11 May 2010

Today’s Tabbloid
PERSONAL NEWS FOR [Link]+webnews@[Link]

FISCALLY CONSERVATIVE BLOG FEEDS FISCALLY CONSERVATIVE BLOG FEEDS

Former Congressman Nathan Claybrook: All Your Data Are

Deal Signs Gubernatorial Belong to U.S. [Cato at Liberty]
MAY 10, 2010 04:25P.M.
Taxpayer Protection Pledge
By Jim Harper
[Americans for Tax Reform]
MAY 10, 2010 07:16P.M. I was pleased last week to testify in Congress about a draft bill that would
mandate “event data recorders” in all new cars. Automobile black boxes
Today former Congressman Nathan Deal, a Republican running to be the or “EDRs” are an issue that found me a few years ago when I commented
next governor of Georgia, signed the gubernatorial Taxpayer Protection on their privacy consequences to a newspaper and heard from concerned
Pledge sponsored by Americans for Tax Reform (ATR). The g... drivers across the country.

My testimony to the House Commerce Committee’s Subcommittee on

Commerce, Trade, and Consumer Protection had three main themes:
FISCALLY CONSERVATIVE BLOG FEEDS
1) The Constitution doesn’t give Congress authority to design
Nebraskans: Do You Know Who automobiles or their safety features;

Signed the Taxpayer Protection 2) Only a relevant sample of crash data is needed to improve auto
safety—overspending on a 100% EDR mandate will keep the poor in
Pledge? [Americans for Tax older, more dangerous cars and undermine auto safety for that cohort;
and
Reform]
MAY 10, 2010 05:31P.M. 3) The privacy protections in the bill help, but consumers should control
the existence and functioning of EDRs in their cars.
Today, ATR released an updated list of incumbents and challengers in
Nebraska who have signed the Taxpayer Protection Pledge. These A co-panelist taking a different view was Joan Claybrook, President
candidates have made a written commitment to their constitue... Emeritus of Public Citizen and a former administrator of the National
Highway Traffic Safety Administration. In her testimony, Claybrook
called for a near quadrupling of NHTSA’s budget to $500 million per
year. She also called for the construction of what might be called “Total
Auto Awareness” infrastructure.

“[T]he bill should require that the data collected by the EDR be
automatically transmitted to a NHTSA database,” Claybrook
wrote. She probably meant only crash data, and she paid lip service to
privacy, but this represents a probable goal of the auto safety
community. Our money, our cars, and our data are instruments for them
to use in pursuit of their goals.

If this auto surveillance infrastructure is mandated, what EDRs collect,

store, and transmit to government databases will grow over time.

They’re going to keep you alive, damnit, if it burns up all your freedom
and autonomy to do it! It’s the beating heart count that matters, not the

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reasons for living. in procurement spending. People treated him like a revolutionary for
doing so, but he was just balancing his books. Now that the worst white
elephant programs are gone (with several glaring exceptions), Gates
is pushing the services to cut overhead costs and shift the saving into
FISCALLY CONSERVATIVE BLOG FEEDS procurement. And he is telling them to buy more cheap platforms by
controlling requirements creep. Same price, better product. End of story.
No Eisenhower [Cato at Liberty]
MAY 10, 2010 04:06P.M. The point Gates missed about Eisenhower is that he used strategy to
limit spending. The New Look was an air force-first strategy that limited
By Benjamin H. Friedman army and navy spending, much to the chagrin of those services. Gates’
enthusiasm for counter-insurgency wars has not lead him to propose
cutting the navy and air force budgets to fund the super-sized ground
forces one needs for such missions. His official strategy shows little
inclination for hard choices.

Real reductions in military spending require reductions in the ambitions

it serves. A cheaper military means doing less. This administration has
shown no interest in that. Maybe the fiscal situation will force them to
reconsider.

FISCALLY CONSERVATIVE BLOG FEEDS

Initial Kagan Critiques Miss the

(First Amendment) Point [Cato
Dwight D. Eisenhower
at Liberty]
The Secretary of Defense gave a good speech over the weekend at the MAY 10, 2010 03:29P.M.
Eisenhower library. Gates used the occasion to evoke Eisenhower and
call for discipline in defense spending. But he didn’t really mean it. By Ilya Shapiro

The speech makes excellent points about how our military’s size long ago As I’ve been re-reading Supreme Court nominee Elena
ceased to have anything to do with our potential enemies. He pointed out Kagan’s publications — of which there are surprisingly few for someone
that the non-war defense budget has grown by about half of her achievements and reputation — I’ve had half an eye on the TV
since September 11 and that country’s current fiscal circumstance means punditry. It seems that the leading critique from both the right (e.g., Fox
that that growth has got to slow. News, Senator Jon Kyl — who’s usually excellent on these things) and
extreme left (e.g., Jane Hamsher) is that Kagan doesn’t have judicial
But the speech shows no indication that Gates wants to cut defense experience.
spending. It isn’t even clear that he has changed his view that defense
spending should grow by about 2% annually no matter what happens in This just completely misses the point. As a solicitor general (the “Tenth
the world. He claims that while defense secretary he has canceled Justice”) and former dean of Harvard Law — where she did a
programs worth $330 in their lifetime. True, but they were replaced by magnificent job and gained the respect of scholars from across the
other programs, and the budgets Gates has sent to the Hill have been political spectrum — not to mention senior roles in the Clinton White
bigger each year in real terms. A cynical take is that Gates is trying to House, teaching at the University of Chicago and clerking for Justice
preempt calls for defense cuts by acting as if roughly flat budgets require Thurgood Marshall, Kagan absolutely has the credentials and intellectual
great discipline. chops to be a Supreme Court justice. Indeed, as I said this morning, her
scholarly persona means she’s probably better suited to being a justice
What’s really going here is that the cost of the current defense program is than to being solicitor general – especially given that her performance as
growing so fast that you need large annual increases just to keep what an oral advocate has left something to be desired. And we’ve had plenty
you have. The main cause is rapid growth in the cost of operations and of non-judges on the Court, people coming from the executive branch
maintenance and personnel. Those accounts are squeezing others (William Rehnquist), academia (Louis Brandeis), private practice (Lewis
(research, development and procurement) needed for new vehicles and F. Powell, Jr.), and politics (Hugo Black).
weapons. Last year, Gates responded to that pressure by proposing cuts

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I actually agree with President Obama that it’s not a bad idea to have behind-the-scenes lobbying by big European banks (which foolishly own
somebody with a “different” professional background on the Court — a lot of government debt from profligate nations such as Greece,
although Kagan’s time in the ivory tower is no more likely to give her a Portugal, Spain, and Italy) may have been the most important factor.
common touch than a nominee coming from the “judicial monastery.” Regardless of the real motive, the original bailout was a flop, so the
And, as the president said, Kagan “has won accolades from observers political class has decided to go with the in-for-a-dime-in-for-a-dollar
across the ideological spectrum, not just for her intellect and record of approach and commit nearly $1 trillion of other people’s money to prop
achievement, but also for her temperament.” So the problem really isn’t up the continent’s welfare states. The Wall Street Journal reports on the
her supposed lack of relevant experience. issue, noting that American taxpayers will be involuntary participants
thanks to the financial world’s keystone cops at the International
One problem is precisely her very short paper trail — though there are no Monetary Fund:
indications she’s anything but a conventional modern liberal, on which
more in future – but something to tease out of that trail, combined with The European Union agreed on an audacious €750 billion
her year as SG, is a certain hostility to the freedom of speech. For ($955 billion) bailout plan in an effort to stanch a burgeoning
example, in her article “Regulation of Hate Speech and Pornography sovereign debt crisis that began in Greece but now threatens
After R.A.V.,” she attempts to find a constitutional way to restrict the the stability of financial markets world-wide. The money
sorts of speech that she personally finds offensive. And in her defense of would be available to rescue euro-zone economies that get
the federal “depiction of animal cruelty” statute — which the Supreme into financial troubles. The plan would consist of €440 billion
Court struck down 8-1 — she argued for a balancing test weighing the of loans from euro-zone governments, €60 billion from an
value of speech against its social harm. Not to mention her arguments in EU emergency fund and €250 billion from the International
Citizens United, the campaign finance statute that, until it was struck Monetary Fund. Immediately after the announcement, the
down could have banned books, flyers, and movies that contained European Central Bank said it is ready to buy euro-zone
political speech. (Interestingly, in Citizens United, she abandoned the government and private bonds “to ensure depth and
very “level political playing field” argument the president invokes to liquidity” in markets, and the U.S. Federal Reserve
criticize the decision.) announced it would reopen swap lines with other central
banks to make sure they had ample access to dollars.
I’m of course not criticizing her appearance as an advocate defending the
federal laws at issue in Stevens and Citizens United — that’s her job as Back when Greece first began to collapse, I argued that bankruptcy was
solicitor general — but if you read the argument transcripts, you see that the best option. And I noted more recently that my colleague Jeff Miron
she could have done so in ways less sweepingly inimical to free reached the same conclusion. Everything that has since happened
speech. There is other evidence to this effect (see her First Amendment reinforces this viewpoint. Here are a few additional observations on this
articles here, here, and here, plus others lacking public links), but you get latest chapter in the collapse of the welfare state.
the idea.
1. A bailout does not solve the problem. It just means that taxpayers bear
the cost rather than the banks that foolishly lent money to corrupt and
incompetent governments.
FISCALLY CONSERVATIVE BLOG FEEDS
2. A bailout rewards profligate politicians and creates a moral hazard
Europe’s Über Bailout [Cato at problem by letting other politicians think that it is possible to dodge
consequences for reckless choices.
LibertyÜber Bailout]
MAY 10, 2010 02:52P.M. 3. A bailout undermines growth by misallocating capital, both directly
via bailouts and indirectly by signaling to financial markets and investors
By Daniel J. Mitchell that governments are a “safe” investment.

I’m semi-impressed with the Europeans for choosing the hog-wild 4. A bailout will cause a short-term rise in the market by directly or
approach to bailouts. Not because it is good policy, but rather because it indirectly replenishing the balance sheets of financial institutions, but
will be a useful demonstration of the old rule that bad policy begets more this will be completely offset by the long-run damage caused by moral
bad policy (which begets God knows what, but it won’t be pretty). The hazard and capital misallocation.
background is that many European nations have been over-spending,
over-taxing, and over-regulating. This has created a poisonous The last point deserves a bit of elaboration. Assuming markets continue
combination of weak economies, pervasive dependency, and political to rise, the politicians will interpret this to mean their policies are
corruption, with Greece being the nation farthest down the path to effective. But that is akin to me robbing my neighbor and then boasting
Krugman-topia. Europe’s political elite at first thought they could paper about how my net wealth has increased. In the long run (which is
over the problems with a $140 billion Greek bailout. The ostensible probably not too long from now), though, this system will not work. At
motives were to stop contagion and to demonstrate “solidarity,” but best, Europe’s political elite have postponed the day of reckoning and

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almost certainly created the conditions for an even more severe set of FISCALLY CONSERVATIVE BLOG FEEDS
consequences. No wonder, when I was in Europe a couple of weeks ago, I
kept running in to people who were planning on how to protect their Uncle Sam: Payday Lender
families and their money when the welfare state scam unravels. Their
biggest challenge, though, is finding someplace to go. People use to think [Cato at Liberty]
the United States was a safe option, but the Bush-Obama policies of MAY 10, 2010 02:36P.M.
bigger government have pushed America much closer to European levels
of fiscal instability. By Mark A. Calabria

One of the puzzles of Congressional efforts to “reform” our financial

system to avoid future crises is the amount of attention to lenders who
FISCALLY CONSERVATIVE BLOG FEEDS had nothing to do with the crisis (almost as puzzling as the inattention to
many who did).
Public Pensions as Property
Today’s Washington Post, for instance, details the efforts of payday
Rights [Cato at Liberty] lenders to fight back against both Senator Dodd’s new consumer agency
MAY 10, 2010 02:47P.M. and Senator Hagan’s amendment, that would essentially eliminate the
consumer option of payday loans.
By David Boaz
In general, any efforts to restrict consumer choice is rarely likely to
On Thursday I noted that former California House Speaker Willie Brown improve consumer welfare. This has been repeatedly demonstrated in
said we shouldn’t worry about the cost of government workers’ pensions research on payday lending. Senator Hagan played a key role in banning
because “My guess is that the State of California, like most places such products in North Carolina. What was the result of that ban? Don
involved with pensions, is going to cease to pay them.” Morgan, at the Federal Reserve Bank of New York, decided to test
whether such a ban helped or hurt consumers. He compares how
My former colleague Andrew Biggs, writing at The American, says households in North Carolina fared after payday loan bans. The
Speaker Brown and I are, believe it or not, too optimistic: results: since the loans were banned in 2005 in North Carolina,
compared to states where payday lending is permitted, households in NC
In most states, accrued public-sector pension benefits carry have bounced more checks and complained more to FTC about lenders
an effective property right, either through legal rulings or and debt collectors. “The increased credit problems contradicts the debt
outright constitutional provisions. As Donald Kohn, the vice trap critique of payday lending, but is consistent with the hypothesis that
chairman of the Federal Reserve Board, put it, “For all intents payday credit is preferable to substitutes such as the bounced check
and purposes, accrued benefits have turned out to be riskless protection sold by credit unions and banks or loans from pawnshops”
obligations.” states Morgan.

Some states interpret these rights as prospective, meaning Where Hagan proposes to ban payday, Dodd proposes to have banks and
that not only does a public-sector employee have a right to non-profits directly compete with payday lenders, but with one big,
the benefits he’s already earned, but he has a right to important difference: taxpayers would cover a substantial portion of the
continue earning benefits at the same rate no matter how credit losses. Buried at the end of Dodd’s massive bill in Title XII is a
financially unsustainable the pension formula may be. These grant program that would cover credit losses on “payday” loans made by
provisions make state pension benefits far more assured than non-profit community lenders as an “alternative to more costly
even Social Security, which the federal government can payday loans.” Of course the private sector loans will be more costly, as
legally cut at anytime. the lender will have to charge a rate that covers its losses. The difference
between Dodd’s proposal and the private sector is that while
Plus, he says, the pension shortfalls are even larger than most analysts private sector payday loans may be expense, they are entered into
think. voluntarily, whereas Dodd make the taxpayer an unwilling participant in
subsidizing high risk borrowing. Perhaps Dodd should examine previous
Resume worrying. efforts to subsidize high cost mortgage lending, before we repeat the
same mistakes in payday.

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FISCALLY CONSERVATIVE BLOG FEEDS Calabrese.

Free Press Continues

Manufacturing Congressional FISCALLY CONSERVATIVE BLOG FEEDS

Support for Net Neutrality Democrat Rep. Teague’s

[Americans for Tax Reform] Company Cuts Healthcare
MAY 10, 2010 01:46P.M.
Benefits [The Club for Growth]
The Federal Communications Commission is trying desperately to MAY 10, 2010 01:13P.M.
manufacture Congressional support for their radical proposal to regulate
the Internet. But it now appears they have simply found... Tsk, tsk, tsk. t say at the time: At the very moment he was voting against
the bill, his own companies were eliminating health care coverage for
employees.

FISCALLY CONSERVATIVE BLOG FEEDS

West Virginians: Do You Know FISCALLY CONSERVATIVE BLOG FEEDS

Which Candidates Have Signed Market Comeback: A Special

the Pledge? [Americans for Tax Edition of The Kudlow Report
Reform] [Larry Kudlow’s Money
MAY 10, 2010 01:40P.M.
Politic$]
Today, ATR released an updated list of incumbents and challengers in MAY 10, 2010 12:35P.M.
West Virginia who have signed the Taxpayer Protection Pledge. These
candidates have made a written commitment to their cons...

FISCALLY CONSERVATIVE BLOG FEEDS

Monday Links [Cato at Liberty]

MAY 10, 2010 01:39P.M.

By Chris Moody

• Cato legal scholars Ilya Shapiro, Roger Pilon and Walter Olson Tonight at 7pm ET:
analyze the Kagan SCOTUS pick.
MARKET REPORT...
• They have it backwards: How one “free-trade agreement” might
include new trade barriers. STOCKS: Bob Pisani - NYSE
TECH: Bertha Coombs - NASDAQ
• Another day, another unwelcome surprise in the new health care COMMODITIES - OIL/GOLD: Sharon Epperson - NYMEX
law. BOND REPORT: Rick Santelli - CME/Chicago

• In 2009, 7,600 people died in drug-related episodes in Mexico.

Here’s what we can do to put an end to it. WHAT’S AN INVESTOR TO DO?

• Podcast: “National ID Means National DMV” featuring Christopher - Alan Valdes, Hilliard Lyons Vice President/Trader

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- Warren Meyers, CNBC Market Analyst; Walter J. Dowd CEO FISCALLY CONSERVATIVE BLOG FEEDS
- CNBC’s Bob Pisani - NYSE booth
- CNBC’s Rick Santelli - CME/Chicago Bennett’s Ouster: a Sign That
EUROPE GOES ALL IN … THE EU BAILOUT DEAL Conservatives Have Started
CNBC’s Simon Hobbs reports. Paying Attention to Health
WHAT EXACTLY IS THE DEAL? HOW DO YOU STOP THE Care? [Cato at Liberty]
SOCIALISM/SPENDING GROWTH IN EUROPE? MAY 10, 2010 11:42A.M.

- Andy Busch, Global FX Strategist; BMO Capital Markets; CNBC By Michael F. Cannon
Contributor
- Peter Morici, University of Maryland Robert H. Smith School of Utah Republicans will not be re-nominating U.S. Senator Bob Bennett
Business Professor; U.S. International Trade Commission Fmr. Chief (R-UT) for another term. A principal reason appears to be their
Economist displeasure over a health care bill that Bennett teamed with Sen. Ron
Wyden (D-OR) to sponsor.
HOW TO PLAY THIS MARKET
- James Altucher, Formula Capital Managing Director Some commentators decry how Bennett’s ouster demonstrates that the
- Robert Doll, Vice Chairman & Global CIO of Equities at BlackRock Republican party has lurched to the right. That’s a reasonable
interpretation if you believe, as conservative Washington Post columnist
Please join us. The Kudlow Report. 7pm ET. CNBC. Kathleen Parker does, that Wyden-Bennett was a moderate, “market-
driven” bill.

Rather than a moderate, market-driven bill, Wyden-Bennett would have

FISCALLY CONSERVATIVE BLOG FEEDS created “Medicare Advantage for All.” It would have made health
insurance compulsory for all Americans, and imposed stringent
Friedman and Moynihan Agree government controls on what type of coverage Americans must
purchase. It would have imposed federal price controls on health
with Sanders and Paul [Cato at insurance. As I explain elsewhere, once you have those elements in place,
you’ve got socialized medicine.
Liberty]
MAY 10, 2010 12:19P.M. Wyden-Bennett went further. It would have created a new government
entitlement to insurance subsidies. Yes, the legislation would have given
By Steve H. Hanke workers more insurance choices — at first. But it would have set in
motion economic and political dynamics that would reduce choice and
Reportage in today’s New York Times (“Consensus For Limits to Secrecy innovation, forcing all Americans into a narrow range of health plans. It
At the Fed” by Sewell Chan) indicates that more auditing of the Fed is effectively would have prohibited employer-sponsored health insurance,
probably in the cards. forcing even more Americans to give up their current coverage than
ObamaCare would.
Prof. Milton Friedman and Senator Daniel Patrick Moynihan would have
most certainly agreed with the thrust of the Senate (S. 604) and House Wyden-Bennett was more honest than ObamaCare, in that it would have
(H.R. 1207) bills sponsored by Senator Bernard Sanders and forced workers to pay their premiums to the IRS. That would have made
Representative Ron Paul, respectively. These bills would partially lift the it explicit that the mandatory premium payments are indeed a tax. Those
shroud of secrecy draped over the Fed. tax payments would have appeared in the federal budget, and the
American people would have been able to evaluate the law based on its
Prof. Milton Friedman weighed in on central bank independence in a actual cost. In contrast, ObamaCare’s authors assiduously worked to
1962 essay, “Should There Be an Independent Monetary Authority?” keep those mandatory (read: tax) payments out of the federal budget.
Prof. Friedman’s conclusion: “The case against a fully independent
central bank is strong indeed.” As for letting in some sunshine, Senator But on policy grounds, as National Review notes, Wyden-Bennett is
Moynihan had this to say: “Secrecy is for losers.” more radical than ObamaCare — which itself was so radical that a
majority of voters oppose it, and Democrats could just barely corral
enough members to pass it.

“Okay, Cannon,” you might object, “but if Wyden-Bennett is even further

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to the left than ObamaCare, then why do its cosponsors include not just unanimously popular position to take at top law schools. By way of
Bennett, but other conservative Republican senators like Lamar comparison, recall the mini-furor over Sonia Sotomayor’s “wise Latina”
Alexander (TN), Mike Crapo (ID), and Judd Gregg (NH)?” Good comments, which she’d repeatedly delivered in various versions on the
question. academic conference circuit. There, the notion that a judge’s ethnic
background could and should make for different and better decisions
The answer: conservatives and Republicans just don’t pay as much was met with predictable applause and little challenge; when aired in
attention to health care as they should. (Ask any leftist or free-market wider public debate, it proved hotly controversial and the nominee
health policy wonk; they’ll agree.) As a result, the health care industry prudently backed away.
and the Left can easily seduce them into supporting legislation that
violates their limited-government principles. Sen. Wyden pulled it off by Obama spokespeople spent much of last week rumbling about the need
dangling the words “choice” and “health savings accounts” in front of his for judges with a common touch who’d stand up for the people. This fed
Republican colleagues. Even when Republicans do pay attention to speculation that they might mix up the Court by picking an elected
health care, it’s often after someone convinces them that a left-wing goal official, trial lawyer or crusading prosecutor. Just kidding! For better or
like universal coverage can be done in a free-market way. (Exhibit A: worse, we’re in for more law made by Harvard, Yale and Chicago
Mitt Romney.) intellectuals.

Viewed from this perspective, Bennett’s ouster is not evidence that the
GOP has lurched rightward. It is a sign that conservative voters may be
starting to pay attention to health care. And it gives hope that FISCALLY CONSERVATIVE BLOG FEEDS
conservative politicians will do the same.
The National Debt Is Huge, but
Unfunded Liabilities Are
FISCALLY CONSERVATIVE BLOG FEEDS
America’s Real Red-Ink
Kagan: Revenge of the Grinds
Challenge [Cato at Liberty]
[Cato at Liberty] MAY 10, 2010 10:27A.M.
MAY 10, 2010 10:37A.M.
By Daniel J. Mitchell
By Walter Olson
I frequently argue that government spending is the problem, not budget
I’ve been saying for a while that to understand the Obama deficits. Regardless of whether it is financed by taxing or borrowing,
administration specifically and much of today’s liberal Left more every penny of spending diverts resources from the productive sector of
broadly, you need to conceive of it as a sort of extension of the the economy. I narrated a video explaining why excessive spending is
intellectual and policy culture of high-end legal academia. The bad from a theoretical perspective. I did another looking at the empirical
nomination of Elena Kagan, best known as a successful Harvard law evidence for smaller government. And I had another video discussing
dean, extends this familiar pattern. Assuming Kagan coasts to an easy why deficits are a symptom and the real problem is bloated budgets.
confirmation, she’ll join a liberal caucus on the Court that more than
ever resembles a faculty meeting. Nonetheless, some people seem convinced that deficits and debt are the
real problem. While I think that focus is a bit misguided, I certainly agree
To the dismay of some on the left, Kagan, like Ruth Bader Ginsburg, that there is something utterly immoral about spending today and
Stephen Breyer, and Sonia Sotomayor before her, counts as a “cautious imposing a fiscal burden on future taxpayers (especially since so much
and confirmable” pick — a reliable liberal vote, almost certainly, but not government spending is for current consumption and transfers).
particularly known for disturbingly big ideas or impassioned rhetorical
gestures. (The Obama administration does contain plenty of law But here’s some really depressing news for the anti-debt crowd. Today’s
professors of the latter type — from big thinker Cass Sunstein to liberal deficits and debt actually are just the tip of the iceberg. Here’s a new
firebrand Harold Koh — but has not yet chosen to nominate them to the video exposing the enormous unfunded liabilities resulting from
Court.) entitlement programs. As the video explains, unfunded liabilities are
promises by politicians that impose enormous long-term obligations for
Consider the likeliest speed bump on Kagan’s road to confirmation, her more spending and debt.
decision to bar military recruiters from Harvard, which resulted in a
prolonged and losing showdown with Congress. That episode will be the The narrator of the video is Kelly McDonough, a student at American
hardest thing on her record for many Democratic senators to accept University and a former Cato Institute intern. If this video is anywhere
(though accept it they will). But it was an overwhelmingly, even near- near as successful as the other video narrated by a former Cato intern,

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perhaps this will become a new tradition. That won’t be good for my
video career, but it shows that the Cato Institute is doing a good job FISCALLY CONSERVATIVE BLOG FEEDS
cultivating a new generation of freedom fighters.
Does Elena Kagan Support
Limited Government? [Cato at
FISCALLY CONSERVATIVE BLOG FEEDS
Liberty]
RIP Max Palevsky, a Man MAY 10, 2010 09:30A.M.

Whose Vast Wealth Helped Stop By Roger Pilon

a War [Cato at Liberty] After Justice Stevens announced his retirement from the Supreme Court,
MAY 10, 2010 10:17A.M. President Obama spoke of wanting to nominate someone with a “keen
understanding of how the law affects the daily lives of the American
By David Boaz people.” If Solicitor General Elena Kagan has that understanding, she
probably got it from books.
“Max Palevsky, a pioneer in the computer industry and a founder of the
computer-chip giant Intel who used his fortune to back Democratic We get a glimpse of that in this morning’s New York Times. Drowning
presidential candidates and to amass an important collection of her sorrow in vodka and tonic after Ronald Reagan took the White
American Arts and Crafts furniture, died on Wednesday at his home in House in 1980 – during that summer she’d worked on the losing Senate
Beverly Hills, Calif. He was 85,” reports the New York Times. campaign of liberal Democrat Liz Holtzman – the young Ms. Kagan
would write in the Princetonian, “Where I grew up – on Manhattan’s
Palevsky used his vast wealth to influence politics, especially to oppose Upper West Side – nobody ever admitted to voting for Republicans.” She
the Vietnam War. He was one of the liberal mega-givers who made the described “the Manhattan of her childhood,” the Times adds, as a place
Eugene McCarthy campaign possible in 1968, along with such people as “where those who won office were ‘real Democrats – not the closet
Stanley Sheinbaum, Stewart Mott, and Martin Peretz. Describing the Republicans that one sees so often these days but men and women
McCarthy campaign as “shoestring,” Christopher Hitchens added: committed to liberal principles and motivated by the ideal of an
affirmative and compassionate government.’”
When one says “shoestring,” by the way, one is forced to
recall that the whole operation was essentially underwritten Ms. Kagan would go on from Princeton to Oxford, Harvard Law,
by a few ill-sorted but well-off individuals including, notably, clerkships with Judge Abner Mikva and Justice Thurgood Marshall, a
Max Palevsky, Blair Clark, and Martin Peretz. Today’s stint in private practice in Washington, a professorship at the University
campaign-finance laws—or “reforms” as they are always of Chicago Law School, then back to Washington for service in the
described—make a similar undertaking extremely difficult, if Clinton White House, and finally a return to Harvard Law as professor,
not impossible. then as dean, before being tapped by Obama as solicitor general.

Hitchens may be a bit misty-eyed in his memory of a “shoestring” That’s an impressive rise, to be sure. Whether it has acquainted Ms.
campaign. Time reported that “In 1968 Clean Gene led the list of Kagan with the lives of ordinary Americans is open to question. But it
preconvention spenders with an $11 million outlay.” But he’s right about surely has acquainted her with the modern conception of the
the campaign finance laws. An outsider candidate with a mission, like Constitution, which is at some remove from the document itself.
McCarthy in 1968 or George McGovern in 1972 (to whom Palevsky is Whereas the Constitution as written creates a government of limited
said to have given $320,000), is not allowed to jump-start his campaign powers, modern “constitutional law” has allowed an all but unlimited
with a few big contributions from donors who share his vision. federal government – nowhere more evident than in Ms. Kagan’s
sponsor’s cardinal achievement to date, ObamaCare.
Ironically, Palevsky later donated $1 million to a California initiative that
would have limited campaign contributions. It is not recorded whether In this time of the Tea Party movement (witness this weekend’s
Palevsky specifically wished that he and his friends had been forbidden developments in Utah), when the cry is “Give us back our Constitution,”
to make the McCarthy and McGovern campaigns possible. But he did the question, “Are there any longer any limits on federal power?” will
make them happen, and the restrictions on such outsider campaigns are doubtless be prominent during the upcoming Senate confirmation
one of the big costs of our current campaign finance laws. hearings. Ms. Kagan has a slim publishing record for someone with her
background, so the hearings will be especially important for answering
Cross-posted at Politico Arena. that question. One hopes that at least the Republicans on the Senate
Judiciary Committee will be resourceful and diligent in pressing the

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question.

FISCALLY CONSERVATIVE BLOG FEEDS

Our AAA Credit Rating

[Americans for Tax Reform]
MAY 10, 2010 09:30A.M.

With the very real possibility of a sovreign debt default in Greece, and
the instability it has caused global financial markets, many have asked
what it would take the USA to lose its AAA credit ra...

Once again, Jon Alterman has outdone himself with a series of meetings
FISCALLY CONSERVATIVE BLOG FEEDS with senior officials. We have covered a range of topics, from monetary
policy and economic development, and from counterterrorism to Iran,
Two Towers – Dubai and Iraq and Afghanistan. I focused my attention on the power shifts in the
region. Last year, China displaced the United States as the leading
Riyadh [Cato at Liberty– Dubai market for Saudi oil. India is in the third place, and charging forward. As
the United States continues to shift to alternative sources, either oil from
and Riyadh] other places, or different forms of energy entirely, this trend will
MAY 10, 2010 08:33A.M. continue. I wondered, therefore, if China might displace the United
States here in other ways.
By Christopher Preble
That seems unlikely. Tens of thousands of Saudis have studied in the
Riyadh, Saudi Arabia — I have spent the last two days in Riyadh in Saudi United States and elsewhere in the West. I have met graduates from
Arabia, and it is impossible to miss the contrasts between here and Penn State, Iowa State, the University of Idaho, the University of Denver,
Dubai. Indeed, I might have tried, except that a number of officials that and many other Americans colleges and universities. Others have
we have met here tell us “We are not Dubai.” studied in the UK and elsewhere in Europe. Although the numbers
dropped off precipitously after 9/11, Saudi citizens are now returning to
On the one hand, this is smart politics by the Saudis. Dubai’s brand has the States to study, many aided by generous scholarships from the Saudi
been harmed by the collapse of Dubai World, and by the softening of the government. The level of personal interaction that occurs from study
real estate market there. By way of contrast, the Saudis point to their abroad programs make possible a level of understanding and mutual
conservative investment and monetary policies that have softened the respect, even if — in the end — we maintain very different political and
blow of the global financial crisis. They paid down government debt social systems. Riyadh will never be Los Angeles or Manchester.
during the boom years, and have cautiously loosened credit and money But neither will it ever be Beijing.
since 2008. Saying “We are not like Dubai” in the Gulf region is a bit like
saying “We are not Greece” in Europe.

On the other hand, the contrasts go far deeper. I will write more about
Saudi society and culture when I get back to the States, but it seems quite
obvious that Dubai’s relative free spiritedness has not significantly
spread to the Kingdom, and it likely never will. Saudi Arabia remains a
very conservative place. People here stress how much things have
changed. For someone with no prior experience here, that claim is
impossible to assess.

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I close with reference to two pictures, the Burj Khalifa in Dubai, the concern is her mediocre performance in her current position – the
world’s tallest building, which I visited on Friday, and the Kingdom choices of which legal arguments to make from those available to her in
Center Tower that looms over Riyadh. The Burj Khalifa, formerly known defending federal laws in Citizens United and United States v. Stevens,
as Burj Dubai, is easily twice as tall as most of the other buildings there, for example, were not strategically sound – though she may well be
but any one of those lesser structures would stand taller than Kingdom better suited to a judicial rather than advocacy role.
Center. The latter dominates the landscape here because there really is
no “downtown” per se; there is no skyline of lighted buildings. Riyadh is In any event, with Democrats still holding a 59-seat Senate majority,
a sprawl of old neighbor-hoods and structures, interspersed with Elena Kagan’s confirmation is in no doubt whatsoever. The more
new construction and only the occasional tall building. interesting aspect of the next couple of months, culminating in hearings
before the Judiciary Committee, will be the debate over the meaning of
It remains to be seen which model, Dubai’s audacious bid for global the Constitution and what limits there are to government action. In an
attention (and money), or Saudi Arabia’s cautious and deliberate move election year when a highly unpopular and patently unconstitutional
toward modernity, will be best suited to improving the lives of their health care “reform” was rammed through Congress using every
respective citizens over the long term. procedural gimmick imaginable, voters are more sensitive to
constitutional discourse now than they have been in decades. From
bailing out the financial and auto industries to fining every man, woman
and child who doesn’t buy a government-approved health insurance
FISCALLY CONSERVATIVE BLOG FEEDS policy – and, coming soon, regulating carbon emissions – the Obama
administration is taking over civil society at a rate that alarms Americans
Kagan Nomination Launches and fuels both Tea Party populism and interest in libertarian policy
solutions (which Cato is happy to offer but wishes were implemented on
Constitutional Debate [Cato at the front end instead of being invoked as a response to destructive
statism). The Kagan nomination is the perfect vehicle for a public airing
Liberty] of these important issues.
MAY 10, 2010 07:42A.M.
Senators should thus ask questions about the meaning of the Commerce
By Ilya Shapiro Clause, the Necessary and Proper Clause, and the General Welfare
Clause, to name but three provisions under which courts have ratified
As expected, and despite an exhaustive review of shortlist candidates, incredible assertions of federal power divorced from those the
dead-end leaks about Hillary Clinton, and other distractions, President Constitution discretely enumerates. If Elena Kagan refuses to answer
Obama settled on the long-time prohibitive favorite to be his next such queries substantively – employing the usual dodge that she may be
Supreme Court nominee. Elena Kagan became the justice-in-waiting the called upon to interpret these clauses as justice – we can rightfully hold
moment Sonia Sotomayor was confirmed, so you didn’t have to be Tom that response against her, as she herself counseled in a law review article
Goldstein to have predicted this. The president wanted a highly 15 years ago.
credentialed non-judge who would serve for a long time and wouldn’t
cost too much political capital. He got a 50-year-old solicitor general and
former dean of Harvard Law School – the first female in each post –
whose record the Senate (and media, and activists) already examined in FISCALLY CONSERVATIVE BLOG FEEDS
a confirmation process that put her into her current post. That her
appointment would put three women on the high court for the first time Monday Maps: State and Local
also doesn’t hurt.
Tax Burdens vs. State Tax
Kagan is certainly not the worst possible nominee from among those in
the potential pool – that would’ve been Harold Koh, had President Collections [Tax Foundation]
Obama been most inclined to appoint the first Asian-American justice – MAY 10, 2010 12:00A.M.
but others would have been better in various ways. Although all
Democratic nominees would be expected to have similar views on hot- We often get questions, and inevitable misunderstandings, regarding the
button “culture war” issues like abortion, gay rights and gun control, difference between tax collections and tax burdens by state. A tax
Diane Wood is a renowned expert on antitrust and complex commercial burden is a calculation of the total amount paid by residents in taxes
litigation, for example, and Merrick Garland would almost certainly divided by the total income in each state (when looked at as percentage
bring a stronger understanding of administrative law. Although some on of state income). The burden also reflects the economic incidence of
the left are concerned that replacing Justice John Paul Stevens with taxes that are commonly shifted to out-of-state taxpayers. Tax
Kagan “moves the Court to the right,” there is no indication that the collections are simply what a state collects in taxes (which is to say, not
solicitor general is anything but a standard modern liberal, with all the the same as revenue).
unfortunate views that entails on the scope of federal power. Another

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Tax Foundation economist Gerald Prante, regarding tax burdens, notes: FISCALLY CONSERVATIVE BLOG FEEDS

The goal is to focus not on the tax collectors but on the taxpayers. That is, Suspicious Cinco de Mayo
we answer the question: What percentage of their income are the
residents of this state paying in state and local taxes? We are not trying Behavior Re: Illegal Immigrants
to answer the question: How much money have state and local
governments collected? The Census Bureau publishes the definitive [Reason TV]
comparative data answering that question. MAY 10, 2010 12:00A.M.

Here are some examples of the difference between collections (focusing The Daily Show With Jon StewartMon - Thurs 11p / 10cSuspicious
on the tax collector) and burdens (focusing on the taxpayer). Behavior on Cinco de [Link] Show Full
EpisodesPolitical HumorTea Party
• When Connecticut residents work in New York City and pay
income tax there to both the state and the city, the Census Bureau
will duly tally those amounts as New York tax collections, but we
will count them as part of the tax burden of Connecticut’s
residents.

• When Illinois and Massachusetts residents own second homes in

nearby Wisconsin or Maine, local governments in Wisconsin and
Maine will tally those property tax collections, but we will shift
those payments back to the states of the taxpayers.

• When people all over the country vacation in Disney World or Las
Vegas, tax collectors will tally the receipts from lodging, rental car,
restaurant and general sales taxes in Florida and Nevada, but we
will use economic tools to tally those payments in the states where
the vacationers live

Here I’ll provide maps of Tax Foundation calculated tax burdens by state
and tax collections per state for comparison. As you can see, a few states
significantly move in ranks. Alaska and North Dakota have a low tax
burden—50th and 33rd respectively—while very high tax collections—1st
and 6th highest in the country. This disparity is caused by their oil,
which states tax before it is sold to people outside of the state.

Click here to see the State and Local Tax Burden methodology and
study.

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