9 June 2010

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

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Angle Wins Big in Nevada; Will A Public Thumb on the Election

Now Face Reid in November Scales [Cato at Liberty]
JUN 08, 2010 05:12P.M.
[The Club for Growth]
JUN 09, 2010 07:46A.M. By Roger Pilon

Victory! With 100% reporting: Angle - 40% Lowden - 26% Tarkanian - When taxpayers underwrite the campaign expenses of candidates for
23% Others - 11% public office, serious questions arise: Not least, why should taxpayers
subsidize candidates or ideas they oppose? But when taxpayers subsidize
only one side in a campaign, there should be outrage. Perhaps there was
at the Supreme Court this morning, when the Court blocked an appalling
FISCALLY CONSERVATIVE BLOG FEEDS opinion out of, not surprisingly, the oft-overturned Ninth Circuit.

Scott and Duncan Advance to In McComish v. Bennett the Goldwater Institute is challenging Arizona’s
Clean Elections Act, under which “candidates who run with public
Runoffs in SC-01 and SC-03 campaign subsidies receive an almost dollar-for-dollar match each time a
privately funded opponent raises money above a certain amount,” the
[The Club for Growth] Goldwater press release states, “and additional matches when
JUN 08, 2010 11:45P.M. independent expenditures are made against the subsidized candidate.”

Club PAC-endorsed candidates Tim Scott and Jeff Duncan advanced to The problem for proponents of this Act is that the Supreme Court has
their respective runoffs in SC-01 and SC-03. Election results here. said more than once that “leveling the playing field” is a forbidden
rationale for campaign finance regulations. Moreover, and more
precisely, in 2008, in Davis v. FEC, the Court held that the so-called
Millionaires Amendment to the McCain-Feingold campaign finance act
FISCALLY CONSERVATIVE BLOG FEEDS of 2002 was unconstitutional. Under that amendment the contribution
caps that would otherwise apply to congressional candidates were lifted
AP Calls the GA-09 Special if a candidate was running against a self-financed opponent — a
“millionaire” who, under the First Amendment, could not be restricted in
Election for Tom Graves [The funding his own campaign. Again, leveling the playing field won’t do.
(Note also that that amendment put a lie to the main rationale for
Club for Growth] campaign finance restrictions – to prohibit corruption or its appearance.
JUN 08, 2010 09:39P.M. The caps are needed to prevent the candidate from being corrupted, so
the argument runs – unless he’s running against a millionaire, in which
Club PAC-backed Tom Graves is heading to Washington as the House case he won’t be corrupted by the added contributions. Such are the
Election results here. lengths to which campaign finance regulators are prepared to go to
justify their schemes.)

Writing for the majority in Davis, Justice Alito went to the heart of the
matter: “It is a dangerous business for Congress to use the election laws
to influence the voters’ choices.” That it is, and it’s not through election
laws alone that Congress – or states, as here – tries to influence voters
choices through the use of taxpayer dollars. Do we need any better
example, on this primary election day around the country, than publicly-
funded National Public Radio?

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In January, U.S. District Court Judge Roslyn Silver found Arizona’s Act FISCALLY CONSERVATIVE BLOG FEEDS
unconstitutional under the First Amendment. But the state appealed,
and last month a three-judge panel of the Ninth Circuit issued an Senate Bill More Than Doubles
opinion stating that the damage to free speech was minimal. This
morning the Supreme Court issued an order to enforce the District Tax Rate on Pensions, Charities,
Court’s injunction against the use of matching funds. As reported by the
Goldwater Institute, the order says the injunction will remain in effect and Colleges [Americans for Tax
until the Court rules on the underlying appeal of the Ninth Circuit
decision. The injunction also would be lifted if the Supreme Court Reform]
decides not to consider the formal appeal. This is one to watch. JUN 08, 2010 04:52P.M.

The Senate this week is taking up the tax extenders package. According
to the Congressional Budget Office, it raises net taxes by $47.5 billion.
FISCALLY CONSERVATIVE BLOG FEEDS Like its House counterpart, this bill is...

One From Silicon Valley: Leave

Us Alone [Cato at Liberty] FISCALLY CONSERVATIVE BLOG FEEDS
JUN 08, 2010 05:11P.M.
Club for Growth PAC Releases
By Jim Harper
Final Tallies for NV-Sen, GA-09
A passionate plea from Michael Arrington TechCrunch, the number
three tech blog in the country and the number four blog overall, [The Club for Growth]
according to Technorati’s current rankings: JUN 08, 2010 04:43P.M.

Silicon Valley has fueled much of the growth in our economy WASHINGTON S COMMITTEE. 202-955-5500.
over the last few decades and has created amazing (and
highly profitable) companies that are making the world a
much better and more interesting place to live. All that
happened while the government ignored us. FISCALLY CONSERVATIVE BLOG FEEDS

We don’t want handouts. We don’t want “public-private The European Example

partnerships,” and we sure as hell don’t want legislation. Just
let us do our thing and maybe say thanks to those companies [Americans for Tax Reform]
that create jobs by the hundreds of thousands and send in JUN 08, 2010 02:51P.M.
those humongous corporate tax payments on profits. Because
all you can do is screw up something beautiful. Really. Across the pond, Obama’s European counterparts have owned up to
governmental fiscal mismanagement. Prime Minister Cameron even
While maintaining his hugely popular site, Arrington has made himself went so far as to say that “we’ve been living beyond o...
something of a controversialist. His policy preferences aren’t strictly
libertarian, but his instincts are that freedom produces innovation much
better than any alternative public policies.

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Wonder Why We Are Drowning FISCALLY CONSERVATIVE BLOG FEEDS

in Debt? [Cato at Liberty] Explaining Free Trade and

JUN 08, 2010 02:16P.M.
Convincing Its Critics [Cato at
By Neal McCluskey
Liberty]
Look no further than Representatives David Obey (D-WI) and George JUN 08, 2010 02:14P.M.
Miller (D-CA), who gladly scream “fire” when there clearly is none to
get $23 billion to politically precious special interest groups. By Daniel Ikenson

Bankrupting shamelessness, thy name is Washington. Further to Tom Palmer’s illuminating post entitled “How to Explain Free
Trade in Less Than Three Minutes,” let me add that, occasionally,
skeptical professors, teachers, and our favorite protectionists muster up
retorts to our sensible arguments. And sometimes further elaboration
FISCALLY CONSERVATIVE BLOG FEEDS and exposition are necessary before we can convincingly dispense with
those objections.
Ninja Bureaucrats on the Loose
For those occasions, you will be happy to have been acquainted with the
[Cato at Liberty] work of the Cato Institute’s Center for Trade Policy Studies, which has
JUN 08, 2010 02:15P.M. been producing arrows for free trade quivers for 12 years. Given the
persistence of myths that feed trade’s skeptics, eradication of
By David Rittgers protectionism requires that our arguments appeal to those who can be
convinced in three minutes, as well as those who may be more
Quinn Hillyer has an excellent piece at the Washington Times stubborn.
highlighting the simultaneously farcical and frightening use of armed
agents in enforcing suspected regulatory violations.

”The government,” wrote 50-year-old Denise Simon, “is too FISCALLY CONSERVATIVE BLOG FEEDS
big to fight.” With those words, in a note to her 17-year-old
son, Adam, she explained why she was committing suicide Daily Media Spotlight June 8,
(via carbon monoxide) three days after 10 visibly armed IRS
agents in bulletproof vests had stormed her home on Nov. 6, 2010 [Americans for Tax
2007, in search of evidence of tax evasion. Her 10-year-old
daughter, Rachel, was there with Simon when the agents Reform]
stormed in. JUN 08, 2010 02:12P.M.

“I cannot live in terror of being accused of things I did not The Hill published an article about Republicans putting healthcare
do,” she wrote to Adam. To the rest of the world, in a separate reform on state ballots in order to bring out conservative voters in
suicide note, she wrote: “I am currently a danger to my November and fight back against federal legislation. Republic...
children. I am bringing armed officers into their home. I am
compelled to distance myself from them for their safety.”

The IRS is not the lone culprit. The EPA, National Park Service, Small
Business Administration and even the Railroad Retirement Board have
acquired a taste for tactical enforcement of administrative sanctions.

Read the whole thing. And when you’re done, check out Tim Lynch’s
book on the proper role of the criminal law, Radley Balko’s work on the
unwarranted expansion of SWAT teams within American law
enforcement, and the Heritage Foundation’s report on the uncontrolled
growth of the federal criminal code.

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A Soda Tax Completely, Utterly, Financial Reform Is Not Over –

and Totally Unrelated to Conferees Have 12 Major
Individual Choice [Cato at Differences to Iron Out
Liberty] [Americans for Tax Reform–
JUN 08, 2010 01:09P.M.
Conferees Have 12 Major
By Sallie James
Differences to Iron Out]
An interesting article in Slate today about the social psychology of “sin JUN 08, 2010 12:17P.M.
taxes” and how people in general resent being told what to do. They may,
in fact, react by consuming even more of the sinning item than before the [PDF DOCUMENT] Despite the House and Senate passing their own
nannies intervened, just to prove a point. versions of financial reform legislation (HR 4173 and S 3217), the battle
is far from over. Now, the bills must be sent to a bipart...
Unfortunately, the point of the article seems to be how to implement sin
taxes — in this case, a soda tax – without annoying people to the point
where the tax is counterproductive. Something about “refram[ing]” the
tax so it doesn’t tip people off as to its real purpose. The author FISCALLY CONSERVATIVE BLOG FEEDS
concludes with this gem:
How to Explain Free Trade in
If we want to implement a sweetened beverage tax and
maximize its effectiveness, the best approach would be to Less Than Three Minutes [Cato
dissociate it from the larger issue of individual choice and
focus on its immediate practical benefits, such as the revenue at Liberty]
it produces. Over time, we’ll get used to it. We might even JUN 08, 2010 11:41A.M.
wonder why we didn’t do it sooner.
By Tom G. Palmer
To end on a positive note, many of the comments are striking a distinctly
libertarian tone. The professionally ignorant (and I’m thinking here of Lou Dobbs, among
others) never “get it” about trade. They think it’s some complex swindle,
in which we deny ourselves “jobs,” or that it should be about being “fair”
or “balanced.” They don’t see how free trade creates prosperity and
FISCALLY CONSERVATIVE BLOG FEEDS peace. I was inspired by the outstanding trade economist Doug Irwin of
Dartmouth to explain what goes on when people trade. The challenge
Video: Dick Morris Endorses was to explain international trade in under 3 minutes. So here’s the
result in 2:57: The Great Prosperity Machine.
Carly Fiorina [Americans for
Share it with your favorite protectionist, or with professors and teachers.
Tax Reform] (There’s more information at [Link]/BastiatLegacy.)
JUN 08, 2010 01:03P.M.
Watch and share:
Yesterday, Dick Morris announced his endorsement of Carly Fiorina in
the Republican primary for California’s U.S. Senate seat. Morris cited
Tom Campbell’s refusal to sign the Taxpayer Prote...

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Political Economy in Three Prediction: Pelosi is Finished

Panels [Cato at Liberty] [The Club for Growth]
JUN 08, 2010 11:40A.M. JUN 08, 2010 11:30A.M.

By David Boaz I The White House, readying for a tack-to-the-middle re-election

campaign, will have no further use for a San Francisco ideologue as a
face of the national party, and will not step in to save Pelosi.

FISCALLY CONSERVATIVE BLOG FEEDS

Support for Incumbents

Reaches All-Time Low [The
Indeed, every improved product or service may make us no longer value
products and services we previously used. That’s what Schumpeter called Club for Growth]
“creative destruction.” A longer version of the same phenomenon was on JUN 08, 2010 11:05A.M.
the front page of Monday’s Wall Street Journal, in an article about how
Wal-Mart’s rivals secretly fund “grassroots local campaigns” against From the Washington Post [emphasis added]: The national survey shows
Wal-Mart, organized by political consulting firms, to protect the existing that 29 percent of Americans now say they are inclined to support their
firms’ positions. Every innovator puts somebody out of business, as House representative in November, even lower than in 1994, when
Agnes’s friend recognizes. voters swept the Democrats out of power in the that chamber after 40
years in the majority. The poll also finds growing disapproval of the s
main problems.
FISCALLY CONSERVATIVE BLOG FEEDS

Liberals Flunk Econ 101 [The

FISCALLY CONSERVATIVE BLOG FEEDS
Club for Growth]
JUN 08, 2010 11:38A.M. The Message of Falling Stocks &
Here which we do not count as incorrect. In this case, percentage of Rising Gold [Larry Kudlow’s
conservatives answering incorrectly was 22.3%, very conservatives 17.6%
and libertarians 15.7%. But the percentage of progressive/very liberals Money Politic$]
answering incorrectly was 67.6% and liberals 60.1%. The pattern was not JUN 08, 2010 11:02A.M.
an anomaly. Klein asked eight total questions about basic economics.
Click here to find out the full results. “Wall Street in a Slow Crash” was the headline splashed on Dow Jones’
MarketWatch, one of the top financial websites, yesterday afternoon. To
be sure, the Dow suffered yet another down day on Monday, shedding
115 points. And the broad-based S&P 500 is off 14 percent from its late-
April high. The last five to six weeks have been a tough stretch for stocks.

And let me add to the MarketWatch headline: Gold prices are continuing
to rally this spring, even as stocks fall. The precious metal jumped $25
yesterday to close right on top of its $1,240 high. Gold bugs may be
cheering the metal’s recent run, but the surge is a bad economic omen.

Here’s a simple way to look at the unholy combination of falling stocks

and rising gold: Falling stocks are signaling a slower economy. Rising
gold prices are signaling higher inflation down the road, along with
paper-currency debauchment and broad-based financial stresses across

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the globe. FISCALLY CONSERVATIVE BLOG FEEDS

Falling stocks, rising gold. I don’t like the sound of it. Club in the News on Election
Incidentally, my good friend Art Laffer wrote a terrific op-ed in Day [The Club for Growth]
yesterday’s Wall Street Journal warning about the economic threats JUN 08, 2010 10:55A.M.
emanating from Washington. Art sees major storm clouds in 2011. At the
top of his list are enormous, across-the-board tax hikes set to kick in on Today is Election Day for several states. s Primaries - Alex Pappas, Daily
January 1. We’re talking tax increases on capital gains, dividends, and Caller
estates (the death tax). It’s all anti-growth. It’s an attack on the investor
class.

Art has always been a positive, “glass is full” sort of guy, but he sees FISCALLY CONSERVATIVE BLOG FEEDS
serious negative economic calamity ahead, including a double-dip
recession. He makes a compelling case. And I’m wondering whether Ruth Richardson: The Queen of
falling stocks on a near daily basis are already painting a picture of
what’s on the horizon. Fiscal Squeezes [Cato at
I don’t yet see a double-dip recession. A steep yield curve and strong Liberty]
profits are placing a cushion underneath the economy. Is a slowdown in JUN 08, 2010 10:41A.M.
the cards? Probably. But no double-dip recession — not yet.
By Steve H. Hanke
That said, the threat of these higher marginal tax rates on investors and
the ownership class is just plain bad for future growth. Tax rates affect In my posting of June 3, 2010, “Prof Krugman Is Wrong, Again,” I
economic behavior. That’s Art’s principal point. And while Obama’s argued and presented evidence to indicate that Prof. Krugman and other
Washington has rejected this thought, Art’s warning is very important. fiscalists, who peddle the idea that more government spending is the
economic elixir for the United States, are wrong. They have latched onto
You know me. I’m a positive guy, too. An optimist. But I’ll tell you what: an old idea — naive Keynesianism — that has congealed into a crust of
None of this is good. dogma by endless repetition and obeisance.

When fiscal deficits and debt levels are “large” and the state of
confidence is “low,” fiscal multipliers can be negative. Under these
FISCALLY CONSERVATIVE BLOG FEEDS conditions, a fiscal consolidation, not a fiscal stimulus, is stimulative.

Former Union Boss: Free While my June 3, 2010 posting contained well-known contra-Keynesian
cases, my friend Peter Redward in Singapore reminded me that I failed
Market Has “Failed” [The Club to include New Zealand’s 1991 budget squeeze. This leaves me a bit red-
faced as another good friend, Ruth Richardson, was New Zealand’s
for Growth] Minister of Finance (November 1990 – 1993) and was responsible for the
JUN 08, 2010 10:59A.M. 1991 budget. As Ruth makes clear in her memoirs Making A Difference
(Chapter 11 – The Mother of All Budgets), the purpose of New Zealand’s
From CNS Steve Bartin fiscal squeeze was to restore confidence and boost economic growth. Her
squeeze worked like a charm, as Roger Kerr, Executive Director of the
New Zealand Business Roundtable, recounts.

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FISCALLY CONSERVATIVE BLOG FEEDS I’ve included his whole response for context, but I’m only really
interested in the italicized part of the argument. Aren’t all Americans
Problems with Nationalism? supposed to have problems with nationalism? Not our own nationalism,
of course, which we have re-labeled “exceptionalism.” But foreign
[Cato at Liberty] nationalism? Isn’t that supposed to be pernicious?
JUN 08, 2010 10:18A.M.
The way in which Abrams presented the argument struck me as being a
By Justin Logan normative claim, not positive. That is, “particularism, nationalism, and
Zionism” were not just things that Jewish liberals have problems with,
but rather they were things that Jewish liberals have problems with but
should not.

Abrams’ inclusion of Zionism alongside nationalism ought perhaps to

caution him about Zionism’s susceptibility to the perils that have plagued
other nationalisms through history.

FISCALLY CONSERVATIVE BLOG FEEDS

Download Cult of the

Presidency for Free! [Cato at
Liberty]
I try to avoid Sunday morning talk shows like the plague, but somehow I JUN 08, 2010 08:40A.M.
happened to catch five minutes of Fareed Zakaria’s “GPS” show on CNN
International. Elliott Abrams and Peter Beinart were arguing about the By Gene Healy
Gaza flotilla and Beinart’s New York Review of Books article about
liberal Zionism.

What I found interesting about the segment was the exchange between
the two men about the argument Beinart made in the article: that many
young Jews saw the choice before them not as being between liberal
Zionism and conservative Zionism, but rather between conservative
Zionism and no Zionism. Beinart spelled out the argument, and this is
what followed:

ZAKARIA: Elliott, you can briefly respond to this, and then

we’ve got to go.

ABRAMS: OK. I think it’s quite historical.

What Peter is forgetting, that Jewish liberals have never

supported Israel. They didn’t support the founding of the
state of Israel. The reform movement was anti-Zionist for Download my book for free!
decades and decades.
Last week, the New Republic’s Jonathan Chait praised Cult of the
Jewish liberals have a problem with particularism, Presidency, and the Economist quoted the book. Which reminds me, I
nationalism, Zionism, and they always have. And it isn’t due provided a link in my last post, but forgot to stress the fact that we’re
to anything that is going on in Israel, it’s due to things that now literally giving it away with free online downloads (especially nice
are going on inside their heads. They need to grow up and for those of you who are Kindle owners).
realize that Israel has a right to defend itself. (emphasis
mine) With presidential “daddyism” rampant, and our National Father-
Protector’s manifest failure to protect us from oil spills and tornadoes,

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there couldn’t be a better time to check out the comprehensive cuts passed under the Economic Recovery Tax Act (ERTA),
libertarian indictment (if I do say so myself) of the presidency, the very whereby the bulk of the tax cuts didn’t take effect until Jan. 1,
model of a modern constitutional monstrosity. 1983. Reagan’s delayed tax cuts were the mirror image of
President Barack Obama’s delayed tax rate increases. For
Download it here. 1981 and 1982 people deferred so much economic activity
that real GDP was basically flat (i.e., no growth), and the
unemployment rate rose to well over 10%. But at the tax
boundary of Jan. 1, 1983 the economy took off like a rocket,
FISCALLY CONSERVATIVE BLOG FEEDS with average real growth reaching 7.5% in 1983 and 5.5% in
1984. It has always amazed me how tax cuts don’t work until
Will Higher Tax Rates in 2011 they take effect. Mr. Obama’s experience with deferred tax
rate increases will be the reverse. The economy will collapse
Cause an Economic Collapse? in 2011. …The result will be a crash in tax receipts once the
surge is past. If you thought deficits and unemployment have
[Cato at Liberty] been bad lately, you ain’t seen nothing yet.
JUN 08, 2010 08:24A.M.

By Daniel J. Mitchell

Art Laffer has a compelling column in yesterday’s Wall Street Journal,

where he makes the case that future tax rate increases will cause
considerable economic damage because people have an incentive to
maximize income this year to take advantage of current tax rates —
resulting in an artificial drop in economic activity next year. In effect,
this will be a reverse version of the experiment in the early 1980s, when
entrepreneurs and investors had an incentive to postpone economic
activity since Reagan’s tax rate reductions were phased in over several
years. I am reluctant to endorse Art’s prediction that the “economy will
collapse,” since even good economists are lousy forecasters. But we
certainly will see a large degree of tax planning, which will lead to less
revenue than expected next year. And the higher tax rates will inhibit
growth, though it is impossible to predict whether this means 2.1 percent
growth instead of 2.3 percent growth, for instance, or 0.5 percent growth
instead of 0.6 percent growth.

On or about Jan. 1, 2011, federal, state and local tax rates are
scheduled to rise quite sharply. …the highest federal personal
income tax rate will go 39.6% from 35%, the highest federal
dividend tax rate pops up to 39.6% from 15%, the capital
gains tax rate to 20% from 15%, and the estate tax rate to 55%
from zero. …Tax rates have been and will be raised on income
earned from off-shore investments. Payroll taxes are already
scheduled to rise in 2013 and the Alternative Minimum Tax
(AMT) will be digging deeper and deeper into middle-income
taxpayers. And there’s always the celebrated tax increase on
Cadillac health care plans. State and local tax rates are also
going up in 2011 as they did in 2010. Tax rate increases next
year are everywhere. …if people know tax rates will be higher
next year than they are this year, what will those people do
this year? They will shift production and income out of next
year into this year to the extent possible. As a result, income
this year has already been inflated above where it otherwise
should be and next year, 2011, income will be lower than it
otherwise should be. …In 1981, Ronald Reagan—with
bipartisan support—began the first phase in a series of tax