7 August 2009

7 August 2009

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complying with No Child Left Behind, speed limits, or anything else that states do to get some of their citizens’ involuntarily turned over federal tax dollars back. Indeed, though the official first draft of the CCSSI standards hasn’t even been released yet, states are being told that signing onto them will greatly improve their chances of getting a piece of the U.S. Secretary of Education’s $4.35 billion “Race to the Top” fund. Secretary Duncan has also said that the feds would consider spending up to $350 million on a national test to go with “voluntary” national standards. And No Child Left Behind hasn’t been reauthorized yet – what are the chances that forces in Washington will try to link much of the law’s funding to states signing on to national standards and tests?

AARP Members Not Buying Obama Health Care Plan [Cato at Liberty] AUG 06, 2009 09:10P.M. In Dallas, at least, the AARP staff found it tough going attempting to explain to the organization’s members why the elderly would be better off with Obama-like “reform.” These people obviously were having trouble with the line, “I’m from the government and I’m here to help you.” And they were quite vocal in stating their concerns. But they were acting well within the American political tradition, which seems to be what has spooked advocates of a government medical takeover speaking breathlessly of “mobs”–presumably like the one in Dallas–opposing “reform.”

In answer to that question I’d say, to be sure, the chances are pretty good; certainly much better than allowing truly voluntary adoption of national standards and tests.

FISCALLY CONSERVATIVE BLOG FEEDS (H/T to Mark Tapscott of the Washington Examiner.)

Meet the Mob [The Club for Growth]

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AUG 06, 2009 05:46P.M.

It’s All Voluntary But the Taxes [Cato at Liberty]

Liberals are claiming that health care protests are being run by mobs. Well, meet the mob.

AUG 06, 2009 06:24P.M. Chester Finn, president of the national-curricular-standards-pushing Thomas B. Fordham Foundation, has a piece on Forbes.com today saying that our colleges would do much better if our K-12 schools gave them better prepared students to work with. I have no problem with that. I also, surprisingly, don’t have much of a problem with Finn suggesting that national standards, in particular those under development by the Common Core State Standards Initiative, could help get students college ready. That’s because he couches the assertion in numerous qualifications — which are most certainly called for – acknowledging that the resulting standards could very well be garbage or evaded.

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Club Launches New Healthcare Ad in Nevada [The Club for Growth] AUG 06, 2009 05:07P.M.

Club for Growth Launches Second Healthcare Ad

So what do I have a problem with? This single — but critical — sentence about national standards :

Nevada TV Blitz Begins Today

They’ll be voluntary, to be sure, and not every state will embrace them. Washington – The Club for Growth will launch a new

No, they will not be voluntary! At least, they’ll be no more voluntary than

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television ad today aimed at U.S. Senate Majority Leader Harry Reid. The ad is part of the Club’s nationwide $1.2 million campaign to highlight the dangers of government-run healthcare and focuses on the unsustainable fiscal policies of Congress and the Obama Administration.

7 August 2009

But more security in a national ID card almost inevitably means less security for the individual in terms of privacy and autonomy. We don’t want a highly secure national ID card. We want a diverse and competitive identity and credentialing system. In such a system, governments may serve as identity providers. But that is not necessary and, given their powers, not desirable.

“After months of runaway federal spending, bailouts, and record deficits, Harry Reid wants taxpayers to swallow a $1 trillion government takeover of the healthcare sector,” said Club President Chris Chocola. “Instead of growing our economy, Senator Reid has been busy growing the government. Now he wants to stick hard-working families and taxpayers with another bill they can’t afford.”

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“Gov’t Insurance Would Allow Coverage for Abortion” [“Cato at Liberty”]

The new ad (shown below) highlights the crushing financial burden of government-run healthcare, as well as the endless bailouts and spending sprees that have consumed Washington, DC.

AUG 06, 2009 04:15P.M. So reports the Associated Press: For years, abortion rights supporters and abortion opponents have waged the equivalent of trench warfare over restrictions on federal funding. Abortion opponents have largely prevailed, instituting restrictions that bar federal funding for abortion, except in cases of rape and incest or if the mother’s life would be endangered….

“Taxpayers bailed out Wall Street and the auto industry. They were asked to swallow a $1 trillion government stimulus plan, a $400 billion spending bill, and a $3.6 trillion 2010 budget. And what do they have to show for it? Mountains of debt,” said Chocola. “Enough is enough.”

But the health overhaul would create a stream of federal funding not covered by the restrictions.

The Club’s ad campaign in Nevada will run throughout the August recess.

The new federal funds would take the form of subsidies for low- and middle-income people buying coverage through the health insurance exchange. Subsidies would be available for people to buy the public plan or private coverage. Making things more complicated, the federal subsidies would be mixed in with contributions from individuals and employers. Eventually, most Americans could end up getting their coverage through the exchange.

“Our message is simple,” added Chocola. “If you oppose government-run health care, call Harry Reid. If you oppose higher costs, less coverage, and more bureaucracy, call Harry Reid. If you want real healthcare reform that begins with patient-centered, free-market solutions and ensures more Americans have access to quality care, call Harry Reid.”

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The Democratic health care legislation as originally introduced in the House and Senate did not mention abortion. That rang alarm bells for abortion opponents.

The Twelve-Minute ID Card Hack [Cato at Liberty]

Since abortion is a legal medical procedure, experts on both sides say not mentioning it would allow health care plans in the new insurance exchange to provide unrestricted

AUG 06, 2009 04:16P.M.

coverage.

Several people today have sent me the article in the Daily Mail (UK) discussing the twelve-minute hack on a UK identity card. Security consultant/hacker Adam Laurie was apparently able to rewrite the data on the card in very short order. This would imply that making a more secure card is an improvement.

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7 August 2009

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cards they had been dealt by engaging in a serious discussion about

Sotomayor Confirmed, Constitutional Debate Continues [Cato at Liberty]

constitutional interpretation and jurisprudential philosophy.

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Costa Rica’s Social Security System Will Go Bankrupt in 14 Years [Cato at Liberty]

AUG 06, 2009 04:01P.M. All Americans should take pride in seeing our first Hispanic Supreme Court justice (not counting Benjamin Cardozo). While this moment should have belonged to Miguel Estrada—who was denied even a vote by an unprecedented Democratic filibuster—we should nevertheless celebrate Sonia Sotomayor’s rise from very humble beginnings to reach the highest court in the land. Although her selection represents the very worst of racial politics—she is not a leading light of the judiciary and would not have been considered had she not been a Hispanic woman—her career achievements show that the American Dream endures.

AUG 06, 2009 03:02P.M. An independent audit—the first ever—of Costa Rica’s social security system has found that the system will start eating up its reserves in just 6 years, and will see its finances “compromised” (read “go bust”) in only 14 years [story in Spanish here]. Just as in the United States, Costa Rica has a government-run Ponzi scheme called social security that sooner or later was going to become unsustainable due to demographic changes. However, the seriousness of the situation was hidden throughout the years by Enron-like accountability tricks that have been exposed by the external audit. For example, official records reported income to the system from public enterprises that never took place. It also estimated the sustainability of the pension fund based on unrealistic salary projections.

What makes the American Dream possible, however, is the rule of law, which in this country is ultimately guaranteed by the Constitution. The Constitution provides for a very specific government structure, with checks on each branch’s powers designed to maximize liberty and eliminate arbitrary and capricious rule. To that end, officers of the judicial branch—judges—are to make their decisions irrespective of the race, religion, or riches of those who come before them. And judges are to interpret the Constitution as written text. If they set aside the text and rule based on their own notions of fairness, then they act as unelected legislators or, worse, extra-constitutional amenders of our founding document.

The consequences for Costa Rican workers are all too grave. This not only compromises the retirement of young workers, but also of those who are a few years from retiring. If we had only followed the example of countries like Chile or El Salvador that privatized their social security

Nominee Sotomayor knew all this, which is why the testimony she gave at her confirmation hearings disclaimed many of her previous speeches and writings, even going so far as to reject President Obama’s “empathy” standard—the idea that a judge applies the law differently when a litigant is sympathetic in some politically correct way. While she was evasive most of the time—reason enough to vote against her—when she did say something about judicial philosophy, it was often indistinguishable from the words of John Roberts or Samuel Alito (as evidenced by the frustration of left-wing commentators). And for good reason: in poll after poll, the American people overwhelmingly support a vision of the judicial role as one of enforcing the law as written, not of imposing their own policy preferences or vision of justice.

systems years ago….

Kudos from this exercise go to those Republicans whose hard questions and thoughtful statements elevated the discussion of the Constitution beyond mere abstractions, so Americans could better understand the significance of ideological differences over the judicial role, or the use of foreign law in interpreting the Constitution, or property rights, or employment discrimination. In walking away from so many controversial positions, Sonia Sotomayor established a new standard to which all future nominees will at least have to pay lip service. While confirmation was almost a foregone conclusion from the start because of the Democrats’ strong Senate majority, the Republicans played well the

Politico Arena: What’s your question? Grover Norquist, President of Americans for Tax Reform: “If Barack Obama and the left are the

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Media Spotlight—White House Healthcare Hypocrisy [Americans for Tax Reform] AUG 06, 2009 02:56P.M.

masters of social networking and the internet, why ...

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7 August 2009

and Freddie Mac, along with their bureaucratic and congressional overseers, believed those firms’ investments in riskier mortgages were “safe as houses.”)

A Want Ad for God [Cato at Liberty]

Everyone “knew” housing was a sound investment. It just turned out that everyone was wrong.

AUG 06, 2009 02:54P.M. The press is still abuzz over Tim Geithner’s behind-closeddoors tirade against critics of the Obama administration plan to tighten financial regulation. As Mark Calabria writes below, Geithner offered a simple message to Fed chair Ben Bernanke, FDIC chair Sheila Bair, and others: “[Y]ou’ve been heard, so you were ‘included,’ now shut up.”

Hence the problem with a “systemic risk monitor:” Such a monitor would have to know when everyone is wrong — including financial experts and government analysts. And the monitor would need the power to force everyone to act contrary to their beliefs and instead obey the monitor’s judgment — and not demand (successfully) that the monitor be replaced because his judgment is “clearly” flawed.

But while Bernanke, Bair, et al. quibble over details of the Obama plan, Geithner should be more concerned about the glaring flaw at its center: the idea that government can conjure up a “systemic risk monitor” that will identify and avoid future market bubbles.

It seems the Obama administration is creating a position for God. But I doubt that God will leave his current job. Someone might object: We wouldn’t have needed God to realize that there was a housing bubble over the past decade. But the problem with bubbles is that they only become apparent — and policies against them only become politically defensible — once they collapse.

Financial history reveals that one of the key ingredients for a bubble is some belief that “everyone” (including financiers, politicians, and regulators) is confident is true, yet the belief turns out to be wrong (either because it was always wrong, or conditions changed in some unforseen way). Some examples of what everyone once “knew:”

And even then they might not be recognized. Consider another asset that experienced a dramatic price spike and collapse in the last decade: oil. Ah, someone might argue, there wasn’t really an oil bubble; we’re just experiencing a temporary decrease in demand. Oil is a scarce commodity with strong price inelasticities, and its price will soar over the long term. But the same was said of admiral tulip bulbs, and South Seas and Mississippi Valley land, and housing in high-demand areas.

• The supply of Dutch admiral tulip bulbs was constrained though they were in heavy demand, so the 17th-century tulip mania was good investing. • The supply of land in the South Seas and the Mississippi Valley was fixed, so the 18th-century land-buying mania was good investing.

What would happen if a systemic risk monitor were to come to Washington and immediately mandate that we abandon ”energy sustainability” policies because they’re premised on a bubble? Would he be right? Who would believe him? And would politicians and the

• The emergence of a nationwide U.S. marketplace in the early 20th century was a watershed event, so the post-WWI stock frenzy was good investing.

public stand behind this judgment? • The emergence of the Internet marketplace, combined with path dependency and network effects, was another watershed event, so buying “dotcom” stock was good investing. FISCALLY CONSERVATIVE BLOG FEEDS • And of course, until the last few years,”everyone knew” that investing in real estate and mortgages was “safe as houses.”

Tauzin on the $80-Billion PhRMA-Obama Deal [Cato at Liberty]

That last bullet wasn’t just the belief of “greedy investment banks,” but also of government officials and regulators. My colleagues Peter Van Doren and Jagadeesh Gokhale have a forthcoming paper that notes, in part, that despite the populist rhetoric now being bandied around, banking is heavily regulated under international rules. Those rules assume that investment in mortgages and mortgage-backed securities is low-risk (and indeed the rules push money toward those investments).

AUG 06, 2009 02:36P.M. This post by my friend Ben Zycher, at NRO’s The Corner, reminds me that we still don’t know if the drugmakers are going to be net losers or net winners under the secretive deal that PhRMA made with President Obama. To wit…

The paper also quotes numerous top-tier economists who claimed the soaring house prices of the past decade were supported by “the fundamentals,” or that a bubble wouldn’t threaten the broader economy. (Their paper doesn’t mention — but could — that Fannie Mae

A week or so ago, I was at a National Journal salon dinner, which assembled a bunch of Nearly Important People to discuss health reform. The dinner was “on the record,” so you can imagine how frank and

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7 August 2009

interesting the conversation was.

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So after dinner, I asked PhRMA head Billy Tauzin how much his member companies would make in excess of their $80 billion contribution to health care reform. Tauzin said they would make less than $80 billion. (PhRMA is volunteering to make less money! A net contribution to health reform! How civic-minded!)

Barney Frank Endorses Regulatory Protectionism [Cato at Liberty] AUG 06, 2009 02:23P.M.

If that’s true, I asked, then why isn’t he being replaced with a better lobbyist? Tauzin said the reason is that this deal prevents a much worse deal, which might allow reimportation, or apply Medicaid’s price controls to dual eligibles in Medicare Part D, etc.

When a government increases the burden of taxes, spending, and/or regulation, this makes it more likely that productive resources – on the margin – will gravitate to jurisdictions with better economic policy. Crafty politicians understand that the freedom to cross borders is a threat to statist policies, which is why international bureaucracies dominated by high-tax nations, such as the Organization for Economic Cooperation and Development, are trying to undermine tax competition between nations by imposing fiscal protectionism. The same is true for regulation. The Chairman of a key House committee wants to impose regulatory protectionism to restrict the ability of Americans to patronize banks and other financial services companies based in jurisdictions with more laissez-faire policies. The Financial Times has the unsavory details:

Since his member companies would be losing money on the deal, I continued, why not release the data so we could see each company’s net contribution? Tauzin said he can’t do that for his member companies. Why not encourage them to do it? Can’t do that, he said. Besides, all the data are publicly available, so anyone could crunch the numbers themselves. Not as well as the member companies can, I observed. “Awww, sure you could!” he smiled. So I should just trust the head of the pharmaceutical lobby that his members won’t be making money on this deal, I asked? All the data are publicly available, he replied.

Barney Frank, chairman of the House financial services committee, said he was concerned the new U.S. push to regulate banks and brokers more rigorously could put it at a competitive disadvantage if other countries did not follow suit. As a result, he would like to ban U.S. banks from doing business with countries not subject to similarly tough standards on everything from leverage limits and capital requirements to rules on transparency and clearing of derivatives. “Once we have rules . . . we will say to anybody who wants to be an outlier, ‘you forfeit your right to participate in the American system’,” Mr Frank told the Financial Times. “We will instruct the [Securities and Exchange Commission] and Treasury and the Fed to deny access to the American financial system to any country that holds itself out as a haven to escape our financial regulation.” …“It is absolutely the wrong approach,” said a top industry lawyer, who did not want to be identified criticising Mr Frank. “The assumption is that everybody has to do business in the U.S. and we can set global standards. That is absolute nonsense. There are alternatives, including Hong Kong,” the lawyer added. …Tim Ryan, president of the Securities Industry and Financial Markets Association, said that U.S. regulations should not be imposed on other countries. …Mr Frank’s interest in banning groups from non-co-operating countries stems in part from the U.S. experience after it adopted the Sarbanes-Oxley corporate accountability law. Many overseas companies opted to list

A reporter friend commented, “In Tauzin We Trust? Seems like a stretch.”

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That’s Edutainment [Cato at Liberty] AUG 06, 2009 02:25P.M. I recently watched the Pacific Research Institute’s documentary “Not as Good as You Think,” about the woes of a middle-class suburban public school district, the myth of universally good middle class public schools, and the Swedish alternative of private school choice. As with all of PRI’s policy products, the viewer gleans a lot of important information. It’s a quality piece. What’s really great about it, though, is how entertaining it is to watch. Putting myself in the place of someone not working in education policy, I can still imagine watching this flick

outside the U.S. rather than comply with Sarbox requirements.

purely to follow the story it tells. It’s definitely worth a look.

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7 August 2009

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Debating the Future of Shool Choice [Cato at Liberty]

Protest in Connecticut [The Club for Growth]

AUG 06, 2009 02:09P.M.

AUG 06, 2009 01:38P.M.

I have blogged repeatedly of my concern that charter schools are likely to succumb to the same heavy burden of rules and regulations that beset traditional public schools. And that, in doing so, they will expand rather than contract the existing state monopoly – first assimilating independent private schools into their fold, and then homogenizing them as the regulatory burden mounts.

From today’s Hartford Courant: Chanting “Dump Chris Dodd” and “No national health care,” scores of angry constituents confronted U.S. Rep. Chris Murphy at a meet-and-greet outside the Super Stop & Shop Wednesday afternoon.

This does not appear to be one of the concerns that will be represented at a forthcoming Fordham Foundation event on charter schools and the future of school choice. Instead, Fordham staff and their guests will discuss whether the current administration’s desire to expand the number of charter schools has doomed the voucher movement to irrelevancy.

Murphy, a Democrat who represents the 5th District, routinely holds informal office hours at supermarkets and strip malls, but such gatherings are generally uneventful. This time, many of the 150 or so attendees were so boisterous that Stop & Shop management called the police to ask that the crowd be moved from the store’s entrance.

It’s an interesting enough topic by itself, and suitably provocative, but it also excludes from consideration a far larger segment of the private school choice policy spectrum: education tax credits. Perhaps to their occasional advantage, tax credits seem to garner far less attention among education technocrats than do vouchers. Yet scholarship donation and personal use credits are benefitting more than 5 times as many students as vouchers, though the benefit is generally smaller. Credit programs are growing faster than vouchers, on average, and seem to enjoy more bipartisan support — certainly when it comes to programs not limited to special-needs students.

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Using Twitter to Confront an Anti-Semitic Attack in Chile’s Paper of Record [Cato at Liberty]

I’m sure the upcoming Fordham event will be interesting, almost as

AUG 06, 2009 12:20P.M.

much for what it will omit as what it will include. After a morning workout and attending Mass this Sunday, I read El Mercurio (Chile’s paper of record) online. Although I seldom read Chilean newspapers blogs (too many attacks and too much dirt), I did so that morning because I was impressed by the indignation expressed by my friend Luis Larraín in his Sunday blog (titled “Canallas” – Shameless). I had named Larraín Superintendent of Social Security when he was 25 years old. At that time I was 30 and Secretary of Labor and Social Security.

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Children, Turn in Your Parents [Cato at Liberty] AUG 06, 2009 01:59P.M.

With astonishment I discovered that a certain “Mr. Murillo”, in the comment no 10 on the blog (which I copied immediately, and backed up electronically), explicitly attacked another commenter, Mr. José Fregoso Edelstein, by saying that his prev ious comment was due to the fact that he is from a “bad race” because he is Jewish.

That was my response to a comment from talk radio host Brian Wilson, about 14 minutes into this podcast, on the White House’s Snitch Project. Of course, the conversation leading up to that is well worth 14 minutes.

I immediately logged in to Twitter and posted a ‘tweet’ demanding El Mercurio delete the blog comment, because it is a terrible insult directed at a group of people that have suffered indescribable horrors, not only in the 20th Century, but throughout history. I would have done the same thing if the insult was directed at Palestinians, Lebanese, Croatians, or any other racial/religious/national group.

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7 August 2009

However, I found an unexpected surprise. Instead of receiving immediate support for an action I thought just and reasonable, several people on Twitter attacked Jews, and me for defending them (one wrote, “You have used your enormous prestige in Chile to become “a shield for the Jews”). They also accused me of “encouraging censorship”, suggesting a “media dictatorship”, etc… I replied inmediately in Twitter to the least offensive ones. Fifteen minutes later I received a ‘tweet’ from an editor at El Mercurio, saying that they had seen my complaint in Twitter and that they were studying the situation. With anothet tweet I insisted on immediate deletion of the comment. Twenty minutes later the newspaper editors deleted the offensive comment no. 10. I want to emphasize that the editorial mistake, even this grievous one, does not compromise the newspaper El Mercurio as a whole, and its fast action in regards to the issue speaks to the newspaper’s chief editor integrity. It was an extraordinary triumph of the fast boat Twitter over the “media carrier” in Chile, another demonstration of the liberating potential of the wonderful new technologies being developed in the land of the free and the brave.

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What left me very worried, and the reason I wrote this comment, is having detected a worrisome anti-Semitic sentiment among my fellow countrymen. Is this unjust anti-Semitic sentiment widespread, though hidden, in Chile, or was this only a “black swan”? I declare myself in a state of alert. We are building a free and good country. There should be no place whatsoever for the language of hate and the discrimination of minorities. As the great Albert Einstein said: “The world is a dangerous place, not because of those who do evil, but because of those who look on

That is a debate I think we desperately need to have – it is fundamental

Government Schooling vs. Freedom [Cato at Liberty] AUG 06, 2009 10:58A.M. Yesterday, I posted a blog entry responding to an interview with historian Diane Ravitch in which she criticized “privatization” and asserted that “deregulation nearly destroyed our economy in the past decade.” My response was directed at Prof. Ravitch, but touches on a bigger issue with which all people in the education debate need to grapple: How much should the school choice debate be centered not around test scores or financial costs – though those are obviously very important considerations – but on the role and structure of education in a free society? Can we not trust free people to make their own education decisions? If not, how can our system of education be compatible with a nation firmly rooted in individual liberty?

for a free society – and I hope others will join in.

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Protest Videos [The Club for Growth]

and do nothing.”

AUG 06, 2009 10:14A.M. FISCALLY CONSERVATIVE BLOG FEEDS

The Club has a new video blog that tracks townhall protests from across

Thursday’s Daily News [The Club for Growth]

the country.

AUG 06, 2009 12:15P.M. THE DAILY NEWS ObamaCare: Serfs Up! - Ken Blackwell, American Spectator Health Care Reform or Death of Constitution? - Frank Ryan, Cent. Penn Biz ObamaCare’s Real Price Tag - Wall Street Journal Editorial Obama May Abandon Bipartisanship - J. Rowley & L. Litvan, Bloomberg Healthcare Debate Gets Uglier - Janet Hook, LA Times Recess Gets Louder - Zachary Abrahamson, The Politico Special Interests Cash in on Clunker Boondoggle - Tim Carney, DC Examiner Our Lyin’ Eyes - IBD Editorial Lobbying is a Booming Business - David Boaz, Cato Institute Cap-and-Trade Would Trigger a New Global Trade War - DC Examiner Editorial Cubs 0, Reds 4 - Associated Press

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