A friend comments on my “How Does It Feel to Be at the Table Now?” post thus:
I think there is a pyschological element at work here a la Atlas Shrugged — many of the Washington lobbyists who were here in 93–94 feel repentant of having killed health reform back then and don’t want another 15 years of being considered “bad people” in Washington cocktail party circles. So they genuinely want to be “part of the solution” this time. The hard part is selling that to the folks who pay their salaries!
Bloomberg reports:
General Motors Corp., facing a probable bankruptcy filing by June 1, is telling 1,100 “underperforming” U.S. dealers they will be terminated as the automaker starts shrinking its retail network.
Most of the closings will occur by October 2010, and none are happening now, Detroit-based GM said today. The targeted outlets will have until the end of the month to appeal the decisions, GM said, without specifying the stores on the list.
The shutdowns are the biggest U.S. automaker’s first step toward paring domestic dealers to a range of 3,600 to 4,000 from 5,969 by the end of 2010.
To be sure, it is a very sad day for thousands of workers and businesses around the country. But we’re in the midst of a deep recession, which may be nowhere deeper than in the auto sector. Demand for cars and light trucks has absolutely tanked, which means the economy has an excess supply of inventory, productive capacity, and retail capacity.
Dealerships are closing, as they should be. Chrysler’s in bankruptcy, as it should be. GM is headed for bankruptcy, as it should be.
But this all should have happened long ago…
…long before President George W. Bush had the chance to circumvent the wishes of Congress to give Chrysler and GM more than $19 billion (not including GMAC) from the TARP allotment,
…long before President Obama had the chance to promise billions more and assume a large operational role for the U.S. government in Chrysler’s and GM’s future operations,
…long before President Obama had the chance to create a huge moral hazard by strong-arming Chrysler’s preferred lenders into taking pennies on their loan dollars, while giving preference to claimants of lesser priority,
…long before Ford, Toyota, Honda, BMW, Kia, and the rest of America’s automobile industry were implicitly taxed by the government’s insistence on preventing two firms from exiting the market or substantially reducing their presence in accordance with established bankruptcy provisions.
And most certainly, long before other businesses in other industries started to get the idea that failure is the new success.
In the last week there’ve been deeply worrying developments in Guatemala. Rodrigo Rosenberg, a highly respected Guatemalan lawyer, was killed Sunday outside of his house by unknown gunmen. On Monday, a posthumous video recorded by Rosenberg was released where he blames the country’s president, Alvaro Colom, for his assassination. Constantino Díaz-Durán, former editor of elcato.org, tells the story in a piece appearing in the Daily Beast.
Since Monday, thousands of Guatemalans have flocked to the streets demanding Colom’s resignation, but they have been met by an equal number of government supporters who are resorting to violence and intimidation against the protesters. This is the modus operandi of the hard-left in countries such as Venezuela, Bolivia, Argentina, and Ecuador. But nobody would’ve expected a center-left government led by a mild-manner president like Colom to employ such tactics.
However, there are more worrisome signs that the government is planning to crack down on dissenters. Yesterday a man was arrested after encouraging people through Twitter to withdraw their savings from Banrural, the bank involved in the corruption charges that Rosenberg made against the Colom administration. He’s been charged with “inciting financial panic.” Hours later, another man was arrested for distributing copies of Rosenberg’s video in the streets. The government claims he was “inciting the public.”
Whatever happens in the following weeks will determine the future of Guatemala’s institutional democracy. The United States should be paying closer attention to the situation, considering Guatemala’s position as Central America’s most populous democracy.
White House Official Says Government Will Stop Using Term ‘War on Drugs’
The Wall Street Journal reports that White House Drug Czar Gil Kerlikowske is calling for a new strategy on federal drug policy and is putting a stop to the term “War on Drugs.”
The Obama administration’s new drug czar says he wants to banish the idea that the U.S. is fighting ‘a war on drugs,’ a move that would underscore a shift favoring treatment over incarceration in trying to reduce illicit drug use…. The Obama administration is likely to deal with drugs as a matter of public health rather than criminal justice alone, with treatment’s role growing relative to incarceration, Mr. Kerlikowske said.
Will Kerlikowske’s words actually translate to an actual shift in policy? Cato scholar Ted Galen Carpenter calls it a step in the right direction, but remains skeptical about a true change in direction. “A change in terminology won’t mean much if the authorities still routinely throw people in jail for violating drug laws,” he says.
Cato scholar Tim Lynch channels Nike and says when it comes to ending the drug war, “Let’s just do it.” In a Cato Daily Podcast, Lynch explained why the war on drugs should end:
Cato scholars have long argued that our current drug policies have failed, and that Congress should deal with drug prohibition the way it dealt with alcohol prohibition. With the door seemingly open for change, Cato research shows the best way to proceed.
In a recent Cato study, Glenn Greenwald examined Portugal’s successful implementation of a drug decriminalization program, in which drug users are offered treatment instead of jail time. Drug use has actually dropped since the program began in 2001.
In the 2009 Cato Handbook for Policymakers, David Boaz and Tim Lynch outline a clear plan for ending the drug war once and for all in the United States.
Help Wanted: Supreme Court Justice
Justice David Souter announced his retirement from the Supreme Court at the end of last month, sparking national speculation about his replacement.
Calling Souter’s retirement “the end of an error,” Cato senior fellow Ilya Shapiro makes some early predictions as to whom President Obama will choose to fill the seat in October. Naturally, there will be a pushback regardless of who he picks. Shapiro and Cato scholar Roger Pilon weigh in on how the opposition should react to his appointment.
Shapiro: “Instead of shrilly opposing whomever Obama nominates on partisan grounds, now is the time to show the American people the stark differences between the two parties on one of the few issues on which the stated Republican view continues to command strong and steady support nationwide. If the party is serious about constitutionalism and the rule of law, it should use this opportunity for education, not grandstanding.”
Obama Pushing for Credit Card Regulation
President Obama has called for tighter regulation of credit card companies, a move that “would prohibit so-called double-cycle billing and retroactive rate hikes and would prevent companies from giving credit cards to anyone under 18,” according to CBSNews.com.
But Cato analyst Mark Calabria argues that this is no time to be reducing access to credit:
We are in the midst of a recession, which will not turn around until consumer spending turns around — so why reduce the availability of consumer credit now?
Congress should keep in mind that credit cards have been a significant source of consumer liquidity during this downturn. While few of us want to have to cover our basic living expenses on our credit card, that option is certainly better than going without those basic needs. The wide availability of credit cards has helped to significantly maintain some level of consumer purchasing, even while confidence and other indicators have nosedived.
In a Cato Daily Podcast, Calabria explains how credit card companies have been a major source of liquidity for a population that is strapped for cash to pay for everyday goods.
On Monday, the Obama administration held a well-publicized love-fest with lobbyists for the health care industry. It turns out that rather than a “game-changer,” the event was a fraud. And the industry got burned.
At the time, President Obama called it a “a watershed event in the long and elusive quest for health care reform”:
Over the next 10 years — from 2010 to 2019 — [these industry lobbyists] are pledging to cut the rate of growth of national health care spending by 1.5 percentage points each year — an amount that’s equal to over $2 trillion.
By an amazing coincidence, $2 trillion is just enough to pay for Obama’s proposed government takeover of the health care sector.
Yet The New York Times reports that isn’t the magnitude of spending reductions the lobbyists thought they were supporting:
Hospitals and insurance companies said Thursday that President Obama had substantially overstated their promise earlier this week to reduce the growth of health spending… [C]onfusion swirled in Washington as the companies’ trade associations raced to tamp down angst among members around the country.
Health care leaders who attended the meeting…say they agreed to slow health spending in a more gradual way and did not pledge specific year-by-year cuts…
My initial reaction to Monday’s fairly transparent media stunt was: “I smell a rat. Lobbyists never advocate less revenue for their members. Ever.” The lobbyists are proving me right, albeit slowly. (Take your time, guys. I don’t mind.)
The Obama administration seems a little less clear on that rule. Again, The New York Times:
Nancy-Ann DeParle, director of the White House Office of Health Reform, said “the president misspoke” on Monday and again on Wednesday when he described the industry’s commitment in similar terms. After providing that account, Ms. DeParle called back about an hour later on Thursday and said: “I don’t think the president misspoke. His remarks correctly and accurately described the industry’s commitment.”
How did the industry find itself in this position? Politico reports:
The group of six organizations with a major stake in health care…had been working in secret for several weeks on a savings plan.
But they learned late last week that the White House wanted to go public with the coalition. One health care insider said: “It came together more quickly than it should have.” A health-care lobbyist said the participants weren’t prepared to go live with the news over the weekend, when the news of a deal, including the $2 trillion savings claim, was announced by White House officials to reporters.
Gosh, it’s almost like the White House strong-armed the lobbyists in order to create a false sense of agreement and momentum. Pay no attention to that discord behind the curtain!
At the time, I also hypothesized that this “agreement” was a clever ploy by all parties to pressure a recalcitrant Congressional Budget Office to assume that the Democrat’s reforms would produce budgetary savings. “Otherwise, health care reform is in jeopardy,” says Senate Finance Committee chairman Max Baucus (D‑MT). Turns out there was no agreement, and the industry was just being used.
American Hospital Association president Richard Umbdenstock was more right than he knew when he told that group’s 230 members:
There has been a tremendous amount of confusion and frankly a lot of political spin.
Merriam-Webster lists “to engage in spin control (as in politics)” as its seventh definition of the word “spin.” Its second definition is “to form a thread by extruding a viscous rapidly hardening fluid — used especially of a spider or insect.” Which reminds me…
CORRECTION: My initial reaction to Monday’s media stunt — “I smell a rat” — was transcribed incorrectly. It should have read, “I smell arachnid.”
(HT: Joe Guarino for the pointers.)
Ask anyone who has experienced life in a country where freedom of movement is not recognized, and you’ll come away impressed with the importance of having the right to travel. That right takes another step back in the United States today.
Today the federal government takes over from airlines the process of running passengers against its terrorist watch lists. This means that when you fly, the Transportation Security Administration now requires airlines to give the government your full name, your itinerary, your date of birth, your gender, and an optional “redress number.”
Running names against watch lists does not secure against even modestly sophisticated attackers — 17 of 19 9/11 hijackers were “clean skin” terrorists, without histories of activity that would get them on watch lists. And in 2002, an MIT study (the “Carnival Booth”) showed how passenger profiling failed as a security measure. Attackers could “step right up” and test the system on dry runs to see if it singles them out. The same applies to watch listing.
Transferring responsibility for checking watch lists is a small step, but it brings into sharp focus that the government is now pre-screening Americans’ travel and travel plans.
There is no telling which direction this mission will creep over time. In the event of an attack on some other mode of travel — even a small or failed attack — expect the government to extend pre-approval for travel in that direction. The government will soon discover that it can run names of travelers past other lists — first dangerous wanted criminals, then wanted criminals, then “deadbeat dads,” and on down the line to people with unpaid parking tickets.
With government officials pushing fear of disease to the level of mania, watch for medical records to be used in government pre-screening of travelers.
The current policy is to retain information about travelers for no more than seven days after each leg of a trip has been completed. If a person is a suspected match, TSA will retain the information concerning that potential match for seven years. If the potential match is confirmed, TSA will retain the confirmed match for 99 years.
Seven years is already a lot for people who just happen to have a name similar to a name on the burgeoning terror watch list. But the policy is likely to change too, and deep dossiers of Americans’ travel will grow.
Remember, again, that watch listing is security theater. It looks like it protects air travel, but it doesn’t. When you are prescreened for travel by the government — as this program saps your freedom to travel — you are giving up something for nothing.
A tax credit bill was recently proposed in South Carolina to give parents an easier choice between public and private schools. It would do this by cutting taxes on parents who pay for their own children’s education, and by cutting taxes on anyone who donates to a non-profit Scholarship Granting Organization (SGO). The SGOs would subsidize tuition for low income families (who owe little in taxes and so couldn’t benefit substantially from the direct tax credit). Charleston minister Rev. Joseph Darby opposes such programs, and I support them. We’ve decided to have this dialogue to explain why. The previous installments are here and here. The final installment is here.
Rev. Joe Darby
We agree on something, Andrew — you don’t lock kids in a burning building while you try to put out the fire. Dangerous buildings can, however, be expeditiously made excellent and secure while occupied and before they catch fire, as was the case with the first church I pastored — all it took was will and commitment. The chronic inequities in public education can be expeditiously addressed with will and commitment. The most shameful thing about my state’s five year fight for scholarships and tax credits is that our legislators have spent time, energy and resources debating privatization, but haven’t taken a single step toward improving public education. They’ve simply chosen to argue over the merits of a new house while the old, still occupied house deteriorates.
I commend your zeal in gathering and noting studies, but like Biblical Scriptures, scholarly studies can be carefully chosen, subjectively interpreted and tactically presented to gain one’s desired result. At the end of the day, studies on the success of privatization and its impact on public schools are a “wash” — each of us can find support for our positions.
I remain convinced that privatization in South Carolina would not benefit low income families. Struggling parents who could claim tax credits would still have to pay tuition “up front,” and those tax credits would not cover the tuition for most quality private schools in South Carolina. Scholarships might help, but they aren’t guaranteed. I recently learned, however, of another troubling alternative beyond the proposed law from a parent in a state where privatization is a reality. She wrote me a letter telling how she received mailings touting private schools, noting that only bad parents leave their children in public schools, and offering to put her in touch with helpful tuition lenders. She took the bait, and is now in greater debt because of predatory lenders who preyed on a mother who simply wanted the best for her child.
You also said, based on expenditures in Charleston, that we’re already adequately funding our public schools — although Charleston is now facing a $10 million shortfall for the coming school year. Look beyond Charleston, Andrew, for South Carolina’s public schools are funded with a mix of state and local revenue. We have excellent schools along our state’s urban, businesses rich, predominately white and politically conservative I‑85 corridor. The I‑95 corridor, however, is rural, has a limited tax base, is predominately African-American, is politically progressive to liberal, and is bordered by some of the most underfunded and needy schools in our nation.
The I‑95 corridor, however, was the site of a recent blessing. A mid-western businessman was so touched by the story of the J.V. Martin School in Dillon, SC, that he donated new desks and equipment to the school and paid for their installation and for campus painting. His voluntary and genuine generosity is a reminder that businesses with conscience and good motives don’t have to wait for statutory privatization to make a difference — they can make a difference in the public schools right now.
You also noted that resourceful parents have found ways to augment government funds for their children in private schools for things like providing transportation and buying uniforms. I’m not surprised by that, because good parents will go to great lengths for their children’s well being. They’ve been doing so for years — without public funds going to private schools. I can testify to that, because my wife and I did so when our sons were young and we were struggling parents, but I’ll save that story for my last installment in our dialogue.
***
The Rev. Darby is senior pastor of the AME Morris Brown Church in Charleston, and First Vice President of the Charleston Branch of the NAACP.
Andrew Coulson
You’ve cited two historical examples to suggest that school choice might hurt kids who remain in public schools. But as I noted last time, the evidence from actual choice programs shows that doesn’t happen.
Still, let’s take a closer look at the historical record. Public schools discriminated against and segregated black children for more than a century. Worse yet, an 1850 Massachusetts supreme court ruling upholding segregation in public schools was a key precedent cited by the U.S. Supreme Court to establish the “separate but equal” doctrine in Plessy v. Ferguson (1896). Jim Crow laws rested, in part, on a legacy of racist public schools.
It was common in the 19th century for public schools to require reading of the Protestant King James version of the Bible, and Catholic children who refused were sometimes whipped or beaten for the offense. Such punishments were upheld by the Maine supreme court.
And while it is true that some racist whites tried to use private schools to flee integration, their more common tactic was to move to areas where the public schools remained overwhelmingly white. As I wrote in Market Education, “during the height of white flight… total private school enrollment actually decreased by 17 percent (public enrollment also decreased, but only by 3 percent).”
Public schools today may be somewhat more racially integrated than private schools in the earliest grades, but private schools are more integrated at the end of high school — no doubt in part because public school dropout rates for black students are astronomical. Private schools have repeatedly been shown to significantly raise graduation rates over those found in public schools, even after controlling for other factors, especially for minority children. And when it comes to truly meaningful, voluntary integration — the peers kids choose to sit with in school lunchrooms — private schools are significantly more integrated than public schools.
A few years ago, a friend of mine was seeking support for school choice among community leaders in the rural south. At one home, the man asked my friend: “So, black kids would be able to attend private schools like the one my kids go to?” My friend answered yes. “And they’d be prepared for the same kinds of jobs as my kids?” Again, my friend said yes. “Well now, I don’t think I can support that,” was the man’s reply.
That was an uncommon reaction, but it offers a glimpse into the mind of the modern racist. They see the upward mobility offered by school choice as a threat.
And there’s no need to make dubious analogies to the banking industry to understand how markets work in education. We can simply look at real education markets in action. Consider the new book The Beautiful Tree: A Personal Journey into How the World’s Poorest People are Educating Themselves. From the shanty towns and fishing villages of Africa, to the slums of India, to the rural farming villages of China, the poor are already abandoning public schools that have failed them and setting up their own private schools. These entrepreneurial schools outperform the local public schools at a tiny fraction of the cost, and the parents love them.
The higher labor costs in this country put private schooling out of reach of many poor families, but an education tax credit bill would change that.
You asked why we can’t fix the public schools before offering parents such a choice. The answer is simple: the way you “fix” a monopoly like public schooling is to inject consumer choice and competition. In other words, school choice IS the solution. We can’t fix public education without it.
***
Andrew Coulson is director of the Cato Institute’s Center for Educational Freedom, and author of Market Education: The Unknown History.