilling in places “… such as Nigeria, where chronic corruption, environmental neglect and the resulting unrest and instability lead to pipeline explosions, oil spills and illegal siphoning by the poverty-stricken population – which leads to more spills and explosions.”

Just this week, two Royal Dutch Shell pipelines had to be shut down because bombings by local militants were causing leaks into the ground.

Compare the Niger Delta to the Gulf of Mexico, where deep-sea U.S. oil rigs withstood Hurricanes Katrina and Rita without a single undersea well suffering a significant spill.

The United States has the highest technology to ensure the safest drilling. Today, directional drilling – essentially drilling down, then sideways – allows access to oil that in 1970 would have required a surface footprint more than three times as large. Additionally, the United States has one of the most extensive and least corrupt regulatory systems on the planet.

Does [House Speaker Nancy] Pelosi imagine that with so much of America declared off-limits, the planet is less injured as drilling shifts to Kazakhstan and Venezuela and Equatorial Guinea? That Russia will be more environmentally scrupulous than we in drilling in its Arctic?

Posted on 08/01/08 01:43 PM by Alex Adrianson

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