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2 December 2009

Today’s Tabbloid
PERSONAL NEWS FOR lgn@limitedgovernmentnetwork.com

FISCALLY CONSERVATIVE BLOG FEEDS FISCALLY CONSERVATIVE BLOG FEEDS

Libertarian Candidate May Workers Should Direct Anger at


Force a Runoff in Costa Rica Pension Managers, Not
[Cato at Liberty] Students [Americans for Tax
DEC 01, 2009 05:09P.M.
Reform]
A new poll published today by Costa Rica’s daily La Nación shows that DEC 01, 2009 04:46P.M.
Libertarian presidential candidate Otto Guevara has 30% of support
among likely voters, trailing the candidate of the incumbent social The following was originally posted at www.workerfreedom.org With
democrat party Laura Chinchilla, who has 43% support. The news here is many defined benefit plans drifting towards insolvency, governments
that in just two months, Guevara has increased his share of the vote by will be increasingly pressured to bailout pensions in the red. ...
18 percentage points, while Chinchilla’s share has collapsed by 20
percentage points during the same period.

The elections are scheduled for February 7th, and if neither of the FISCALLY CONSERVATIVE BLOG FEEDS
candidates reaches the 40% threshold, there would be a runoff on April
4th. Given the trend, it is very likely that Guevara might force a runoff Volcker on Financial Reform
with Chinchilla in April. However, if Chinchilla’s rapid decline continues
and Guevara captures more independent and undecided voters, he could and Economic Stimulus [Cato at
still pull a surprising victory in February.
Liberty]
Guevara is a capital “L” Libertarian. His main issue during the campaign DEC 01, 2009 04:32P.M.
has been to get tough on crime (Costa Ricans’ main concern, according
to polls). His economic platform is consistently free market: he proposes In a recent edition of The Region magazine, published by the Federal
to abandon the colón and adopt the U.S. dollar as the official currency, Reserve Bank of Minneapolis, retiring Minn. Fed President Gary Stern
he wants to unilaterally liberalize trade, he is calling for the interviews Paul Volcker on a variety of topics. It’s an interview well
implementation of a flat tax, and promotes an aggressive deregulation worth reading, and reminds one why Volcker is one of the more
agenda. Moreover, he wants to introduce more competition in health thoughtful voices on economics and finance, even if he isn’t always right.
care (currently a government single payer system) and education. On the
international front, he has said that he would use international pulpits Some highlights. On the Obama financial reform plan:
such as the UN and the Organization of American States to criticize
Washington’s War on Drugs and propose sensible alternatives to I do not share one part of the general philosophy which
international drug policy. seemed to emerge from this, particularly the proposal that
the Federal Reserve supervise directly all “systemically
It’s still too early to call this election. Two months is also an eternity in important” institutions. I don’t know what “systemically
Costa Rican politics. But things are certainly getting interesting in my important” institutions are, incidentally, but I’m sure that if
home country. you picked them out, people will assume they’re going to be
saved, that they’re too big to fail. At the same time, there’d be
some that you don’t pick out in advance that you’d want to
save under particular circumstances. So I think that is a
mistake.

Volcker also express concern that those institutions at the center of the
crisis are left out of the reform. Specifically he mentions that Obama
Administration officials “haven’t said anything about Fannie Mae or

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Today’s Tabbloid PERSONAL NEWS FOR lgn@limitedgovernmentnetwork.com 2 December 2009

Freddie Mac.” corporate tax is uniquely subject to evasion and avoidance. It isn’t.
Corporate income taxes around the globe are subject to large avoidance
Volcker also takes issue with the Administration’s proposal to regulate and evasion pressures because of globalization and technological
non-banks, including hedge funds and private equity. “I wouldn’t advance.
regulate so strictly the nonbanks. I’d like to create the impression…that
there’s no automatic bailout of those institutions.” That is one of the main reasons why virtually every other industrial
nation has dramatically cut its corporate tax rate over the last decade or
Volcker also raises important questions about the Administration’s so. But the United States has not followed suit, and that’s why U.S.
Keynesian stimulus actions. As the stimulus was meant to replace a corporations are having to put large efforts into avoidance.
reduction in private sector demand, Volcker asks “are we really dealing
with the underlying pressures in the economy without permitting a
relative decline in consumption to proceed?”

Those are just a few of his comments. Here’s to hoping the rest of the
Obama Administration is listening. They could do a lot worse than
Volcker’s advice.

FISCALLY CONSERVATIVE BLOG FEEDS

Explaining the Death Tax Mess


[Americans for Tax Reform]
DEC 01, 2009 04:11P.M.

This Article originally appeared at www.americanshareholders.org With The latest data from KPMG shows that the U.S. federal/state rate is 40
the health care debate raging in the Senate, another fight has been lost in percent–tied with Libya for the third-highest rate among 116 countries
the background: the death tax. It can be conf... surveyed. The chart shows the average rate for the 30 OECD nations.

Summers may be right that U.S. corporate taxes are “low” when
measured as a share of profits, although that calculation is more complex
FISCALLY CONSERVATIVE BLOG FEEDS than you might think (For example, is he talking about domestic taxes
divided by domestic profits, domestic taxes divided by worldwide profits,
Summers’ Corporate Tax or something else?)

Confusion [Cato at Liberty] Anyway, Larry is referring to a measure of the average tax rate. But,
DEC 01, 2009 03:45P.M. generally, it is statutory rates that drive avoidance, and so it is the very
high U.S. statutory rate that is helping to shrink federal taxes paid and
At a conference yesterday, White House National Economic Council thus drive down the average rate that Larry is worried about.
Director Larry Summers repeated a superficial critique of the U.S.
corporate income tax that we’ve heard often from the Obama Note that lower statutory corporate rates over the last two decades have
administration. been associated with higher corporate tax revenues, as Figure 1
illustrates here. Thus, if Larry wants a higher average rate, he should
Politico notes that Summers suggested “that U.S. corporate tax rates are propose cutting the U.S. statutory rate.
relatively low, despite complaints from U.S. corporations.” And they
quote him: “If you look at taxes paid by corporations as a fraction of Summers apparently wants corporations to “help the country” by paying
profits, they’re actually very low” because the U.S. tax code is replete more taxes. But Larry must know that it is individual workers,
with “evasion and avoidance.” consumers, and savers who actually bear the burden of the corporate tax.
These people are “the country” and they would be helped by dramatically
The Obama team’s solution to the supposed problem is to pile more cutting the corporate tax rate and boosting the economy.
complex IRS rules and regulations on U.S. corporations and to increase
taxes on their foreign earnings.

There are lots of problems here. One is the implication that the U.S.

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Today’s Tabbloid PERSONAL NEWS FOR lgn@limitedgovernmentnetwork.com 2 December 2009

FISCALLY CONSERVATIVE BLOG FEEDS since the end of the Great Depression. Once again we see that when the
line of responsibility between federal and state government is blurred,
Oregon Voters can Stop Their the result is more of both and poor policies compounded.

Tax Increases [Americans for


Tax Reform] FISCALLY CONSERVATIVE BLOG FEEDS
DEC 01, 2009 03:34P.M.
On CNBC’s Kudlow Report
Early next year, Oregon voters have the chance to overturn a harmful
new tax policy that was signed into law this summer. Ballot Measures 66 Tonight [Larry Kudlow’s Money
and 67 both gained more than enough citizen petition s...
Politic$]
DEC 01, 2009 12:41P.M.

FISCALLY CONSERVATIVE BLOG FEEDS

California Illustrates Need to


Revive Federalism [Cato at
Liberty]
DEC 01, 2009 02:03P.M.

This evening at 7pm ET:


The state of California recently received $60 million in U.S. Department
of Labor stimulus funds to upgrade its 23 year-old unemployment
THE COST OF OBAMA’S AFGHANISTAN PROPOSAL
benefits system. But according to the Associated Press, California is yet
Taxing rich people to fund the war?
to spend $66 million it received from Labor in 2002 to upgrade its
system. The price tag isn’t whopping by federal standards, but it is
Panel:
another reminder of the need to return to fiscal federalism.

*Christopher Hitchens, Vanity Fair columnist


Apparently, the Department of Labor couldn’t care less:
*Gen. Barry McCaffrey, Fmr. US Drug Czar; U.S. Army (RET.); NBC
News Military Analyst
The federal government has no plans to sanction or fine
*Peter Beinart, Prof of Journalism & Political Science, City Univ of NY;
California for not completing the original technology
New America Foundation; Sr Pol. Writer, Daily Beast
upgrade. The Labor Department said it was more concerned
that new stimulus funding is used in a way that will allow
GM NEWS: FRITZ HENDERSON IS OUT
more workers to qualify for unemployment assistance.
CNBC’s Phil LeBeau reports.

At the same time, California’s unemployment insurance fund is $7.4


MARKETS, ECONOMY, DOLLAR & GOLD
billion in the red, which has forced it to “borrow” $4.7 billion from the
federal government. According to an editorial in the Oakland Tribune,
*Alison Deans; Fmr. CIO Neuberger Berman Private Asset Management
California increased the generosity of its unemployment benefits when
*Kevin Kerr Editor, Kerr Trading International President & Chief
the economy was healthy, but now that the economy is stagnant
Trading Officer
spendthrift policies are creating a fiscal crisis.

GE/COMCAST DEAL- INTERNET VS. CABLE - CAN THIS


Alan Reynolds reminds that the federal stimulus package “bribed states
WORK?
to extend benefits — which have now been stretched to an
unprecedented 79 weeks in 28 states and to 46 to 72 weeks in the rest.”
*Michael Wolff, CNBC Contributor; Vanity Fair Media Critic; “The Man
When you subsidize something you get more of it—federal subsidies
Who Owns The News: Inside the Secret World Of Rupert Murdoch”
prompt more state subsidies to the unemployed, which generates more
Author
unemployment. Alan concludes that “the February stimulus bill has
*Jon Fine, Media Columnist; BusinessWeek Magazine
added at least two percentage points to the unemployment rate.”

OBAMA’S AFGHANISTAN DECISION


California’s unemployment rate of 12.5 percent is the state’s highest

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Today’s Tabbloid PERSONAL NEWS FOR lgn@limitedgovernmentnetwork.com 2 December 2009

Col. Jack Jacobs will join us. FISCALLY CONSERVATIVE BLOG FEEDS

Please join us. The Kudlow Report. 7pm ET. CNBC. The Convergence of “Health
Care” and “Climate Change”
FISCALLY CONSERVATIVE BLOG FEEDS [Americans for Tax Reform]
DEC 01, 2009 11:37A.M.
Capitalism: It Works
The phenomenon identified as as Blair’s Law™ – the ongoing process by
[Americans for Tax Reform] which the world’s multiple idiocies are becoming converging into one
DEC 01, 2009 11:57A.M. giant, useless force - was in effect yet again ye...

Stephen Horwitz, Professor of Economics at St. Lawrence University,


recently discussed how rising real wages, along with a dramatic
reduction in costs, have considerably cut the work time needed to bu... FISCALLY CONSERVATIVE BLOG FEEDS

Illinois Policy Institute Report:


FISCALLY CONSERVATIVE BLOG FEEDS Pelosicare Bends Cost
Tuesday Links [Cato at Liberty] Curve…Up [Americans for Tax
DEC 01, 2009 11:54A.M.
Reform…Up]
• A glimmer of hope for libertarian public policy in the age of DEC 01, 2009 11:35A.M.
Obama: The War on Drugs may be slowly winding down. “The
prospects for reform are better than they’ve been in decades.” According to a new policy report by the Illinois Policy Institute, the
health care bill before Congress will kill 3.9 million jobs over the next 10
• An overview of religious liberty around the world. Doug Bandow: years. 169,000 of those jobs will be lost ...
“Martyrdom did not disappear with imperial Rome.”

• All eyes on India: Party crashers aside, Indian Prime Minister


Manmohan Singh’s visit to the U.S. was an important event. FISCALLY CONSERVATIVE BLOG FEEDS

• Patrick J. Michaels on “ClimateGate.” More, here. President Obama to Announce


• The insanity of housing subsidies: “If you’re thinking to yourself Troop Increase in Afghanistan
that this is the sort of government-induced behavior that helped
create the housing bubble, go to the head of the class.” [Cato at Liberty]
DEC 01, 2009 10:55A.M.
• Podcast: “Judicial Takings at SCOTUS“

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Today’s Tabbloid PERSONAL NEWS FOR lgn@limitedgovernmentnetwork.com 2 December 2009

FISCALLY CONSERVATIVE BLOG FEEDS

Comparing Vietnam and


Afghanistan [Cato at Liberty]
DEC 01, 2009 10:54A.M.

Reports have leaked out over the past week that President Obama will
announce that he is sending additional troops into Afghanistan. The only
question seems to be whether he will send 30,000, 40,000 or some
number in between. That is, frankly, not a very important issue.

And for all of his talk about “off ramps” for the United States if the
Afghan government does not meet certain policy targets or
“benchmarks,” the reality is that he is escalating our commitment. Since
Obama has repeatedly asserted that the war in Afghanistan is a war of
There are two things that President Obama’s plan won’t do: win the war, necessity, not a war of choice, his talk of off ramps is largely a bluff—and
or end the war. the Afghans probably know it.

While all Americans hope that the mission in Afghanistan will turn out There are obvious hazards in equating one historical event with a
well, the U.S. military’s counterinsurgency doctrine says that stabilizing development in a different setting and time period, but there are a couple
a country the size of Afghanistan would require far more troops than the of very disturbing similarities between Vietnam and Afghanistan. In both
most wild-eyed hawk has proposed: about 600,000 troops. An cases, U.S. leaders opted to try to rescue a failing war by sending in more
additional 30 to 40,000 troops isn’t just a case of too little, too late; it troops. And in both cases, Washington found itself desperately searching
holds almost no prospect of winning the war. Accordingly, this likely for a “credible” leader who could serve as an effective partner in the war
won’t be the last prime-time address in which the president proposes effort.
sending many more troops to Afghanistan; my greatest fear is that this is
only the first of many. The United States never found such a leader in Vietnam, and was
frustrated by a parade of repressive, corrupt, and ineffectual political
But we shouldn’t just commit still more troops. President Obama should figures. That experience sounds more than a little like the problem the
have recognized that the goals he set forth in March went too far. A Bush and Obama administrations have encountered with Afghan
better strategic review would have revisited our core objectives and President Hamid Karzai and his government. That fact alone suggests
assumptions. It would have focused on a narrower set of achievable that our Afghanistan mission is not likely to turn out well.
objectives that are directly connected to vital U.S. security
interests—chiefly disrupting al Qaeda’s ability to do harm—and that
would have left the rebuilding of Afghanistan to Afghans, not Americans.
President Obama’s national security team seems not to have even FISCALLY CONSERVATIVE BLOG FEEDS
considered this course. Instead, the administration focused on
repackaging the same grandiose strategy. LA Times Hastens Toward the
Secretary of Defense Gates fixed on the dilemma several weeks ago when Light [Cato at Liberty]
he pondered aloud: “How do we signal resolve and at the same time DEC 01, 2009 08:46A.M.
signal to the Afghans and the American people that this is not open-
ended?” With print media players disappearing faster than mosasaurs in the late
Cretaceous, one would expect the last papers standing to be extra careful
It turns out you can’t. The president’s decision to deepen our with their fact checking for fear of being blogged into extinction. One’s
commitment to Afghanistan while simultaneously promising an exit is expectations would be mistaken.
ultimately absurd on its face.
Yesterday’s LA Times editorial on charter schools combined errors of fact
I’d be surprised if any foreign policy analyst would bet his or her next and omission with a misrepresentation of the economic research
paycheck that this is going to work. I wouldn’t. on public school spending. First, the Times claims that KIPP charter
public schools spend “significantly more per student than the public
school system.” Not so, says the KIPP website. But why rely on KIPP’s
testimony, when we can look at the raw data? LA’s KIPP Academy of
Opportunity, for instance, spent just over $3 million in 2007-08, for 345

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Today’s Tabbloid PERSONAL NEWS FOR lgn@limitedgovernmentnetwork.com 2 December 2009

students, for a total per pupil expenditure of $8,917. The most recent FISCALLY CONSERVATIVE BLOG FEEDS
Dept. of Ed. data for LAUSD(2006-07) put that district’s comparable
figure at $13,481 (which, as Cato’s Adam Schaeffer will show in a Let Them Eat Rice Crispy
forthcoming paper, is far below what it currently spends). Nationwide,
the median school district spends 24 percent more than the median Treats! [Tax Foundation]
charter school, according to the National Center for Education Statistics. DEC 01, 2009 12:00A.M.

Next, in summarizing the charter research, the Times’ editors omitted Comments Regarding Proposed Amendment to Definition of Candy
the most recent and sophisticated study, by Stanford professor Caroline
Hoxby. It finds a significant academic advantage to charters using a The Streamline Sale Tax (SST) has already had trouble defining candy
randomized assignment experimental model that blows the and soda. The SST seems to be doing no better with cereal.
methodological doors off most of the earlier charter research. The Times
also neglects to mention Hoxby’s damning critique of the CREDO study Question: Are breakfast cereals and breakfast bars, whose ingredient
it does cite. labeling does not contain a specific listing for flour, “candy” as the term
is defined in the Streamlined Sales and Use Tax Agreement?
Finally, the Times’ editors are mistaken in claiming that district
operating costs “do not necessarily go down” as large numbers of Proposed Answer:
students migrate to charters. Economists find that districts reap
significant cost savings as students leave — e.g., by cutting staff and (1) Breakfast cereals are not candy because they are not sold in the form
consolidating buildings. The Times is claiming that the marginal cost of of bars, drops or pieces.
public schooling is essentially zero — that it neither costs more to
educate one additional student nor less to educate one fewer student. In (2) Natural or artificially sweetened breakfast bars, Carmel Corn, Rice
reality, the marginal cost of public schooling is generally found in the Cakes, and Rice Krispie Treats that do not have ingredient labeling
empirical literature to be near or above 80 percent of the total cost. specifying flour and do not require refrigeration are candy. These
products are sold in the form of bars and meet the objective test in the
There are certainly reasons to lament the performance of the charter definition of candy.
sector, and the Times’ editors even came close to citing one of them: its
inability to scale up excellence as rapidly and routinely as is the case in (3) Lightly Salted Rice Cakes that do not contain natural or artificial
virtually every field outside of education. Before getting into such sweeteners according to the ingredient labeling are food, and food
policy issues, however, the Times should make a greater effort to ingredients and are not classified as candy.
marshal the basic facts.
My question for the SST is what about Rice Krispy Treats Cereal? The
SST was established with the noble goal of bringing simplicity and
uniformity to states’ sales tax codes. Greater uniformity would lower the
FISCALLY CONSERVATIVE BLOG FEEDS compliance costs of multi-state organizations. Unfortunately, the SST
has drifted from this mission. The only reason for making such
This Won’t Put Al Gore in the definitions is to allow states to engage in discriminatory sales tax
practices. Facilitating specific excises taxes is not a viable way to
Christmas Spirit [Cato at improve any state’s sales tax structure.

Liberty]
DEC 01, 2009 08:43A.M.

This has not been a good week for the global warming alarmists. They’ve
been caught with their pants down on the Climate-gate email scandal,
and they are terrorized by my colleague Pat Michaels. So this is the time
to add some insult to injury with a very amusing video.

On the topic of amusing videos, here’s one on health care put together by
Ladies4Liberty, featuring Cato’s Nena Bartlett.

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Today’s Tabbloid PERSONAL NEWS FOR lgn@limitedgovernmentnetwork.com 2 December 2009

FISCALLY CONSERVATIVE BLOG FEEDS FISCALLY CONSERVATIVE BLOG FEEDS

But I Don’t Want My Tax Report: Gasoline Taxes Cover


Dollars Going to That [Tax Only Half of Highway Expenses
Foundation’t Want My Tax [Tax Foundation]
DEC 01, 2009 12:00A.M.
Dollars Going to That]
DEC 01, 2009 12:00A.M. SubsidyScope, a Pew initiative, is producing a series of reports looking at
transportation funding. In October, they scrutinized Amtrak and
A lot of health care legislation news has been about the opposition estimate that the railroad loses about $24 for each passenger carried.
conservatives and some pro-life liberals have toward federal tax dollars Pew’s numbers show that Amtrak recovers about 68.5% of its costs from
being uses to fund abortions. The Stupak Amendment of course passed fares.
the House and there will be likely be debate in the Senate for something
similar. No matter if one is pro-life or pro-choice, there is some logic At the end of November, Pew took on highways:
behind legislation resembling the Hyde Amendment (a similar spending
limitation on the annual appropriations bill for the HHS) on a health Subsidyscope has calculated that in 2007, 51 percent of the nation’s $193
care bill. Some are very much opposed to an act, and if they can’t stop billion set aside for highway construction and maintenance was
others from performing it, they at least don’t want to fund it. It is a generated through user fees-down from 10 years earlier when user fees
variant of the benefit principle of taxation (like an anti-benefit made up 61 percent of total spending on roads. The rest came from other
principal). sources, including revenue generated by income, sales and property
taxes, as well as bond issues.
But with health care legislation it’s complicated. If government
insurance crowds out private options, as some rightly fear, and the Of course, some highway “user taxes” (a more accurate description than
public insurance that is left must exclude abortion, now one has pro-life “user fees,” since gasoline taxes are taxes not fees) are diverted to non-
values thrust upon others. (Notice the scarcity of private insurance road uses. Even throwing them in leaves roads as more subsidized than
available without one needing a subsidy is implicit in some arguments Amtrak:
against things like the Stupak Amendment.)
Of the 18.4 cent per gallon federal tax on gasoline, 2.86 cents are
It is a problem when individual’s tax dollars are spent on other people’s allocated specifically for mass transit projects. Another 0.1 cent per
goods, like with health care. Spending represents an individual’s values. gallon is used to pay for environmental cleanup resulting from leaking
And individuals have an array of values that cannot be properly fuel storage tanks. From 1990 to 1997, the federal government also set
represented by government spending. If it could, then 100% tax rates aside a portion of taxes on gasoline, diesel and other fuels to reduce
might not be too bad. If a major good, now becomes public, or heavily budget deficits.
subsidized, who decides what that good looks like? It must be a political
decision if not a market decision. And whatever that decision is, it now However, even if those funds were fully devoted to highways, total user
affects a large mass of the population. fee revenue accounted for only 65 percent of all funds set aside for
highways in 2007, according to Subsidyscope calculations. This is down
Drinking soda, smoking cigarettes, having an abortion-these things from 84 percent in 1997 and 77 percent in 1967.
before mainly had an affect on the person taking part. But if I am
sharing costs with all of America, those externality arguments for obesity Pew’s data and charts, as well as the full report, are here.
start to at least make sense (though they are still wrong).

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Today’s Tabbloid PERSONAL NEWS FOR lgn@limitedgovernmentnetwork.com 2 December 2009

FISCALLY CONSERVATIVE BLOG FEEDS


This case seeks to vindicate the right of all Virginians to speak and earn
Maryland Officials Balk at Toll, an honest living. That is why, on December 1, 2009, yoga-teacher
trainers Julia Kalish, Suzanne Leitner-Wise, and Beverly Brown teamed
Prefer General Funding [Tax up with the Institute for Justice to challenge the constitutionality of
Virginias vocational-school law as applied to yoga-teacher trainers.
Foundation]
DEC 01, 2009 12:00A.M.

Speaking of highways, Maryland officials are balking at proposed $6 tolls


for the expensive Intercounty Connector (ICC) in suburban Washington,
D.C. They’re now discussing capping the tolls at $3, relying on general
revenues to build the rest of the $2.4 billion 14-mile road. If officials are
worried that the beneficiaries won’t pay the toll for what it costs to build
the road, then why build it?

FISCALLY CONSERVATIVE BLOG FEEDS

Challenging Virginia’s
Unconstitutional Regulation of
Yoga Teacher Training [Reason
TV]
DEC 01, 2009 12:00A.M.

In Virginia, you can teach anyone anything—except how to earn an


honest living.
http://www.ij.org/vayoga

Anyone in Virginia can do yoga, and anyone can teach yoga. But,
incredibly, it is illegal to teach people to teach yoga. Yoga-teacher
training is just the latest target of vocational school licensing laws that
require countless entrepreneurs to ask the governments permission
before opening their mouths.
Vocational-school licensing burdens both economic liberty and freedom
of speech. The cost of compliance is typically thousands of dollars and
over a week of full-time administrative work. For owners of small
schools, these costs can make the difference between viability and
closing down.

Vocational-school laws arent just bad policy—theyre unconstitutional.


The First Amendment protects the right of individuals to decide for
themselves what is worth saying and who is worth listening to. States
cant require writers to get permission before publishing a book, nor can
they force filmmakers to seek permission before making and selling a
movie. Similarly, it is unconstitutional for state governments to demand
that speakers ask the governments permission before lecturing to a room
of willing listeners, regardless of whether the subject is how to do
something useful.

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