Cato Daily Dispatch for December 14, 2005
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Iraqis Go to PollsCongress to Decide PATRIOT Act's Future
Cut in AMT Unlikely This Year
Iraqis Go to Polls
"Campaigning around Iraq stopped Wednesday to give the country's 15 million voters an opportunity to reflect before deciding who will govern their country for the next four years," the Associated Press reports. "The Bush administration hopes the election will draw a large turnout among Sunni Arabs and produce a government that can win the trust of the minority community that is the backbone of the insurgency. That would in turn allow the United States and its coalition partners to begin bringing their troops home next year."
In "U.S. Should Call It a Wrap after Iraq Elections," Chris Preble, director of foreign policy studies at the Cato Institute, writes: "The elections represent the last best hope, a narrow -- and closing -- window of opportunity, to leave Iraq on our terms. The United States got rid of Saddam Hussein's government, the Iraqis drafted and ratified a constitution, and in December they will elect a parliament under that constitution. The next political benchmark may not come along for years; as currently written, the Iraqi constitution does not require the government to hold another parliamentary election until near the end of 2009.
"Now is the time to chart a new course. The first step should be a firm pledge to begin the withdrawal of American troops soon after the December 2005 elections. The Bush administration should further commit to have all U.S. troops out of Iraq by the end of 2007 at the latest. By taking these steps to end the U.S. military presence in Iraq, we will reaffirm that the elections are the culmination of a political process that Americans started, but that Iraqis must finish."
Congress to Decide PATRIOT Act's Future
"The House on Wednesday was expected to pass a White House-backed bill that would renew more than a dozen provisions of the Act, the government's premier anti-terrorism law, which are due to expire Dec. 31," the Associated Press reports. "Senate Democrats joined by some libertarian-leaning Republicans want to extend the expiring provisions of the law by three months to give Congress time to add more protections against what they say are excessive police powers."
Tim Lynch, director of Cato's Project on Criminal Justice, argues that Congress should let all of the PATRIOT Act provisions that were originally designated to "sunset" expire on schedule in December 2005, repeal the "Delayed Notification" or "Sneak and Peek" provision of the PATRIOT Act, and repeal the money laundering provisions of the Patriot Act and the Bank Secrecy Act of 1970.
According to Lynch: "One of the most serious threats to liberty comes from Section 215. According to the Department of Justice, that section allows investigators to obtain 'business records' for terrorism investigations pursuant to a federal 'court order.' In fact, the provision is not limited to business records. Federal agents can use that section of the PATRIOT Act to seize any tangible item (correspondence, film, personal belongings) directly from a person's home. The 'court order' is nothing but a facade because the PATRIOT Act says the judge 'shall' issue such orders whenever the executive branch claims it is conducting a terrorism investigation. Most shocking of all, Section 215 makes it a crime for anyone to speak out about its use. Any person who speaks to a relative, a neighbor, or a reporter about the government's demand can be jailed."
Cut in AMT Unlikely This Year
"Senator Bill Frist, the majority leader, said Tuesday that Congress was not likely to act this year to shield millions of middle- and upper-income taxpayers from a larger income tax bite as lawmakers moved into the final days of the session with many major issues hanging in the balance," The New York Times reports.
"In laying out what he hoped to accomplish before adjourning for the year, Mr. Frist, Republican of Tennessee, said that 'in all likelihoo' the Senate would not try to reach agreement with the House on competing $30 billion plans to reduce the impact of the alternative minimum tax. The tax, originally created to prevent the rich from escaping tax liability, is expected to reach another 15 million Americans next year because of inflation."
In "Maximizing the Minimum Tax," Cato senior fellow Alan Reynolds, writes: "A New York Times editorial, 'Mr. Bush's stealthy tax increase,' claimed, 'President Bush is presiding over a big middle-class tax hike.' That is because rising nominal incomes will push more and more taxpayers into the 'alternative minimum tax' (AMT). Such partisan complaints are ironic because the AMT was invented by Democrats to squeeze more taxes from the rich. It does so by denying those with higher incomes deductions and personal exemptions available to other taxpayers -- that is, by denying equal treatment under the law."
Reynolds continues, "Watch out for the old shell game, wherein the pea has already been hidden as we foolishly watch the shells being moved around the table. In particular, saying more taxpayers may be subject to the AMT in the future is not at all the same thing as saying they will pay more taxes than if tax rates had not been reduced. The former is likely true; the latter is not. If you look at both the income tax and the AMT, the 'big middle-class tax hike' is actually a significant middle-class tax cut. 'By 2010,' Tax Policy Center economists predicted, 'AMT returns will account for 55 percent of all AGI. More strikingly, by 2008, it will cost less to repeal the regular income tax -- by setting the tax rates equal to zero and abolishing all credits -- than it will to repeal the AMT.' That is not as striking as it sounds because nearly all income tax revenue is collected from those with high salaries, who are most vulnerable to the AMT."
Kristen Kestner, editor, kkestner@cato.org
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