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www.freedomandprosperity.org |
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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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Wednesday, November 30, 2005 ~ 8:55 a.m., Dan Mitchell Wrote: Our base rightly expects Republicans to govern by the principles -- lower taxes, less government and more freedom -- that got them elected. Today, with Republicans controlling
both the legislative and executive branches of the federal government, there is a widening credibility gap between their political rhetoric and their public policies. What will happen to Republicans if these
freedom-loving, grassroots activists don't show up for work next fall? The elections earlier this month may be an indication of the answer. ...As the party of smaller government, Republicans will always have a
more difficult job governing than Democrats do. Government naturally wants to expand. It is always easier for politicians when both you and your political base truly believe that there is a new government
program to solve any problem, real or imagined. We will always have to work harder and be more entrepreneurial than our political opponents when it comes to implementing reforms. To succeed in the future, the
Republican Party must get back to basics. We need, in effect, another Republican takeover of Congress, reaffirming a commitment to less government, lower taxes and more freedom. As in 1994, this revolution will
be driven by the young Turks of the party -- the brave backbenchers more inspired by Reagan than the possibility of a glowing editorial on the pages of the New York Times.
Wednesday, November 30, 2005 ~ 7:22 a.m., Dan Mitchell Wrote: Clinton is gone from the White House, but the federalization laws of his administration - Goals 2000, School-to-Work, and Workforce
Investment - are still in place. President George W. Bush, who says the federal government has "a role to play in education," has merely
substituted labels more comforting to Republicans: standards, tests, and accountability. Now we find that the process is no longer just federalization; it's globalization. Who would have guessed that the
United Nations Educational, Scientific and Cultural Organization would be positioning itself to design curricula for U.S. schools? Former President Ronald Reagan withdrew the United States from UNESCO on
Dec. 31, 1984, because it was corrupt, anti-Western and a vehicle for far-left propaganda. Unfortunately, President George W. Bush rejoined UNESCO in 2003.
Tuesday, November 29, 2005 ~ 10:02 a.m., Dan Mitchell Wrote: In any rational insurance plan, coverage increases with increasing costs. But the likes of Senate Finance Committee Chairman Chuck
Grassley and House Speaker Dennis Hastert were determined to hand out a bit of money to all seniors, regardless of whether or not they really needed the help. The donut hole is their feckless attempt at cost
control. And the results are already in as to whether this was a political winner. Far from attracting senior gratitude or establishing GOP credibility on health care, these Republicans have set the stage for
decades of Democratic demagoguery about closing the donut hole and enriching the benefit. This is a perfect political-science-class illustration of why creating new entitlements can never work to the political
advantage of parties that pay even lip service to the goal of limited government. There will always be someone agitating for the entitlement
to be bigger. ...Politically, the worst is probably yet to come as private employers start ditching retiree drug coverage and throwing more people into the government system. And as costs for the program
inexorably increase, so will the pressure to raise taxes.
Tuesday, November 29, 2005 ~ 8:36 a.m., Dan Mitchell Wrote: ...the efficiency of the major Scandinavian economies is a myth. The Swedish and Finnish welfare states have been going through a long
period of decline. In the early 1990s they were virtually bankrupt. Between 1990 and 1995 unemployment increased five-fold. The Scandinavian countries have not been able to recover. ...By 2003
Sweden had fallen to 14th place from 5th in the prosperity index... According to OECD figures, Denmark was the 3rd most prosperous economy in the world in 1970, immediately behind Switzerland and the
United States. In 2003, Denmark was 7th. Finland did badly as well. From 1989 to 2003, while Ireland rose from 21st to 4th place, Finland fell from 9th to 15th place. Together with Italy, these three
Scandinavian countries are the worst performing economies in the entire European Union. Rather than taking them as an example, Europe's politicians should shun the Scandinavian recipes.
Monday, November 28, 2005 ~ 11:33 a.m., Dan Mitchell Wrote: ..the free-market policies of the U.S....could be put at risk by the...the Organization for Economic Cooperation and Development. ...the
Paris-based OECD is dominated by the nations of Old Europe. Founded in the 1960s as an academic group that primarily researched economic development, the body has transformed itself in the past few years into
a sort of booster organization for the high-tax high-regulation policies of European Union nations. As Dan Mitchell, economist and senior fellow at the Heritage Foundation has said, OECD seeks to "create an
OPEC for politicians" by hindering countries from lowering their taxes and regulatory barriers....An OECD official complained a few years ago
that tax competition "may hamper the application of progressive tax rates and the achievement of redistributive goals." ...The OECD's 2005
Economic Survey of the United States urged that the U.S. adopt a European-style value-added tax (VAT)... Groups like the OECD attempt to short-circuit this competition through a process that
now-United Nations Ambassador John Bolton referred to as a "worldwide cartelization of governments and interest groups." Writing in the Chicago Journal of International Law in 2000, Bolton asserted
that "the costs to the United States" in "reduced constitutional autonomy ... and limitations on our domestic and foreign policy options and solutions are far too great ... to be acceptable."
Monday, November 28, 2005 ~ 11:00 a.m., Dan Mitchell Wrote: In the Tax Reform Act of 1986 (TRA'86) the U.S. Congress lowered the top corporate income tax rate from 46 percent to 34 percent, the
largest reduction since the tax was enacted in 1909. This change, along with an earlier move in the United Kingdom, started a wave of corporate income tax reduction worldwide. One of the ironies of tax
policy during the Bush presidency is that five years of tax-cutting legislation have left the corporate income tax rate unchanged. Meanwhile, another wave of corporate income tax reduction has swept
around the world and is still underway. The United States is not the leader this time around. In fact, the U.S. is lagging behind and now has the highest combined statutory corporate income tax rate among
OECD countries.
Monday, November 28, 2005 ~ 10:14 a.m., Dan Mitchell Wrote: ...despite persistent claims that the region has tried the "free-market" model and found it wanting, Latin America is stubbornly stuck in a
statist time warp. When it comes to burdensome government and weak property rights, Latins don't fare as badly as Africans but their freedoms lag behind those in much of Asia and the former Soviet
satellites of Europe. ...Take for example Mexico...businesses face crippling regulation and inadequate legal protections, weakening the potential for market competition, investment and productivity gains.
...In the category of the World Bank report that deals with "hiring and firing," Mexico ranks 125th out of the 155 countries surveyed, not least
because it costs a firm almost 75 weeks of wages to fire a worker. Mexico also ranks 125th in "protecting investors"... In 25th place globally, Chile has the best business climate in the region but is
inexcusably behind Malaysia, Estonia and Lithuania. It badly needs to advance reforms undertaken in the 1980s, but instead the Socialist government of Ricardo Lagos has yielded to union activists by
increasing labor law burdens. ...Why hasn't democracy in Latin America produced change? The answer can be found in public-choice theory -- a school of economics made famous by Nobel Prize winner James
Buchanan. Public choice views politics as a market, where the highest bidders have the power to "purchase" what they want. Deregulation
may be best for the majority, but politicians don't have an incentive to do it when their most powerful, best-organized constituents -- the ones
who put them in office -- prefer the status quo. That includes not only labor unions but rich, established oligarchs and government bureaucrats.
Monday, November 28, 2005 ~ 9:45 a.m., Dan Mitchell Wrote: EU sugar prices will fall by 36 percent over the next four years...under a deal reached by European agriculture ministers on Thursday (24
November). ...The decision relaxes almost 40 years of protectionism for EU sugar beet farmers and comes in response to a World Trade Organisation (WTO) ruling in October. ...European sugar beet farmers
fear the move will destroy small businesses in new member states, which cannot compete... A spokesman for a large European sugar producer pointed out that "our profits will also fall." Meanwhile, fair
trade NGO Oxfam slammed the new accord for its disregard of small growers in developing countries. "The commission has hurled money at its member states to convince them to sign up, but has abandoned some
of the poorest countries to destitution," Oxfam's Brussels head, Luis Morago, said.
Sunday, November 27, 2005 ~ 11:51 a.m., Dan Mitchell Wrote: Congress is about to do severe harm to the U.S. economy if it fails to act in the next few months to stop three huge automatic tax increases.
...The dividend and capital gains rates were reduced to 15 percent in 2003. The estate (also called death or inheritance) tax got an overhaul in 2001, with gradual reductions over 10 years and complete
elimination set for 2010. But the dividend and capital gains cuts turn into pumpkins (reverting to their old top rates of 35 and 20 percent, respectively) at the end of 2008. And in 2011, the pre-2001 estate tax
reappears. Since backers lacked 60 Senate votes, all three of the cuts were only temporary. ...In a perfect world, an extension of the Big Three cuts could be part of comprehensive tax reform, along the lines
recently recommended by the Mack-Breaux Commission. Let's end tax breaks on real estate, health insurance, state taxes and other preferences and lower all rates to the 15 percent level. Then we'd see
fantastic economic growth in America, just in time to engage surging China, India and Japan. But I'd settle for a simple Hippocratic move:
extend the dividend and capital gains cuts by April, then force a vote on an estate-tax compromise just before the 2006 elections. Defuse the ticking time bombs.
Sunday, November 27, 2005 ~ 9:27 a.m., Dan Mitchell Wrote: Supporters of the theory of human origins known as "intelligent design" want it taught alongside the theory of evolution. Opponents will do
anything to keep it out of science classrooms. The disagreement is clear. But why does everyone assume that we must settle it through an ideological death-match in the town square? ...We're fighting because
the institution of public schooling forces us to, by permitting only one government-sanctioned explanation of human origins. The only way for
one side to have its views reflected in the official curriculum is at the expense of the other side. ...The sad truth is that state-run schooling has
created a multitude of similarly pointless battles. Nothing is gained, for instance, by compelling conformity on school prayer, random drug testing, the set of religious holidays that are worth observing, or the
most appropriate forms of sex education. Not only are these conflicts unnecessary, they are socially corrosive. Every time we fight over the official government curriculum, it breeds more resentment and
animosity within our communities. These public-schooling-induced battles have done much to inflame tensions... Fortunately, there is a way to end the cycle of educational violence: parental choice. Why not
reorganize our schools so that parents can easily get the sort of education they value for their own children without having to force it on their neighbors? ...the promotion of social harmony is an unusual
justification for replacing public schools with parent-driven education markets. Most arguments for parental choice rest on the private sector's superior academic performance or cost-effectiveness. But when
you stop and think about it, doesn't the combination of these advantages suggest that free markets would be a far more intelligent design for American education?
Saturday, November 26, 2005 ~ 3:31 p.m., Dan Mitchell Wrote: Canada's Minister of Finance Ralph Goodale has made the surprising decision to respond to concerns regarding income trusts and other
flow-through entities by announcing a reduction in personal income taxes on dividends ..."Reducing the tax individuals pay on dividends will encourage savings and investment and will help establish a better
balance between the tax treatment of large corporations and that of income trusts," explained Minister Goodale. "This action will benefit
Canadians and result in bottom-line tax savings for them," he added.
Saturday, November 26, 2005 ~ 1:18 p.m., Dan Mitchell Wrote: If I want to buy one of these remedies, I have to take the corresponding card to the pharmacist's counter, wait in line, show my ID and add my
name to a register. This procedure, required by an "emergency order" from Virginia Gov. Mark Warner, is supposed to prevent me from using
the pseudoephedrine in products such as Sudafed and Dayquil to cook up a batch of methamphetamine in my garage. If you're not lucky enough to live in a state with similar restrictions, fear not: Under the
Combat Meth Act, which Congress is expected to pass soon, you too can be treated like a criminal the next time you have nasal congestion, thereby doing your part to help achieve a drug-free society. ...According
to the Drug Enforcement Administration, some 80 percent of the illicit meth consumed in the United States comes from large-scale Mexican traffickers, who buy their pseudoephedrine in bulk rather than a couple
boxes at a time from CVS. Restricting retail access to pseudoephedrine may shift production away from small local labs and toward the big-time meth makers who already account for most of the supply, but
it's not likely to have a noticeable effect on consumption. ...Hard as this collateral damage is to justify, it pales in comparison to that suffered by
other innocent victims of the government's war on methamphetamine. Last summer, for instance, state and federal agents arrested 49 convenience store clerks and owners in Georgia on charges that they
sold pseudoephedrine and other supplies to informants posing as meth cooks. The supplies, including matches, charcoal, anti-freeze, coffee filters, aluminum foil, and cat litter, were all perfectly legal. The
charges, which carry penalties of up to 25 years in prison as well as fines and asset forfeiture, are based on the doubtful premise that the defendants knew or should have known what the fake customers were
pretending to be planning. ...This is the logic of the war on drugs. By criminalizing possession of a substance that is readily manufactured using innocuous everyday products, the government created the illicit
labs it is now trying to shut down by criminalizing the sale of those innocuous everyday products.
Saturday, November 26, 2005 ~ 11:23 a.m., Dan Mitchell Wrote: ...it's a matter of time before some jury somewhere says fat is McDonald's' fault. In a documentary that promoted the "dangers" of
fast food, Morgan Spurlock ate all of his meals at McDonald's for 30 days, saying "yes" whenever "Super size" fries were offered. "Super
Size Me" was a hit. It won awards from the Sundance Film Festival and the Writers Guild. As a result of his experiment, Spurlock says, he had trouble breathing, became hot and felt like he was having heart
palpitations. He gained 24.5 pounds, and his cholesterol shot up 65 points. Not good. But why was that McDonald's' fault? The same thing would happen if he ate that much at an elegant French restaurant. We
don't blame GM because cars lead us to avoid exercise, or ABC because TV invites us to be couch potatoes. ...The legal system should be reformed so people bear the consequences of their own bad choices.
The best solution would be to make people who file baseless lawsuits pay the costs of defending against them. "Loser pays," that system is
called, and that's the way it works in most of the civilized world. America's tort lawyers cleverly call loser-pays the "the English Rule,"
as if it's an odd British idea. It's not. It's the "Rest-of-the-World Rule." Only America suffers under the bizarre "American Rule," which allows
lawyers to sue again and again, while forcing others to pay. Loser-pays would bring some justice to their victims.
Friday, November 25, 2005 ~ 8:34 a.m., Dan Mitchell Wrote: When Bush ran for president in 2000, he proposed increasing federal funding for local public schools -- a dramatic departure from the
Republican platform of 1996, which called for abolishing the Department of Education. At the same time, however, Bush called for giving vouchers to students in persistently failing public schools so they
could attend private or religious schools, instead. This was supposed to be a payoff for conservatives if they acquiesced in increasing the size
and power of a federal agency not authorized by the Constitution. As soon as Bush was elected, he began backtracking on school choice. The day after he was inaugurated, White House Chief of Staff Andy Card
said, "Vouchers won't be a top priority of this administration." ...When Bush was campaigning in 2000, according to the Office of Management
and Budget, Department of Education spending was $33.9 billion. In 2005, it spent $70.9 billion. But long before 2014 rolls around, Republicans ought to leave President Bush's education policies and his
big spending behind. The Constitution left control and funding of local public schools to local government. That's where it still belongs.
Thursday, November 24, 2005 ~ 1:45 p.m., Dan Mitchell Wrote: Spanish Prime Minister José Luis Rodríguez Zapatero has announced that his government is seeking to steer through cuts in taxation for both
small and large companies which could go into effect from next year. In an attempt to bring Spanish company taxes more into line with international rates, Mr Zapatero stated at an event organised by The
Economist magazine in Madrid on Monday that taxation on small companies will be reduced to 25% and for large businesses to 30%. ...Mr Zapatero also announced that the government intends to reform
the personal income tax system to "reduce fiscal pressure on earnings" and to make taxation "simpler and fairer". With Ireland's company tax policy seemingly under attack from various quarters, Minister for Enterprise, Trade and Employment Míchéal
Martin told a conference in Australia this week that the government has no intention of increasing its flagship 12.5% rate of corporate tax. "To
be quite clear about this, the Irish corporate tax rate has been a key cornerstone of our economic policy - getting that tax rate down to
12.5pc and keeping it there...," Mr Martin stated during an Enterprise Ireland mission to Australia. ...As if the Irish government needed reminding that an increase in corporate tax is unlikely to be well
received by the large number of multinationals which have established operations in Ireland, Dell chief executive, Kevin Rollins warned in an interview with the Sunday Business Post at the weekend that the
computer giant would consider relocating if corporate taxes in the Republic increase. "Any time a cost goes up, we will reassess our position, particularly with tax," he said. Colombia last week said it is planning to cut corporate tax from 38.4% to under 30% by the end of the year in order to spur investment.
Finance Minister Alberto Carrasquilla said the government will ask Congress to reduce the tax rate, which is currently one of the highest rates of corporate tax in the region. Businesses have repeatedly begged
the government to reduce the tax rate to encourage both local and foreign investment in the country."In Colombia, the rate is the highest
in Latin America and it dissuades the investment's growth to be as high as in other countries in the region," said Eugenio Marulanda, head of the Confecamaras, a business grouping. Carrasquilla said the
government agrees with the business community. Russian President Vladimir Putin has stated that the government remains committed both to simplifying tax legislation and reducing the
tax burden... "All our plans in this sphere have one aim - to reduce the tax burden," Mr Putin told business leaders during his recent visit to
Japan. According to the President, taxation as a share of the Russian economy, at 34% to 35% of GDP, is lower than in Western Europe where the average is about 40%. However, he went on to add that the
government still plans to "reduce this yet further"... Since 2002, the Putin administration has reduced and abolished a number of taxes,
including turnover tax, payroll taxes, sales tax, and value added tax, which was recently cut to 18% from 20% and could be reduced to as low as 13% in the coming years. Deputy Finance Minister Sergei
Shatalov told reporters on Wednesday that a proposal to cut profit tax to 20% from 24% will also be put on the table within the next two years.
Thursday, November 24, 2005 ~ 11:46 a.m., Dan Mitchell Wrote: In a Gallup Poll conducted over the weekend, President Bush got low marks on every issue. His lowest, however, was "controlling federal
spending," with 71 percent disapproving of his performance on that point. A CNN/USA Today poll found the same thing. Bush scored lowest
(26 percent approval) on ... "controlling federal spending." ...What, exactly, have Republicans done that is so conservative? They've
tightened Washington's grip on education policy, expanded the welfare state, enhanced unnecessary farm and corporate subsidies, passed a
campaign finance "reform" law that lets the federal government silence citizens' political speech, refused to control immigration, grown the
federal budget faster than President Clinton did, and exploded the deficit.
Wednesday, November 23, 2005 ~ 8:37 a.m., Dan Mitchell Wrote: Whenever there have been sharp rises in gasoline prices, whether nationwide or locally in California, Senator Barbara Boxer has loudly
demanded an investigation of the oil companies. These repeated investigations over the years have repeatedly failed to turn up anything other than supply and demand. The real irony is that it has been
precisely liberals like Barbara Boxer who have been the chief obstacles to increasing the supply of oil because they are dead set against drilling
for oil in more places and against building more refineries. When you refuse to let supply rise to meet rising demand, why should you be surprised -- much less outraged -- when prices rise?
Tuesday, November 22, 2005 ~ 2:35 p.m., Dan Mitchell Wrote: ...let's not let politicians deceive us, and escape culpability, by defining inflation as rising prices, which would allow them to make the pretense
that inflation is caused by greedy businessmen, rapacious unions or Arab sheiks. Increases in money supply are what constitute inflation, and the general rise in the price level is the result. Who's in charge of
the money supply? It's the government operating through the Federal Reserve.
Tuesday, November 22, 2005 ~ 11:54 a.m., Dan Mitchell Wrote: Dennis Kozlowski stole $600 million from Tyco and got eight to 25 years in prison; Kofi Annan supervised more than $12 billion in
international theft and will stay in his job. All of which explains why allowing the United Nations to be in charge of running the Internet is a very bad idea. ...Today no organization or government controls the
Internet. ...Much of the rest of the world, gathered last week in Tunisia for the U.N.-hosted World Summit on the Information Society, wants to
take over that responsibility, or as European Union spokesman Martin Selmayr put it, the U.S. must "give up their unilateral control and
everything will be fine." ...Old Europe and the despotic nations want exactly that--international Internet content control. And they have
convinced the EU establishment that U.N. control of the Internet would be just and appropriate. ...The good news is that last Wednesday U.N. and U.S. representatives in Tunis agreed upon, and the World Summit
then adopted, a process that at least for the moment avoids U.N. control of the Internet. ...But the war against Internet freedom is far from over; Mr. Annan again demands international discussions of
"Internet governance issues" and says that change has become necessary regarding Icann Internet oversight. So first the U.N. and the
E.U. will seek Internet content control, and then perhaps the old U.N. idea of applying an international tax on e-mail messages.
Monday, November 21, 2005 ~ 7:00 a.m., Dan Mitchell Wrote: Commenting on the outcomes of the Melbourne Global Forum, Keith Johnston, Head of Policy and Communications at STEP Worldwide,
said: "...it is worrying that a large number of the other jurisdictions that attended the Forum for the first time, such as Austria, which is a
member of both the OECD and the European Union, continue to refuse to offer this endorsement. Other major finance centres, including Luxembourg and Belgium, also both OECD and EU members, refused
even to attend the Forum, let alone commit to the principles of exchange and information and transparency. There has also been no attempt to bring US states, such as Delaware and Wyoming, into the
process, despite these being in competition with major finance centres across the world."
Monday, November 21, 2005 ~ 6:14 a.m., Dan Mitchell Wrote: Robert Mugabe denounced plans to keep the current U.S.-based technical management of the 'Net in place. If the likes of Zimbabwe's
tyrant are against it, the rest of the world clearly should be for it. The upshot of the so-called "Tunis Agenda" is that the everyday Internet
user will see almost no change in how cyberspace works. That's quite an accomplishment on the part of American negotiators and allies such as Canada and Australia. Many observers had feared that this meeting
would end up giving birth to an intergovernmental body that would clog the 'Net with regulation and bureaucracy. It's true that the agreement does call for the U.N. to establish an Internet Governance
Forum next year. Importantly, however, it further says that this forum "would have no oversight function and would not replace existing arrangements, mechanisms, institutions or organizations."
Monday, November 21, 2005 ~ 3:47 a.m., Dan Mitchell Wrote: British environment secretary, Margaret Beckett, has suggested a u-turn in climate policies, suggesting voluntary targets for cutting
emissions when the Kyoto climate agreement ends in 2012. Environmentalists say that, without mandatory targets, the climate deal is effectively dead. ...She said it would be impossible to achieve
consensus on compulsory targets, according to UK Sunday paper the Observer. ...Last week a UN report concluded the EU as a bloc has achieved a reduction of only 1.4 percent in emissions from 1990 to
2003, far from the minus 8 percent target in 2012 that the Europeans have set themselves in the framework of Kyoto. Goals set by the EU to increase the share of renewable energy also seem to have failed.
Sunday, November 20, 2005 ~ 8:30 a.m., Dan Mitchell Wrote: The cost to taxpayers of Medicare Part D was initially estimated at $400 billion over the next 10 years, but that was soon revised to $520
billion and then $760 billion. Those first 10 years would be cheap compared with the following 20. The number of people eligible for Medicare will nearly double by 2030. Medicare is projected to rise from
12 percent of the federal budget to 25 percent by 2025, which is literally unsustainable because young taxpayers will not sustain it. ...Isn't insurance supposed to protect against surprisingly large expenses,
rather than routine outlays? Only a group of politicians would choose a policy that covers a generous 75 percent of the first $2,250 yet not one
cent of the next $2,850. Why are seniors compelled to have a zero or $250 deductible on Part D of Medicare and only a $110 deductible on Part B? When buying home or car insurance, smart shoppers would
choose a deductible of at least $500.
Saturday, November 19, 2005 ~ 3:46 p.m., Dan Mitchell Wrote: A senior member of the Hungarian Communist Workers' Party has received a one-year suspended sentence for wearing a red star, the
communist symbol which is banned under Hungarian law. ...Sporting communist or Nazi symbols is forbidden in Hungary. The red star was banned after Hungary threw off communism in 1989. British historian David Irving, who once famously said that Adolf Hitler knew nothing about the systematic slaughter of 6 million Jews, has been
arrested in Austria on a warrant accusing him of denying the Holocaust. ...If formally charged, tried and convicted, he could face up to 20 years in prison, said Otto Schneider of the public prosecutor's office.
Friday, November 18, 2005 ~ 6:26 p.m., Dan Mitchell Wrote: Prior to the decade of the 1930s, the wages of inexperienced and unskilled labor were determined by supply and demand. There was no
federal minimum wage law and labor unions did not usually organize inexperienced and unskilled workers. That is why such workers were able to find jobs, just like everyone else, even when these were black
workers in an era of open discrimination. ...The net economic effect of minimum wage laws is to make less skilled, less experienced, or otherwise less desired workers more expensive -- thereby pricing many
of them out of jobs. Large disparities in unemployment rates between the young and the mature, the skilled and the unskilled, and between different racial groups have been common consequences of minimum
wage laws.
Thursday, November 17, 2005 ~ 8:17 p.m., Dan Mitchell Wrote: ...the GOP plan reduces the increase in the federal budget by a microscopic 0.25% over the next five years. The new prescription drug
bill by itself adds some $300 billion to the budget over this same five years, or six times what this "deficit reduction" bill would save. ...For
the past five years federal spending on anti-poverty programs has increased by 41%. Medicaid...is scheduled to grow by 7.9% a year, and under the GOP plan it would grow by 7.5% a year. Either way the
program expands by more than double the rate of inflation through 2011. ...several areas, the Republicans actually expand entitlements. The Senate version would raise the cost of farm price supports by
extending the subsidy program for four more years past 2007, at a cost of $60 billion -- that is, more than the savings in this bill's first five
years. ...Midwestern Senators are also insisting on extending the milk program, which was supposed to expire this year and mainly benefits well-to-do dairy farmers. Northeasterners get $1 billion more for
low-income heating assistance -- which means that Uncle Sam will be subsidizing families to use more energy, while the feds spend billions in other agencies for energy conservation. There's even $130 million to
expand Medicaid for Alaska, which has become the Republican version of West Virginia as a state bathed in taxpayer subsidies.
Thursday, November 17, 2005 ~ 5:16 p.m., Dan Mitchell Wrote: 10 states already had laws banning the use of the government's power of "eminent domain" to evict homeowners in favor of private economic
development. Since then, at least two -- Texas and Alabama -- have followed suit. Taking private property to build a highway is one thing -- the Constitution's Fifth Amendment clearly provides for that. But
taking it to put up a mall is something else. Now the U.S. Congress is getting in on the act. The House this month overwhelmingly passed a bill that would withhold all federal economic development aid for two
years from states or localities that use economic development as a rationale for seizing private property. The vote was 376-38.
Thursday, November 17, 2005 ~ 3:53 p.m., Dan Mitchell Wrote: MILC was one product of the 2002 farm-subsidy bill, and even by farm-subsidy standards it is perverse. ...MILC makes direct payments to
farmers based on their production whenever the milk price falls below a certain level. What's more, MILC kicks in at a much higher level than the price-support program. The effect of this is that production is
encouraged by MILC even as prices are falling, which drives the price down toward the support level and prevents the shakeout that the price-support program is intended to allow. ...MILC distorts the market
and conflicts directly with other pre-existing subsidy programs. It has also cost close to $2 billion since its inception, nearly twice the $1
billion originally budgeted for it. ...Two billion dollars over three years may be a drop in the fiscal milk-bucket, but Republican lawmakers used
to insist on sunsetting government programs for a reason. Taxpayers have been MILCed enough by this particular boondoggle.
Wednesday, November 16, 2005 ~ 6:45 p.m., Dan Mitchell Wrote: ...the next German government ...manages to combine the worst ideas from both parties. Take the value added tax (VAT) for example. Before
the election, Ms. Merkel advocated raising it... The Social Democrats opposed the idea, saying it would dampen consumer demand. What was the outcome? Instead of raising VAT by just two percentage points, as
the Christian Democrats wanted, the new government will raise it by three points to 19%. ...It gets worse. The Social Democrats pushed through an all-time favorite among left-wing populists: high marginal
tax rates. The top rate for single households earning more than EUR250,000 (for couples the threshold is EUR500,000) will rise to 45% from 42%. Even the optimists among the Social Democrats don't
believe that it will "generate" much revenue but milking the rich apparently is always good propaganda. Most likely, though, it will drive out many of the country's most talented and productive people,
reducing growth and tax revenues along the way. ...Ms. Merkel is destined to make history on Nov. 22 by becoming the country's first female chancellor. If she doesn't manage to inject more of her original
free-market ideas into the coalition, that might be all she will be remembered for. The coalition agreement, signed by the German christian democrat CDU and the social democrat SPD parties, ...revives plans for a
ratification of the EU constitution, which was put on ice by EU leaders in June following a rejection of the new treaty by French and Dutch voters.
Wednesday, November 16, 2005 ~ 3:51 p.m., Dan Mitchell Wrote: Nothing the UN has inflicted on innovation and research and development is worse than its record on biotechnology applied to
agriculture and food production. The work of the UN's Task Force on Biotech Foods continues to be no more than bureaucratic slapstick -- in
which American taxpayers and scientists are getting the pies in the face. No serious, coherent defense of its work is even remotely possible. Its
scope is unscientific, and its projects largely pointless and gratuitous. ...The U.S. Government should pull the plug on this task force -- for the
good of food biotech, in the interest of sound public policy, and to save the United Nations from itself. More generally, federal officials should
pursue projects only if they will benefit American interests -- and oppose and reject those that don't. They should adhere to the simple principle that no agreement is better than one that damages the
long-term interests of the United States.
Wednesday, November 16, 2005 ~ 11:32 a.m., Dan Mitchell Wrote: How do you define insanity? Here's one way: The U.S. is importing millions of tons of man-made cement from the likes of Thailand and
China, including the costs of shipping it across the Pacific Ocean, because the federal government wants to limit cement imports from Mexico. ...right now the U.S. has a self-inflicted cement shortage. By
slapping a 55% anti-dumping duty on cement from Mexico, the Commerce Department is doing what three hurricanes could not: slowing the U.S. economy. This border tax was first levied in 1990, in
response to an anti-dumping petition filed by a group of U.S. cement producers that didn't like competing with Mexican companies. ...The Commerce Department has the power to suspend the dumping duties
against Mexican cement makers, and we know that the White House was considering this in the wake of Katrina. What's taking so long?
Tuesday, November 15, 2005 ~ 8:39 a.m., Dan Mitchell Wrote: ...the automobile is one of the two most liberating inventions of the past century, ranking only behind the microchip. The car allowed even the
common working man total freedom of mobility -- the means to go anywhere, anytime, for any reason. In many ways, the automobile is the most egalitarian invention in history, dramatically bridging the
quality-of-life gap between rich and poor. The car stands for individualism; mass transit for collectivism. Philosopher Waldemar Hanasz, who grew up in communist Poland, noted in his 1999 essay
"Engines of Liberty" that Soviet leaders in the 1940s showed the movie "The Grapes of Wrath" all over the country as propaganda against the
evils of U.S. capitalism and the oppression of farmers. The scheme backfired because "far from being appalled, the Soviet viewers were
envious; in America, it seemed, even the poorest had cars and trucks."
Monday, November 14, 2005 ~ 4:12 p.m., Dan Mitchell Wrote: In a recent speech at Georgetown University, Sen. Joseph Lieberman (D-Conn.) outlined forthcoming legislation to "set America free" from
"dependence" on imported oil. He wants to end both our pain at the pump and America's reliance on oil sheiks. But there's a catch. The bill
would empower politicians to determine how much gasoline we may use and which types of cars we may buy. This is freedom? Sen. Lieberman cites the devastation wrought by recent hurricanes and the consequent
surge in gasoline prices as proof not only of "how vulnerable our [energy] supplies have become," but also of why we must end dependence on foreign oil. That is silly. Disasters happen, and when
they do, they disrupt everything, not just motor fuel supplies. The hurricanes left millions of people without food, water, homes, medicines, and electricity. Does that mean we are overly reliant on
those essentials, or that government should try to "set us free" from such "dependence"?
Monday, November 14, 2005 ~ 1:33 p.m., Dan Mitchell Wrote: The French have enacted all of the economic policies that liberals would like to see implemented in this country. So, for example, jobs are
protected. If a French company employing more than 600 people wants to fire someone, it must endure administrative procedures that last an
average of 106 days. Because it is so difficult to fire employees, French companies are less willing to take risks in hiring. This hurts young, inexperienced workers disproportionately. Once unemployed, 40
percent of French workers can expect to remain so for more than a year. Not only are jobs hard to find, but joblessness is softened by generous benefits. Unemployment benefits range from 57 to 75 percent
of the worker's last salary and can last as long as three years (with a cap of 5,126 Euros per month). ...socialism is an insidious poison. The vast majority of French voters seem wedded to their
government-supplied goodies -- failing to recognize that their economic and therefore social lives are unraveling because of that dependence.
Sunday, November 13, 2005 ~ 10:14 a.m., Dan Mitchell Wrote: Top members of the Christian Democratic Union and the Social Democratic Party returned to the negotiating table one last time on
Friday afternoon and quickly hammered out an agreement to raise Germany's value-added tax on most purchases from 16 to 19 percent in 2007. The negotiators also agreed on a special wealth surtax of 3
percent on individuals who make more than 250,000, or $292,000, per year. The Free Democrats, Germany's free-market "liberals" and now
the largest opposition group in Parliament, criticized the larger groups for relying on "an orgy of tax hikes" to clean up the budget. "The
grand coalition will be very expensive for the citizens of Germany," the chairman of the Free Democrats, Guido Westerwelle, said in a written statement.
Irish internal market commissioner Charlie McCreevy has suggested tax harmonisation is not and will not be on the Brussels agenda whether
"by the front door or the back", stressing tax competition among countries is "healthy". In a speech given in Brussels on Thursday (10
November), Mr McCreevy said "National vetoes will be retained and competition between member states for inward investment - some of it tax based - will continue. Tax competition is a healthy spur to
governments across Europe," according to the Financial Times.
Sunday, November 13, 2005 ~ 9:09 a.m., Dan Mitchell Wrote: Republican disarray on Capitol Hill reached self-ramming speed yesterday, as both the House and the Senate abandoned key policy
priorities... In the Senate, Maine's Olympia Snowe helped to scuttle even a single-year extension of the current 15% tax rate on dividends and capital gains that is due to expire in 2008. Senate Finance Chairman
Chuck Grassley was thus forced to postpone a committee vote on extending a tax cut that has been crucial to an economic rebound that since mid-2003 has been marked by 10-straight quarters of nearly 4%
average growth. ...The chaos was even worse in the once-disciplined GOP House, where leaders had to pull their budget from the floor for lack of a majority. The immediate cause was the revolt of the 25 House
Members listed nearby, who signed a letter demanding that a provision to allow drilling in the Arctic National Wildlife Refuge be stripped from
the bill. These are many of the same Members who earlier threatened to bolt on the budget unless President Bush reimposed Davis-Bacon union wage levels on Gulf reconstruction projects. And they are some of the
same Members from the Northeast who demanded $1 billion more in subsidies for home heating this winter. Irony is apparently not their strong suit. ...America can survive these policy setbacks; the question is
whether the Republican majority will, or even should. If a GOP Congress can't vote to sustain its own wildly successful tax cuts, or to explore for more domestic energy, let's just turn Congress over to
Democratic Leader Nancy Pelosi and at least have truth in liberal advertising.
Saturday, November 12, 2005 ~ 3:57 p.m., Dan Mitchell Wrote: ...the most important domestic accomplishment of the Bush Presidency has been the tax cuts of 2003. The mystery is why Republicans have
been so reluctant to extend them, or for that matter even to defend them politically. ...We could understand if the tax cuts had failed to do what supporters promised, but they have done that and more. Almost
from the day in May of 2003 when it became clear they'd become law, the U.S. economy shifted into a higher gear -- to 4% average GDP growth from 2%. The stock market bounced back, corporate
investment revived, and unemployment declined to its current and historically low rate of 5%. Even the GOP's deficit-phobes should be happy, as federal revenue has soared -- by an astonishing $274 billion,
or nearly 15%, last fiscal year, suggesting that the tax cuts have been self-financing. The federal budget deficit fell by $100 billion last year, despite federal spending that increased at a roughly 7% rate.
Saturday, November 12, 2005 ~ 2:15 p.m., Dan Mitchell Wrote: Who wrote the following? "[I]t is possible that once residents gave up their handguns, San Francisco would be seen as an easy hunting ground
for criminals who have no intention of giving up their own pistols." Is it the NRA claiming that gun laws disarm law-abiding citizens and not
criminals? No. Amazingly enough it was the San Francisco Chronicle, one of the more liberal newspapers in the U.S., in an editorial arguing against Proposition H, the initiative that passed on Tuesday to ban
handguns in the city. ...the police came out against the gun ban. Besides discussing the increases in murder occurring in Washington, D.C. after
it instituted a handgun ban, the officers stated: "When we disarm honest, law-abiding citizens, we contribute to empowering criminals and endangering society-at-large." They directly acknowledged how
important it was for people to be able to defend themselves with a handgun when the police couldn't be there.
Friday, November 11, 2005 ~ 2:17 a.m., Dan Mitchell Wrote: The CEOs of the world's biggest oil companies will be paraded before a pair of Congressional committees today, as political props to take the blame for high gasoline prices. Both parties will compete to throw the most stones. Meanwhile, the same Members will in their un-self-conscious wisdom claim to want the U.S. to become more energy "independent." Since cognitive dissonance is a prerequisite for politics, no one should be surprised. And perhaps the spectacle will even be useful if the Solons learn a few things about the oil industry. To wit, that roughly 75% of Exxon's oil profits are earned overseas, so they wouldn't even be subject to such East German concepts as the "windfall profits" tax. Or that Exxon makes only about 15 cents on each gallon of product it sells -- which is higher than the five cents it was making in recent years, but is hardly in the same league as, say, the profit margin of Microsoft. Exxon made about $1 billion in the U.S. in the third quarter in large part because it sold some seven billion gallons of fuel products. And fortunately so for American drivers, who were always able to buy gasoline -- albeit at higher prices -- despite having some 30% of U.S. refining capacity knocked out by back-to-back Gulf Coast hurricanes. Already gasoline prices are falling back to pre-Katrina levels, thanks in part to the exertions of the same industry that the Members will denounce today. If Congress were this efficient, the U.S. government woul | ||||||||||