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The views expressed by Andrew Quinlan and Dan Mitchell on this weblog are solely their own and are not necessarily those of their employers, The Center for Freedom and Prosperity Foundation and The Heritage Foundation, respectively. |
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The Market Center Blog |
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Observations and insights on the global fight |
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CF&P's Market Center Blog Archives |
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Tuesday, May 31, 2005 ~ 4:00 p.m., Dan Mitchell Wrote: Business leaders were quick to applaud his drive, and especially Mr Barroso's attempt to revive the ambitious Lisbon agenda, a 10-year plan to boost Europe's competitiveness.
In addition, they had every right to believe that the new Brussels executive would champion initiatives such as the plan to liberalise the bloc's services market, which were launched by the previous Commission.
Yet after France's rejection of the constitutional treaty, those hopes have given way to despondency. Analysts quickly pointed out that the French No was in part fuelled by opposition to free-market reforms, and
fears that further economic integration would hurt French jobs and social standards. ...Ms Mettler said she hoped pro-reform countries would now press ahead without France: "You have to give countries that
genuinely want economic reforms the chance to go ahead. If that's without France, then so be it. My only hope is that France will not hold others back and force its dying economic model on everybody else."
Europe is bad news, the argument goes, but we'd better be inside the tent: From Jacques Chirac to Socialist leader François Hollande, this has been the mantra of the treaty's
supporters. As recently as last Thursday, three days before the vote, Mr. Chirac was on television trying to shore up support for the treaty in a solemn address in which he warned of dire consequences if, within
the EU, advocates of "ultraliberal" policies were left to their own sinister designs -- "ultraliberal," in France, having become the code word for the free-market approach that most other
European governments are now endorsing. As recently as a few months ago, then-Finance Minister Nicolas Sarkozy, now Mr. Chirac's arch-nemesis in his own party, was using scare tactics and the threat of
government intervention to trumpet his desire to fight against labor outsourcing and posturing as the last shield against the European Commission's evil competition policies. The problem for Germany and France is that the new Europe calls for sleek economic efficiency at a time when both are carrying too much weight. "Safety nets" for
people at all levels of society cumulatively promote sloth. Their economies have lost their competitive edge in Europe and the world. Unemployment in Germany is nearly 12% and in France it exceeds 10%. Both
governments are timidly trying to adapt economic policies to the new competitive realities, but the traditionalists, particularly on the left, are fighting to hold back the tide. If Mr. Chirac is in bad shape
politically, his longtime Socialist rivals are even worse off. They are facing an outright rebellion by the rank and file, whose war cry is that ugly capitalism is threatening the French way of life. ...The
appeal of Europe for most members has always been economic integration, not the prospect of eventual submersion into a vast federal state. The very thing that the French left abhors is what the new member states
want, the potential for new economic opportunities. In today's EU, people are free to conduct business in a huge single market, now larger than the U.S. economy, that offers enormous economies of scale. They are
willing to accept the bureaucratic nonsense that flows out of Brussels to win that big prize. The French vote is a victory of democracy against an opaque and elite process that few people really understood. It is also a defeat for those leaders, notably French
President Jacques Chirac, who have been unable to deliver on what they promised from a united Europe. The defeat shouldn't be seen as a renunciation of "Europe" writ large, so much as for a particular
narrow vision of the Continent. The document itself is a monstrosity running to 485 pages. As a flavor of its character, consider that one of the treaty's "annexes and protocols" concerns the right of
the Sami people to husband reindeer. ...The prevailing view among European elites was summed up by a senior EU bureaucrat we spoke to last month who said about the French and the constitution: "They haven't
read it. If they had read it, they wouldn't understand it. If they understood it, they wouldn't like it." Nonetheless, he thought that the French should vote yes anyway. ...the French may well have done the
right thing for the wrong reason. The opposition included much of the political left, which derided the constitution as an ultra-liberal (in the classical sense of liberal), Anglo-Saxon thing, destined to strip
Europe of its social-welfare model. At the same time, Mr. Chirac asserted that the constitution was France's only bulwark against the encroachment of Anglo-Saxon-style capitalism. ...One lesson Americans
shouldn't draw, however, is that this is somehow a defeat for the common European currency, despite its 1% speculative fall against the dollar yesterday. The euro's impact may well have contributed to the French
defeat by exposing the failure of socialist economic policies. The repudiation earlier this month of Chancellor Gerhard Schröder's Social Democrats in their heartland of North Rhine-Westphalia had similar
economic causes. The low-tax challenge from other European nations is precisely what many supporters of the euro, including us, had hoped for. The euro has been a liberalizing force in Europe, while the
constitution was designed to be centralizing force. Tony Blair is preparing to battle with President Chirac of France over Europe's political direction for the coming decades. ...Taking a break from his Italian holiday, he
said: "The question that is being debated by the people of Europe is how do you, in this era of globalisation, make our economies strong and competitive?" The political vacuum has prompted a battle for
the "heart of the Union", with Mr Blair keen to push more liberal economic policies, rather than French-style social protection with a large welfare state. ...Mr Blair has made economic reform the top
priority of his presidency, hoping to make labour markets more flexible in order to tackle record unemployment and sluggish growth across the continent. However, he is now likely to face challenges from
President Chirac, who recently called economic ultra-liberalism the "new communism of our age". Link to this Blog Entry
Tuesday, May 31, 2005 ~ 11:45 a.m., Dan Mitchell Wrote: Our current income tax system is a catalog of favors for special interests and a chamber of horrors for the rest of America. As a country, we spend
more time filing taxes than we spend building every car, truck, and van produced in the United States. To put this in perspective, it takes the average taxpayer over 26 hours to file a standard 1040, which has
caused over 60 percent of Americans to pay a professional to complete their taxes. Simply complying with the complex tax code costs $194 billion each year, or about $650 for every man, woman, and child in
America. ...The flat tax will replace the current tax code with a flat-rate income tax that treats all Americans equally. All income is taxed only
once and at one rate. There are no breaks for special interests and no loopholes for powerful lobbies, just a simple tax system that treats every
American the same. ...Every American will benefit under a flat tax system. An increase in national income will increase charitable giving, lower interest rates will more than offset the loss of the mortgage
deduction in the current system, the income exemption will continue the tax code's progressive precedent, saving for your retirement or children's
education will be easier, the marriage penalty will be eliminated, the deduction for dependent children will double, and every taxpayer will see their tax rates reduced. Link to this Blog Entry
Tuesday, May 31, 2005 ~ 10:30 a.m., Dan Mitchell Wrote: Some of the future economic challenges posed by demographic changes stem directly from the structure of federal programs. In and of itself, an
increase in the share of the elderly in the population need not present a problem. If each individual or household adequately prepared for retirement through its own saving, a greater share of elderly in the
population would place no burden on younger people or the economy in general. However, a substantial share of the elderly's consumption is currently provided by government programs such as Social Security,
Medicare, and Medicaid. ...Social Security outlays are projected to rise from 4.3 percent of gross domestic product (GDP) to 6.3 percent in the next few decades, largely as a result of the aging of the baby-boom
generation. Thereafter, outlays will continue to rise slowly from continued increases in people's life spans, reaching about 6.6 percent of
GDP by 2080. ...if costs per beneficiary continued to rise as fast as they have in the past, overall federal outlays for Medicare and Medicaid could
climb from about 4 percent of GDP to more than 20 percent by 2050 ...the impact of an aging population on the budget will tend to reduce national saving. By 2050, government spending is projected to climb to
well above its historic share of GDP and considerably higher than the historical average share of revenues, which is about 18 percent ...at
some point, it is almost certain that spending will have to be cut or that taxes will have to rise. To the extent that increased taxes involved higher
marginal rates on labor and capital income, they would tend to discourage work and saving, and therefore reduce economic output. For example, the Congressional Budget Office (CBO) has estimated that if all
projected spending was financed by higher taxes, GDP could be 6 percent lower by 2050 than if spending was cut instead. Link to this Blog Entry
Monday, May 30, 2005 ~ 1:10 p.m., Dan Mitchell Wrote: French voters rejected the European Union's first constitution Sunday, a stinging repudiation of President Jacques Chirac's leadership and the
ambitious, decades-long effort to further unite the continent. ...With 92 percent of votes counted, the treaty was rejected by 56.14 percent of
voters, the Interior Ministry said. It was supported by 43.86 percent. Treaty opponents chanting "We won!" gathered at Paris' Place de la
Bastille, a symbol of rebellion where angry crowds in 1789 stormed the Bastille prison and sparked the French Revolution. Cars blared their
horns and "no" campaigners thrust their arms into the air. "This is a great victory," said Fabrice Savel, 38, from the working class suburb of
Aubervilliers. He was distributing posters that read: "Non to a free-market Europe." EU leaders in Brussels, Belgium, vowed to continue their effort to have the constitution approved. ...The Dutch vote
Wednesday, with polls showing opposition to the constitution there running at about 60 percent. On Friday, the constitution's main architect, former French President Valery Giscard d'Estaing, said
countries that reject the treaty will be asked to vote again. France's rejection could set the continent's plans back by years. The nation was a
primary architect of European unity. ...Backers said the constitution, which European leaders signed in October, would streamline EU operations and decision-making, and make the bloc more accessible to
its 450 million citizens. The text would give the EU a president and foreign minister so it could speak with one voice in world affairs. Opponents feared it would strip nations of sovereignty ...Left-wing
opponents argued that the treaty would not protect France's cherished social protections and public services, and would open the door to unfettered capitalism and trample on workers' rights.
Monday, May 30, 2005 ~ 12:34 p.m., Dan Mitchell Wrote: A team from West Middlesex University Hospital said violent crime is on the increase - and kitchen knives are used in as many as half of all
stabbings. ...The researchers said there was no reason for long pointed knives to be publicly available at all. They consulted 10 top chefs from
around the UK, and found such knives have little practical value in the kitchen. ...The researchers say legislation to ban the sale of long pointed
knives would be a key step in the fight against violent crime. "The Home Office is looking for ways to reduce knife crime. "We suggest that
banning the sale of long pointed knives is a sensible and practical measure that would have this effect." ...A spokesperson for the Association of Chief Police Officers said: "ACPO supports any move to
reduce the number of knife related incidents, however, it is important to consider the practicalities of enforcing such changes."
Monday, May 30, 2005 ~ 11:06 a.m., Dan Mitchell Wrote: Regardless of the cause of the current warming, the best available evidence indicates a warmer planet should result in bountiful crops. The
modest warming many scientists expect should result in longer growing seasons, more sunshine and rainfall, while summertime high temperatures change little. And a warmer planet means milder winters
and fewer crop-killing frosts. History shows the Earth's climate is less stormy and more stable in relatively warm eras. ...global warming also
increases carbon dioxide (CO2), which acts like fertilizer for plants. As the planet warms, oceans naturally release huge tonnages of additional CO2. (Cold water can hold much more of a gas than warmer water).
...since 1950, in a period of global warming, these factors have helped the world's grain production soar from 700 million more than 2 billion
tons last year. ...The real famine threat will come not in the present warming, but rather the next Ice Age when huge ice sheets will once again cover Canada and Russia, and the Northern Plains will be too cold
to farm. Fortunately, that test may not come for another 10,000 years. By then, unless regulations interfere, the world should have genetically
engineered a set of even higher-yielding and still more stress-tolerant crop varieties to feed humanity on dramatically reduced acreage.
Monday, May 30, 2005 ~ 9:45 a.m., Dan Mitchell Wrote: Africa's poverty is not due to exploitation by Nike, McDonalds and Microsoft, but rather because it is the continent where multinational
companies are the least active and which is the least capitalist. Above all, the region south of Sahara has since its liberation in the 1960s and
70s been dominated by protectionism, extensive government interference and disregard of market mechanisms. Several countries, such as Somalia, Benin, Ethiopia, Angola and Mozambique, were classical
Marxist-Leninist Communist states for many years. Others opted for the so called "African Socialism", the most typical example probably being
Tanzania. Almost all states in the region resort to extensive tariffs and other restrictions on imports, which hurts trade with multinational companies as well as intraregional trade. ...History has proven that
foreign aid is not the solution to Africa's problems. Total overseas development assistance (ODE) that went to sub-Saharan Africa between 1984-2002 accounted for $319 billion. This corresponds to
approximately 80 percent of the region's total GDP in 2002. Despite this relatively large development investment, 23 countries in the region experienced negative compound annual growth between 1980 and 2002,
while only three achieved growth over 4 percent. During this period, GPD per capita in sub-Saharan Africa fell from $660 to $577 dollars (in constant terms). Foreign aid fosters dependence, corruption, plan
economy and government waste. ...Africa is poor because most countries in the region lack the fundamental elements of a capitalist system:
property rights, free markets, free trade and the rule of law. Africans are like everybody else, and ideas that did not work in China, North Korea and the Soviet Union will not work in Africa either. Link to this Blog Entry
Sunday, May 29, 2005 ~ 1:45 p.m., Dan Mitchell Wrote: ...the epic tragedy of Argentina's slow and tenacious decline from a world-class economic power to world-class basket case remains a work
in progress. Any hope that the 2001 crisis might have been used to bring about constructive reform has been lost. ...By now even Mr. Kirchner and his atavistic Peronist Party must understand the link between
government policy and investment. Making Argentina a prime destination for international investment would require an economic restructuring inconsistent with populist Peronism -- thus the need to keep
expectations low. It is always at least moderately amusing to listen to this government parse its own economic agenda. On the one hand it denounces the savagery of market economics -- so as to keep its labor
base and its hard-left, picketing militants happy -- and on the other hand it flirts with investors by insisting that it does not endorse statism. ...As
other competitors for global capital race along the highway of liberalization, Argentina risks slipping further behind, even if it just stands still. ...Egypt is doing what Mr. Kirchner rejects: moving to
reduce the drag of big government on the economy. Egyptian Finance Minister Youssef Boutros-Ghali could have been describing Argentina when he told us that under the traditional state system, "Government is
a predator and the citizen is the prey. You pounce on him and you squeeze him all you can." Egypt wants to break with that tradition so as
to attract capital and boost economic activity. Speaking like a Reagan supply-sider, Mr. Boutros-Ghali offered that any revenue loss under his
tax plan to cut rates and provide an amnesty would be offset by higher growth and more taxpayers coming into the formal economy. Link to this Blog Entry
Sunday, May 29, 2005 ~ 1:03 p.m., Andrew Quinlan Wrote: ...politicians like spending other people's money. As one wag put in the 1980s, "Today, wanting someone else's money is called 'need,' wanting to
keep your own money is called 'greed,' and 'compassion' is when politicians arrange the transfer." Nothing could be more true of life today under Big Government Conservatism. In Bush's first term, he spent
money like a pimp with only a week to live. ...Bush's people are making the right noises these days and they seem - seem! - to be taking spending
just a bit more seriously. Unfortunately, Bush lost some credibility in his first term. And, to be fair, he was never a small-government conservative
in the first place. He always said he wanted to do more on education, teen pregnancy, social activism and the like. Link to this Blog Entry
Sunday, May 29, 2005 ~ 10:55 a.m., Dan Mitchell Wrote: Among the 2004 campaign promises that aren't close to being fulfilled are making the Bush tax cuts permanent, reforming Social Security and
expanding the market for private health care. Instead of any of those big three, Congress next seems poised to pass a subsidy-laden energy bill and
a highway bill with some 4,000 earmarks for individual Members. For this we elected Republicans? ...Republicans have only made it easier for Democrats on Social Security by caviling and whining that President
Bush is making them face up to this problem, and declaring private accounts all but dead almost before they were proposed. Individual Democrats are not going to break with their party leadership when they
can see that Republicans are divided. Pre-emptive surrender has also been the order of the day on taxes, despite the manifest economic success of the 2003 tax cuts. It took a heroic, one-man lobbying effort by
Arizona's Jon Kyl to persuade his Senate colleagues to extend the 15% dividend and capital-gains tax rate for a mere two years. Too many GOP
Members are cowering in fear over "the deficit"--except when it comes to spending. That they can still do. The Senate blew past Mr. Bush's
already generous $284 billion limit on highways, and overall federal spending is growing by 7% this year. ...We'd have thought that for Republicans this would mean a philosophy of limited but energetic
government when energy is needed, as it is on national defense and law enforcement. ...what is "limited" about a House Financial Services
Committee that wants to increase the moral hazard to taxpayers by raising federal deposit insurance to $130,000 from $100,000? Or that finds itself united with liberal Barney Frank on a bill to let Fannie Mae
continue to rake in private profit while exploiting an implicit taxpayer bailout guarantee?
Saturday, May 28, 2005 ~ 2:11 p.m., Dan Mitchell Wrote: The most important hazard of the [pay-as-you-go] PAYG system is not financial, as economists Isaac Ehrlich and Jinyoung Kim show in their
recent working paper "Pension Systems, Demographic Trends and Economic Growth" (NBER, February 2005). The very principle of the pay-as-you-go system adversely affects demographic structure, rate of
private savings and long term economic growth. The flaw is not in the system's parameters, but in its fundamental nature. ...The demographic crisis (which endangers all PAYG systems to some extent) has not come
out of the blue sky. It's a direct consequence of how PAYG pension systems work. Ehrlich and Kim illustrate this assertion on the panel of data from 57 countries during 1960-92. "We find that PAYG tax
measures account for a sizeable part of the downward trends in family formation and fertility worldwide, and for a slowdown in the rates of savings and economic growth, especially in OECD countries."
...Researchers Michele Boldrin, Mariacristina De Nardi and Larry Jones come to the same conclusion in the working paper "Fertility and Pension
System" (NBER, February 2005). "The data show that an increase in government-provided old-age pensions is strongly correlated with a
reduction in fertility," concludes the study. The effect is massive enough to explain 80 percent of observed differences in cross-country birth rates.
...There is only one way to moderate the damage: to minimize the total value of pensions paid by the government. This may sound harsh, but wait: low government-paid pensions do not mean that pensioners must
starve. Take Iceland. Retirees are paid flat pensions by the government. The total value of the Icelandic PAYG system does not exceed 7 percent
of GDP, vs 12 percent in Italy. The total fertility rate in Iceland is 1.9 child per woman vs. 1.2 in Italy. Link to this Blog Entry
Saturday, May 28, 2005 ~ 1:39 p.m., Dan Mitchell Wrote: If the French and the Dutch reject the EU Constitution on Sunday and Wednesday, they should re-run the referendums, the current president of
the EU, Jean-Claude Juncker, has said. "If at the end of the ratification process, we do not manage to solve the problems, the countries that
would have said No, would have to ask themselves the question again", Mr Juncker said in an interview with Belgian daily Le Soir. ...rejection of
the Constitution would also lead to "external observers" not knowing what direction Europe wants to take anymore, which means that the
"economy will not get better with a No", Mr Juncker pointed out.
Saturday, May 28, 2005 ~ 11:41 a.m., Dan Mitchell Wrote: German opposition party, the Christian Democratic Union has warned that Germany's persistent budget deficit may derail its plans to introduce
tax cuts should it win the next general election, which Chancellor Gerhard Schroeder is seeking to bring forward by one year after the ruling Social Democrats received a bloody nose in a regional election.
The CDU had pledged to cut the top rate of income tax to 39% from 42% and the bottom rate to 12% from 15% whilst also slimming down the income tax system to three brackets. However, the party has been
forced into an early review of its economic programme after Chancellor Gerhard Schroeder announced that he would seek an early general
election... "The budget situation is far from rosy. All we can promise now is to simplify the tax system," noted CDU budget spokesman Michael Meister, according to Bloomberg. Link to this Blog Entry
Saturday, May 28, 2005 ~ 9:51 a.m., Dan Mitchell Wrote: Tom Daschle may be in forced retirement from the Senate, but it seems Republicans are only too happy to preserve one of his legacies. As the
Senate turns (yet again) to its uninspired energy bill, the majority party is busy passing an enormous ethanol mandate that would make even corn
farmers blush. The taxpayers and drivers who get to fund this special interest extravaganza can thank Missouri Senator Jim Talent, though he's hardly alone in bidding for the subsidy hall of fame. Mr. Talent
pushed an amendment through the Energy and Natural Resources Committee yesterday that would require drivers to use eight billion gallons of ethanol a year by 2012. The proceeds from this forced product
march would be funneled into the pockets of Midwest farmers and giant agribusiness concerns such as Archer-Daniels-Midland. ...The terms of this mandate are munificent, because every gallon of ethanol blended
into gasoline receives a 51-cent subsidy. An eight-billion-gallon mandate translates into an extra $2.3 billion windfall for the ethanol lobby. The
mandate would also raise gas prices, especially outside the Midwest where ethanol is costly to ship. Even a five-billion-gallon mandate is
estimated to add some $8.4 billion to fuel costs over each of the next five years, on top of today's already high pump prices. ...when voters complain about high gas prices, we hope Republicans don't stoop to
blaming the oil companies. The fault will be their own. Link to this Blog Entry
Friday, May 27, 2005 ~ 10:00 a.m., Dan Mitchell Wrote: The European Union, which has a flag no one salutes and an anthem no one knows, now seeks ratification of a constitution few have read. Surely
only its authors have read its turgid earnestness without laughing, which is one reason why the European project is foundering. ...Some French
factions, their normal obstreperousness leavened by paranoia, think the constitution is a conspiracy to use "ultraliberalism" -- free markets -- to
destroy their "social model." That is the suffocating web of labor laws and other statism that gives France double-digit unemployment -- a
staggering 22% of those under age 25. ...The proposed constitution, with 448 articles, is a jumble of pieties, giving canonical status to sentiments
such as "the physical and moral integrity of sportsmen and sportswomen" should be protected. It establishes, among other rights, a
right to "social and housing assistance" sufficient for a "decent existence." Presumably, supranational courts and bureaucracies will
define and enforce those rights, as well as the right of children to "express their views fully." And it stipulates that "preventive action
should be taken" to protect the environment. The constitution says member states can "exercise their competence" only where the EU does
not exercise its. But the constitution gives EU institutions jurisdiction over foreign affairs, defense, immigration, trade, energy, agriculture,
fishing, and much more. If the French and Dutch reject the constitution, they will do so for myriad reasons, some of them foolish. But, the result
will be salutary because the constitution would accelerate the leeching away of each nation's sovereignty. Sovereignty is a predicate of self-government. The deeply retrograde constitution would reverse five
centuries of struggle to give representative national parliaments control over public finance and governance generally. Link to this Blog Entry
Friday, May 27, 2005 ~ 9:38 a.m., Dan Mitchell Wrote: The European Union could have a common corporate tax base in place within three years if all goes to plan, EU Taxation Commissioner Laszlo
Kovacs told a conference in Stockholm this week. ..."At the moment there are 25 different ways to calculate the corporate tax base," noted
Kovacs. "If we manage to have only one EU-wide set of rules that will increase competitiveness." ...According to Kovacs, 20 of the 25 EU
member states are in support of a common corporate tax base. Notable objectors include the United Kingdom, which fears that the move would take away governments' ability to influence domestic tax policy and
represents the first step towards harmonisation of corporate tax rates. Link to this Blog Entry
Friday, May 27, 2005 ~ 8:45 a.m., Dan Mitchell Wrote: No matter which side prevails in this Sunday's French referendum on the EU constitutional treaty, the result will be the same: a victory for
collectivism. This, of course, means that both sides have the same aim but not the same means. So the most important outcome of the referendum is not that the French will say Yes or No, but that they will
reveal themselves yet again as being strongly collectivist. ...France's central role in EU policymaking is a clear threat to Europe's market-based economy. This was highlighted by three recent political
statements: harming cross-border competition by shutting down the Bolkestein directive on liberalization of services; promoting protectionism by forcing China to reduce its textile exports; weakening
property rights when President Jacques Chirac expressed a willingness to expropriate patents on medicine. ...The desire to build a collectivist
society is embodied in Chirac's call for a reinforcement of the European social model. This is a counter-model to a free and open society best represented by some Eastern countries -- such as Estonia -- and
Anglo-Saxon countries. ...French leadership bases its social vision on equality, the very source of collectivism. This does not mean being equal
before the law, it means being socially equal - no one higher, no one lower. This eliminates any notion of competition in the name of social
cohesion. That's why civil servants' jobs are so popular; that's why health coverage is a state monopoly and creates a welfare society; that's why
politicians rave about a social economy. What kind of future can France have when 70 percent of its teenagers dream of being civil servants? ...In
Eastern European and Anglo-Saxon countries, social vision is based on freedom. This involves the social integration of the rule of law and the acceptance of risk. Freedom is a risk and cannot be separated from
responsibility.
Friday, May 27, 2005 ~ 8:13 a.m., Dan Mitchell Wrote: ...the cradle-to-grave welfare model is causing increasing problems and is questioned and revised. Growth is low, dependency on government is
high and the expected welfare services are deteriorating. Over the past decade a series of comprehensive reforms have taken place; taxes have been lowered, private competition in welfare services allowed, and
pensions systems have been changed. But the steps are too small and too slow. Between 1890 and 1950, Swedish economic growth was the highest in the world. Politically, Sweden was what would today probably be
referred to as a neo-liberal country. Taxes as a percentage of gross domestic product increased to 20% from below 10%. In 1950 the tax take was the same as that of the U.S. and below the average in Western
Europe. By 1980, however, the tax pressure had been raised to about 50% of GDP. The state had grown enormously. ...it was harmful to expand the state so dramatically. Sweden today lives off the successes of
the past, before big government. Only one of Sweden's 50 largest companies today was founded after 1970. ...The largest trade union, LO, a strong supporter of the Social Democrats for more than 100 years,
recently admitted that real Swedish unemployment is closer to 20%-25%. Of the Swedish population of working age (5.8 million), 2.2 million
belong to the category "not at work," of which 1.4 million live off government handouts. In 2004, this amounted to 39% of the population
of "working age" -- that is, almost four out of 10 people of working age don't go to work. ...The Swedish welfare state is a model for growth --
but only growth of government. With an annual growth of 3.5%, GDP doubles in 20 years; no amount of government redistribution can match this in terms of prosperity. Link to this Blog Entry
Friday, May 27, 2005 ~ 7:45 a.m., Dan Mitchell Wrote: I buy more from my grocer than he buys from me, and I bet it's the same with you and your grocer. That means we have a trade deficit with our
grocers. Does our perpetual grocer trade deficit portend doom? If we heeded some pundits and politicians who are talking about our national
trade deficit, we might think so. ...International trade operates under the identical principle. When we as consumers purchase goods from China,
and the Chinese don't purchase a like amount of goods from us, it is said that there's a trade deficit. But instead of purchasing goods, the Chinese might purchase corporate stocks, bonds or U.S. Treasury debt
instruments. ...The fact that foreigners are willing to exchange massive amounts of goods in exchange for slips of paper in the forms of currency,
stocks and bonds should be a source of pride. It means America, with its wealth, rule of law and the sanctity of contracts, inspires foreigners to
hold large amounts of their wealth in U.S. obligations. Their willingness to do so means something else: Trade increases competition. Ultimately
it's competition, many producers competing for his dollar, that truly protects the consumer. What protects producers, at the expense of consumers, are restrictions on competition.
Friday, May 27, 2005 ~ 7:19 a.m., Dan Mitchell Wrote: After more than a decade of haggling, the European Union is now just one month away from starting its biggest, coordinated assault on tax
evasion: a new law aimed at uncovering - and taxing - interest earned on the hundreds of billions in savings stashed by EU citizens outside their
home countries. Yet the windfall of new revenue that some cash-strapped countries, led by Germany and France, had been hoping for is unlikely to
materialize, according to bankers in Switzerland and other tax havens. Not only are historic low interest rates keeping the potential pot to be
taxed low, but many investors are restructuring their deposits to legally avoid paying anything, bankers say. Others have already moved their money even farther afield - to places like Singapore - where it can
remain hidden from tax collectors at home. ...The new EU law, which takes effect July 1 ...was eventually whittled down to aim at only interest income from savings and bonds. It covers only individuals, not
companies and trusts, and earnings from other assets, like stocks and derivatives, are exempt. ...In 2007, the EU will review the directive with a view to possibly broadening its scope. ...The German government,
which is one of the biggest losers from tax evasion, estimates its citizens have some EUR300 billion to EUR500 billion, or $378 billion to $631
billion, in so-called offshore bank accounts. But Charles Hermann, a partner at KPMG, an accounting firm, in Zurich, estimates that Switzerland will collect only about 30 million francs to 50 million francs
annually in withholding tax. "The directive is full of loopholes," Hermann said. Rather than spur depositors to bring their money back
home, he expects most will rejigger their accounts to avoid any tax by such methods as moving them into trusts. Funds that are less than 40
percent invested in interest-paying assets, like bonds, are also exempt, according to Kaiser at the banking federation. The chief executive of a
private, Zurich-based bank, who declined to be identified, said large investors have "got their money structured in a way so it doesn't trigger
the taxes." Swiss bankers say the new EU law also has sparked an outflow of money to Singapore, a relatively safe haven that will not come
under the withholding tax. Credit Suisse, Switzerland's second-largest bank after UBS, decided recently to move its head of international private banking, Joachim Straehle, to Singapore from Zurich to take
advantage of faster growth rates in Asia. "We see lots of money flowing in to Singapore from all over the world these days," Straehle said during an interview. |
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Thursday, May 26, 2005 ~ 12:30 p.m., Dan Mitchell Wrote: Much of the gain from reform comes from reducing the code's bias against saving and investment, which slows capital formation and wage growth. Any plan--whether aiming for a
broad tax on income or consumption--should remove taxes on dividends, capital gains, and interest. But that doesn't mean capital income escapes totally. My brand of reform would tax all income only once--wages
at the household level and business income at the business level. That's a big improvement over the convoluted mix of preferences (special provisions or tax shelters) and biases (double taxation or worse) under
current law. Indeed, unlike today's devilishly difficult code, landmark changes can be simple. First, individuals would pay a tax on compensation, but not on income from savings (dividends, capital gains, and
business interest). All businesses would be taxed on sales, less the costs of materials, wages, and a portion of capital expenses. Under an income tax, that capital expense would be a depreciated value over a
period of years. Under a consumption tax, it would be 100% expensed. But both would end the double taxation of income on savings. Link to this Blog Entry
Thursday, May 26, 2005 ~ 11:50 a.m., Andrew Quinlan Wrote: The $35 billion-a-year war on drugs has turned largely into a war on marijuana, and a losing war at that. Pot isn't harmless, but shouldn't law
enforcement focus more of its resources on hard drugs - cocaine, heroin and methamphetamines - that are associated with violence and devastated lives? ...The theory behind the war on drugs is that enough
arrests will curtail both supply and demand. But the impact of increased marijuana arrests appears negligible. According to private and government studies, overall marijuana use is the same as it was in 1990,
while daily use by high school seniors has nearly tripled, from 2.2% to 6%. Since 1992, the inflation-adjusted price of pot has fallen about 16% while potency has doubled, the studies show. So the intensified
crackdown has coincided with cheaper, stronger pot that's readily available. Law enforcement's efforts to arrest marijuana smokers are diverting resources from combating other crimes and those who traffic
in hard drugs. ...The drug war against low-level users also sparks resentment against police, particularly in the minority community. ...The get-tough approach is showing cracks both at home and abroad. Twelve
states have some form of decriminalization or reduced sentences. Great Britain, Canada and Russia have decriminalized possession of small amounts of the drug. ...it's a smoke screen to suggest that rising arrest
numbers show the war on drugs is working. It's time for a serious debate on whether massive arrests of low-level users are worth the cost or having any benefit. Link to this Blog Entry
Thursday, May 26, 2005 ~ 10:15 a.m., Dan Mitchell Wrote: ...the AMT is the parallel tax system designed some 35 years ago by Democrats to make sure the rich can't exploit too many loopholes. But
because it isn't indexed for inflation it is sweeping up more and more middle-class taxpayers, especially in New York, California and other liberal states. As Mr. Grassley noted, "this should get Democratic
support right off the bat because all of these people that are being taxed are in their blue states." ...We're all for repeal, though we'd also like to
know what Mr. Grassley is going to get in return for doing Senate Democrats this favor. Are they going to help him pass a broader tax reform, one that lowers rates in return for broadening the base? Or short
of that, how about making permanent the 15% dividend and capital gains tax rate that has helped the economy so much since it passed in 2003? Among the options for reform-including indexing the system for inflation, adding more deductions and exemptions, and outright repeal of
the AMT-only repeal accompanied by reductions in tax preferences in the regular income tax provides a stable long-term solution to the AMT's
flaws. One advantage of repeal is that it would help refocus tax reform efforts on broadening the tax base and lowering rates in the regular income tax system. Congress' original goal of enacting the AMT was to
ensure that very wealthy taxpayers do not escape tax liability through the abuse of tax preferences. However, the most economically sound way
to achieve that was not to graft additional complexity onto the tax code. It was to eliminate the very tax preferences that were the source of the abuse. Link to this Blog Entry
Thursday, May 26, 2005 ~ 10:02 a.m., Dan Mitchell Wrote: The American sugar industry is so strongly advantaged by quotas, tariffs and subsidies that total sugar imports have declined by about a third
since the 1990s. Cafta would allow additional sugar imports from the Central American nations totaling 107,000 metric tons in the first year. Annual U.S. sugar production is about 7.8 million metric tons, so the
effect of Cafta is to raise sugar imports into America by about one day's sugar production, or as Mr. Portman puts it, "approximately one teaspoon of sugar per week per adult American." That threat--a
teaspoon of sugar a week--has caused the U.S. sugar lobby to focus its efforts on killing Cafta. And it may succeed. The U.S. government agreed not to free up the sugar market in the 2004 trade pact with
Australia. ...U.S. Sugar Corp.'s Senior Vice President Robert Coker believes that "bilateral and regional trade agreements are death by a thousand cuts." Such economic protectionism--no bilateral trade
agreements allowed--is the good old-fashioned socialism that has failed millions of people for hundreds of years. Like Lenin, U.S. Sugar seems to
think that Americans should suffer economically rather than have a free market in sugar. Link to this Blog Entry
Thursday, May 26, 2005 ~ 9:39 a.m., Dan Mitchell Wrote: Asian Americans achieve spectacular academic success. They make up just 4 percent of the US population, but 17 percent of the incoming
students at Harvard, 18 percent at Columbia, 25 percent at Stanford, and 27 percent at MIT. Fewer than 1 New York City student in 10 is
Asian, yet Asians fill half the seats in the city's elite public schools, Bronx Science and Stuyvesant. One-fifth of US medical students are Asian, as
are 10 to 20 percent of the students attending Harvard, Yale, Stanford, and other leading law schools. Asian students score in the highest bracket on the SAT -- both verbal and math -- at far higher proportions
than their share of the public. Likewise the specialized SAT II subject tests, in which Asians amass triple their proportional share of top scores
in writing and history, five times their share in biology, and eight times their share in math, chemistry, and physics. ...On average, Asian students spend twice as much time doing homework as their non-Asian
classmates. They believe they'll get in trouble at home if their grades fall below A-, while for whites the ''trouble threshold'' is B-, and for blacks
and Hispanics, C-. They don't believe that success or failure in school depends on factors beyond their control. Link to this Blog Entry
Thursday, May 26, 2005 ~ 8:30 a.m., Dan Mitchell Wrote: ...no country has implemented a more complete reform of school financing than Sweden did in the 1990s. Two parts of the reform are of
particular interest. A voucher system has replaced the earlier centralized system of financing and a parental choice reform has been instituted. ...
The Swedish experience is of interest for at least three reasons. First, the reforms have been radical. Under the Swedish system, municipal schools
and independent schools receive public financing on close to equal terms. ...the country has experienced a rapid growth in the number of independent schools due to these reforms. The impact of the reform also
differs between different municipalities1 in Sweden. Enrollment in independent schools, at the compulsory school level, ranges between zero and almost twenty per cent. ...increased competition and the risk of
losing students and resources, give public schools incentives to improve education and which may lead to more experimentation with regard to, e.g., pedagogical methods. In addition, competition may have a
beneficial impact on teachers for two reasons. First, it may induce them to increase their work effort, thus reducing x-inefficiency. Second, if public schools in effect form a monopsony for teachers' services,
competition may result in higher salaries, which would attract able people to the profession. Both these effects have been documented empirically. ...productivity increases due to changes in both the
numerator and the denominator: Student achievements improve, while the costs of schooling fall. Hoxby also finds that private school enrollement is lower where the Tiebout choice is more intense, plausibly
because the demand for private education is smaller when public schools are of high quality. ...competition from private schools has a significantly
positive effect on the quality of public schools in terms of educational attainment, measured as the highest grade completed by the age of 24, wages, also measured by the age of 24, and high school graduation
rates. ...The central contribution of the present paper is that we use an extensive data set to study the effects of a truly radical reform of school
financing. Before the reforms began in the early 1990s, Sweden had a completely centralized school system. Financing of schools was mainly provided by the national government. Hardly any independent or private
schools existed. Today, Sweden has more generous rules for the use of public funds to finance independent schools than any other country, with
the possible exception of the Netherlands. ...We find that the extent of competition from independent schools, measured as the proportion of
students in the municipality that goes to independent schools, improves both the test results and the grades in public schools. This is confirmed by the results from the panel data models. The improvement is
significant both in statistical and real terms. This result holds for test results, final grades and for the likelihood that a student will leave
school with no failing grades. Thus, our results confirm findings from earlier research which indicate that competition is beneficial for students in public schools. Link to this Blog Entry
Wednesday, May 25, 2005 ~ 1:00 p.m., Dan Mitchell Wrote: If France votes no, the European Union will face a so-called "rolling no" across much of northern Europe, beginning with the Netherlands on
June 1. To head off that calamity the council of ministers will swiftly declare the present constitution dead and plan another one. They will
parrot Peter Hain and dismiss Giscard's work as just "a tidying-up exercise" which can be handled in other ways. Bits of the constitution
may be implemented under present treaties. Everyone will repair to another chateau and try again. Europe's rulers will always crave what the constitution calls Europe's "primacy over the law of the member
states". Self-aggrandisement must continue and the gravy train keep rolling. Anyone who says there is no plan B does not know his Eurocrat. On the other hand, if France votes yes a glorious prospect opens.
However the Dutch vote, Tony Blair and Jack Straw will be unable to wriggle out of their own referendum commitment, the first on Europe in
30 years. Britons will be offered a choice between Giscard's introverted, high-spending, "social" Europe and the deep blue sea. They will be told
by Blair that the deep blue sea is not an option. That again will be a lie. ...It is near inconceivable that a British no shared with a handful of other
states would fail to precipitate a general renegotiation of the European project. From this would emerge a sincere divergence between those states wanting more centralisation and those wanting less. This tension
would mean two or three "rings" of association. A new Europe would emerge organically from the old one. As the agent of that change, Britain
would be well placed to drive it forward. The French and Germans would move towards closer federation, with Italy and Spain in hesitant alliance. This core would have France at the centre, with the "Roman
empire" states gathered round it. The Mediterranean, not the Atlantic, would be their pond. They would have no truck with global free markets
or fair trade with Africa, with America or the English language. They could retain the habits and horrors of the present EU directorates and parliament. Members would take smug comfort in Churchill's remark to
de Gaulle: "When I have to choose between you and Roosevelt, you should know that I will always choose Roosevelt. And when I have to choose between Europe and the wide open seas . . . I will always choose
the wide open seas." That is just what Blair has done. ...A looser European polity is no longer "the unthinkable". A British no would
render it inevitable. Maastricht showed that some states want to continue with the centrally regulated regime of the post-war settlement. Britain since Margaret Thatcher has taken a different view, one shared
with smaller northern nations. It is clearly time to honour that diversity, to repatriate farm and regional subsidies and to end the absurdity of a
"level regulatory playing field" defined by the entire continental shelf. A globalised economy has rendered that dead and the new constitution with it. Link to this Blog Entry
Wednesday, May 25, 2005 ~ 10:10 a.m., Dan Mitchell Wrote: The U.S. corporate tax system is a patchwork of overly complex, inefficient and unfair provisions that impose large costs on corporate
business. U.S. corporations seeking to minimize the costs imposed by the detrimental provisions in the U.S. corporate tax system have adopted strategies to reduce overall tax exposure and increase profits. Such
strategies include moving operations overseas, corporate inversions, transfer pricing, earnings stripping, and complex leasing arrangements,
all to minimize taxation. Debate surrounding the issue of corporate tax reform has lately focused on whether or not the U.S. corporate tax system contributes to structural declines in manufacturing jobs and,
more generally, to the weakening competitiveness of U.S. firms in a global economy. Furthermore, it is obvious that many U.S. businesses are conducting costly and complex operations that have minimal
economic content but rather seem designed solely to reduce tax exposure. Unless broad and significant corporate tax reforms are enacted, it is likely that U.S. tax competitiveness will continue to suffer.
The results of inaction are undesirable: potential loss of American jobs, movement of production overseas, sale of U.S. companies to foreign multinational firms and general erosion of the corporate tax base.
Wednesday, May 25, 2005 ~ 9:41 a.m., Dan Mitchell Wrote: Liberal Democrats, especially, must keep blacks fearful of racism everywhere, including in an administration whose Cabinet includes
people of Chinese, Japanese, Hispanic, and Jewish ancestry, and two consecutive black Secretaries of State. Blacks must be kept believing that their only hope lies with liberals. ...Black self-reliance would be
almost as bad as blacks becoming Republicans, as far as liberal Democrats are concerned. All black progress in the past must be depicted as the result of liberal government programs and all hope of
future progress must be depicted as dependent on the same liberalism. In reality, reductions in poverty among blacks and the rise of blacks into
higher level occupations were both more pronounced in the years leading up to the civil rights legislation and welfare state policies of the 1960s
than in the years that followed. ...What blacks have achieved for themselves, without the help of liberals, is of no interest to liberals. Nothing illustrates this better than political reactions to academically
successful black schools. Despite widespread concerns expressed about the abysmal educational performances of most black schools, there is remarkably little interest in those relatively few black schools which
have met or exceeded national standards. Anyone who is serious about the advancement of blacks would want to know what is going on in those ghetto schools whose students have reading and math scores
above the national average, when so many other ghetto schools are miles behind in both subjects. But virtually all the studies of such schools have been done by conservatives, while liberals have been strangely
silent. Achievement is not what liberalism is about. Victimhood and dependency are. Black educational achievements are a special inconvenience for liberals because those achievements have usually been
a result of methods and practices that go directly counter to prevailing theories in liberal educational circles and are anathema to the teachers' unions that are key supporters of the Democratic Party.
Wednesday, May 25, 2005 ~ 8:58 a.m., Dan Mitchell Wrote: Lawmakers long ago gave up reading every word of the bills they pass, but maybe they should be forced to read things like the energy bill that
passed the House last month, 249-183, and runs to more than 1,000 pages. Certainly as the bill moves to the Senate, somebody should look at a curious amendment called Section 2053, also known as the
Domestic Offshore Energy Reinvestment Program. It's a lesson in miniature in what's gone wrong with the GOP Congress. ...in 2016, something happens: The formula changes radically, from $50 million a
year to an annual sum equivalent to 25% of all "Continental Shelf revenues" received in 2015. The House Budget Committee estimates this
to be about $1.75 billion a year, and calls it "a new permanent entitlement." ...For a GOP Congress pledged to spending restraint,
that's quite an accomplishment. No less impressive is the skill with which Republicans slipped Section 2053 into the broader bill. According to
Illinois Republican Mark Kirk, the amendment was dropped into the final version of the energy bill just before the window to add amendments
closed. "It took the Budget Committee four hours to figure out" what this was about, the Congressman tells us. ...In case you're wondering
what's so magical about the date 2016, it happens to be one year beyond the Congressional Budget Office's 10-year scoring window. This legislative contrivance allows the CBO to score the provision at "no
cost"; it also allows House leaders to claim they've stayed within the Bush Administration's spending guidelines.
Wednesday, May 25, 2005 ~ 8:15 a.m., Dan Mitchell Wrote: Speaking last week, Israeli Prime Minister Ariel Sharon announced that he supported proposals by Minister of Finance Benjamin Netanyahu for
cuts in company and personal taxation. Under Netanyahu's plan, corporate income tax will be reduced incrementally to 25% by 2009 and the maximum rate of personal income tax, including National Insurance
contributions, will fall to 44% from 49% by 2010. The rate of value added tax will also be cut by 0.5% to 16.5% in June or July this year, with an additional 0.5% cut due in 2007, depending on the state of the
economy.
Tuesday, May 24, 2005 ~ 11:39 a.m., Dan Mitchell Wrote: Then came the miserable stagflation of the mid- and late 1970s, and an upheaval began, at least in America. Regulators began to trim back the
red tape and to pull down the barriers that protected established firms from upstarts. Tax law was changed to inspire entrepreneurial risk, and
new lenders emerged to seed it. Customers began to see price breaks, upgrades, longer retails hours, fresher fare and new products and services. Technology pushed the revolution along as well. Today
competition reigns in the U.S. in a way undreamed of 20 years ago--competition for markets, for labor, for capital, for time and, yes, for attention (just ask the newspaper industry). A lot of people have
enriched themselves in the process, but no one feels safe from a new competitor sailing into view and sending shots across the bow, 24/7. You could argue that this free-for-all--even more than sound money and
lower tax rates--is responsible for the stunning recent outperformance of the U.S. relative to other developed economies, with their more-regulated and rigid business ways. And that is basically what Paul
A. London does in "The Competition Solution." But Mr. London is not, as one might suspect, another Republican acolyte. He is, according to his
publisher, an "ardent Democrat," an economist who served in the Clinton administration from 1993 to 1997. His faith in markets reminds
us why America's economy over the past 20 years, far from stalling when Democrats controlled Congress or the presidency, kept growing and even at times accelerated its pace.
Tuesday, May 24, 2005 ~ 10:44 a.m., Dan Mitchell Wrote: Scores of convicted rapists and other high-risk sex offenders in New York have been getting Viagra paid by Medicaid for the last five years,
the state's comptroller said Sunday. Audits by Comptroller Alan Hevesi's office showed that between January 2000 and March 2005, 198 sex offenders in New York received Medicaid-reimbursed Viagra after their
convictions. Those included crimes against children as young as 2 years old, he said. ...According to Hevesi, the problem is an unintended
consequence of a 1998 directive from federal officials telling states that Medicaid prescription programs must include Viagra. His office discovered that the state was helping sex offenders pay for Viagra by
checking Medicaid pharmacy expenditures against the state's sex offender registry.
Tuesday, May 24, 2005 ~ 10:02 a.m., Dan Mitchell Wrote: When government is involved in producing or subsidizing news coverage or political and historical documentaries - even entertainment - it
amounts to state-supported propaganda. And that conjures up Pravda. But unlike Pravda, the Public Broadcasting Service and National Public
Radio are still around. ...There is bias in news reporting and there always will be. That's hardly the problem. The problem is forcing people to pay
for the bias and propaganda with which they disagree. As Jefferson once wrote, "To compel a man to furnish contributions of money for the
propagation of opinions which he disbelieves and abhors, is sinful and tyrannical." ...Let's cut the cord between government and media. Let's
end taxpayer subsidies for TV and radio - and columnists, for that matter - forever. We don't need a more balanced Pravda. We need to make Pravda, PBS, and NPR private.
Tuesday, May 24, 2005 ~ 8:43 a.m., Dan Mitchell Wrote: This so-called "Constitution" or "Treaty Establishing a Constitution for Europe" (TCE) is unintelligible. No ordinary person has the time or
background to understand it. A Constitution should be comprehensible for the people it will govern. This text completely fails the test. The
Constitution of the United States of America is about 30 pages long - I suggest you check the length of your own national Constitution. The European Constitution is 252 pages long in the French version and with
all the protocols and annexes comes to 850. ...People who have actually read the text almost always come out of this difficult exercise determined
to vote against it. Naturally all the official, economic-financial and media propaganda is in favour of voting Yes - they say it's 'more democratic than what we had".
Monday, May 23, 2005 ~ 1:23 p.m., Dan Mitchell Wrote: When politicians talk about the federal budget, they like to focus on "the deficit," or (once in a great while) the surplus. This is a political disguise
that lets them avoid discussing the components of the budget -- spending and revenues -- lest the voters react in horror and ask them to tax and
spend less. So we thought our readers might like to know that so far this year federal tax revenues are booming. Overall, in the first seven months
of Fiscal Year 2005 through April 30, they climbed by $146 billion to a total of $1.216 trillion. That's an increase of 13.6% over a year earlier,
some four or five times the inflation rate, and the kind of raise that most American families can only dream about. Income tax receipts are driving
this windfall, with individual revenues up $66 billion, or 16%, to $547 billion. Corporate income taxes are rolling in even faster, tsunami-like in
fact, rising 48% to $134 billion. Not even Congress can spend all of this in just a few months, though it is trying. According to the Congressional
Budget Office, spending in the first seven months of FY 2005 rose 7.1%, more than twice the inflation rate, or about $97 billion, to $1.451
trillion. ...There are several lessons here, starting with the fact that somebody is earning all that extra income that the feds are getting their share of. The economy has been doing better than media coverage
admits, with growth lifting employment and incomes and thus the federal fisc. This revenue boom also is taking place in the wake of the 2003
reduction in dividend, capital gains and marginal income tax rates that Robert Rubin and other worthies predicted would be fiscally disastrous.
...It's amazing, amid these results, that some Republicans are reluctant to make the 2003 tax cuts permanent. They should be advertising that their
tax policies have helped the economy and will continue to do so if they are extended. The best solution for federal red ink is continued prosperity combined with spending restraint and entitlement reform, not
a tax increase.
Monday, May 23, 2005 ~ 1:00 p.m., Andrew Quinlan Wrote: ...the federal government costs 33 percent more than in 2001. ...the federal government cannot account for $25 billion it spent in 2003. That's billion with a "b." Federal auditors know someone spent $25 billion, somewhere on something, but don't know who, where or on what. ...Another audit shows the D | |||||||||||