Yuval Levin and Ramesh Ponnuru have a fantastic article on health care [subscription required] in the February 6 issue of National Review that, while not excusing RomneyCare, offers probably the best way that a compromised Mitt Romney could run against ObamaCare. If you don’t have a subscription, find a copy.
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The State of the Union on Stossel
Here’s an edited version of last night’s special “Stossel” show following the State of the Union Address. Our Cato tape editors have cut right to my opening one-one-one with Stossel, wherein I talk about Obama’s “blueprint” for America and my suggestion for a bumper sticker reading YES YOU DID. Later Matt Welch, Megan McArdle, and Gov. Gary Johnson join the discussion and take on issue of taxes, Iraq, the looming but mostly ignored entitlements crisis, outsourcing, and the president’s audacious claim that his $50 billion bailout of GM and Chrysler had been a good deal. Skip the commercials, watch it here:
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Obama’s State of the Union Signals Grand Strategy Status Quo
It was clever, though a bit too opportunistic, for the president to begin and end his State of the Union address with references to Iraq, and the sacrifices of the troops. The war has been a disaster for the United States, and for the Iraqi people, of course. But the subject has always been a win-win for him. Whenever he talks about Iraq, it serves as a not-so-subtle reminder about who got us into this mess (i.e. not him).
Others might gripe about the president wrapping himself in the troops, and the flag (or, in the case of this speech, the troops’ flag). But Americans are rightly proud of our military, and there is nothing wrong with invoking the spirit of service and sacrifice that animates the members of our military. (There is something wrong with suggesting that all Americans should act as members of the military do, a point that Ben Friedman makes in a separate post.)
But while some degree of chest-thumping, “America, ooh-rah” is to be expected, this passage sent me over the edge:
America is back.
Anyone who tells you otherwise, anyone who tells you that America is in decline or that our influence has waned, doesn’t know what they’re talking about. …Yes, the world is changing; no, we can’t control every event. But America remains the one indispensable nation in world affairs – and as long as I’m President, I intend to keep it that way.
Have we learned nothing in the past decade? Have we learned anything? To say that we are the indispensable nation is to say that nothing in the world happens without the United States’ say so. That is demonstrably false.
Of course, the United States of American is an important nation, the most important, even. Yes, we are an exceptional nation. We boast an immensely powerful military, a still-dynamic economy (in spite of our recent challenges), and a vibrant political culture that hundreds of millions of people around the world would like to emulate. But the world is simply too vast, too complex, and the scale of transactions in the global economy is enormous. It is the height of arrogance and folly for any country to claim indispensability.
The president is hardly alone, however. Many in Washington—including some of his most vociferous critics in the Republican Party— celebrate the continuity in U.S. foreign policy as an affirmation of its wisdom. The president’s invocation of the “indispensable nation” line from the mid-1990s is merely the latest manifestation of a foreign policy consensus that has held for decades.
But the world has changed, and is still changing. Our grand strategy needs to adapt. When we embarked on the unipolar project after the end of the Cold War, the United States accounted for about a third of global economic output, and a third of global military expenditures; today, we account for just under half of global military spending, but our share of the global economy has fallen below 25 percent.
What we need, therefore, is a new strategy that aims to promote our core interests, but that doesn’t expect U.S. troops and taxpayers to also bear the burdens of promoting everyone else’s. After all, the values that are so important to most Americans, and that the president cited in his speech last night, are also cherished by hundreds of millions, perhaps billions, of people in many countries around the world. It is reasonable to expect them to pay some of the costs required to advance these values, and to sustain a peaceful and prosperous international order. Our current strategy still presumes that it is not.
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Fact Checking the SOTU: Corporate Taxes
Let’s do some fact checking on President Obama’s corporate tax comments in last night’s State of the Union.
Claim: “Right now, companies get tax breaks for moving jobs and profits overseas.”
False: There are no such breaks. Instead, we punish U.S. and foreign businesses for investing and creating jobs here.
Claim: “If you’re a business that wants to outsource jobs, you shouldn’t get a tax deduction for doing it.”
False: There is no such tax deduction.
Claim: “No American company should be able to avoid paying its fair share of taxes by moving jobs and profits overseas.”
False: America is not a prison camp. Besides, imposing a 40-percent tax rate on corporations that invest here is not a “fair share.”
Claim: “From now on, every multinational company should have to pay a basic minimum tax.”
False: We’ve already got a corporate “alternative minimum tax,” and it’s an idiotic waste of accounting resources that ought to be repealed.
Claim: “It is time to stop rewarding businesses that ship jobs overseas.”
False: We penalize them for locating jobs here. Besides, the overseas operations of U.S. companies generally complement domestic jobs by boosting U.S. exports.
Claim: “Companies that choose to stay in America get hit with one of the highest tax rates in the world.”
True: Our rate is 40 percent, which compares to the global average rate of just 23 percent. See the chart below, which is based on KPMG data.
![Media Name: 201201_blog_edwards251.jpg](/sites/cato.org/files/styles/pubs_2x/public/wp-content/uploads/201201_blog_edwards251.jpg?itok=IgGNRgIA)
Claim: “If you’re an American manufacturer, you should get a bigger tax cut. If you’re a high-tech manufacturer, we should double the tax deduction you get for making your products here. And if you want to relocate in a community that was hit hard when a factory left town, you should get help financing a new plant, equipment, or training for new workers.”
False: It’s a horrible idea to create special breaks for certain types of government-favored businesses. It would simply encourage the exact type of tax game-playing and lobbying that the president decries. What’s a “high-tech” manufacturer? What’s an “American” manufacturer? What’s a “manufacturer”? How “hard hit” do towns need to be?
Upshot: From the president’s one “true” comment we can derive the simple and logical solution to our corporate tax problem. We should stop “hitting” companies with a 40-percent sledgehammer, and cut our corporate statutory rate to boost investment and reduce corporate tax avoidance.
Note to self: Mail copies of Global Tax Revolution to WH speechwriters.
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Cato Institute Scholars on the State of the Union 2012
Cato Institute scholars Malou Innocent, Chris Edwards, Neal McCluskey, Ilya Shapiro, Jerry Taylor, Dan Mitchell and Dan Ikenson respond to President Obama’s 2012 State of the Union Address.
Video produced by Caleb O. Brown, Austin Bragg and Lester Romero.
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Live Blog of the 2012 State of the Union Address and the GOP Response
Please join us at 9:00pm Eastern on Tuesday, January 24, for live commentary during President Obama’s third State of the Union address and the GOP response given by Indiana Governor Mitch Daniels. Here is our panel of policy experts:
- Legal Associate Trevor Burrus
- Senior Fellow Ilya Shapiro
- Senior Fellow Pat Michaels
- Budget Analyst Tad DeHaven
- Foreign Policy Analyst Malou Innocent
- Director of Health Policy Studies Michael F. Cannon
- Senior Fellow Daniel J. Mitchell
- Associate Director, Center for Educational Freedom Neal McCluskey
Other Cato scholars will also contribute.
Come back to this page at 9:00pm Eastern on Tuesday, January 24, to join us — we look forward to having you, and to sharing our insights with you.
You can also follow the conversation on Twitter by following @CatoInstitute, the hashtag #SOTU, and these Cato experts:
- Director of Financial Regulation Studies Mark Calabria (@MarkCalabria)
- Vice President for Defense and Foreign Policy Studies Christopher Preble (@CAPreble)
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Let’s Regulate Harder. That’ll Provide More Jobs For Young Law Grads!
No, legal academics don’t usually come right out and say this, but Hazel Weiser, executive director of the Society of American Law Teachers (SALT), did say it as part of a discussion of the woes of new law graduates in a slow hiring market:
Rather than deregulate the legal profession, which is notoriously bad at self-policing, the best way to get more jobs for these unemployed recent graduates is to up regulation, not do away with it. Another op ed piece, “It’s Consumer Spending, Stupid” dated October 25, 2011, by James Livingston, a professor of history at Rutgers, puts it perfectly: “…private investment — that is, using business profits to increase productivity and output — doesn’t actually drive economic growth. Consumer debt and government spending do. Private investment isn’t even necessary to promote growth.” Government spending means regulation as well as bridges and tunnels. Let’s hire these young attorneys to enforce the laws of the land!
In a similar vein, note this blog post by University of Michigan law professor Sam Bagenstos, a leading disabled-rights expert who served in the Obama administration until last year as Principal Deputy Assistant Attorney General for Civil Rights, the number two official in the Civil Rights Division. Commenting on a report that the city of Mobile, Alabama, was preparing to spend $146,000 to comply with new federal rules governing its public swimming pools, Prof. Bagenstos ran the item under the headline “New ADA Regs: Job Creators.” (Update: It was a joke, he says.)
Next time you read about some daffy new idea out of Washington, keep in mind that there’s a whole school of thought out there that, faced with a choice between a mild and a stringent regulatory option, imagines that by going with the more stringent Washington can create more jobs. It explains a lot.