Last week, I expressed some skepticism about whether trade negotiations could help convince the EU not to be so cautious about approving genetically modified foods. Along the same lines, I came across the following Bloomberg article:

Wall Street Seeks to Change Dodd-Frank Rules Via Trade Deals

U.S. bankers and insurers are trying to use trade deals, which can trump existing legislation, to weaken parts of the Dodd-Frank Act designed to prevent a repeat of the 2008 financial crisis.

So the first thing to point out is that it’s not really accurate to say that trade deals “trump existing legislation.” But yes, you could negotiate a trade deal that created an international legal obligation that would have some impact on domestic policy.

Let me put the nuances of the interntional law-domestic law relationship aside, though, and say something about the focus of trade agreements. As noted in the GM foods post, I think trade agreements are most useful when they focus on protectionism. So, if the goal with regard to financial regulation is to prevent discrimination against foreign providers of financial services, trade agreements could help with that.

By contrast, if the objective is to remove the burden of financial regulations more generally (and the article is a bit vague on the substance of what’s at issue), I’m not sure trade agreements are the place to go. There seems to be a tendency in recent years to have trade agreements take on any issue that has even a tenuous relationship to trade. In my view, if we go that route, we are unlikely to have any trade agreements at all.

Instead, for domestic regulatory issues, I would rely on the domestic policymaking process, and the arguments of people like my colleague Mark Calabria. Problems with Dodd-Frank are not going to be solved in the backroom by trade negotiators. They are only going to be solved by a vigorous public debate over what constitutes sensible policy.

Most times when I write about campaign finance laws, the context is a presidential race or Supreme Court case. But these restrictions on political speech — the protection of which is the main purpose of the First Amendment — abound in local politics and state courts even without FEC intervention or presidential finger-wagging.

Here’s a case from California that literally just came across my transom:

Last year, John Mlnarik ran for Santa Clara City Council. Mlnarik is the sole shareholder of a small business, a law firm with seven employees — a fact revealed in several mandatory campaign disclosures. Because his money is partly tied up in his business, along with two personal loans to his campaign he also made a third loan (for about $6000) via his business. He fully disclosed the loan and its source.

More than three months later, after the election, the City of Santa Clara issued a citation against Mlnarik for receiving an excessive loan “from a third-party source.” Yet the City Code also states: “For purposes of the contribution limits … [a]n individual and any corporation in which the individual owns a controlling interest, shall be treated as one person .… Nothing … shall prohibit a candidate from making unlimited contributions to his/​her own cam­paign.” And under state law incorporated into the City Code, an individual’s income includes his business’s income; an individual’s real property includes his business’s real property; and an individual’s investments include his business’s investments.

Given this logical overlay, and the fact that his sole ownership and the loan’s source were both fully disclosed, Mlnarik thought he was following the law. After all, as the Supreme Court reiterated in 2008, “the use of personal funds … reduces the candidate’s dependence on outside contributions and thereby counteracts the coercive pressures and attendant risks of abuse to which … contribution limitations are directed.” (Davis v. FEC, quoting Buckley v. Valeo).

The City, however, cited the following from its Code: “[U]nless a term is specifically defined in this chapter, or the contrary is stated (or clearly appears from the context), the definitions set forth in [a portion of the State Government Code] shall govern the interpretation of the provisions of this chapter.” The State Code, in turn, includes a 192-word definition of “candidate,” which — along with many other possible definitions — states that “ ‘Candidate’ means an individual who is listed on the ballot.” Thus, while Mlnarik was free to make unlimited loans to his campaign, he supposedly violated the law by making a campaign loan via his wholly owned business, which itself wasn’t a “candidate.”

Mlnarik argued that the City law was unconstitutionally vague — after all, how is one to know whether a term’s contrary meaning “clearly appears from the context”? (If it does, then the State law’s definition of “candidate” must not be used — and there would be no case against Mlnarik.) As noted above, the “context” was a law that repeatedly makes an equivalence between a person and his or her business; moreover, the law has eight statutory purposes, three of which (Mlnarik argued) were actually advanced by allowing sole business-owners to contribute to their own campaigns via their business, while none of the eight purposes was thwarted. If that’s not the contrary “clearly appearing,” what is?

Nevertheless, the City refused to drop the case, and the trial judge denied that the phrase “the term[‘s] … contrary … clearly appears from the context” was unconstitutionally vague (in a quasi-criminal case!). Mlnarik is now attempting to appeal further, but he has been warned that state law may not permit an additional appeal — even though his constitutional argument couldn’t be heard by the administrative hearing officer, and thus has been heard only once, and then only by one judge.

So not only is there an underlying First Amendment violation, but there are due process infringements squared or cubed. And all this because a candidate for office “loaned himself” $6,000 and fully disclosed all aspects of the transaction.

You can’t make this stuff up!

Ezra Klein writes in the Washington Post that congressional Republicans have moved to the right on such issues as health care, stimulus spending, and a carbon tax, forcing Democrats to move to the center to find common ground. And thus:

If you imagine a policy spectrum that that goes from 1–10 in which 1 is the most liberal policy, 10 is the most conservative policy, and 5 is that middle zone that used to hold both moderate Democrats and Republicans, the basic shape of American politics today is that the Obama administration can and will get Democrats to agree to anything ranging from 1 to 7.5 and Republicans will reject anything that’s not an 8, 9, or 10. The result, as I’ve written before, is that President Obama’s record makes him look like a moderate Republicans from the late-90s.

His argument is that Mitt Romney and Newt Gingrich used to support “the basic architecture of the Affordable Care Act,” John McCain (R‑AZ) supported a cap-and-trade bill, George W. Bush pushed a stimulus bill in 2008—but now Republicans don’t want to support any of those policies. So, he says, Democrats have moved to the right, away from what they really want, like single-payer health care, command-and-control environmental regulation, and no cuts to entitlements plus massive new spending. He says that leads to center-right policy.

But another way to look at it is this: on his scale of 1 to 10, where 1 represents bigger government and 10 represents smaller government, what’s happening? Is government getting bigger or smaller? Take health care: if 1 represents national health care and 10 represents a free market in health care, then surely with income tax preferences for health insurance, Medicare, the prescription drug benefit, and government paying for more than half of all health care, we were at least at 5 by 2009. Everybody from Michael Cannon to Joe Biden thinks Obamacare is a BFD on the road to total government control of medicine. So let’s say it put us at 3 or 4.

You can see the same pattern in the other issues Klein discusses. Carbon tax, cap and trade, stimulus spending—they all make government bigger than it is now. So when Republicans endorse any of those policies, they are playing on bigger-government territory. Now, Republicans say they’re not going to do that any more. So Klein’s complaint is not really that Republicans are insisting on “8, 9, or 10” policies; they’re just no longer proposing policies in the 3 and 4 range, hoping that Democrats will agree to make government only a little bigger, rather than way bigger. Sounds like maybe the debate is moving back toward the 50-yard line, instead of taking place entirely in Democratic territory.

Note: Klein talked only about economic issues, so I’ve done the same. There’s a clear trend in a liberal/​libertarian direction on social issues such as marriage and marijuana. And Republicans who propose further restricting immigration or getting involved in yet another Mideast war are hardly advocates of small government. This analysis deals only with fiscal, regulatory, and entitlements issues.

Over at Bloomberg, National Review’s Ramesh Ponnuru writes about the Obama administration’s disregard for the rule of law, including the IRS’s $800 billion power grab:

The Patient Protection and Affordable Care Act, the sweeping health-care law that Obama signed in 2010, asks state governments to set up health exchanges, and authorizes the federal government to provide tax credits to people who use those exchanges to get insurance. But most states have refused to establish the online marketplaces, and both the tax credits and many of the law’s penalties can’t go into effect until the states act.

Obama’s IRS has decided it’s going to apply the tax credits and penalties in states that refuse, even without statutory authorization. During the recent scandal over the IRS’s harassment of conservative groups, many Republicans have warned that the IRS can’t be trusted with the new powers that the health law will give the agency. They are wrong about the verb tense: It has already abused those powers.

For more, read my article (with Jonathan Adler), “Taxation Without Representation: The Illegal IRS Rule to Expand Tax Credits Under the PPACA.”

By a 4–2 margin, the Colorado Supreme Court has rejected a lawsuit claiming that the state’s method of funding public schools is unconstitutional. It overturned a lower court ruling that had held that the current arrangement of funding fails to meet a requirement in the Colorado constitution that the state operate a “thorough and uniform” system of education. [decision in State v. Lobato via KDVR coverage] 

For years, pushing their Lobato case in the court of public opinion, school-spending advocates have been decrying Colorado schools as underfunded. The state has been given a series of bad ratings on education scorecards, many of which turn out on inspection to measure quality by how much money is spent—thus ensuring that Colorado, which spends less than many other states, will come off badly. This one, for example, ranks Colorado at “C‑minus” for reasons that include low overall spending, low teacher salaries, and the state’s failure to fund “induction, mentoring or reduced workloads for new teachers.” 

When you measure outputs as opposed to inputs, on the other hand, the state comes off looking far better. In this ranking of SAT scores, Colorado scores 15th among the 50 states, the best performance of any Western state. In this ranking based on 4th and 8th grade testing, Colorado comes in 11th among the 50 states, trailing only Washington among Western states. 

But modern school-finance litigation only poses as being about educational quality. Its deeper mission is control—specifically, transferring control over spending from voters and their representatives to litigators whose loyalty is to a mix of ideologues and interest groups sharing a wish for higher spending. As I wrote in a draft chapter on school finance litigation cut for space from my book Schools for Misrule:

In the forty years since the pioneering Serrano v. California (California Supreme Court, 1971) school finance lawsuits have been filed in nearly every state, courts in around half the states have thrown out existing finance systems as unconstitutional, and many of them have ordered states to raise school budgets, not merely change the way in which they are financed. Vast sums have been redistributed as a result. Lawmakers in Kentucky enacted more than a billion dollars in tax hikes. New Jersey adopted its first income tax. Kansas lawmakers levied an additional $755 million in taxes after the state’s high court in peremptory fashion ordered them to double their spending on schools.

While filed on a state-by-state basis, the suits have been very much a coordinated national project. For many years their impetus came from the Ford Foundation and its various grantees, notably the American Civil Liberties Union. Furnishing, presumably, the brains of the operation, law-school-based groups have been instrumental, particularly the Education Law Center at Rutgers Law School in New Jersey. …

The educational establishment had always resented the periodic need to go hat in hand – such a demeaning phrase! – to local electorates for tax and bond measures, as if the voters were somehow the bosses and they the servants. School finance litigation promised a more indulgent master, a jurist or panel of them who (it was hoped) would glance over the rows of costing-out numbers, nod appreciatively and feel good afterward about having done something for the children. … School finance litigation is the ultimate monument to the triumph of governance by litigation at the cost of democracy itself. 

Despite the victory in Colorado, there’s no reason to think this war of forty years’ duration (so far) is drawing to a close. 

The sudden collapse of a 58-year-old bridge across the Skagit River in Washington state has led to renewed calls to spend more money on American infrastructure. But if that spending comes out of tax dollars rather than user fees and is dedicated to replacing bridges, it will be seriously misplaced.

The usual media hysteria followed the collapse. “Thousands of bridges around the U.S. may be one freak accident or mistake away from collapse,” screamed CBS News. “If just one of [New York’s Tappan Zee Bridge’s] structural elements gives way, the whole bridge could fall and send” hundreds of cars “tumbling into the Hudson River,” warned Business Week.

About 18,000 highway bridges (less than 3 percent of the total) built in the 1950s and early 1960s have what is now considered to be a design flaw that makes them “fracture critical.” This means that at least one major element does not have redundent support, so if that element gives way, the entire bridge could collapse. The Skagit River Bridge failed when an oversized truck that should not have been on the bridge hit a cross beam that lacked redundent support. “This does not mean the bridge is inherently unsafe, only that there is a lack of redundancy in its design,” says the American Association of State Highway and Transportation Officials (AASHTO).

To listen to the hype, you would think that bridges are failing on almost a daily basis. But put this into perspective: In 2012, more than 34,000 people died in traffic accidents. Virtually none of them died due to a fracture-critical bridge failure. We can do lots of things to make highways safer and reduce that 34,000. A crash program to replace thousands of bridges isn’t one of them and is likely to divert funds away from programs that are far more important.

Many of the stories about America’s infrastructure focus on the number of “structurally deficient” bridges, which (says AASHTO) doesn’t mean the bridges are unsafe but only that they require “significant maintenance and repair to remain in service.” What the stories rarely mention is that in the last two decades the number of structurally deficient bridges has declined by 44 percent, from more than 118,000 in 1992 to fewer than 67,000 in 2012, even as the total number of highway bridges increased from 572,000 to 607,000. The number of fracture-critical bridges has declined from 22,000 in the last four years alone. In other words, the problem is going away without the help of a giant new federal program.

Highway user fees, including federal and state gas taxes and tolls, fund nearly all construction and maintenance of state highways and bridges. The Skagit River Bridge notwithstanding, these roads and bridges tend to be in better shape than those that are locally owned, which need about $30 billion a year from property, sales, or other local taxes. User fees work better than taxes because the fees give highway managers signals about where to spend the money.

Speaker of the House John Boehner wants to dedicate oil and gas royalties to highway infrastructure. But that’s the wrong source of money and it will almost certainly be spent in the wrong places as as much if not most spending will be on glitzy projects that glorify the elected officials who appropriate the money rather than where it is really needed. For example, one sector hungry for more “infrastructure spending” is the rail transit industry, which since 1982 has automatically received a large share of all new transportation dollars. Yet rail transit does virtually nothing to relieve congestion or make our highways safer. Moreover, transit suffers from its own infrastructure crisis, mainly because it is funded mostly out of tax dollars that get spent on glamorous new rail lines rather than user fees that would be spent on maintenance.

Recent highway safety data reveal a striking 20 percent decline in fatalities between 2007 and 2010. This decline was associated with a mere 2.2 percent decline in driving, suggesting that–in the absence of the recession–a 2.2 percent increase in highway capacity and other congestion relief could have produced a similar decline in fatalities. Of the 41,259 fatalities in 2007, 13 were due to a bridge failure; there have been virtually none since then.

In short, the key to sound infrastructure is funding that infrastructure out of user fees rather than tax dollars. Since that’s true, one way to improve highway safety would be to develop a new system of user fees that local governments can tap into so that local as well as state highway engineers receive sufficient funds and the appropriate signals about where to spend money.

This is a provocative question, of course, or at least it is seemingly everywhere in the world but the United States. In just the last three years, the Supreme Court has protected highly offensive funeral protests, violent video games, animal “crush” videos, and a host of other types of expression. No law punishing blasphemy or “defamation of religion”—as approved by various UN resolutions and making inroads into the legal codes of even Western countries—could possibly survive First Amendment scrutiny. But that’s not the case elsewhere in the world, as an excellent new video by Danish human rights lawyer Jacob Mchangama shows (courtesy of Free to Choose TV; see press release):

America isn’t immune from increasing demands that free speech be limited to respect religious feelings. Recall the condemnations of the anti-Islamic video that may have caused rioting in Cairo on September 11 of last year (but not in Beghazi, as details of that scandal develop). The outcome of this battle will have profound consequences for the ability of people everywhere to freely express themselves and follow their beliefs. Democratic governments play a dangerous game when appeasing religious sensitivities rather than defending free speech.

Mchangama, not coincidentally, is affiliated with the invaluable Human Rights Foundation—an organization that deals with actual human rights violations rather than simply being a vehicle for pushing a transnational leftist agenda—whose president, Thor Halvorssen (with whom I’ve been acquainted since college), calls himself a “classical liberal” rather than a man of the Right or Left.