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Archive for the ‘Corruption’ Category

I’m frequently baffled at the stupidity of Republicans.

When they took control of Congress back in 1994, for instance, they had unrestricted ability to get rid of the bureaucrats that generated bad economic analysis at both the Joint Committee on Taxation and the Congressional Budget Office.

Yet notwithstanding more than a decade of congressional power, GOPers did almost nothing to neutralize the bureaucrats who produced shoddy research that helped the left push for more spending and higher taxes.

Sort of like a football team allowing the opposing coach to pick the refs and design game plans for both teams.

Another painful example is that Republicans never used their majority status to defund the Paris-based Organization for Economic Cooperation and Development.

This international bureaucracy is infamous for pushing policies to expand the power of government. That’s not too surprising since it’s dominated by European welfare states. But it is amazing that Republicans seem to think it’s perfectly fine to send about $100 million each year to subsidize the OECD’s agenda.

Particularly when the OECD so often pushes policies that are directly contrary to American interests.

It has allied itself with the nutjobs from the so-called Occupy movement to push for bigger government and higher taxes in the United States.

The bureaucrats are advocating higher business tax burdens, which would aggravate America’s competitive disadvantage.

The OECD is pushing a “Multilateral Convention” that is designed to become something akin to a World Tax Organization, with the power to persecute nations with free-market tax policy.

It supports Obama’s class-warfare agenda, publishing documents endorsing “higher marginal tax rates” so that the so-called rich “contribute their fair share.”

The OECD advocates the value-added tax based on the absurd notion that increasing the burden of government is good for growth and employment.

It even concocts dishonest poverty numbers to advocate more redistribution in the United States.

Let’s elaborate on the last item dealing with poverty in the United States. According to the OECD, poverty is more sever in the United States than it is in relatively poor nations such as Greece, Portugal, and Hungary.

Indeed, the bureaucrats in Paris even put together a chart showing how “bad” America ranks in this category.

But it’s all bunk. Utterly dishonest garbage. Here’s some of what I wrote last year on this topic.

…if you read the fine print, you may notice one itsy-bitsy detail. The chart isn’t a measure of poverty. Not even close. Indeed, the chart wouldn’t change if all of the people of any nation (or all nations) suddenly had 10 times as much income. That’s because the OECD is measuring is relative income distribution rather than relative poverty. And the left likes this measure because coerced redistribution automatically leads to the appearance of less poverty. Even if everybody’s income is lower!

But the OECD isn’t letting up. In a new “Society at a Glance” look at the United States last month, here’s what the OECD claimed.

The relative poverty rate in the U.S. is 17.4%, compared to an OECD average of 11.1%. Only Chile, Israel, Mexico and Turkey have higher poverty rates than the U.S.

But unlike in other publications, the OECD didn’t bother to include any fine print admitting that its poverty measure has nothing to do with poverty.

That’s grotesquely dishonest and morally corrupt.

And since we’re on the topic of corruption, let’s broaden our discussion. National Review’s Kevin Williamson has an article on the rampant corruption among elected officials.

But what caught my attention weren’t the parts about pro-gun control politicians trying to help sell weapons to terrorists. Instead, I especially appreciated the broader lesson he provides for readers.

James Madison famously observed that “if men were angels, no government would be necessary.” But he also understood that men do not become angels once they win elections, become police, or are appointed to positions of power. Our constitutional order strikes an elegant balance between policing the non-angels outside of government and constraining the non-angels within government, setting the ambitions of the three branches against one another and subdividing the legislative branch against itself. …Adam Smith’s formula for prosperity — “peace, easy taxes, and a tolerable administration of justice” — is the very modest ambition that conservatives aim for. Limited government is the tool by which government can be made to do good without necessarily being good, or being composed of good men. …The corruptibility of the political classes is fenced in by limiting the power of the political classes per se. You cannot expand the scope and scale of government without expanding in parallel the scope and scale of government corruption.

Amen to that. That’s the core message of this video I narrated, which explains that shrinking the size and scope of government is the only effective way to reduce corruption.

Remember the lesson of this superb poster: If more government is the answer, you’ve asked a very strange question.

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If you look at measures (such as the Fraser Institute’s Economic Freedom of the World index) of what makes a nation competitive and prosperous, you’ll find some obvious variables such as fiscal policy, trade openness, regulatory burden, and monetary policy.

But in addition to those policy levers, you’ll find that it’s equally important that a nation does a good job of protecting and maintaining the rule of law.

This is not something easy to define or measure. It includes all sorts of characteristics such as protection of property rights, absence of corruption, honest courts, government transparency, and non-discriminatory application of laws.

But one thing is clear. Nations that don’t have good rule of law are not going to enjoy much prosperity, even if they have ostensibly good policies.

So it was with considerable interest that I saw that a Rule of Law Index has been released by the World Justice Project.

This is the first I’ve heard of the WJP, and I don’t pretend to be an expert in this area, but the Index is interesting and impressive.

And I’m a bit dismayed – but not surprised – to see that the United States only ranks #19 in their comprehensive measure of the rule of law. Here are the top 52 nations.

Rule of Law Rankings

If you look at the detailed data for the 8 major categories in the Index, you’ll see that the United States was fairly consistent, with a high score of 17 and low scores of 27.

To use a classroom analogy, America is akin to a decent student, with grades of B+ in some classes and B- in other classes.

Other nations display more variety. They may have a higher overall GPA (like #10 Singapore) or lower overall GPA (like #50 Belarus), but their grades for specific categories may deviate substantially.

Looking at the places with the strongest rule of law, the good performance of the Nordic nations is not surprising. Countries such as Denmark and Sweden may have big welfare states, but they have very laissez-faire policies in other areas.

And let’s give a special shout-out to the nation that produced the PotL. Lebanon made it into the top 50.

Interestingly, the WJP must have previous editions, or at least historical data, because they also show whether countries are getting better or worse.

The good news is that America apparently has more order and security. The bad news is that we’re moving in the wrong direction with regards to constraints on government power.

Rule of Law US Trend

I don’t know why the U.S. score deteriorated, but the Obama Administration’s abuse of the IRS and its lawless behavior on Obamacare might be good guesses.

Let’s now look at the slow students in the class.

Is anybody surprised to learn that Venezuela is in last place of the 99 nations in the Index?

Rule of Law Rankings 2

And if you’re interested in other nations that are in the news, the low rankings for Ukraine and Russia help to explain why these countries are under-performing (even though they both have a flat tax, which is one of my favorite policies).

Now that I’ve shared this data, it’s time to acknowledge that there’s no obvious way to improve the rule of law.

In my humble opinion, the rule of law is a form of social capital. And like other examples of social capital (work ethic, honesty, etc), it’s part of a nation’s culture.

That being said, let’s look at some polling data from Europe that captures one aspect of the rule of law. These numbers show the extent of corruption.

The moral of the story is that it would be a good thing to reduce the burden of government in countries such as Germany and Denmark, but that it’s absolutely critical to reduce the size and scope of the state in nations such as Greece, Italy, and Spain.

Simply stated, a smaller public sector would reduce opportunities to abuse the rule of law.

P.S. Since we just showed some data on Europe, let’s share some European humor. I don’t know if this is an example of someone from Europe mocking America, or someone from Europe engaging in some self-mockery of European stereotypes about America. In either case, this image is amusing.

American Breakfast

Well done, though maybe the carbs should be excluded.

And also long overdue.

I’ve shared some cartoons about Europe (here and here), and this Dave Barry satire about Europe is very funny, but I don’t often see political humor produced by Europeans.

The Brits occasionally step forward, as you can see from this terror alert humor and this jab at France and Germany. And this comedian definitely seems to be Greek, but that’s about it.

Though it’s possible someone from Europe put together these maps about European stereotypes. Or perhaps this video about a German-Greek romantic breakup.

P.P.S. There is a global ranking that puts Venezuela ahead of the United States. I’ll let you decide whether it has any merit.

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No matter how much I pontificate about Washington corruption, there’s no way I can get across the true extent of the DC establishment’s self-serving behavior.

Washington is rich because government is big and the beneficiaries of this system are enjoying their status as America’s new gilded class.

It’s even gotten to the point where children and other family members also put their hands in the cookie jar.

I guess we can call this a system of hereditary corruption. Heck, maybe we can even create hereditary titles for this new elite. The Duke of Pork. The Earl of Sleaze. The Marquise de Cronyism.

Just in case you think I’m exaggerating, check out these blurbs from a Daily Beast article.

Connected children of political families catching a break is something we Americans are plenty used to—there would be no Kennedy or Bush dynasties without the public’s acceptance… But it might be that Americans are less aware of political family power plays when they’re not accompanied by gripping and grinning and kissing our babies for cameras and votes. …“Members of Congress basically are profit centers for their entire families,” says Melanie Sloan, Executive Director of Citizens for Responsibility and Ethics in Washington.

The article cites examples of this unseemly process.

Nathan Daschle, son of former Senate majority leader Tom Daschle, …did a stint at a D.C. firm before heading to the Democratic Governor’s Association (where he eventually served as Executive Director), and now works for Clear Channel Media as its Executive Vice President for Political Strategy. …then there are the lobbyists—that professional amalgam of business and politics—the litany of which reads something like an Old Testament family tree. There’s Andy Blunt, son of Senator Roy Blunt and brother of former governor Matt Blunt; Andrew Coats, son of Senator Dan Coats; Scott Hatch, son of Senator Orrin Hatch; David Roberts, son of Senator Pat Roberts; Shantrel Brown Fields, daughter of Rep. Corinne Brown; Giliane Carter, daughter of Representative John Carter; Sean King, son of Rep. Peter King; Clark Mica, son of Rep. John Mica.

As you might expect, this incestuous system produces spectacular examples of wasteful and counterproductive spending.

…sometimes there is trouble in the paradise where business and politics and family meet. There’s the case of Brad Enzi, son of Mike, Senator from Wyoming. Enzi the younger has been overseeing the building of the Two Elk Power Plant in Wyoming for North American Power Group. …Senator Enzi pushed for Department of Energy funds to go towards clean coal research projects in his state and Brad Enzi’s company benefitted from them; it received nearly $10 million in funding to drill a well to study the site surrounding the plant, and Enzi himself earned $128,000 in compensation from the federal money. …Chaka Fattah Jr., son of Pennsylvania Congressman Chaka Fattah, has similarly felt the double-edged blade of intertwining family, business, and political ties. The management consulting company he founded was paid $450,000 by an education firm with lucrative contracts with the Philadelphia City School District—turns out Chaka’s father requested a $375,000 earmark for the firm from a 2009 transportation bill. Both father and son are currently under federal investigation.

Keep in mind, by the way, that these examples are just the tip of the iceberg.

For every bit of scandal and pork that gets publicized, you can be confident that there are hundreds of equally sordid deals that haven’t been exposed.

For all intents and purposes, big government in Washington has created a niche market for insiders who learn the specialized skill of transferring money from those who earned it to those with political pull.

And these insiders pass along this “skill” to their children.

…a hereditary specialized group of people who perform certain necessary social functions and because they have families, they’re going to gradually monopolize the functions they perform.” And in 2014, the place that’s increasingly being chosen as a place to call home by American “elites” happens to be Washington, D.C. The city’s greater metropolitan area boasts the largest number of “Super Zips”—those areas with the highest combined wealth and level of education—in the country.

They get the “super zips” while the rest of the country is treated as “super chumps.”

No wonder the Washington metropolitan area is now the richest part of the United States.

If that sounds like we’re becoming Argentina or some other cesspool of cronyism, then you understand the problem.

By the way, none of this should be interpreted to suggest that parents shouldn’t try to help their kids. Or even to give them some help joining the family business. That’s a normal part of life.

The problem exist when the “family business” is big government and income is obtained by facilitating the coercion and oppression of other people.

In a genuinely free market, by contrast, you get rich by serving other people.

P.S. Some people argue that the solution is to ban family members from lobbying or to otherwise impose restrictions on the political process. But until you deal with the underlying problem of Washington being a favor factory, all of these efforts will be akin to playing whack-a-mole.

This video explains.

P.P.S. On a totally separate issue, it appears that our right to keep and bear flamethrowers has been eroded in North Dakota.

Here are some excerpts from a Fargo news report.

Local resident Todd Fox has been detained for “reckless endangerment” and “illegal use of high-powered fire-breathing weaponry” for attacking snow with his flamethrower. …Fox stated that he was simply “fed up with battling the elements” and that he did not possess the willpower necessary to move “four billion tons of white bull [expletive deleted].” Police say that Fox surrendered his efforts immediately upon their arrival and that his front yard “looked like a hydrogen bomb had gone off.” They think he was just happy to be done with snow removal, even if it did mean a trip to jail.

I have two reactions to this story.

First, does Fargo really have a local ordinance governing the use of “high-powered fire-breathing weaponry”? I’m skeptical.

Second, isn’t this a great country? There probably aren’t many places in the world where citizens are allowed to own flamethrowers. Makes me proud to be American.

And we’re even allowed to own tanks and machine guns.

On the other hand, we do have a problem letting children possess pencils and pop tarts, so we obviously have some flaws to fix.

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We’ve reached the stage where Obamacare is the punchline to a bad joke.

The law has been a disaster, both for the economy and for the Democratic Party. Not that we should be surprised. You don’t get better healthcare with a poisonous recipe of higher taxes, added government spending, and more intervention.

With any luck, Obamacare will be a textbook example of why we should never again give power to a bunch of political hacks and dreamy-eyed central planners.

Because when they try to buy votes and create more dependency with Rube Goldberg schemes, the results are…well, we see the cluster-you-know-what of Obamacare unfolding before our eyes.

Not that anyone should be surprised. Remember what happened when politicians decided government would make housing more affordable?

And remember what happened when politicians decided government should extend American tax law into other nations?

Simply stated, grandiose plans for expanded government don’t end well.

But this isn’t a normal public policy issue.

The Obama Administration has just announced that it arbitrarily will be ignoring one of the requirements in the law, and this is the executive branch’s 18th unilateral change to Obamacare.

We have to ask whether the American political system is being corrupted by a White House that doesn’t feel bound by the rule of law.

To put it mildly, the Wall Street Journal is not impressed.

…the law increasingly means whatever President Obama says it does on any given day. His latest lawless rewrite arrived on Monday as the White House decided to delay the law’s employer mandate for another year and in some cases maybe forever. …last summer the Treasury offered a year-long delay until 2015 despite having no statutory authorization. …Now the new delay arrives amid a furious debate about jobs after a damning Congressional Budget Office report last week, only this time with liberals celebrating ObamaCare’s supposed benefits to the job market. …Oh, and the Treasury also notes that, “As these limited transition rules take effect, we will consider whether it is necessary to further extend any of them beyond 2015.” So the law may be suspended indefinitely if the White House feels like it. …The text of the Affordable Care Act specifically says when the mandate must take effect—”after December 31, 2013″—and does not give the White House the authority to change the terms. Changing an unambiguous statutory mandate requires the approval of Congress, but then this President has often decided the law is whatever he says it is.

I admit that part of me wants Obamacare delayed as much as possible.

After all, even more jobs will be lost if the employer mandate is properly enforced, and that would add to an already anemic employment situation.

But America isn’t Argentina, or some other Banana Republic, where the law is based on the arbitrary and capricious decisions of some political thug.

Political Cartoons by Lisa Benson

At least it shouldn’t be.

If the President wants to change the law, he should propose legislation and send it to Congress.

But it’s obvious what that isn’t happening. The White House understands that it would be forced to make concessions to get the changes it wants.

So why not make a mockery of the rule of law instead?

As nicely illustrated by the Lisa Benson cartoon.

This is such a depressing topic that we need to close this post with some cartoons about the failure of Obamacare.

We’ll start with Henry Payne, who uses an Olympics theme.

Political Cartoons by Henry Payne

Gary Varvel has some fun mocking the left about being “liberated” from the drudgery of employment.

Political Cartoons by Gary Varvel

Fans of James Bond my remember a certain scene from Goldfinger, and Glenn McCoy recreates that scene.

Political Cartoons by Glenn McCoy

Steven Breen looks at the law’s impact on jobs.

Political Cartoons by Steve Breen

And Robert Gorrell makes a nice point about labor supply incentives.

Political Cartoons by Bob Gorrell

These are all amusing cartoons, but let’s not forget that Obama will get the last laugh if the final result is more dependency and a permanent expansion of the welfare state.

At some point, we need to restore genuine market forces and get a lower-cost, more-efficient healthcare system.

And that means not only repealing Obamacare, but also addressing all the other programs and policies which have caused the third-party payer crisis.

P.S. Here’s some good news showing we’re not quite at the same level as Argentina.

You may remember what I wrote back in 2012 about the IRS seeking to impose new restrictions on the tax preparation industry.

This was a power grab with no legal justification. Indeed, it seems to have been an example of crony capitalism since H&R Block wanted to shut down low-cost competitors.

That was the bad news. The good news is that the Institute for Justice sued to block the IRS/H&R block scheme.

And the great news is that the D.C. Circuit Court of Appeals just drop-kicked the IRS thugs into a dumpster.

Here’s part of the Court’s decision, as reported in the Washington Post.

It might be that allowing the IRS to regulate tax-return preparers more stringently would be wise as a policy matter. But that is a decision for Congress and the President to make if they wish by enacting new legislation…. The IRS may not unilaterally expand its authority.

Let’s keep our fingers crossed that the Courts do the same – by defending the rule of law – on future Obamacare decisions.

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The Bible says that “the wages of sin is death,” but the same can’t be said of Washington, DC.

The bureaucrats, lobbyists, politicians, contractors, insiders, cronyists, and influence peddlers have rigged the system so that they get rich by diverting money from people in the productive sector of the economy.

How bad is the disconnect between Washington and real America?

Well, according to Gallup’s Economic Confidence Index, people in every state have a negative outlook.

But there is one outpost of giddy prosperity, and that’s the District of Columbia, where residents have a 20-point gap compared to the most optimistic (or, to be more accurate, least pessimistic) state and a whopping 35-point gap with the average American.

Gallup Confidence DC

If you’re a glass-half-full person, there is a tiny sliver of good news in the new Gallup report.

It turns out that DC is not as fat and happy as it was one year ago, and the likely reason is that the federal Leviathan got put on a modest diet.

The District of Columbia (+19) is the clear outlier in economic confidence, having the only positive reading for 2013 and well above the readings for even the most optimistic states. Its confidence has taken a hit, however, since 2012, when its index was +29. Likely factors in the 10-point drop include October’s federal government shutdown as well as the sequestration spending cuts that occurred earlier in the year.

This explains, of course, why lobbyists were so bitterly opposed to the sequester. It reduced the money flow to Washington, and that meant less of our money to be shared by looter class that dominates the DC establishment.

Unfortunately, the establishment ultimately prevailed and they weakened the sequester as part of the Murray-Ryan tax-hike budget deal.

So don’t be surprised if Washington’s Economic Confidence Index is higher when new numbers are released next year.

And that means that we’ll be one step closer to being another Argentina, a nation on the decline because a corrupt elite uses the coercive power of government to obtain undeserved and unearned wealth.

And the most depressing sign that this already is happening to the United States is that so many of America’s richest communities are now part of the Washington metropolitan area.

P.S. I’m a big fan of Australia. Their private Social Security system is a huge success, and I’ve even suggested that it might be the best place to go if America suffers a Greek-style fiscal collapse.

But that doesn’t mean its government isn’t capable of squandering money in stupendous fashion. Check out this blurb from an Australian news report.

A refrigerator lightbulb retailing for about $3 at a hardware store ended up costing a far north Queensland state school almost $500 after Queensland’s Public Works Department sent an electrician to install it in a teacher’s government-owned home. Doomadgee State School, on the Gulf of Carpentaria, was billed $200 for labour alone after the teacher was told workplace health and safety regulations prevented any staff member from buying and replacing the bulb themselves

This sounds even crazier than some of the absurd examples of waste that I listed last month.

And since I’m in the uncharacteristic position of beating up on Australia, you may as well click here and here to see other examples of government stupidity Down Under.

Though, to be fair, at least the Aussies manage to involve sex when trying to bilk the workplace compensation system.

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Imagine you’re a statist and you want to raise your kids to have the same spiteful and envious mindset.

What’s the best approach? Well, sending your children to a government school is an obvious first step.

But kids sometimes rebel against big-government orthodoxy, so perhaps you want to take additional measures such as a visit to their school from President Obama.

As shown in the image, he can tell them about the glories of redistribution.

You can also make sure to have them only visit certain houses on Halloween. That will help them appreciate class-warfare policy.

That being said, you probably want some insurance. An extra way of helping them understand the joy of living off other people.

So what could be better than these new toys, called the Kronies!

With these new toys, your kids will enjoy hours of fun as they learn to use mandates, protectionism, bailouts, and pork to obtain undeserved wealth!

They’ll definitely realize that big government is very profitable if you’re an insider!

P.S. I hate to be the bearer of bad news, but I feel compelled to inform left-wing readers that this post - including the video – is satire. In other words, there aren’t real action figures called the Kronies. If you want to teach your kids to rape and pillage other people using the coercive power of government, you’re on your own. My only advice is to keep them from reading about the fiscal chaos in Europe so they don’t realize the consequences of redistribution and corruption.

P.P.S. And for the rest of you readers, the Kronies satire video was produced by John Papola, who gave us the famous Keynes v. Hayek rap contest, followed by the equally entertaining sequel, featuring a boxing match between Keynes and Hayek. And even though it’s not the right time of year, he also gave us the satirical commercial for Keynesian Christmas carols.

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I don’t like government bureaucrats.

Actually, let me re-phrase that statement. I know lots of people who work for different agencies in Washington and most of them seem like decent people.

So maybe what I really want to say is that I’m not a big fan of government bureaucracies and the results they generate. Why?

Because a bloated government means overpaid bureaucrats, both at the federal level and state level (and in other nations as well).

Because inefficient bureaucracies enable loafing and bad work habits.

Because being part of the government workforce even encourages laziness!

And it may even be the case that government bureaucracies attract dishonest people. A story in the L.A. Times reveals that there’s a correlation between cheating and a desire to work for the government.

Here are some excerpts.

College students who cheated on a simple task were more likely to want government jobs, researchers from Harvard University and the University of Pennsylvania found in a study of hundreds of students in Bangalore, India. Their results, recently released as a working paper by the National Bureau of Economic Research, suggest that one of the contributing forces behind government corruption could be who gets into government work in the first place. …Researchers ran a series of experiments with more than 600 students finishing up college in India. In one task, students had to privately roll a die and report what number they got. The higher the number, the more they would get paid. Each student rolled the die 42 times. …Cheating seemed to be rampant: More than a third of students had scores that fell in the top 1% of the predicted distribution, researchers found. Students who apparently cheated were 6.3% more likely to say they wanted to work in government, the researchers found.

I’m not surprised. Just as the wrong type of people often are attracted to politics, we shouldn’t be surprised to learn that less-than-admirable folks sometimes are attracted to jobs in the bureaucracy.

But I don’t want to draw too many conclusions from this research.

The study looked at people in India and that nation’s government is infamous for rampant corruption.

However, if you look at how America scores in that regard (corruption measures are included in both Economic Freedom of the World and the Index of Economic Freedom), the problem is much less severe.

So even though I’m willing to believe that bureaucrats in America are more prone to bad habits than their private-sector counterparts, I don’t think many of them decide to get government jobs in the expectation that they can extract bribes.

Indeed, I would guess that the average American bureaucrat is far more honest than the average American politician.

That’s damning with faint praise, I realize, but it underscores an important point that the real problem is big government. That’s what enables massive corruption in Washington.

P.S. Switching gears, I’ve written a couple of times about the intrusive and destructive Foreign Account Tax Compliance Act. Well, we have some good news on that front. The Republican National Committee has endorsed the law’s repeal. I don’t want to pretend that’s a momentous development and I even told Reuters that the GOP may only be taking this step for narrow political reasons.

Daniel Mitchell, a senior fellow at the Cato Institute, a libertarian think tank, said: “It’s hard to imagine an issue this obscure playing a visible role in elections … It is making overseas Americans far more sympathetic to (Republicans) and could have an impact on fundraising.”

That being said, I’m more than happy when politicians happen to do the right thing simply because it’s in their self interest. And if we can eventually undo FATCA and enable more tax competition, that’s good news for America and the rest of the world.

P.P.S. And here’s another positive update on a topic we’ve examined before. Governor Rick Perry of Texas has joined a growing list of people who are having second thoughts about the War on Drugs. Here’s an excerpt from a report in the Washington Post.

Texas Gov. Rick Perry (R) on Thursday voiced support for softening penalties for marijuana use, and touted his work moving in the direction of decriminalization. “After 40 years of the war on drugs, I can’t change what happened in the past. What I can do as the governor of the second largest state in the nation is to implement policies that start us toward a decriminalization and keeps people from going to prison and destroying their lives, and that’s what we’ve done over the last decade,” Perry said, according to the Austin American-Statesman.

He joins a growing list of people – such as John Stossel, Gary Johnson, John McCainMona Charen, Pat Robertson, Cory Booker, and Richard Bransonwho are recognizing that it’s foolish to give government massive amounts of power and money simply to stop people from doing dumb things to themselves.

But maybe you disagree with all those people and would rather be on the same side as Hillary Clinton.

And make life easier for the folks in this cartoon.

P.P.P.S. I’ve written before about how leftists always criticize so-called tax havens, even though rich statists are among the biggest beneficiaries of these low-tax jurisdictions.

President Obama, for instance, has been so critical of tax havens that he’s been caught making utterly dishonest statements on the topic.

But I guess the President’s opposition to tax competition is less important than his desire to prop up Obamacare. Look at some of what’s been reported by Bloomberg.

…the job of taking over construction of HealthCare.gov, which failed miserably when it debuted in October, is going to Accenture Plc, which switched its place of incorporation in 2009 to Ireland from Bermuda. …Accenture has endured so much criticism over the years for its use of tax havens that it even has a disclosure in its annual report warning investors to expect as much. …Accenture’s roots date back to a once-iconic American business, which helps explain why it’s gotten a lot of heat for incorporating in tax havens since spinning off.

By the way, it makes sense for Accenture to be domiciled in Bermuda rather than the United States.

P.P.P.P.S. On a personal note, I’m down in Florida for my first softball tournament of the year and I’m happy to report that I managed to put one over the fence.

Tampa HRHitting home runs has become a distressingly infrequent event as I’ve gotten older (I’m playing in a tourney for the 55-and-up crowd), and I like to memorialize it when it happens just in case it’s the last time.

So forgive me if I engage in Walter Mitty-style fantasizing. Maybe, just maybe, the Yankees will call with a contract offer.

Wait, who am I kidding?!?

That’s even less likely than Obamacare succeeding. Or politicians surrendering some of their power by enacting a flat tax.

I’m doomed to be a policy wonk for the rest of my life.

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In the famous “Bridge of Death” scene in Monty Python and the Holy Grail, some of the knights are asked to name their favorite color. One of them  mistakenly says blue instead of yellow and is hurled into the Gorge of Eternal Peril.

I can sympathize with the unfortunate chap. If asked my least favorite part of the tax code, I sometimes get confused because there are so many possible answers.

Do I most despise the high tax rates that undermine economic growth?

Am I more upset about the pervasive double taxation of income that is saved and invested?

Or do I get most agitated by a corrupt and punitive IRS?

How about the distorting loopholes for politically connected interest groups?

And the anxiety of taxpayers who can’t figure out how to comply with an ever-changing tax code?

Depending on my mood and time of day, any of these options might be at the top of my list.

But I also might say that I’m most upset about the way that the tax code facilitates a perverse form of legalized corruption in Washington. In this FBN interview, I explain how even small tax bills often are vehicles for lining the pockets of lobbyists and politicians.

To elaborate, some taxpayers may pay more when there’s new tax legislation and some may pay less. But this “winners” and “losers” game only applies outside the beltway.

The inside-the-beltway crowd always wins. Whether they’re lobbying for or against a provision, they get very big checks. Whether they’re voting yes or no on legislation, they’re getting showered with campaign contributions.

This chart, showing the growing number of pages in the tax code (by the way, we’re now up to 76,000 pages of tax law), also could be seen as a proxy for how the Washington establishment has gamed the system so that they always profit.

Or, to be more specific, it’s an example of how government has become a racket for the benefit of insiders. All of us pay more and endure less growth, but Washington’s gilded class lives fat and happy because there is always lots of money changing hands.

So how do we solve this problem?

The answer, at least for a period of time, in the flat tax. This video explains how this simple and fair system would operate.

But even though I’m a big advocate of tax reform, the flat tax is only a partial solution.

Simply stated, there’s no way to reduce Washington corruption until and unless you shrink the size and scope of the federal government.

That means somehow figuring out how to restore the Constitution’s limits on Washington. For much of our nation’s history, federal spending consumed only about 3 percent of our economic output.

And when the public sector was small and government generally focused only on core competencies, there wasn’t nearly as much opportunity for the graft and sleaze that characterize modern Washington.

P.S. The bad news is that all the projections show that the federal government will get far bigger in the future. So before we shrink the burden of government, we first need to come up with ways to keep it from growing.

P.P.S. The national sales tax is another intermediate option for reducing DC corruption, though that option requires repeal of the 16th Amendment so politicians don’t pull a bait-and-switch game and stick up with both an income tax and consumption tax.

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Let’s start 2014 with a depressing story about the reprehensible way in which big companies get in bed with big government.

If asked to list the example of cronyism that I find most nauseating, the Export-Import Bank would be at the top of my list.

The Obamacare handouts for Big Insurance and Big Pharma obviously belong on the list as well.

But don’t forget the corrupt TARP giveaways to Wall Street, the handouts for GM (though at least we got some good parody from that farce), the corrupt H&R Block collusion with the IRS, and the sleazy ethanol handouts to agribusinesses.

We could list more examples, but let’s look at something from today’s newspapers. We normally think of the light-bulb ban as silly environmentalism, but the invaluable Tim Carney writes in the Washington Examiner that the real impetus was from corrupt companies.

Say goodbye to the regular light bulb this New Year. …Starting Jan. 1, the famous bulb is illegal to manufacture in the U.S., and it has become a fitting symbol for the collusion of big business and big government.

Tim explains how companies worked the political system.

People often assume green regulations like this represent the triumph of environmental activists trying to save the plant. That’s rarely the case, and it wasn’t here. Light bulb manufacturers whole-heartedly supported the efficiency standards. General Electric, Sylvania and Philips — the three companies that dominated the bulb industry — all backed the 2007 rule… The lighting industry was the main reason the legislation was moving. …“Philips formed a coalition with environmental groups including the Natural Resources Defense Council to push for higher standards.”

Equally important, Tim explains why the companies thought cronyism was an effective way to line their pockets with undeserved wealth.

Competitive markets with low costs of entry have a characteristic that consumers love and businesses lament: very low profit margins. GE, Philips and Sylvania dominated the U.S. market in incandescents, but they couldn’t convert that dominance into price hikes. Because of light bulb’s low material and manufacturing costs, any big climb in prices would have invited new competitors to undercut the giants — and that new competitor would probably have won a distribution deal with Wal-Mart. So, simply the threat of competition kept profit margins low on the traditional light bulb. …the bulb-makers turned to government. Philips teamed up with NRDC. GE leaned on its huge lobbying army — the largest in the nation — and soon they were able to ban the low-profit-margin bulbs.

The better alternative, needless to say, is freedom.

There is a middle ground between everyone using traditional bulbs and traditional bulbs being illegal. It’s called free choice: Let people choose if they want more efficient and expensive bulbs. Maybe they’ll chose LEDs for some purposes and cheap bulbs for others. But consumer choice is no good either for nanny-staters or companies seeking high profit margins.

Reading Tim’s piece, it makes me wonder what sleaze was involved in the rules forcing us to use inferior washing machines.

P.S. Here are my 10 most-viewed posts of 2013.

*Last January, I shared some gun control humor and readers must like mocking the gun grabbers because that post easily got the most views.

*And in October, Libertarian Jesus racked up the second-highest number of views.

*Interestingly, the third most-viewed post was one from 2012. I guess you won’t be surprised to learn it was another example of gun control humor.

*We also go into the archives – back to 2011 – for the post with the fourth-highest number of views. It’s the classic set of cartoons about the rise and fall of the welfare state.

*Another oldie came in fifth place with this 2012 post featuring – you guessed it – gun control humor.

*In sixth place, we get some 2012 lessons on how a story about beer can be used to explain the failures of class warfare tax policy.

*We finally see another 2013 post with our revelation about the most free-market “state” in North America.

*But then we return to 2011 because lots of people waited until 2013 before reading the classroom experiment with socialism.

*In ninth place, you can read a libertarian fantasy from last April.

*Rounding out the top 10 is a celebration of Obama’s biggest fiscal defeat.

My favorite post of the year, for what it’s worth, reveals my fiscal wonkiness.

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Last year, while writing about the sleazy and self-serving behavior at the IRS, I came up with a Theorem that explains day-to-day behavior in Washington.

It might not be as pithy as Mitchell’s Law, and it doesn’t contain an important policy prescription like Mitchell’s Golden Rule, but it could be the motto of the federal government.

Simply stated, government is a racket that benefits the DC political elite by taking money from average people in America

I realize this is an unhappy topic to be discussing during the Christmas season, but the American people need to realize that they are being raped and pillaged by the corrupt insiders that control Washington and live fat and easy lives at our expense.

If you don’t believe me, check out this map showing that 10 of the 15 richest counties in America are the ones surrounding our nation’s imperial capital.

Who would have guessed that the wages of sin are so high?

But even though the District of Columbia isn’t on the list, that doesn’t mean the people actually living in the capital are suffering.

Here are some interesting nuggets from a report in the Washington Business Journal.

D.C. residents are enjoying a personal income boom. The District’s total personal income in 2012 was $47.28 billion, or $74,733 for each of its 632,323 residents, according to the Office of the Chief Financial Officer’s Economic and Revenue Trends report for November. The U.S. average per capita personal income was $43,725.

Why is income so much higher? Well, the lobbyists, politicians, bureaucrats, interest groups, contractors, and other insiders who dominate DC get much higher wages than people elsewhere in the country.

And they get far higher fringe benefits.

In terms of pure wages, D.C., on a per capita basis, was 79 percent higher than the national average in 2012 — $36,974 to $20,656. …Employee benefits were 102 percent higher in D.C. than the U.S. average in 2012, $7,514 to $3,710. Proprietor’s income, 137 percent higher — $9,275 to $3,906. …The numbers suggest D.C. residents are living the high life.

Now let’s share a chart from Zero Hedge. It uses median household income rather than total personal income, so the numbers don’t match up, but what’s noteworthy is how DC income grew faster than the rest of the nation during the Bush years and then even more dramatically diverged from the rest of the country during the Obama years.

In other words, policies like TARP, the fake stimulus, and Obamacare have been very good for Washington’s ruling class.

Want some other concrete examples of profitable Washington sleaze? Well, here are some excerpts from Rich Tucker’s column for Real Clear Policy.

The real place to park your money is in Washington, D.C. That’s because the way to get ahead isn’t to work hard or make things; it’s to lobby Washington for special privileges. Look no further than the sweet deal the sugar industry gets. It’s spent about $50 million on federal campaign donations over the last five years. So that would average out to $10 million per year. Last year alone, the federal government spent $278 million on direct expenditures to sugar companies. That’s a great return on investment.

Big Corn may get an even better deal than Big Sugar.

Then there’s ethanol policy. Until 2012, the federal government provided generous tax credits to refiners that blended ethanol into gasoline. In 2011 alone, Washington spent $6 billion on this credit. The federal government also maintains tariffs (54 cents per gallon) to keep out foreign ethanol,and it mandates that tens of billions of gallons of ethanol be blended into the American gasoline supply. Nothing like a federal mandate to create demand for your product. How much would you pay for billions of dollars worth of largesse? Well, the ethanol industry got a steep discount. In 2012, opensecrets.org says, the American Coalition for Ethanol spent $212,216 on lobbying.

Rich warns that the United States is sliding in the wrong direction.

What makes Washington especially profitable is that its only products are the laws, rules, and regulations that it has the power to force everyone else to follow. …we seem to be sliding toward what the authors term “extractive” institutions. That means government using its power to benefit a handful of influential individuals at the expense of everyone else.

And let’s not forget that some people are getting very rich from Obamacare while the rest of us lose our insurance or pay higher prices.

This Reason TV interview with Andrew Ferguson explains that there is a huge shadow workforce of contractors, consultants, and lobbyists who have their snouts buried deeply in the public trough.

I particularly like his common sense explanation that Washington’s wealth comes at the expense of everyone else. The politicians seize our money at the point of a gun (or simply print more of it) to finance an opulent imperial city.

So if you’re having a hard time making ends meet, remember that you should blame the parasite class in Washington.

P.S. The insider corruption of Washington is a bipartisan problem. Indeed, some of the sleaziest people in DC are Republicans.

P.P.S. Though scandals such as Solyndra show that Obama certainly knows how to play the game.

P.P.P.S. Making government smaller is the only way to reduce the Washington problem of corrupt fat cats.

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I sometimes get irked when I read columns by David Brooks. He’s sort of the token Republican at the New York Times, so he has a very important perch that could be used to educate an important audience about the harmful impact of excessive government.

And Brooks often does a good job of highlighting important and worrisome social trends, but what rubs me the wrong way is that he frequently thinks the right answer is to give government even more power.

He wrote a column back in 2011, for instance, that nailed the problem of growing dependency and declining workforce participation. But then he proposed more government intervention.

And he correctly worried about the social costs of family instability in 2012, but then bizarrely decided that the right response was subsidies to make men more marriageable.

So it won’t come as much of a surprise that I’m perplexed by his reasoning in a new column on executive branch power. He starts with an observation that is true.

We’re in a period of reform stagnation. It’s possible that years will go by without the passage of a major piece of legislation.

But he thinks this is unfortunate, while I view government inaction as a positive development. Simply stated, most new laws lead to bigger government and less freedom.

I don’t want activist government – like we had during Obama’s first two years – if it means faux stimulus and government-run healthcare.

Anyhow, Brooks is unhappy and he thinks the problem is too many interest groups.

…there is the profusion of interest groups. In 1971, there were 175 registered lobbying firms. By 2009, there were 13,700 lobbyists spending more than $3.5 billion annually, and this doesn’t even count the much larger cloud of activist groups and ideological enforcers.

He’s right that there has been an explosion in the number of lobbyists and interest groups, but his analysis is backwards.

We have lots of influence peddlers because we have a big, sclerotic government, not the other way around.

If Brooks really wants to clean out the stables in Washington, he should support a radical reduction in the size and scope of the federal government.

But you won’t be surprised that he comes to a different conclusion.

Things would be better…if we had a more unified parliamentary system, with more administrative discretion. But we don’t. “So we have a problem.” …there is a way out: Make the executive branch more powerful.

The comment about a parliamentary system is rather strange. If evidence mattered in this discussion, shouldn’t there be some explanation of why a parliamentary system was better than America’s separation-of-powers approach?

My guess, based on the mess in Europe, is that the evidence is in the other direction.

But that’s a side issue. The main point Brooks is making is that the Presidency should have more discretionary power.

Amazingly, he even cites the pervasive problems with Obamacare as a reason to augment the power of the White House!

This is a good moment to advocate greater executive branch power because we’ve just seen a monumental example of executive branch incompetence: the botched Obamacare rollout. … it is possible to mobilize the executive branch to come to policy conclusion on something like immigration reform. It’s nearly impossible for Congress to lead us to a conclusion about anything. …So how do you energize the executive? It’s a good idea to be tolerant of executive branch power grabs and to give agencies flexibility. …We need more unified authority. …Allow people in those authorities to exercise discretion.

Wow, those are some rather incredible assertions. Brooks is basically arguing against democracy and against the system of separation of powers created by the Founders.

And the corrupt use of discretion as part of Obamacare is hardly what I would call a positive argument for his position.

And what’s really ironic is that Brooks had a very good column on Fannie Mae and Freddie Mac back in 2011 that showed how unchecked discretionary power led to an economic crisis.

Mark Steyn has a much more logical analysis on this topic, writing that you’re much more likely to have competent government when you limit the power of Washington.

But since Brooks actually tried to equate Reagan’s small-government conservatism with Bush’s so-called compassionate conservatism, we shouldn’t be surprised he errs in other ways as well.

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Remember Sandra Fluke, the 30-year old student who got her 15 minutes of fame last year by becoming the poster child for subsidized birth control?

Fluke Birth ControlShe’s fortunately faded away, but the issue is still with us because the courts are being asked to decide whether government has the right to coerce people into decisions that violate their religious values.

But you won’t be surprised that this feature of Obamacare also has important economic and policy lessons.

Statists have tried to scare young people that there’s a fight over whether people have the right to access birth control. They’ll privately admit that this is just empty rhetoric (after all, there were no barriers to birth control in the pre-Obamacare era), but they nonetheless still argue that the mandate is needed for affordability reasons.

But this is utter bunk, as Megan McArdle explains in her Bloomberg column.

Regular, predictable expenses such as birth-control pills cannot be defrayed by insurance; they can only be prepaid, with a markup for the insurer’s administrative costs. The extra cost is passed on by the insurers to your employer, and from your employer to you and your fellow workers, either by raising your contribution or lowering the wage they are willing to offer.

I would take this one step farther. Costs will rise not only because of administrative costs, but also because we’ll have more third-party payer and that will make it much easier for the providers of birth control pills to raise prices.

And that is a perfect segue into the meat of today’s post, which is about the sleazy and corrupt interaction of big business and big government. And the Obamacare birth control mandate is a perfect example.

Tim Carney exposes this issue in his Washington Examiner column. He starts with a hypothesis that corporate cronyism is the real story.

Look at the contraception mandate from almost any angle, and you see the corporatism. Sometimes it’s on the surface, and sometimes it’s implicit in the arguments. The contraception mandate is nakedly a huge subsidy to the industry that most firmly supported Obamacare: the drugmakers. The drug industry has spent more on lobbying under Obama than any other industry.

Tim provides some of the sordid details.

Top Obama bundler Sally Susman oversees the lobbying shop at drug giant Pfizer, which sells $7.6 million a year in name-brand birth control pills, while also selling contraceptive injections and generic drugs. Pfizer’s CEO during the Obamacare debate was Obama donor Jeffrey Kindler. In a corporate filing, the company justified his salary increase by pointing to his Obamacare lobbying. …Merck, which also makes birth control pills, deployed top lobbyist, former Democratic congressional staffer and major Democratic donor Mark Raabe to Capitol Hill and the White House to lobby on “efforts to gain coverage of preventive services,” according to company lobbying filings. The administration uses the “preventive services” provision of Obamacare to justify the contraception mandate. Merck sells implants and other contraceptives — if “sells” is the right word for products that many customers now get for “free,” sticking colleagues and taxpayers with the bill. Conceptus, a company that sells a sterilization procedure, lobbied Congress and the Department of Health and Human Services on “implementation of the preventive services provisions of the Affordable Care Act,” according to lobbying filings. The mandate covers this patented procedure.

Needless to say, drug companies have spent all this money on lobbying and campaign contributions in the expectation that they can artificially increase their revenue as a result of government favoritism.

Obama’s contraception mandate requires all employer-sponsored health care plans to cover 100 percent of the cost of all FDA-approved contraception. That gives customers incentives to choose…name-brand pills, because the entire cost is passed onto employers and thus onto customers and colleagues.

It’s a different topic, but Tim also has some wise words about the Obama Administration’s arguments against the First Amendment.

…liberals argue that the owners of the privately held store Hobby Lobby are not protected by the First Amendment from intrusions of the “free exercise” of religion — and so it must cover the morning-after pill, which can cause a very early-term miscarriage. …It’s not a novel claim, but it’s still a scary one: A person gives up his First Amendment rights when he is acting as a businessman.

And his summary paragraph hits the nail on the head.

Sometimes people think politics is about the collective versus the individual. Most of the time, though, it’s about the state versus civil society. It’s coercion versus voluntary association.

By the way, the drug companies are just the tip of the iceberg. Companies like General Motors and General Electric also are experts at using government to tilt the playing field.

And don’t forget that companies like Boeing and Exxon Mobil use the Export-Import Bank to line their pockets at our expense.

Or what about H&R Block, which lobbies to protect its ability to profit from a corruption-riddled tax system.

The entire ethanol industry, meanwhile, is dependent on favors from Washington, and Fannie Mae and Freddie Mac were created by the government!

And Pizza Hut, joined by other fast food joints, lobbies for food stamps.

The TARP bailout was the epitome of Washington sleaze, which may help explain the revolving door between Wall Street in Washington.

We should also be upset that big corporations sometimes support higher tax rates on their competitors from the small business sector.

Gee, it’s almost enough to make one think Washington is a rat’s nest of corruption. Speaking of which, here’s my video on the link between big government and big corruption. I think you’ll agree that I understated the case.

P.S. Since we started this post by mentioning Sandra Fluke, we may as well close with some jokes at her expense. You can enjoy some laughs with this great Reason video, this funny cartoon, and four more jokes here.

P.P.S. But Sandra Fluke may have the last laugh since the clowns at the United Nations have declared that birth control (almost surely financed by taxpayers) is a human right.

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Regular readers know I complain about the army of overpaid bureaucrats in Washington, but that’s just the tip of the iceberg.

The larger problem is that Washington also is filled with hundreds of thousands of other people who get rich thanks to big government. And these politicians, lobbyists, crony capitalists, interest groups, contractors, and influence peddlers almost surely are a bigger net drain on the economy’s productive sector.

When you combine the official bureaucracy with these other over-compensated beneficiaries of big government, it’s easy to understand why Washington, DC, is now the richest region of America, with 10 of the nation’s 15 richest counties.

Reuters did an expose last year on how Washington fat cats are living on Easy Street at our expense, and The Economist also has touched on the issue. But you know the problem has reached epidemic levels when even the local left-wing paper covers the story.

And that’s exactly what is happening. The Washington Post reports on how coerced access to other people’s money has meant boom times for the beltway elite. Here are some excerpts on how your money is creating unearned riches for DC insiders.

The avalanche of cash that made Washington rich in the last decade has transformed the culture of a once staid capital and created a new wave of well-heeled insiders.Wash Post Capital Wealth The winners in the new Washington are not just the former senators, party consiglieri and four-star generals who have always profited from their connections. Now they are also the former bureaucrats, accountants and staff officers for whom unimagined riches are suddenly possible. …They are the lawyers, lobbyists and executives who work for companies that barely had a presence in Washington before the boom.

Here are some depressing stats from the story.

During the past decade, the region added 21,000 households in the nation’s top 1 percent. No other metro area came close. …in 2010, companies based in Rep. James P. Moran’s congressional district in Northern Virginia reaped $43 billion in federal contracts — roughly as much as the state of Texas. At the same time, big companies realized that a few million spent shaping legislation could produce windfall profits. They nearly doubled the cash they poured into the capital. …Essentially, Washington has been the beneficiary of a ­decade-long, taxpayer-funded stimulus package.

Unfortunately, all this federal largesse is corrupting the business community, with many companies deciding that lobbying for tax dollars is more lucrative than competing for consumer dollars.

The federal government wasn’t the only one pouring buckets of new money into Washington in the 2000s. Big business did it, too. At a time when promising investments were hard to find, corporate America learned that lobbying was one of the most surefire ways of bolstering its bottom line. …Companies spent about $3.5 billion annually on lobbying at the end of the last decade, a nearly 90 percent increase from 1999 after adjusting for inflation… Legal services also boomed, fueled by the growing complexities of federal business regulations. The number of lawyers in the D.C. metro area increased by a third from 2000 to 2012, nearly twice as fast as the growth rate nationwide. And those lawyers have the highest mean salaries in the country, according to George Mason University’s Center for Regional Analysis.

Lobbying isn’t automatically a bad thing, by the way. Sometimes a company needs representation so that the political vultures in Washington don’t descend upon them.

“You know that if a company stopped lobbying, it would get creamed,” Drutman said. “That’s why companies don’t stop lobbying.”

The real moral of the story is that small government and genuinely free markets are the only effective ways to reduce sordid lobbying and political corruption.

The challenge, needless to say, is convincing the Washington establishment to adopt those policies. That’s not an easy task, particularly when it violates my First Theorem of Government.

P.S. Here’s a great video from Reason about Washington’s parasite economy.

P.P.S. Here’s an example of how Obamacare has lined the pockets of some DC insiders.

P.P.P.S. And here are some grating details about how the President is part of the problem.

P.P.P.P.S. You can enjoy some government corruption humor here, here, here, here, and (my personal creation) here.

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When I write about the importance of understanding the difference between a disease and its symptoms, I’m almost always seeking to help people understand why it’s important to focus on the problem of government spending rather than the side-effect of government borrowing.

But the same analogy is useful when looking at issues such as lobbying and campaign contributions.

It’s very understandable for people to get nauseated when we see things such as lobbying for corporate welfare or campaign contributions being given in exchange for things such as ethanol subsidies.

So would it make sense to outlaw lobbying or to restrict campaign contributions? Setting aside constitutional issues (the First Amendment protects our rights to petition the government and to engage in political speech), the answer is no.

Why? Because lobbying and campaign contributions are a function of government being too big and being involved in too many areas.

If we shrink the size and scope of the state, we reduce incentives to manipulate the system. But if we leave big government in place, laws to restrict lobbying and campaign contributions will simply lead to different forms of “rent seeking.”

Not surprisingly, leftists want the wrong approach. Here are some excerpts from Dana Milbank’s Washington Post column, which argues that campaign spending is the problem.

…the Supreme Court…has created a campaign-finance system that is directly responsible for the rise of uncompromising leaders on both sides of the Capitol. …Political money was again before the Supreme Court on Tuesday morning, and, judging from their questions, the conservative justices are poised to make things even worse. Milbank CorruptionNow they are prepared to expand on their 2010 decision that caused an explosion of independent spending by allowing the wealthy to give about $3.5 million apiece to candidates and parties in each election cycle. …The 1976 decision in Buckley v. Valeo made government for sale and created the arms race in campaign financing by equating unlimited spending with free speech. The John Roberts court in 2010 made the system dramatically worse in its Citizens United decision, loosening restrictions and spurring wealthy donors to make hundreds of millions of dollars in independent expenditures. …Justice Elena Kagan said those who give $3.5 million should expect “special treatment” from Congress — and Burchfield didn’t disagree. Under the Citizens United decision, he said, “gratitude and influence are not considered to be quid-pro-quo corruption.”

Milbank puts the cart before the horse. Big donors aren’t the problem. We should worry about big government.

If we had the type of limited central government envisioned by the Founding Fathers, there would be very little reason for billionaires (or the rest of us) to spend time or energy worrying about what happens in Washington.

I elaborate in this video on the real causes of political corruption in Washington.

P.S. In the title, I wrote that campaign contributions are a “possible” symptom. That’s because campaign contributions (like lobbying) don’t necessarily imply corruption. If John Doe gives money to someone like Rand Paul, he’s probably not looking for a government handout. But if the realtors cut a big check to someone like Chuck Schumer, it’s quite likely that they’re looking to obtain or preserve some undeserved goodie from Washington.

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At the risk of oversimplifying, there are two major challenges to overcome when you’re a pro-freedom policy wonk in Washington.

The first challenge is getting people to connect the dots.

They may understand that the job market is weak and they may understand that redistribution programs are overly generous, but can you help them understand that the job market is weak in part because redistribution programs make work relatively unattractive?

They may understand that the federal government is bloated and they may understand that there’s a big problem with corruption in Washington, but can you make them understand that there’s a lot of sleaze in Washington because government has so much power?

They may understand that the corporate tax burden is very high and they may understand that American companies sometimes aren’t very competitive, but can you help them understand that it’s difficult for firms to compete because they’re saddled with high tax rates?

The second challenge is getting policy makers to do the right thing when doing the wrong thing means more money and power for the political class.

Let’s consider the problem of corruption. And I don’t just mean illegal corruption, though there’s plenty of that in Washington. I’m talking about the everyday graft and sleaze that is perfectly legal, such as when dozens of politicians are caught red-handed supporting legislation that would line their pockets.

Using fiscal policy as an example, how do you get these people to do the right thing? They may understand – at least conceptually – that the United States faces a huge long-run fiscal nightmare because of an ever-growing burden of government spending. They may even vote for the Ryan budget, which theoretically commits them to supporting meaningful entitlement reform.

But the real fight occurs when you ask them to support policies – such as sequestration – that actually slow the growth of Leviathan and require them to say no to lobbyists. Particularly when many lobbyists are their former colleagues and staffers!

To get a sense of what I mean, check out these excerpts from a book review in The Economist.

Washington has always had a permanent establishment of politicians, lobbyists and journalists. But this class has exploded in size in recent decades, and has become more introspective and self-serving. Economist Corruption…The lobbying industry has spent billions greasing the revolving door: in 2009 alone, special interests spent $3.47 billion lobbying the federal government. In 1974 3% of retiring policymakers became lobbyists. Now 50% of senators and 42% of congressmen do. …a “change election” that was supposed to sweep aside the old order and create a politics fit for the 21st century. …But the Washington machine soon took over. …once in the capital, these same figures cashed in on their public service by getting lucrative jobs as lobbyists, bankers or talking heads. David Plouffe, an adviser to the president, joined the jackals at Bloomberg television. Mr Orszag went to Citigroup. Meanwhile, the city’s politicos grew richer while the rest of the country was mired in recession. Washington now has a higher income per person than Silicon Valley.

The final sentence of that passage is very depressing. Or it should be. Do we really want a society where becoming part of the political machine is the easiest path to wealth? Are there any nations that have prospered using that model?

Or is that a symptom of a country on a downward slide?

I don’t know the answer, but it’s very depressing to look at this map and see that 10 of the 15 richest counties in the nation are part of the Washington metropolitan area.

We now have something akin to an imperial capital being supported by coerced tribute from the serfs in the outer provinces.

And as this video explains, all of this unearned wealth is made possible by a bloated budget, a Byzantine tax code, and a maze of complicated regulations.

P.S. The latest example of Washington graft is the way that Obamacare has turned into a get-rich-quick scheme for DC insiders.

P.P.S. Down in Louisiana, Boudreaux and Thibodeaux have a rather sensible view about political corruption.

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I’ve written before that Obama’s Solyndra-style handouts have been a grotesque waste of tax dollars.

I’ve argued that they destroy jobs rather than create jobs.

I’ve gone on TV to explain why government intervention in energy creates a cesspool of cronyism.

I’ve even shared a column from Obama’s hometown newspaper that criticizes the rank corruption in green-energy programs.

And it goes without saying that I’ve disseminated some good cartoons on the issue.

But even though green-energy programs are a disgusting boondoggle, American taxpayers and consumers should be thankful they’re not in Germany.

Our programs may be wasteful and corrupt, but we’re amateurs compared to what’s happening on the other side of the Atlantic.

Here are some passages from a must-read story in Der Spiegel.

The government predicts that the renewable energy surcharge added to every consumer’s electricity bill will increase from 5.3 cents today to between 6.2 and 6.5 cents per kilowatt hour — a 20-percent price hike. German consumers already pay the highest electricity prices in Europe. But because the government is failing to get the costs of its new energy policy under control, rising prices are already on the horizon. Electricity is becoming a luxury good in Germany.

As is so often the case with government intervention, the promises from politicians about low costs were a mirage.

Even well-informed citizens can no longer keep track of all the additional costs being imposed on them. According to government sources, the surcharge to finance the power grids will increase by 0.2 to 0.4 cents per kilowatt hour next year. On top of that, consumers pay a host of taxes, surcharges and fees that would make any consumer’s head spin. Former Environment Minister Jürgen Tritten of the Green Party once claimed that switching Germany to renewable energy wasn’t going to cost citizens more than one scoop of ice cream. Today his successor Altmaier admits consumers are paying enough to “eat everything on the ice cream menu.”

Perhaps the most shocking part of the story is that Germans are being forced to pay $26 billion in subsidies to get less than $4 billion of green energy.

For society as a whole, the costs have reached levels comparable only to the euro-zone bailouts. This year, German consumers will be forced to pay €20 billion ($26 billion) for electricity from solar, wind and biogas plants — electricity with a market price of just over €3 billion. Even the figure of €20 billion is disputable if you include all the unintended costs and collateral damage associated with the project. …On Thursday, a government-sanctioned commission plans to submit a special report called “Competition in Times of the Energy Transition.” The report is sharply critical, arguing that Germany’s current system actually rewards the most inefficient plants, doesn’t contribute to protecting the climate, jeopardizes the energy supply and puts the poor at a disadvantage.

Here’s what it means for ordinary people.

In the near future, an average three-person household will spend about €90 a month for electricity. That’s about twice as much as in 2000. Two-thirds of the price increase is due to new government fees, surcharges and taxes. …Today, more than 300,000 households a year are seeing their power shut off because of unpaid bills. Caritas and other charity groups call it “energy poverty.”

Not surprisingly, politically well-connected interest groups are the ones reaping the benefits.

…the renewable energy subsidies redistribute money from the poor to the more affluent, like when someone living in small rental apartment subsidizes a homeowner’s roof-mounted solar panels through his electricity bill. The SPD, which sees itself as the party of the working class, long ignored this regressive aspect of the system. The Greens, the party of higher earners, continue to do so. Germany’s renewable energy policy is particularly unfair with respect to the economy. About 2,300 businesses have managed to largely exempt themselves from the green energy surcharge by claiming, often with little justification, that they face tough international competition. Companies with less lobbying power, however, are required to pay the surcharge.

Let’s conclude with an ominous excerpt from the article. Even though prices already are very high, energy will get even more expensive in the future.

If the government sticks to its plans, the price of electricity will literally explode in the coming years. According to a current study for the federal government, electricity will cost up to 40 cents a kilowatt-hour by 2020, a 40-percent increase over today’s prices.

And isn’t it nice to know that Obama is doing everything he can to impose these policies in the United States?

This cartoon from Michael Ramirez is a perfect summary of Obama’s policy.

Ramirez Green Energy Cartoon

You can see why Ramirez won my political cartoonist contest.

P.S. I don’t like being the bearer of bad news, but green-energy subsidies are just one part of the statist/green agenda. The IMF, for instance, has recommended a huge carbon tax (about $5,500 per year for a family of four!) for the United States. A few gullible folks think this might not be a bad idea if the money gets used to lower other taxes, but they’re the same people who get suckered into buying oceanfront property in Kansas.

P.P.S. Germany may be more responsible (less irresponsible) than certain other European nations, but the country’s political elite is hopelessly statist. Even the supposedly pro-liberty political party tilts left and wants bigger government. Yet the Washington Post still thought it was appropriate and accurate to declare that Germany is “fiscally conservative.” Sure, and I’m a socialist.

P.P.P.S. But at least the mess in Europe has generated some amusing videos (here, here, and here), as well as a very funny set of maps.

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Want to know why – as shown by this map – most of America’s richest counties are part of the metropolitan DC region?

Part of the answer is that federal bureaucrats are overpaid. Another part of the answer is that the Washington area is filled with consultants and contractors, and this shadow government workforce also is overcompensated by taxpayers.

But I’m guessing that DC’s vast population of lobbyists and influence peddlers dominate the upper end of the income spectrum.

And that community of back scratchers and deal makers are getting even richer thanks to Obamacare. Here’s some of what The Hill is reporting today.

ObamaCare has become big business for an elite network of Washington lobbyists and consultants who helped shape the law from the inside. More than 30 former administration officials, lawmakers and congressional staffers who worked on the healthcare law have set up shop on K Street since 2010. Major lobbying firms such as Fierce, Isakowitz & Blalock, The Glover Park Group, Alston & Bird, BGR Group and Akin Gump can all boast an ObamaCare insider on their lobbying roster — putting them in a prime position to land coveted clients. …The voracious need for lobbying help in dealing with ObamaCare has created a price premium for lobbyists who had first-hand experience in crafting or debating the law.  Experts say that those able to fetch the highest salaries have come from the Department of Health and Human Services (HHS) or committees with oversight power over healthcare.  Demand for ObamaCare insiders is even higher now that major pieces of the law — including the healthcare exchanges and individual insurance mandate — are being set up through a slew of complicated federal regulations.

You’ll also be happy to know that beltway insiders can expect years and years of undeserved loot thanks to rules, regulation, and red tape that will be unveiled for another seven years.

…the healthcare law has generated steady work — a trend that is likely to continue for years to come. That’s because ObamaCare runs on a long timeline, well into the next administration. Unless the law is severely crippled, the reform’s rules and requirements will be rolling out through at least 2020. That’s good news for lobbyists who want to sign up clients for the long haul.

This is the social science equivalent of a kick-in-the-you-know-what. A bunch of political hacks pass legislation that increases both the fiscal burden and the regulatory burden on the rest of us, but they make it very convoluted so that they can cash in and make big bucks navigating the law for deep-pocket clients.

This is a win-win for the political elite and a lose-lose for America’s productive sector.

And it’s a perfect example of what I was trying to get across in this video I narrated about the link between big government and corruption.

There are lots of specific examples of Obamacare’s corruption.

Michael Barone has exposed the sleaziness of the waiver process, Tim Carney revealed the special deals for politically connected companies, and I suggested the process was eerily similar to a passage from Atlas Shrugged.

But don’t forget Obamacare is just one example of the sleaze that defines Washington. Maybe the best way of understanding the game is to watch Andrew Ferguson explain DC’s parasite economy.

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There’s an old joke that the definition of quandary is when your mother-in-law drives off a cliff in your new car.

But since I’m not married, I can’t use that joke.

Besides, I’m a policy wonk, so the type of quandary that catches my attention is when the Obama Administration delays big parts of Obamacare (hooray!), but does so by cavalierly deciding to disregard the law (boo!).

Unfortunately, this isn’t a joke.

I wrote about this topic last month and asserted that one of “the defining characteristics of a civilized government is adherence to the rule of law.”

Why is this important? Here’s some of George Will’s analysis of how Obama is subverting the law.

President Obama’s increasingly grandiose claims for presidential power are inversely proportional to his shriveling presidency. …at last week’s news conference he offered inconvenience as a justification for illegality. …Serving as props in the scripted charade of White House news conferences, journalists did not ask the pertinent question: “Where does the Constitution confer upon presidents the ‘executive authority’ to ignore the separation of powers by revising laws?” The question could have elicited an Obama rarity: brevity. Because there is no such authority.

Will then cites the infamous example of Nixon arguing that, “when the president does it, that means it is not illegal” and compares that to Obama’s lawlessness.

Nixon’s claim, although constitutionally grotesque, was less so than the claim implicit in Obama’s actions regarding the ACA. Nixon’s claim was confined to matters of national security or (he said to Frost) “a threat to internal peace and order of significant magnitude.” Obama’s audacity is more spacious; it encompasses a right to disregard any portion of any law pertaining to any subject at any time when the political “environment” is difficult.

And he also dings Obama for creating – out of thin air – a special handout for members of Congress and their staffs.

…his complicity in effectively rewriting the ACA for the financial advantage of self-dealing members of Congress and their staffs.  …Obama directed the Office of Personnel Management, which has no power to do this, to authorize for the political class special subsidies unavailable for less privileged and less affluent citizens. If the president does it, it’s legal? “Exactly, exactly.”

Charles Krauthammer is equally uncomfortable with the erosion of the rule of law. His column includes a good summary of how Obamacare is being arbitrarily enforced. Or, to be more accurate, how it’s not being enforced.

…the administration…unilaterally waived Obamacare’s cap on a patient’s annual out-of-pocket expenses — a one-year exemption for selected health insurers that is nowhere permitted in the law. It was simply decreed by an obscure Labor Department regulation. Which followed a presidentially directed 70-plus percent subsidy for the insurance premiums paid by congressmen and their personal staffs — under a law that denies subsidies for anyone that well-off. Which came just a month after the administration’s equally lawless suspension of one of the cornerstones of Obamacare: the employer mandate. Which followed hundreds of Obamacare waivers granted by Health and Human Services Secretary Kathleen Sebelius to selected businesses, unions and other well-lobbied, very special interests.

He then accurately explains that we are entering an unpleasant world where the law is not what’s written, but whatever politicians arbitrarily decide on any given day.

The point is whether a president, charged with faithfully executing the laws that Congress enacts, may create, ignore, suspend and/or amend the law at will. …Such gross executive usurpation disdains the Constitution. It mocks the separation of powers. And most consequentially, it introduces a fatal instability into law itself. If the law is not what is plainly written, but is whatever the president and his agents decide, what’s left of the law? The problem is not just uncertain enforcement but the undermining of the very creation of new law. What’s the point of the whole legislative process — of crafting various provisions through give-and-take negotiation — if you cannot rely on the fixity of the final product, on the assurance that the provisions bargained for by both sides will be carried out?

He closes by noting that Obama seems quite proud of his illegal behavior and he warns that America is becoming a banana republic.

…this president is not only untroubled by what he’s doing, but open and rather proud. As he tells cheering crowds on his never-ending campaign-style tours: I am going to do X — and I’m not going to wait for Congress. That’s caudillo talk. That’s banana republic stuff. In this country, the president is required to win the consent of Congress first. At stake is not some constitutional curlicue. At stake is whether the laws are the law. And whether presidents get to write their own.

This is a very troubling issue, so let’s enjoy some gallows humor with some cartoons about Obama’s lawlessness.

Those of you who read Orwell’s Animal Farm will agree that this Eric Allie cartoon is especially insightful.

Banana Republic Cartoon 5

Here’s a Chip Bok cartoon about The One deciding which laws to enforce. Sort of reminds me of this joke about his approach to the Constitution.

Banana Republic Cartoon 3

Not surprisingly, disregard of the law even extends to the President’s top legal appointee. Michael Ramirez shows how the Attorney General decides which laws to enforce.

Banana Republic Cartoon 2

And Lisa Benson has the same theme in a cartoon that includes other Cabinet officials.

Banana Republic Cartoon 1

Here’s another Chip Bok cartoon, this one focusing on the illegal decision to grant subsidies to politicians and their staff.

Banana Republic Cartoon 6

And since we’re making fun of self dealing for the political class, let’s look at a couple of cartoons that focus on Obama’s arbitrary gift for Capitol Hill.

Banana Republic Cartoon 4

By the way, I like the Steve Kelley cartoon because he echoes my comments about “brain drain.”

Last but not least, here’s Ken Catalino making fun of Washington’s gilded class putting themselves first.

Banana Republic Cartoon 7

Let’s close with a final serious point.

Here’s some of what I wrote a couple of years ago to describe the banana republic of Argentina.

…the problem is crony capitalism. Argentina’s economy, for all intents and purposes, is one giant Fannie Mae/Freddie Mac/Obamacare/General Motors/Goldman Sachs Obamaesque dystopia. Government has enormous influence over every major economic decision. It’s like being in the middle of Atlas Shrugged, as political connections are the way to get rich. This type of approach is far worse than the Scandinavian welfare state. Yes, the official size of government is bigger in places such as Sweden, but the negative role of government intervention is far more pervasive in Argentina.

But I actually understated the problem.

Much of what I wrote was a critique of interventionism and the corruption that is facilitated by big government.

That’s part of what defines a banana republic (with Obamacare being a perfect example), but arbitrary law is another characteristic.

And that’s what’s so worrisome about what the Obama Administration is doing.

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Two days ago, I shared an insightful article from Kevin Williamson as we contemplated the President’s ideology.

Yesterday, we reviewed an article by Richard Epstein in hopes of deciphering Obama’s approach to economic policy.

Let’s conclude our series by looking at whether there’s something special about the scandals swirling around the White House.

Big government is the mother’s milk of corruption, so it would be foolish to expect any administration to have a perfectly clean record. So what we’re looking for is some indication as to whether President Obama is better or worse than average.

There’s definitely a lot of smoke. Here’s some of what Victor Davis Hanson wrote for National Review on “Obama’s Watergates.”

The truth about Benghazi, the Associated Press/James Rosen monitoring, the IRS corruption, the NSA octopus, and Fast and Furious is still not exactly known. Almost a year after the attacks on our Benghazi facilities, we are only now learning details ofCIA gun-running, military stand-down orders, aliases of those involved who are still hard to locate, massaged talking points, and the weird jailing of Nakoula Basseley Nakoula. We still do not quite know why Eric Holder’s Justice Department went after the Associated Press or Fox News’s James Rosen — given that members of the administration were themselves illegally leaking classified information about the Stuxnet virus, the Yemeni double agent, the drone program, and the bin Laden document trove.

But is there fire underneath all the smoke? Hanson obviously is rather suspicious.

Almost everything the administration has assured us about the IRS scandal has proven false: It was not confined to rogue Cincinnati agents; liberal and conservative groups were not equally targeted; and there were political appointees who were involved in or knew of the misdeeds. The NSA debacle can so far best be summed up by citing Director of National Intelligence James Clapper, who has now confessed that he lied under oath (“clearly erroneous”) to the U.S. Congress. Even his earlier mea culpa of providing the “least untruthful” statement was an untruth.

Indeed, he suggest that the current administration is eerily reminiscent of the Nixon White House.

There is also nothing new in administration denials. Both President Obama and his press secretary, Jay Carney, characterized the Benghazi, IRS, AP, and NSA allegations as “phony.” So too Nixon’s press secretary, Ron Ziegler, characterized the Watergate break-in as “a third-rate burglary attempt” and insisted that “Certain elements may try to stretch the Watergate burglary beyond what it is.” In August 1972, when news of the break-in first got out, Nixon himself assured the nation, “I can say categorically that . . . no one in the White House staff, no one in this Administration, presently employed, was involved in this very bizarre incident.” The Obama administration’s variation on outright denial is “What difference, at this point, does it make?” And when Jay Carney declares, “I accept that ‘stylistic’ might not precisely describe a change of one word to another,”  I am reminded of Ron Ziegler’s quip, “This is the operative statement. The others are inoperative.”

In some ways, Hanson argues, the current Administration is worse than Nixon.

Nixon tried to use the IRS to punish his enemies, although Lois Lerner and William Wilkins appear to have had far less integrity than did Nixon’s IRS chief, Johnnie Walters, who resisted rather than abetted Nixon’s illegal efforts. As in the case of doctoring CIA talking points and pressuring CIA operatives, so too Nixon tried to cloak misdeeds as “national security” operations. Nixon went after members of the press; Obama had the communications of James Rosen of Fox News — and even those of Rosen’s parents — monitored. Mr. Nakoula was the poor soul the authorities almost immediately jailed for his supposedly right-wing, Islamophobic film. He proved a sort of updated version of the caricatured crazy Cuban burglars and the unhinged Gordon Liddy, whose freelancing zeal allegedly caused the Watergate problem in the first place. The only difference is that the latter really did commit relevant illegal acts, while Nakoula’s videomaking was uncouth, not criminal — and irrelevant to the Benghazi deaths.

So where’s it all going to lead? Hanson thinks it will get worse.

I expect more participants in the Obama-administration misdeeds will invoke the Fifth, and the dodges will ultimately have little effect, other than to remind us that many in the administration have lots to hide. …Nixon left office with historic low poll numbers and the economy a wreck.  …So too already with the unraveling of Obama.  …Because something terribly wrong occurred in Benghazi, with the IRS, with the treatment of the Associated Press and James Rosen, and perhaps with Edward Snowden and the NSA, and those involved are seeking to mask their culpability, the scandals grind on. They will not end until the truth sets us all free. So expect a long-drawn-out and sordid saga.

I agree that there will be more scandals, as well as more news from existing scandals, but I’m not sure any of this suggests Obama is any worse than other Presidents. Or that his appointees are any worse than the appointees of previous Presidents.

I’m not trying to defend the White House. Obamacare is an example of a law that was only made possible because of bribery, and now the Administration is in the process of arbitrarily and illegally rewriting its own signature legislation!

And let’s not forget boondoggles such as Solyndra, where lots of money conveniently wound up in the pockets of Obama donors.

But is there any reason to think that these examples of corruption are worse than TARP? Or some of the other ways that Republicans get in bed with big government and special interests?

In other words, I think the problem is Washington, not any particular politician or political party.

That being said, I reserve the right to change my mind if evidence comes to light that the White House was directing/ordering/approving the illegal partisan activities of officials at the IRS, FEC, and elsewhere.

P.S. If you enjoy the writing of Victor Davis Hanson and you’re not suffering from high blood pressure, read what he wrote about the squalid waste at the Department of Agriculture.

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What do you do if you’re part of a government bureaucracy that has been caught red-handed engaged in sleazy, corrupt, and (almost surely) illegal targeting of Americans for their political beliefs?

But before you answer, keep in mind that your bureaucracy also has been exposed for wasting huge amounts of money at lavish conferences. What’s the ideal way of dealing with the fallout from that scandal as well?

The answer is simple. Even though you and your pals already are paid more than the peasants in the private sector, give yourself and your cronies giant bonuses!

I’m not joking. Here are some excerpts from an AP report.

The Internal Revenue Service is about to pay $70 million in employee bonuses despite an Obama administration directive to cancel discretionary bonuses because of automatic spending cuts enacted this year, according to a GOP senator. …“The IRS always claims to be short on resources,” Grassley said. “But it appears to have $70 million for union bonuses…” Three congressional committees and the Justice Department are investigating the targeting of conservative groups. And key Republicans in Congress are promising more scrutiny of the agency’s budget, especially as it ramps up to play a major role in implementing the new health care law.

Sort of makes this cartoon self evident.

IRS Trust Cartoon

Indeed, this motivates me to announce “Mitchell’s First Theorem of Government.”

I’ve explicitly expressed this sentiment in the past, and hinted at it here, here, and here.

Now it’s time to make it official.

Mitchell's First Theorem of Government

I hope you’ll agree this is a nice addition to Mitchell’s Golden Rule, Mitchell’s Bleeding Heart Guide, and Mitchell’s Law.

And maybe one of these will catch on and I can be famous like Art Laffer.

P.S. Enjoy some cartoons about the IRS scandals here, here, and here.

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The title of this post is sort of like the age-old question of what came first, the chicken or the egg.

Should we blame politicians for our corrupt, loophole-ridden, abusive tax system?

Or should we focus our ire on the IRS, which seems to go above and beyond the call of duty to oppress innocent people?

I’ve generally directed my hostility to the politicians, but the latest IRS scandal is leading me to reassess my views.

This Lisa Benson cartoon captures the mentality of the tax collection bureaucracy.

Benson IRS Cartoon

The problem isn’t that the IRS wasted money at boondoggle conferences. Every government agency and department pisses away money in a frivolous fashion.

We should be far more worried about the IRS’s callous disregard of the Constitution and Bill of Rights.

I’ve said many times that fundamental tax reform is the answer, but that’s only part of the story.

So long as we have a big and bloated government, the politicians are going to want some sort of oppressive bureaucracy to extract several trillion dollars of our money every year.

So if we really want to clip the wings of the IRS, we better figure out how to restore limited, constitutional government.

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We’ve gotten to the point where you need a guide-book to keep track of all the scandals in Washington.

As a fiscal policy wonk, I focus mostly on the sleaze at the IRS, but I also recognize that the other scandals are equally troubling.

So I’m amused by Lisa Benson’s portrayal of the…um…plumbing problems at the White House.

DC Septic Cartoon

But there’s a theme to all the scandals, regardless of whether they’re happening now under Obama or whether they happened under Bush or during the reign of previous Presidents: Many of them take place solely because government is large, bloated, and involved in areas where it doesn’t belong.

Here’s my video explaining why corruption is much more common when government is bigger.

P.S. You can see some of my favorite Benson cartoons herehere, here, here, here, here, here, here, here, here, here, here, here, herehereherehereherehere, hereherehere, and here.

And here’s my favorite one, which criticized Obama’s class warfare policy and became part of my political cartoon contest.

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Did President Obama and his team of Chicago cronies deliberately target the Tea Party in hopes of thwarting free speech and political participation?

Was this part of a campaign to win the 2012 election by suppressing Republican votes?

Perhaps, but I’ve warned that it’s never a good idea to assume top-down conspiracies when corruption, incompetence, politics, ideology, greed, and self-interest are better explanations for what happens in Washington.

Writing for the Washington Examiner, Tim Carney has a much more sober and realistic explanation of what happened at the IRS.

If you take a group of Democrats who are also unionized government employees, and put them in charge of policing political speech, it doesn’t matter how professional and well-intentioned they are. The result will be much like the debacle in the Cincinnati office of the IRS. …there’s no reason to even posit evil intent by the IRS officials who formulated, approved or executed the inappropriate guidelines for picking groups to scrutinize most closely. …The public servants figuring out which groups qualified for 501(c)4 “social welfare” non-profit status were mostly Democrats surrounded by mostly Democrats. …In the 2012 election, every donation traceable to this office went to President Obama or liberal Sen. Sherrod Brown. This is an environment where even those trying to be fair could develop a disproportionate distrust of the Tea Party. One IRS worker — a member of NTEU and contributor to its PAC, which gives 96 percent of its money to Democratic candidates — explained it this way: “The reason NTEU mostly supports Democratic candidates for office is because Democratic candidates are mostly more supportive of civil servants/government employees.”

Tim concludes with a wise observation.

As long as we have a civil service workforce that leans Left, and as long as we have an income tax system that requires the IRS to police political speech, conservative groups can always expect special IRS scrutiny.

And my colleague Doug Bandow, in an article for the American Spectator, adds his sage analysis.

The real issue is the expansive, expensive bureaucratic state and its inherent threat to any system of limited government, rule of law, and individual liberty. …the broader the government’s authority, the greater its need for revenue, the wider its enforcement power, the more expansive the bureaucracy’s discretion, the increasingly important the battle for political control, and the more bitter the partisan fight, the more likely government officials will abuse their positions, violate rules, laws, and Constitution, and sacrifice people’s liberties. The blame falls squarely on Congress, not the IRS.

I actually think he is letting the IRS off the hook too easily.

But Doug’s overall point obviously is true.

…the denizens of Capitol Hill also have created a tax code marked by outrageous complexity, special interest electioneering, and systematic social engineering. Legislators have intentionally created avenues for tax avoidance to win votes, and then complained about widespread tax avoidance to win votes.

So what’s the answer?

The most obvious response to the scandal — beyond punishing anyone who violated the law — is tax reform. Implement a flat tax and you’d still have an IRS, but the income tax would be less complex, there would be fewer “preferences” for the agency to police, and rates would be lower, leaving taxpayers with less incentive for aggressive tax avoidance. …Failing to address the broader underlying factors also would merely set the stage for a repeat performance in some form a few years hence. …More fundamentally, government, and especially the national government, should do less. Efficient social engineering may be slightly better than inefficient social engineering, but no social engineering would be far better.

Amen. Let’s rip out the internal revenue code and replace it with a simple and fair flat tax.

But here’s the challenge. We know the solution, but it will be almost impossible to implement good policy unless we figure out some way to restrain the spending side of the fiscal ledger.

At the risk of over-simplifying, we will never get tax reform unless we figure out how to implement entitlement reform.

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Last week, while writing about the latest IRS scandal, I noted that the IRS has a long record of abusive actions.

So I wasn’t surprised to learn that it also has politically biased employees.

But some Americans probably are shocked. So I want to be the first to publicly thank President Obama for – at the very least – presiding over a culture that gave IRS bureaucrats the green light to engage in this kind of misbehavior.

Why am I thanking Obama? For the simple reason that this scandal means that more Americans now understand that the IRS is a venal agency. And that presumably means that more Americans now realize we should junk the internal revenue code and implement a simple and fair flat tax.

Since I’m in an expansive and sharing mood, I think we also owe some appreciation to some of the good people who are helping to publicize the IRS’s despicable behavior.

Let’s start with George Will, who is predictably – and bitingly – critical.

…the nature of Barack Obama’s administration is being clarified as revelations about IRS targeting of conservative groups merge with myriad Benghazi mendacities. …we are told that a few wayward souls in Cincinnati, with nary a trace of political purpose, targeted for harassment political groups with “tea party” and “patriot” in their titles.  …Jay Carney, whose unenviable job is not to explain but to explain away what his employers say, calls the IRS’s behavior “inappropriate.” No, using the salad fork for the entree is inappropriate. Using the Internal Revenue Service for political purposes is a criminal offense.

I also like that Will took the opportunity to criticize the worst (or at least close-to-worst) President in American history.

Time was, progressives like the president 100 years ago, Woodrow Wilson, had the virtue of candor: He explicitly rejected the Founders’ fears of government. Modern enlightenment, he said, made it safe to concentrate power in Washington, and especially in disinterested executive-branch agencies run by autonomous, high-minded experts. Today, however, progressivism’s insinuation is that Americans must be minutely regulated because they are so dimwitted they will swallow nonsense. Such as: There was no political motive in the IRS targeting political conservatives.

How painfully true. Sheep are not famous for their intelligence. And as the American people learn to be passively dependent on government, presumably we will acquire more sheep-like characteristics.

But the firestorm of protest leads me to think we’re not at that stage. At least not yet.

The lawless and abusive IRS even got Michael Gerson agitated.

…most Americans, myself included, become libertarians when a policeman is rude and swaggering during a traffic stop. Give me that badge number. It is precisely because police powers are essential to the public good that abusing them is so offensive. The same holds for overzealous or corrupt airport-security agents. And it is doubly true with IRS personnel who misuse their broad and intimidating powers. It is enough to bring out the Samuel Adams in anyone.

And here’s what my colleague Gene Healy wrote about the IRS’s history of political shenanigans.

Past presidents have found the IRS an extremely useful piece of federal machinery for that purpose. A lot of what we know about that sordid history comes from the Senate Select Committee on intelligence abuses, chaired by Sen. Frank Church, D-Idaho, in the mid-’70s. As Chris Hayes wrote in the Nation in 2006, “Church and many Democrats…soon found that presidents of both parties were culpable: “Secret documents obtained by the committee even revealed that the sainted FDR had ordered IRS audits of his political enemies.” In “The Lawless State,” his account of the Church Committee revelations, Morton Halperin noted that “the first organized political ‘strike force’ was formed within the IRS in 1961, and was directed against right-wing political groups.” In this case, I doubt there was ever a JFK or Nixon-style direct command from on high to harass the Tea Party. It’s more likely to be a case of “proactive” bureaucrats inspired by presidential railing against the Tea Party and Citizens United: “Will no one rid me of these meddlesome right-wing freaks?”

Let’s close with a couple of good cartoons.

The first one reminds me of the joke that “Service” is part of the IRS’s name, but only in the way that a bull services a cow.

IRS Tea Party Cartoon 1

The humor is a bit darker in this cartoon, but the message is the same.

IRS Tea Party Cartoon 2

P.S. Since I’m in such a good mood,  I’ll share some of my other IRS humor, including a new Obama 1040 form, a death tax cartoon, a list of tax day tips from David Letterman, a cartoon of how GPS would work if operated by the IRS, an IRS-designed pencil sharpener, two Obamacare/IRS cartoons (here and here), a sale on 1040-form toilet paper (a real product), a song about the tax agency, the IRS’s version of the quadratic formula, and (my favorite) a joke about a Rabbi and an IRS agent.

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I’m happy to bash the IRS, but I usually try to explain that our anger should be focused on the politicians who created the corrupt, 74,000-page tax code.

But sometimes the IRS deserves some negative attention. The tax collection bureaucracy has thieving employees, incompetent employees, thuggish employees, brainless employees, and victimizing employees.

The senior folks at the IRS also deserve scorn for bone-headed decisions such as squandering millions of dollars on a P.R. campaign and a scheme to regulate and control private tax preparers.

Now it seems we have another reason to condemn the tax-collection bureaucracy. The IRS is engaging in Nixon-type political harassment.

Here’s some of what the Associated Press just reported.

The Internal Revenue Service inappropriately flagged conservative political groups for additional reviews during the 2012 election to see if they were violating their tax-exempt status, a top IRS official said Friday. Organizations were singled out because they included the words “tea party” or “patriot” in their applications for tax-exempt status, said Lois Lerner, who heads the IRS division that oversees tax-exempt groups.

Heaven forbid somebody self-identify as being patriotic. Obviously a cause for investigation by the IRS.

And it’s rather ironic that the IRS felt compelled to apologize just a few days after President Obama just told us we shouldn’t listen to “voices” telling us that bad things happen in Washington.

But it’s not just that the IRS targeted groups opposing big government. The bureaucrats also violated the rules designed to protect taxpayers from IRS abuse.

…groups were asked for their list of donors, which violates IRS policy in most cases, she said. “That was wrong. That was absolutely incorrect, it was insensitive and it was inappropriate. That’s not how we go about selecting cases for further review,” Lerner said at a conference sponsored by the American Bar Association. “The IRS would like to apologize for that,” she added.

But you can put your mind at ease because senior IRS officials assure us that the targeting of Tea Party groups had nothing to do with political bias.

Lerner said the practice was…not motivated by political bias. …IRS Commissioner Douglas Shulman told Congress in March 2012 that the IRS was not targeting groups based on their political views. “There’s absolutely no targeting. This is the kind of back and forth that happens to people” who apply for tax-exempt status, Shulman told a House Ways and Means subcommittee.

Just like we’re supposed to believe that political bias had nothing to do with all the IRS harassment of conservative groups during the Clinton years. The message from the elites in Washington is “Nothing to see here, move along.”

But as the Wall Street Journal warned at the time, it seems there is a remarkable lack of curiosity about patterns of IRS abuse.

…once we agree that a politicized IRS is a dangerous thing, it is hard to understand the see-no-evil approach taken by the Congress, the press and the judiciary about serious, current allegations of exactly this. …organizations have been using the Freedom of Information Act to find out if there is anything to the extraordinary run of audits that happened to hit a number of tax-exempt organizations that might reasonably be described as Clinton enemies. …we have lots of Clinton enemies who have suffered actual audits, and very little interest in finding out whether this was simply a massive coincidence or the result of something more sinister.

And now we’re going through the same process again.

Maybe, just maybe, there’s a lesson to be learned about the dangers of giving power to politicians and bureaucrats.

Yet another argument for the flat tax. If there’s no charitable deduction, there’s no opening for a politically biased IRS bureaucracy to investigate and harass non-profit groups because of their philosophical beliefs.

P.S. On a lighter note, here’s the IRS version of the quadratic formula, and a cartoon showing how GPS would work if operated by the IRS.

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I get upset by a lot of what happens in the corridors of power, but two things really irk me.

First, I hate it when the rich and powerful use the coercive power of government to screw ordinary people. That’s one of the reasons I hated the TARP bailout.

Second, I hate the utter hypocrisy of the political elite exempting themselves from the bad policies that get imposed on everyone else. That’s why, for instance, it galls me that the pro-tax bureaucrats at the OECD get tax-free salaries.

Well, now we have a new example of political hypocrisy. Behind closed doors, the crooks in Washington are seeking to exempt themselves from Obamacare.

Here are some of the sordid details reported by Politico.

Congressional leaders in both parties are engaged in high-level, confidential talks about exempting lawmakers and Capitol Hill aides from the insurance exchanges they are mandated to join as part of President Barack Obama’s health care overhaul, sources in both parties said. The talks — which involve Senate Majority Leader Harry Reid (D-Nev.), House Speaker John Boehner (R-Ohio), the Obama administration and other top lawmakers — are extraordinarily sensitive, with both sides acutely aware of the potential for political fallout from giving carve-outs from the hugely controversial law to 535 lawmakers and thousands of their aides. Discussions have stretched out for months, sources said. …if Capitol Hill leaders move forward with the plan, they risk being dubbed hypocrites by their political rivals and the American public. By removing themselves from a key Obamacare component, lawmakers and aides would be held to a different standard than the people who put them in office. …There is concern in some quarters that the provision requiring lawmakers and staffers to join the exchanges, if it isn’t revised, could lead to a “brain drain” on Capitol Hill, as several sources close to the talks put it.

Well, to be thoughtful and analytical, my reaction is boo hoo and cry me a friggin’ river.

Obamacare is a fiscal disaster and a healthcare disaster. Our best bet to get the law repealed is to make sure the politicians and their underlings are subject to all of the law’s bad provisions. Period.

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I believe in the First Amendment, so I would never support legislation to restrict political speech or curtail the ability of people to petition the government.

That being said, I despise the corrupt Washington game of obtaining unearned wealth thanks to the sleazy interaction of lobbyists, politicians, bureaucrats, and interest groups.

So you can imagine my unfettered joy when reading about how this odious process is being curtailed by sequestration. Here are some cheerful details from story in Roll Call.

…sequester cuts…reflect not only Washington’s political paralysis but a bitter lobbying failure for K Street interests across the board. From university professors and scientists to cancer victims, defense contractors and federal workers, hundreds of advocacy, trade and labor groups have lobbied aggressively for months to head off the cuts. They’ve run ads, testified on Capitol Hill, staged demonstrations and hounded lawmakers, all to no avail. …the path forward could be a lobbying nightmare.

Reading the story, I recalled a Charles Addams cartoon from my childhood. Thanks to the magic of Al Gore’s Internet, I found it.

Slightly modified to capture my spirit of elation, here it is for you to enjoy.

Charles Addams Cartoon

Except I like to think I’m a bit more prepossessing than the Uncle Fester character, but let’s not get hung up on details.

What matters is that sequestration was a much-needed and very welcome victory for taxpayers. Obama suffered a rare defeat, as did the cronyists who get rich by working the system.

To be sure, all that we’ve achieved is a tiny reduction in the growth of federal spending (the budget will be $2.4 trillion bigger in 10 years rather than $2.5 trillion bigger). But a journey of many trillions of dollars begins with a first step.

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If you’re an amoral person with political connections, it’s possible to make a lot of money.

Warren Buffett lined his pockets by making a government-subsidized investment in Goldman Sachs during the financial crisis.

The rest of us suffered and he got richer, but the left seems to be okay with that perverse form of redistribution because he supports class-warfare tax hikes. Sort of like buying an indulgence in the Middle Ages.

Hey, nice work if you can get it.

But Buffett may be an amateur compared to the crony capitalists at Citigroup.

The just-confirmed Treasury Secretary Jack Lew was given a huge bonus for leaving Citigroup several years ago. Did the company give Lew a bonus because they were happy to shed his $1.1 million salary after he presided over gigantic losses at the firm’s alternative investments division?

Don’t be silly. He was showered with money specifically for leaving the company to take a “high level position with the United States government”

Again, nice work if you can get it.

But Lew’s loot is pocket change compared to the $115 million that former Clinton Treasury Secretary Robert Rubin received for helping to steer the company into financial collapse.

So is this evidence that the private sector is systematically stupid?

I wish that was the explanation.

Instead, this is tragic evidence that it’s possible to “earn” a very high return when you “invest” in cronyism.

Big Bank SubsidyAccording to the Treasury Department’s Special Inspector General, Citigroup got $45 billion of TARP handouts and $301 billion of guarantees.

Not to mention an estimated $13.4 billion subsidy thanks to the government’s too-big-to-fail policy.

Since we’re talking apples and oranges, I have no idea how to compare the value of the payments to Lew and Rubin with the value of all the handouts and subsidies that Citigroup got (and is still getting) from taxpayers.

But I do know that mere mortals like you and me don’t have a prayer of “earning” the incredibly high returns that Citigroup received by “investing” in Robert Rubin and Jack Lew.

And let’s not forget what Goldman Sachs “earned” by “investing” in the previous Treasury Secretary, Tim Geithner.

Hey, nice work if you can get it.

And you can even be absolved of your sins by supporting higher taxes! What’s not to love. You get millions of dollars that you could never earn in a genuinely capitalist economy, and all you have to do is agree to give back an extra 5 percent or so if tax rates go up.

But if you’re someone like Tim Geithner, maybe you can avoid the extra burden by cheating on your taxes. Of course, you’ll be taking a risk of having your wrist slapped if you get caught. And that can really sting for 10 seconds.

Remember, rules and laws are for the peasants, not the cronyist 1 percent.

Nice work if you can get it.

And there are lots of opportunities for unjust enrichment, as explained in this video.

The moral of the story is…well, that you should be a libertarian if you want to be a decent person and not reward those who are indecent.

P.S. At least Jack Lew has now shown us that it’s perfectly fine to invest in the Cayman Islands and benefit from tax competition.

But only if you’re an insider, of course. Nice work if you can get it.

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I did a video several years ago on the link between big government and big corruption, and I periodically revisit the issue by citing disgusting examples of sleaze and cronyism ranging from the Export-Import Bank to the racial spoils scam in Alaska.

The folks at Learn Liberty also have a great video on this topic, explaining how big government creates all sorts of unfair and corrupt advantages for politically connected large corporations.

Amen. Whether we’re talking about TARP bailouts, our loophole-ridden 72,000-page tax code, Obamacare favoritism, or green-energy scams, it seems like the federal government is a giant favor factory.

So why, then, are some people in favor of big government. Is it naiveté or are they part of the racket?

In any event, I highly recommend some other Learn Liberty videos.

I especially like the last video since it echoes many of the points I made in my video series on the economics of fiscal policy.

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I used to think this image was a damning indictment of the internal revenue code. Or here’s another chart showing how the tax system has become more convoluted over time.

But this new image may be the most effective of all of them. We don’t know what’s in the other 72,000 pages of tax code, but we’re all familiar with the basic 1040 tax form. Look at what the politicians have done to it over the past several decades.

1040 Instruction graph

The only answer, needless to say, is to throw the entire mess in the trash can and replace it with a simple and fair flat tax.

Here’s my brief explanation of how the flat tax would work and why it’s a good idea.

Tax reform would give us more growth, but it also would reduce one of the major source of corruption in Washington.

It’s also based on the notion that discrimination is wrong and that class-warfare policy should be rejected.

So what’s not to like?

P.S. I always get a lot of email and comments from people who wonder whether we should adopt a national sales tax instead. That’s fine with me, for reasons I explain here, but you better make sure to first amend the Constitution so that scheming politicians don’t pull a bait-and-switch and saddle us with both an income tax and a sales tax.

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