Russia will cut its army of bureaucrats by more than 100,000 within the next three years, saving 43 billion rubles ($1.5 billion), Finance Minister Alexei Kudrin said on Monday. “We assume more than 100,000 federal state civil jobs will be cut within three years. The government has already included a schedule for cutting the number of federal civil servants in the draft budget for the next three years and coordinated it with ministries and agencies,” Kudrin told President Dmitry Medvedev, who in June ordered a 20 percent cut in the number of bureaucrats. Under the government plan, ministries and agencies will have to sack five percent of their staff in 2011 and 2012, and 10 percent in 2013. …In the last three years, the number of bureaucrats in the federal government had increased by nearly 20,000, in regional governments by 60,000 and at municipalities by 50,000, he said.

Thanks to the Obamacare legislation, we already know there will be a new 3.9 percent payroll tax on all investment income earned by so-called rich taxpayers beginning in 2013. And the capital gains tax rate will jump to 20 percent next year if the President gets his way. This sounds bad (and it is), but the news is even worse than you think. Here’s a new video from the Center for Freedom and Prosperity that exposes the atrociously unfair practice of imposing this levy on inflationary gains.

The mini-documentary uses a simple but powerful example of what happens to an investor who bought an asset 10 years ago for $5,000 and sold it this year for $6,000. The IRS will want 15 percent of the $1,000 gain (Obama wants the tax burden on capital gains to climb to 23.9 percent, but that’s a separate issue). Some people may think that a 15 percent tax is reasonable, but how many of those people understand that inflation during the past 10 years was more than 27 percent, and $6,000 today is actually worth only about $4,700 after adjusting for the falling value of the dollar? I’m not a math genius, but if the government imposes a $150 tax (15 percent of $1,000) on an investor who lost nearly $300 ($5,000 became $4,700), that translates into an infinite tax rate. And if Obama pushed the tax rate to almost 24 percent, that infinite tax rate gets…um…even more infinite.

The right capital gains tax, of course, is zero.

Canada’s private air traffic control system, Nav Canada, recently received its second “Eagle Award” from the International Air Transport Association. The Eagle Awards “honor air navigation service providers and airports for outstanding performance in customer satisfaction, cost efficiency, and continuous improvement.”

In naming Nav Canada “the best” ATC, the IATA said the following in its press release:

Nav Canada is a global leader in the efficient implementation and reliable delivery of air traffic control procedures and technologies. It actively engages its customers at all levels in regular and meaningful consultations. “The performance of Nav Canada has been enhanced by the right technical and operational investments following extensive cost/​benefit analyses. Nav Canada’s effective management has allowed the company to reduce its charges in 2006 and 2007, and freeze them at that level ever since,” Bisignani said.

Unlike the government-run ATC system in the U.S., Nav Canada is a privately run, not-for-profit corporation. As a Cato essay on privatization explains, the U.S. system leaves a lot to be desired while the private Canadian system has been a tremendous success:

The Federal Aviation Administration has been mismanaged for decades and provides Americans with second-rate air traffic control. The FAA has struggled to expand capacity and modernize its technology, and its upgrade efforts have often fallen behind schedule and gone over budget…The GAO has had the FAA on its watch list of wasteful “high-risk” agencies for years…Canada privatized its ATC system in 1996. It set up a private, nonprofit ATC corporation, Nav Canada, which is self-supporting from charges on aviation users. The Canadian system has received high marks for sound finances, solid management, and investment in new technologies.

Critics of privatization claim that it’s “too risky” to place such activities in the hands of the private sector. Canada’s success undermines that argument. In fact, air traffic control is far too important for such government mismanagement and should therefore be privatized. In doing so, policymakers should look to our neighbors to the north as a model for how to get the job done right.

See this Cato essay for more on airports and air traffic control.

Lots of the criticisms of the tea party movement as “extremist” assume that the movement is some sort of “American Taliban” — theocratic, censorious, antigay. The reality is that the highly decentralized tea party movement has done a remarkable job of staying focused on a specific agenda that is nothing like that. The Tea Party Patriots website proclaims its mission as “Fiscal Responsibility, Limited Government, Free Market.” Many tea partiers say that “tea” stands for Taxed Enough Already. Toby Marie Walker, lead facilitator for the Waco [not Wacko] Tea Party, told NPR Thursday, “Well, we focus around three main issues, is constitutionally limited government, free markets and fiscal responsibility.”

In fact, some social conservative activists are annoyed that President Obama’s big-government agenda and the robust tea party response have focused the country’s attention on the issues of spending, debt, and the size of government rather than cultural war. On that same NPR interview Bryan Fischer of the American Family Association complained that “the leadership of the Tea Party movement is at a fundamentally different place … when it comes to social issues” and demanded that the movement “send a clear note on the culture of conservative issues.” Walker explained that the tea party isn’t opposed to social conservatism, it just doesn’t take a position on those issues: “It would be like asking the NRA to take up an abortion issue. That’s not what the NRA is about. They’re about gun rights.” As she said:

I think that the Tea Party movement is more of a Libertarian movement. I think that that’s one of the things that has been like a myth out there, that it’s a Republican-based. But not all of us are Libertarians. You know, we have Republicans, Democrats, independents, all over the spectrum. And that’s why we stick to the issues that brought us together.

In the Washington Times social conservatives complain about the tea party movement’s emphasis on fiscal issues:

“There is suspicion among our social-conservative base that the new tea party/​libertarian Republicans might soon view restrictions on abortion as they would any government proscription of private conduct,” said former Oklahoma Gov. Frank A. Keating. [Not clear if this is also the position of his current employer, the American Council for Life Insurance.]

“Some of my law enforcement friends have expressed similar views about a worrisome second look at drug laws,” Mr. Keating added. “Perhaps it is fringe thinking and a fringe worry, but it is still a worry.”

In fact, many libertarian-minded Republicans — among them Senate nominee Rand Paul of Kentucky — have raised questions about the wisdom of the country’s strict laws on drug use.

Saturday’s Wall Street Journal quotes me in a discussion of the Values Voter Summit and social conservatives’ griping about the tea party:

[Christine] O’Donnell’s appearance at the Values Voter Summit in Washington put a spotlight on the challenge facing social conservatives, prominent in GOP politics earlier in the decade, as they try to hitch themselves to the fiscal insurgents of 2010. They may be ideological soul mates, but that doesn’t mean they’d govern the same way.

“My sense of the average tea party-endorsed candidate this year is that what motivates them is their concern over spending and the national debt,” said David Boaz, executive vice president of the libertarian Cato Institute. “If a gay-marriage ban came before Congress, they’d probably vote for it, but that’s not what motivates them.”

Mr. Boaz predicted tea-party congressional freshmen would push for a balanced-budget amendment to the Constitution, not an amendment to ban gay marriage. “I don’t think there’s likely to be a lot of social activism coming out of them,” he said.…

A Wall Street Journal/​NBC News poll conducted in June found that just 2% of those identified as tea partiers put social issues such as abortion and same-sex marriage at the top of their priority lists for federal action. 

The tea party is not a libertarian movement, but (at this point at least) it is a libertarian force in American politics. It’s organizing Americans to come out in the streets, confront politicians, and vote on the issues of spending, deficits, debt, the size and scope of government, and the constitutional limits on government. That’s a good thing. And if many of the tea partiers do hold socially conservative views (not all of them do), then it’s a good thing for the American political system and for American freedom to keep them focused on shrinking the size and cost of the federal government.

Liberals spend too much of their time being deathly afraid of the religious right. Brink Lindsey described contemporary American politics as a “libertarian consensus that mixes the social freedom of the left with the economic freedom of the right” in his book The Age of Abundance. Over the past 50 years, social conservatism has lost its battles against civil rights, against feminism, against sexual freedom, against gay rights. It hasn’t even managed to reduce the illegitimacy rate. The real challenge in American politics today is to constrain and reverse the past decade’s accumulation of money and power in Washington. And in that effort the tea party movement is on the front lines.

Over at Downsizing Government, we focused on the following issues this week:

• There’s more corruption at Amtrak, but Congress probably won’t hold any “show trials” for Amtrak management since it’s not a private business.
• A new study find that the government’s “cash for clunkers” program had no long-run effect on auto purchases. It’s hard to believe this clunker of a program still has defenders.
• Federal payments to individuals as a share of the economy has reached an all-time high after 70 years of steady growth. Unfortunately, all those free lunches aren’t actually “free.”
• The battle over the administration’s plan for a national system of high-speed rail is heating up.
• The head of the Federal Housing Finance Agency throws cold water on the horrible idea of having the federal government explicitly back most mortgages.

Not that we need more evidence, but here is a story from Los Angeles revealing that the city only created 55 jobs with $111 million of stimulus funds. This translates to a per-job cost of $2 million, which is a grossly inefficient rate of return. But this calculation is incomplete because it doesn’t measure how many jobs would have been created if the money had been left in the productive sector of the economy. Moreover, it’s also important to consider long-term costs such as the fact that Los Angeles now has more overhead, which will exacerbate the city’s fiscal problems.

A snippet:

The Los Angeles City Controller said on Thursday the city’s use of its share of the $800 billion federal stimulus fund has been disappointing. The city received $111 million in stimulus under the American Recovery and Reinvestment Act (ARRA) approved by the Congress more than a year ago.

“I’m disappointed that we’ve only created or retained 55 jobs after receiving $111 million,” says Wendy Greuel, the city’s controller, while releasing an audit report.

…The audit says the numbers were disappointing due to bureaucratic red tape, absence of competitive bidding for projects in private sectors, inappropriate tracking of stimulus money and a laxity in bringing out timely job reports.

Wisconsin has become a battleground over the Obama administration’s plan to create a national system of high-speed rail. Of the $8 billion in HSR grants awarded to the states in the stimulus bill, $810 million of it went toward a high-speed route between Milwaukee and Madison.

Ironically, this Wisconsin “high-speed” route would only achieve speeds of 79 mph initially and 110 mph by 2016. As a Cato essay on high-speed rail points out, HSR aficionados don’t even consider 110 mph to be true high-speed. In fact, passenger trains were being run at speeds of 110 mph or more back in the 1930s. And those “high-speed” trains didn’t prevent the decline of passenger trains after World War II.

The Cato essay also notes that the 85-mile line between Milwaukee and Madison “is only a tiny portion of the eventual planned route from Chicago to Minneapolis, and no one knows who will pay the billions necessary to complete that route.” In fact, to build a national system of true high-speed rail on the 12,800 mile network envisioned by the administration, the cost could be close to $1 trillion.

Where would the money come from? State governments are hoping that it would be all from federal taxpayers. As I recently discussed, the states’ interest in grabbing new federal HSR money has dropped now that Congress is requiring a 20 percent state match:

The states already have dedicated revenue sources for federal highway aid matching requirements (also 20 percent). With state tax revenues flat due to the recession, where would the money come from to pay for high-speed rail projects? Proposing new taxes to fund high-speed rail would probably be political suicide. And most state policymakers recognize that shifting money away from more popular programs to pay for high-speed rail won’t be any more politically rewarding.

The issue is even affecting elections in states that are in line to receive federal funding for high-speed rail. Scott Walker, a Republican candidate for governor in Wisconsin, recently said he’d send back the $810 million in stimulus funds the state has received for a rail line between Madison and Milwaukee. Walker appears to understand that his state has more pressing infrastructure needs and that high-speed rail could become a fiscal black hole.

On Tuesday, Walker won the GOP primary to replace outgoing Democratic Governor Jim Doyle, who is an ardent supporter of the Milwaukee-Madison route. Walker’s Democratic opponent, Milwaukee mayor Tom Barrett, supports the route’s construction. According to State​line​.org, the outgoing Doyle administration plans to have $300 million of the money under contract by January, which Walker says he would cancel if elected.

Wisconsin Democrats have made hay out of the fact that former Republican Governor Tommy Thompson first championed the idea of a regional network of high-speed rail. Unfortunately for HSR proponents, Thompson’s past involvement with federally-subsidized rail is a reason not to build the route.

From a Cato essay on Amtrak subsidies:

Amtrak reform legislation in 1997 stipulated that its board be replaced with a “reform board” of directors. The Clinton administration nominated, and the Senate confirmed, politicians that included the then-governor of Wisconsin, Tommy Thompson, and the mayor of Meridian, Mississippi, John Robert Smith. Mayor Smith tried to create a route that would have lost millions linking Atlanta and Dallas via Meridian. Governor Thompson succeeded in creating a route from Chicago to Janesville, Wisconsin. It was eventually discontinued after Thompson’s departure from the board due to low ridership and financial losses.

As is the case with Amtrak, HSR can’t compete with more efficient modes of transportation like automobiles and airplanes without massive subsidies. At a time when the federal debt is heading toward the moon, policymakers should be looking to the private sector to take care of our transportation needs. The country simply can’t afford to sink taxpayer money into high-speed rail when it makes so little economic sense.