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Recent Posts From Cato Institute

Never Mind the IRS, You’d Better Be Nice to Kathleen Sebelius

Written by Michael F. Cannon, Director of Health Policy Studies at the Cato Institute. Posted with permission from Cato @ Liberty.

ObamaCare’s Independent Payment Advisory Board is everything its critics say and worse. It is a democracy-skirting, Congress-blocking, powers-unseparating, law-entrenching, tax-hiking, fund-appropriating, price-controlling, health-care-rationing, death-paneling, technocrat-thrilling, authoritarian, anti-constitutional super-legislature. Its very existence is testament to government incompetence. It stands as a milestone on the road to serfdom.

The Congressional Research Service has now confirmed what HHS Secretary Kathleen Sebelius pretends not to know but what Diane Cohen and I explained here:

[I]f President Obama fails to appoint any IPAB members, all these powers fall to Secretary of Health and Human Services Kathleen Sebelius.

Entitlement Spending Is America’s Biggest Fiscal Challenge, but Discretionary Spending Is Still Far too High

Written by Daniel J. Mitchell, a senior fellow at the Cato Institute. Posted with permission from Cato @ Liberty.

If America descends into Greek-style fiscal chaos, there’s no doubt that entitlement programs will be the main factor. Social Security, Medicare, Medicaid, and Disability are all fiscal train wrecks today, and the long-run outlook for these programs is frightful.

Just look at these numbers from the Bank for International Settlements and OECD to see how our fiscal future is bleaker than many of Europe’s welfare states.

Simply stated, if we don’t implement the right kind of entitlement reform, our children and grandchildren at some point will curse our memory.

But that doesn’t mean we shouldn’t worry about other parts of the budget, including the so-called discretionary programs that also have been getting bigger and bigger budgets over time.

Duplicative Government Programs Are a Symptom of the Problem

Written by Tad DeHaven, a budget analyst at the Cato Institute. Posted with permission from Cato @ Liberty.

The Government Accountability Office has released its third annual report on fragmented, overlapping, or duplicative federal programs and activities. Proponents of making the government more efficient view the findings as an opportunity to achieve cost savings. While there’s obviously nothing wrong with the government spending less money than it has to, the goal should be to permanently shut the trains down – not just try to get them to run on time.

Some examples:

Stop Rewarding North Korea

Written by Doug Bandow, a senior fellow at the Cato Institute. Posted with permission from Cato @ Liberty.

To a degree almost impossible to imagine just a month ago, North Korea has won international attention, dominated events in Northeast Asia, and embarrassed the United States. Unfortunately, the Obama administration has played into Pyongyang’s hands by responding to the North’s provocations. Now Secretary of State John Kerry is visiting East Asia, beginning Friday, where the so-called Democratic People’s Republic of Korea will dominate the agenda.

Rushing off to the region on a high-profile trip is another mistake. Whatever Secretary Kerry does or says is likely to be seen as enhancing the DPRK’s stature. Better for him to have stayed home, phoning his counterparts as appropriate.

No doubt the Obama administration hopes to craft a diplomatic answer to what is widely seen as a crisis. However, Washington dare not reward the North for its caterwauling, even if Kim Jong-un suddenly adopts the mien of a serious leader of a serious nation. Rather, Secretary Kerry should hold out the possibility of engagement, even diplomatic relations—but only if Pyongyang chooses to behave like other nations. No more providing benefits in response to threats.

Investigative Reporters Tackle the Small Business Administration

Written by Tad DeHaven, a budget analyst at the Cato Institute. Posted with permission from Cato @ Liberty.

When it comes to reporting on the Small Business Administration, it seems to me that most journalists simply assume that if a government agency exists to “help” small businesses then it must be good. So I was pleased to read a weekend piece from two investigative journalists with the Dayton Daily News that challenges the conventional wisdom on the SBA.

As the reporters explain, the SBA’s main job is to back loans issued by private lenders to small businesses that couldn’t get financing on market terms. The result is that taxpayers end up holding the bag when these naturally riskier loans go bad.

And quite a few go bad as this Cato essay on the Small Business Administration explains.

Lenders have little skin in the game so for them it’s heads they win, tails they win. Thus it was shocking – absolutely shocking – that a representative from the SBA and the head of the Ohio Bankers Association provided the reporters with the most favorable quotes.

The entire piece is worth reading, but the authors did a particularly good job of turning the spotlight on the racket that exists between the SBA, lenders, and national franchisors:

Untappable Apple or DEA Disinformation?

Written by Julian Sanchez, a research fellow at the Cato Institute. Posted with permission from Cato @ Liberty.

Tech news site CNET has an interesting, but I suspect somewhat misleading, story today suggesting that text messages sent via Apple’s iMessage service—an Internet-based alternative to traditional cell phone SMS text messages—are “impossible to intercept” by law enforcement. Yet that is not quite what the document on which the story is based—an “intelligence note” distributed to law enforcement by the Drug Enfrocement Administration—actually says.

The DEA memo simply observes that, because iMessages are encrypted and sent via the Internet through Apple’s servers, a conventional wiretap installed at the cellular carrier’s facility isn’t going to catch those iMessages along with conventional text messages. Which shouldn’t exactly be surprising: A search of your postal mail isn’t going to capture your phone calls either; they’re just different communications channels. But the CNET article strongly implies that this means encrypted iMessages cannot be accessed by law enforcement at all. That is almost certainly false.

Eleventh Circuit Overturns Department of Labor’s Claim of Authority As “Absurd”

Written by Walter Olson, Senior Fellow at the Cato Institute. Posted with permission from Cato @ Liberty.

The U.S. Department of Labor claimed the authority to issue rules governing the H-2B guest worker program on the grounds that the underlying statute provides for it to be consulted as part of the program’s administration. On Monday, the Eleventh Circuit U.S. Court of Appeals curtly rebuffed this “absurd” claim. From its opinion:

In its proposed and final rules, DOL cited two statutory provisions as the source of its rulemaking authority. First, DOL cited 8 U.S.C. § 1184(c)(1), which instructs the Secretary of DHS to consult with the “appropriate agencies of the Government” in resolving whether to grant a foreign worker a visa upon the “petition of the importing employer.” Although there is no grant of rulemaking authority to DOL in this statutory section, DOL asserts that as the result of the permission it grants to DHS to consult with it, DOL “has authority to issue legislative rules to structure its consultation with DHS.” The end result, in DOL’s view, is that it is empowered to engage in rulemaking, even without the DHS.

We reject this interpretation of “consultation.” Under this theory of consultation, any federal employee with whom the Secretary of DHS deigns to consult would then have the “authority to issue legislative rules to structure [his] consultation with DHS.” This is an absurd reading of the statute and we decline to adopt it.

Was William Shakespeare the First Libertarian?

Written by Daniel J. Mitchell, a senior fellow at the Cato Institute. Posted with permission from Cato @ Liberty.

I’ve never been a big Shakespeare fan, but that may need to change. It seems the Bard of Avon may be the world’s first libertarian.

Some of you are probably shaking your heads and saying that this is wrong, that Thomas Jefferson or Adam Smith are more deserving of this honor.

Others would argue we should go back earlier in time and give that title to John Locke.

But based on some new research reported in Tax-news.com, we need to travel back to the days of Shakespeare:

Uncertainty over the likely future success of his plays led William Shakespeare to do “all he could to avoid taxes,” new research by scholars at Aberystwyth University has claimed. The collaborative paper: “Reading with the Grain: Sustainability and the Literary Imagination,”…alleges that, in his “other” life as a major landowner, Shakespeare avoided paying his taxes, illegally hoarded food and sidelined in money lending. …According to Dr Jayne Archer, lead author and a lecturer in Renaissance literature at Aberystwyth: “There was another side to Shakespeare besides the brilliant playwright - a ruthless businessman who did all he could to avoid taxes, maximize profits at others’ expense and exploit the vulnerable - while also writing plays.”

In that short excerpt, we find three strong indications of Shakespeare’s libertarianism.

  1. What does it mean that Shakespeare did everything he could to avoid taxes? His actions obviously would have upset the United Kingdom’s current political elite, which views tax maximization as a religious sacrament, but it shows that Shakespeare believed in the right of private property. Check one box for libertarianism.
  2. What does it mean that the Bard “illegally hoarded food”? Well, such a law probably existed because government was interfering with the free market with something like price controls. Or there was a misguided hostility by the government against “speculation,” similar to what you would find from the deadbeats in today’s Occupy movement. In either event, Shakespeare was standing up for the principle of freedom of contract. Check another box for libertarianism.
  3. Last but not least, what does it mean that Shakespeare “sidelined in money lending”? Nations used to have statist “usury laws” that interfered with the ability to charge interest when lending money. Shakespeare apparently didn’t think “usury” was a bad thing, so he was standing up for the liberty of consenting adults to engage in voluntary exchange. Check another box for libertarianism.

Obama’s Perilous Foreign Policy Path

To both a greater and lesser degree of success, foreign policy scholars have tried to explain the disconnect between President Obama’s soaring idealism of America’s role in the world and his halting political caution about it in discrete situations. That vacillation has drawn criticism, both for being too meddlesome and for not being meddlesome enough.

Daily Caller contributor Adam Bates ably sums up the president’s incoherence as “not based on any particular logic or worldview beyond the president’s own desire to distance himself from America’s foreign policy past without bothering to actually change any policies.” Indeed. As this author has written in the past, specifically on counterterrorism policies,

On the one hand, Obama openly rejected Bush’s ‘with us or against us’ approach to foreign affairs. On the other hand, Obama’s sophisticated demeanor opened him to criticism, with hawks condemning him as too weak and easily manipulated by America’s enemies.

Three Cheers for Autonomy

Written by Trevor Burrus, research fellow at the Cato Institute’s Center for Constitutional Studies. Originally published on Monday, March 25, 2013, it has been cross-posted with permission from Cato @ Liberty.

In today’s New York Times, philosopher Sarah Conly gives “Three Cheers for the Nanny State,” specifically, NYC’s famed big soda ban. Invoking aspects of the theory of “nudge,” made popular in a book by Richard H. Thaler and Cass R. Sunstein, Conly argues that, sometimes, the government can rightfully save us from ourselves.

The popularity of “nudge theory” is closely tied to the recent spate of popular science books on the foibles of the human brain. Books such as Predictably Irrational and A Mind of Its Own are part of a new self-help fad: the idea that scientists studying the error-prone human brain can help us understand why we are unable to quit smoking, lose weight, and many other common problems.

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