Feb8th2010

Quote Of The Day

“Apparently, the administration has issued rules requiring parity for mental health treatment with other illnesses.  They’ll take effect July 1st.  If you want to know why health insurance costs keep marching upward seemingly uncontrolled, this is why:  mandating new benefits is always popular, and the government doesn’t have to pay for them.” — Megan McArdle

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Feb5th2010

Quote Of The Day

“As has been voluminously documented here, one of the most notable aspects of the first year of the Obama presidency has been how many previously controversial Bush/Cheney policies in the terrorism and civil liberties realms have been embraced.  Even Obama’s most loyal defenders often acknowledge that, as Micheal Tomasky recently put it, “the civil liberties area has been [Obama’s] worst.  This is the one area in which the president’s actions don’t remotely match the candidate’s promises.”  From indefinite detention and renditions to denial of habeas rights, from military commissions and secrecy obsessions to state secrets abuses, many of the defining Bush/Cheney policies continue unabated under its successor administration.” — Glenn Greenwald, writing in Salon

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Feb4th2010

Winning The Lottery

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The Lottery, a documentary due out May 7, follows four New York City families hoping to win the lottery to enroll their children in a Harlem charter school”. Via Joanne Jacobs.

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Feb3rd2010

Eliot Spitzer On The Recent Supreme Court Decision

Eliot Spitzer on the Supreme Court decision that struck down the heart of campaign finance reform:

As an elected official who often tangled with wealthy corporations, I recognize that there is a superficial appeal in the prospect of being able to silence their political voices. Of course that is precisely why the First Amendment protects them and why I find myself sympathetic to the First Amendment absolutists in this case. What distinguishes what Citizens United did and what Bill O’Reilly on Fox News—Rachel Maddow on MSNBC—does every day? Fox and MSNBC are corporations bombarding the airwaves with political rhetoric, from the right and left, that is as close to “electioneering communications” as anything I can imagine. The McCain-Feingold statute excluded “media companies” from its limitations, a distinction that makes no logical sense. The constitutionality of Citizens United’s speech should have nothing to do with what else may or may not go on at the corporation it is part of.

It is not surprising that the ACLU, wearing its First Amendment fundamentalist hat, and the NRA and the Chamber of Commerce, trying to protect corporate power and speech rights, are urging the court to find the provision unconstitutional.

The full article can be found here.

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Feb2nd2010

The Real Bush Deficit

Obama is fond of saying that he ‘inherited’ a $1.3 trillion budget deficit and is merely ‘only increasing it to $1.4 trillion in 2009 and to $1.6 trillion in 2010′.

Dick Morris gets behind the numbers and tells the part that Obama left out:

In 2008, Bush ran a deficit of $485 billion. By the time the fiscal year started on October 1, 2008, it had gone up by another $100 billion due to increased recession-related spending and depressed revenues. So it was $600 billion. That was the real Bush deficit.

But when the fiscal crisis hit, Bush had to pass TARP in the final months of his presidency which cost $700 billion. Under the federal budget rules, a loan and a grant are treated the same. So the $700 billion pushed the deficit — officially — up to $1.3 trillion. But not really. The $700 billion was a short term loan. $500 billion of it has already been repaid.

So what was the real deficit Obama inherited? The $600 billion deficit Bush was running plus the $200 billion of TARP money that probably won’t be repaid (mainly AIG and Fannie Mae and Freddie Mac). That totals $800 billion. That was the real deficit Obama inherited.

Then…he added $300 billion in his stimulus package, bringing the deficit to $1.1 trillion. And falling revenues and other increased welfare spending pushed it up to $1.4 trillion.

So, effectively, Obama came close to doubling the deficit.

More at the link here.

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Feb1st2010

20 Years Is Not A Century

Obama, during the State Of The Union address, said:

“With all due deference to separation of powers, last week the Supreme Court reversed a century of law that I believe will open the floodgates for special interests –- including foreign corporations –- to spend without limit in our elections. (Applause.) I don’t think American elections should be bankrolled by America’s most powerful interests, or worse, by foreign entities. (Applause.) They should be decided by the American people. And I’d urge Democrats and Republicans to pass a bill that helps to correct some of these problems.”

Randy Barnett, professor of constitutional law at Georgetown Law Center, writes in the WSJ about Obama’s criticism of the Supreme Court:

Then there is the substance of the remark itself. It was factually wrong. The Court’s ruling in Citizens United concerned the right of labor unions and domestic corporations, including nonprofits, to express their views about candidates in media such as books, films and TV within 60 days of an election. In short, it concerned freedom of speech; in particular, an independent film critical of Hillary Clinton funded by a nonprofit corporation.

While the Court reversed a 1990 decision allowing such a ban, it left standing current restrictions on foreign nationals and “entities.” Also untouched was a 100-year-old ban on domestic corporate contributions to political campaigns to which the president was presumably referring erroneously.

That is a whole lot to get wrong in 72 sanctimonious words. Clearly, this statement had not been vetted by the president’s legal counsel. Solicitor General Elena Kagan, for example, would never have signed off on such a claim. Never.

Then there is the lack of any reference to the Constitution or First Amendment upon which the Court rested its decision. The president made a nakedly result-oriented criticism: Because interest groups and foreigners (gasp!) will allegedly get to influence our elections, the Supreme Court made a legal mistake. As though this is the way the Supreme Court should decide constitutional cases.

Oh, and how exactly is Congress supposed to override a constitutional ruling by the Supreme Court by enacting a statute? Or was the president merely urging Congress to evade it?

If the president, himself a Harvard Law School graduate, is going to criticize a judicial opinion, it is incumbent upon him to be legally accurate and responsible in his commentary. If that is too much to expect of a politician giving a nationally televised speech to the general public, then this again illustrates the inappropriateness of making this remark in this venue.

The full article can be found here.

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Jan29th2010

Obama The Debater

Obama gave a speech and responded to questions at the House Republican retreat in Baltimore. See the full video on C-Span here. The transcript can be found here.

I disagree with Obama on many things. Alot of which he discussed in this video. But it is clear from the dialogue that Obama has a far better command of the issues than present day Republicans. He clearly cleaned their clocks in this discussion.

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Jan29th2010

Correcting Obama On The Recent Supreme Court Decision

I assume that Obama’s comments about the recent Supreme Court ruling were meant to be intentionally misleading and/or inaccurate in order to score political points. After all, Obama is a constitutional lawyer who knows better.

Nevertheless, to kill some of the rumors going around, here are some further clarifications on why Alito was correct in his statement that what Obama said was simply ‘not true’:

This time, Justice Alito shook his head as if to rebut the president’s characterization of the Citizens United decision, and seemed to mouth the words “not true.” Indeed, Mr. Obama’s description of the holding of the case was imprecise. He said the court had “reversed a century of law.”

The law that Congress enacted in the populist days of the early 20th century prohibited direct corporate contributions to political campaigns. That law was not at issue in the Citizens United case, and is still on the books. Rather, the court struck down a more complicated statute that barred corporations and unions from spending money directly from their treasuries — as opposed to their political action committees — on television advertising to urge a vote for or against a federal candidate in the period immediately before the election. It is true, though, that the majority wrote so broadly about corporate free speech rights as to call into question other limitations as well — although not necessarily the existing ban on direct contributions.

Or another explanation here:

The Court held that 2 U.S.C. Section 441a, which prohibits all corporate political spending, is unconstitutional. Foreign nationals, specifically defined to include foreign corporations, are prohibiting from making “a contribution or donation of money or ather thing of value, or to make an express or implied promise to make a contribution or donation, in connection with a Federal, State or local election” under 2 U.S.C. Section 441e, which was not at issue in the case. Foreign corporations are also prohibited, under 2 U.S.C. 441e, from making any contribution or donation to any committee of any political party, and they prohibited from making any “expenditure, independent expenditure, or disbursement for an electioneering communication.”

This is either blithering ignorance of the law or demagoguery of the worst kind.

More can be found at the articles here and here. If you read anything on this Supreme Court decision, read Glenn Greenwald, writing in Salon.com, here and here.

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Jan28th2010

Origin Of The Minimum Wage In The United States

Economist David Henderson explains:

Proponents of the minimum wage, when it was legislated in 1938, were disproportionately from Northeastern high-wage states where a minimum wage would be binding only on a very small segment of the labor force. They used it to narrow the differential in wages between the Northeastern states and the Southeastern states, where black men were a much higher fraction of the labor force and where the minimum wage would be binding on a much higher fraction. I posted about the role of Senator John F. Kennedy in the 1950s and his explicit statement that he wanted to hobble competition from black labor.

Much more at the full post here.

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Jan27th2010

Quote Of The Day

“At the risk of rambling on redundantly, I want to stress one thing about my attitude toward the Citizens United case: We’ve been focusing on this question of “corporate personhood” because that’s the legal frame we’ve been handed, but it’s pretty much irrelevant to my thinking about this question. The root conviction here is just that when someone has produced an unflattering political documentary about a sitting senator who is seeking higher office, and the government seeks to prohibit it from airing just because the person to whom it pertains is seeking political office, that cannot possibly be compatible with the First Amendment. Who produced or funded it are beside the point.  Now, if you tell me that with such-and-such a fact pattern, given a framework of other legal decisions, this result requires the court to treat corporations as bearers of First Amendment rights, so be it. If you tell me the courts have an alternative means of reaching the same result while denying that corporations have such rights, fantastic. I have no real independent commitment to a position either way on this question, except insofar as it appears to be necessary to avoid carving a huge loophole in protections for political speech.” — Julian Sanchez

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Jan26th2010

Explaining The Supreme Courts Decision To Overturn Campaign Finance Reform

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CATO explains.

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Jan25th2010

Quote Of The Day

“The anguished cries of left-leaning folk over the Citizens United ruling seem to me to be emanating from an alternate universe, so bizarre are they. This was a case about whether the state can suppress the distribution of an unflattering documentary about a powerful political candidate produced by a small group of private citizens. The crazy thing to me is that anyone ever thought that such a rule was not in blatant violation of the First Amendment. The extra-crazy thing is that four Supreme Court justices evidently think this kind of state censorship of political speech is hunky dory. I’m going to chalk up some of the freakout to this week’s spectacular pileup of disasters for progressives. Sorry guys. I know it’s been rough. But I have to say I was taken aback by the vehemence with which people I like and admire have insisted that the state must selectively silence political speech. I didn’t realize that this was such a profound point of disagreement. As I see it, these regulations have accomplished very little other than to protect the interests of powerful, entrenched incumbent politicians against public criticism.” — Will Wilkinson

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Jan22nd2010

Quote Of The Day

“It’s really hard to get rid of bad legislation. Most people (almost everybody?) think ethanol subsidies are a loser except for the people who get rich from them directly, Archer Daniels Midland and maybe some others. But do we fix it? We don’t. That’s the way the system works. There’s a lot of inertia. It’s hard to get health care changed. And once it’s changed it’s hard to change it back. So advocating something horribly flawed as Collins and others have done on the grounds that we can fix it later is absurd. It won’t get fixed.” — Russ Roberts, on why its a bad idea to pass the healthcare bill now and ‘fix it later’

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Jan20th2010

Quote Of The Day

“Thus, I disagree with Josh Tucker that the election isn’t that consequential. First, the pivotal Senator will now be a Republican, not a Democrat. The parties put a lot of pressure on moderate members of Congress to vote one way or the other; it’s often unsuccessful, but its a pretty powerful source of influence. Second, that pivotal Senator will be Brown, not Snowe (if my prediction proves accurate). Finally, this pivotality will exist on every issue, not just health care reform, which probably just expired in its current form. Not too shabby as a consequential election, right?” — Boris Shor, assistant professor in the Harris School at the University of Chicago, on the political implications of the Brown win

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Jan19th2010

Why A Bank Tax Is A Good Idea

Greg Mankiw explains:

One thing we have learned over the past couple years is that Washington is not going to let large financial institutions fail.  The bailouts of the past will surely lead people to expect bailouts in the future.  Bailouts are a specific type of subsidy–a contingent subsidy, but a subsidy nonetheless.

In the presence of a government subsidy, firms tend to over-expand beyond the point of economic efficiency.  In particular, the expectation of a bailout when things go wrong will lead large financial institutions to grow too much and take on too much risk.

You may recall that I made precisely this argument regarding Fannie Mae and Freddie Mac some years ago when I was CEA Chair.  (No, I was not a prescient genius.  The potential problem was apparent to anyone who cared to look.)  But now the problem of implicit subsidies is far more widespread.  We have in effect turned much of the financial system into government-sponsored enterprises.

What to do?  We could promise never to bail out financial institutions again.  Yet nobody would ever believe us.  And when the next financial crisis hits, our past promises would not deter us from doing what seemed expedient at the time.

Alternatively, we can offset the effects of the subsidy with a tax.  If well written, the new tax law would counteract the effects of the implicit subsidies from expected future bailouts.

Will the tax law in fact be so well written?   It certainly won’t be perfect.  But it is possible that it will be better than doing nothing at all, watching the finance industry expand excessively, and waiting for the next financial crisis and taxpayer bailout.

The full post can be found here.

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Jan18th2010

The Best Way To Help Haiti Victims

Paul Romer gives my preferred solution:

There is a natural complementary approach that is a much better bet than giving colonialism another chance–letting Haitians migrate somewhere with better governance and rules. This is the surest answer to the question posed in the beginning. It can give them access to the urban infrastructure, buildings, equipment, and the know-how that can support jobs in areas like garment assembly.

Immigration, like free trade, is the greatest poverty alleviation tool the world has ever seen.

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