- Higher deficits and debt mean we must confront entitlements and re-think the way government insurance creates perverse incentives that increase our dependence.
- Higher gas prices have nothing to do with Wall Street speculators.
- Higher polemics against limited government aren’t going to restore our fiscal sanity.
- Higher taxes on soda will have little, if any, effect on our waistlines.
- Please join us one week from tomorrow, on Friday, April 29 at 4:00 p.m. Eastern for a special sneak preview of Free or Equal, a documentary from Free to Choose Media. In this one-hour film, Cato Senior Fellow Johan Norberg retraces Milton Friedman’s steps from the trailblazing 1980 documentary Free to Choose to see how economic liberalization has transformed societies around the world. Norberg will introduce Free and Equal, and will answer questions following the screening. Complimentary registration is required of all attendees by noon Eastern on Thursday, April 28. Until then, please enjoy this preview:
And don’t miss Milton Friedman’s 1988 essay in the Cato Policy Report, “Using the Market for Social Development,” an excellent primer to some of the topics addressed in the two films.
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No Profile in Courage Here, Either
Yesterday, speaking at Facebook headquarters, President Obama assessed the guts of Rep. Paul Ryan (R‑Wisc.) and other congressional Republicans and concluded that their deficit reduction plan isn’t “particularly courageous.” That might be accurate — their plan lacks specificity and could target a lot more for elimination — but it’s pretty rich for the President to throw out such a conclusion. After all, his whole strategy appears to be the bankruptingly lame-but-safe crying of doom for cute kids and other supposedly defenseless people no matter what the size of the proposed cut to a social program or how ineffective the program has been. That, and the constant lamentation that “the rich” — a small and therefore electorally weak group of voters — don’t pay their fair share. (And the constitutionality of federal programs? That doesn’t even get a mention.)
Representative of this cowardly course is the President’s mantra about “investing” more in education-related programs despite blaring evidence that the programs don’t work or, as is the case with federal student aid, actually make the problem they’re supposed to solve much worse. But the President wants votes — like most politicians, he wants lots of people to think he’s giving them great stuff for free — so he’s not doing the mildly courageous thing and telling people “look, these programs don’t work, we have a titanic debt, and I’m going to cut things that might sound good but aren’t.” No, he’s doing things like going to community colleges and, in front of cheering groups of students, talking about mean Republicans and how he wants to protect students just like them by keeping the federal dollars flowing.
That’s no profile in courage, nor is it a responsible way to deal with the federal government’s gigantic problems.
Senator Corker Explains His Plan to Cap Spending and Reduce the Fiscal Burden of Government
America is in fiscal peril in the short run because of a 10-year spending binge by Bush and Obama and in the long run because of a toxic combination of entitlement programs and demographics.
Congressman Paul Ryan has introduced a budget plan to address America’s fiscal crisis, but Senator Reid and President Obama have summarily rejected his proposal, so it appears the United States will continue to drift in the wrong direction.
Something is needed to compel action. One might think that such an impetus would have been provided by the recent decision by Standard & Poor’s to downgrade the fiscal outlook for the United States. But this development hasn’t affected the spending culture in Washington.
But there is hope. Senator Corker has legislation that would force Congress to act — and automatically impose fiscal discipline if they don’t. His bill caps — and then slowly reduces — government spending as a share of national economic output (gross domestic product).
I’ve already written about the merits of this proposal, including an explanation of the all-important enforcement mechanism of sequestration (automatic spending cuts). Here’s Senator Corker’s description of his plan, as delivered at a Cato Institute conference on the Economic Impact of Government Spending.
To build on the Senator’s comments, there are two things that deserve special emphasis.
- He correctly understands that the problem is the size of government. As explained in this video, spending is the problem and deficits are a symptom of that problem.
Unfortunately, many policy makers focus on the budget deficit, which often makes them susceptible to misguided policies such as higher taxes. At best, such an approach merely substitutes one bad way of financing federal spending with another bad way of financing federal spending. And it’s much more likely that higher taxes will simply lead to more spending, thus exacerbating the real problem. - Senator Corker’s legislation has a real enforcement mechanism. If Congress fails to produce a budget that meets the annual spending cap, there is a “sequester” provision that automatically takes a slice out of almost every federal program.
Modeled after a similar provision in the successful Gramm-Rudman-Hollings law of the 1980s, this sequester puts real teeth in the CAP Act and ensures that the burden of government spending actually would be reduced.
Some people complain that Senator Corker’s plan is too timid and that it doesn’t balance the budget by 2021. While it would be desirable to impose additional fiscal restraint, the Tennessee Senator has deliberately chosen a more modest goal in order to attract support from colleagues on the other side of the aisle. And he does have Democratic co-sponsors, something that is critical given the composition of the Senate.
Since I’m just a policy wonk, I’ll leave it to the other people to argue about what’s feasible in the current political environment. My final comment, though, is that we’re on an unsustainable path that will lead to the end of American exceptionalism and turn the United States into a decrepit, European-style welfare state. So I’m not going to complain if someone has a plan that finally moves policy in the right direction, albeit not quite as fast as I prefer.
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The Takings Clause Has No Expiration Date II
As I wrote last week, a decade ago in Palazzolo v. Rhode Island, the Supreme Court rejected the idea that those who buy property subject to burdensome regulations lose the right the seller otherwise has to challenge those regulations. The Court ruled that the Takings Clause does not have an “expiration date.” Sadly, not all government authorities or courts took Palazzolo to heart, and now we have a second such case meriting Cato’s involvement in the span of a week.
In 2000, after the EPA issued a Record of Decision concerning limiting access to a “slough” (a narrow strip of navigable water) on its Superfund National Priorities List, CRV Enterprises began negotiations to buy a parcel of land next to the slough across from a site once occupied by a wood-preserving plant. CRV hoped to develop that parcel and others it already controlled into a mixed-use development, including a marina, boat slips, restaurants, lodging, storage, sales, and service facilities. The company eventually bought the land with notice of the EPA’s ROD but the EPA later installed a “sand cap” and “log boom” that obstructed CRV’s access to the slough.
CRV sued the United States in the Court of Federal Claims, which dismissed the case for lack of standing. The Federal Circuit affirmed, finding that CRV’s claim “is barred because [the company] did not own a valid property interest at the time of the alleged regulatory taking.” The Federal Circuit thus turned two Supreme Court precedents on their head and put that “expiration date” on the Takings Clause. It did so despite the fact that multiple federal courts have upheld Palazzolo’s rule and that longstanding California common law recognizes that a littoral (next to water) owner’s access to the shore adjacent to his property is a property right.
Cato, joined by Reason Foundation, the Center for Constitutional Jurisprudence, and the National Federation of Independent Business, filed an amicus brief supporting CRV’s request that the Supreme Court review the Federal Circuit’s decision and reaffirm Palazzolo. We argue the following: (1) when post-enactment purchasers are per se denied standing to challenge regulation, government power expands at the expense of private property rights; (2) a rule under which pre-enactment owners have superior rights to subsequent title-holders threatens to disrupt real estate markets; (3) the Federal Circuit abrogated the rule of Palazzolo; and (4) this case — viewed in the context of other courts’ rulings — indicates the need for the Supreme Court to settle the spreading confusion about Palazzolo. Otherwise, the existence of a “post-enactment” rule will create a “massive uncompensated taking” from small developers and investors that would preserve and enhance the rights of large corporations.
Palazzolo put to rest “once and for all the notion that title to property is altered when it changes hands.” The ability of property owners to challenge government interference with their property is essential to a proper understanding of the Fifth Amendment; the Court must reestablish the principle that transfer of title does not diminish property rights. Significantly, the Federal Circuit isn’t alone in its misapplication of Palazzolo; the Ninth Circuit in Guggenheim v. City of Goleta (in which Cato also filed a brief) recently issued an opinion severely narrowing Palazzolo’s scope and deepening a circuit split.
Thanks to legal associate Nick Mosvick and former legal associate Brandon Simmons (acting as our outside counsel in this case) for their work on this case, CRV Enterprises v. United States.
Lobbying Wolves on the Prowl
The other day I noted that the budget cuts agreed to last week contained lots of familiar faces. Many of the agencies and programs getting a trim were also cut in 1995 in a rescissions package put together by Gingrich Republicans. In the fifteen intervening years, federal spending exploded across the board, which means that an occasional trim job doesn’t accomplish much if the goal is to limit government.
The reason why is that if the scope of government activities isn’t curtailed, the cuts will be short-lived. As long as the agencies and their programs remain, special interests won’t stop agitating Congress to continue, or more likely, increase, funding.
A recent article in The Hill reports that lobbyists are already hard at work:
Groups that advocate for everything from more foreign aid to bolstering the nation’s transportation system saw several of their favorite government programs suffer deep spending cuts in the fiscal year 2011 budget deal.
With millions of dollars now axed from what they consider key federal initiatives, groups are planning to redouble their efforts and lobby to restore as much funding as possible in next year’s budget.
(Note to reporter: A lot of adjectives could be used to describe the spending cuts. “Deep” is not one of them.)
A fellow who lobbies for foreign aid argues that cutting it won’t balance the budget and that “We need to be planting the seeds for future economic prosperity around the world.” It’s true that even eliminating foreign aid wouldn’t balance the budget, but every little bit helps. But what’s striking is his arrogant pronouncement that “we” (taxpayers) need to be forced by the federal government to send our money abroad for the causes he fancies.
A lobbyist with the National League of Cities is relieved that the GOP didn’t get the small cut in local handouts that were originally proposed, but is nonetheless concerned about the “anti-spending climate in Washington”:
‘We’re talking about staff layoffs at the city level. Cities are also going to have completely reorganize their budgets mid-year and prioritize some things out.’
‘In this environment, the numbers from fiscal year 2011 might be the new baseline but our message isn’t going to change,’ Wallace said. ‘We’re focusing on those local programs that create jobs and spur economic growth.’
Cities prioritizing spending? Heaven forbid. Suck more money out of the private sector in order to save bureaucratic deadweight in local government? That doesn’t sound like a recipe for economic growth to me. (See here for more on the problems with federal subsidies to state and local governments.)
Then there are the transportation lobbyists. These folks would probably argue that a giant escalator to nowhere would be a wise use of taxpayer money:
Dean’s group is lamenting spending cuts made to the high-speed rail program, transit security grants as well as funding for “fixed guideway” projects, which include commuter trains, cable cars and ferryboats among other public transit systems.
For the fans of The Simpsons who didn’t catch the escalator reference, see this link for my feelings on government-funded rail projects. (Fans and non-fans should check out these essays on urban transit subsidies and high-speed rail.)
In Washington, it’s the squeaky wheel that gets greased. Lobbyists for government programs exist to make sure that Congress hears their wheel squeaking. Yes, the deck is stacked against those who are forced to foot the bill, but if taxpayers want federal agencies and their programs to get more than a trimming every fifteen years or so, now is the time to make a lot more noise.
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Your Tax Dollars at Work (2)
Public television stations in Washington and elsewhere will be broadcasting live the wedding of Prince William and Catherine Middleton for several hours on Friday, April 29. And if you need more background on the happy couple, they will also broadcast a documentary, “William and Kate: The Royal Wedding,” in the weeks leading up to the big day.
Now some churlish republicans might say that our ancestors fought and died just so we didn’t have to pay attention to the comings and goings of royalty. But I say it’s just this sort of live, breaking-news, current affairs coverage for which we need public broadcasting. Without PBS, where could Americans watch the handsome young prince take the beautiful commoner to be his wife? I mean, other than ABC, NBC, CBS, CNN, Fox, MSNBC, TLC, BBC America, and YouTube?
As they used to say, If PBS doesn’t do it, who will?
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AEP v. Connecticut: Global Warming as Political Question
Yesterday the U.S. Supreme Court heard oral arguments in American Electric Power v. Connecticut, the massive greenhouse-gas suit. Like the other “big” global warming/climate change suits, this one suffers from a basic and incurable defect: it seeks to undermine the separation of powers established under the U.S. Constitution by inviting the courts to address “political questions” of a sort properly resolved by other branches of government. As Cato’s amicus brief by Ilya Shapiro and Evan Turgeon explained in the case of Comer v. Murphy Oil:
“[W]hile it executes firmly all the judicial powers intrusted to it, the court will carefully abstain from exercising any power that is not strictly judicial in its character, and which is not clearly confided to it by the Constitution.” Muskrat v. United States, 219 U.S. 346, 355 (1911). A dispute is not “judicial in its character” when, among other reasons, the plaintiff does not have “standing” or the claim raises a “political question.” … And the political question doctrine, for which “the appropriateness under our system of government of attributing finality to the action of the political departments and also the lack of satisfactory criteria for a judicial determination are dominant considerations,” Coleman v. Miller, 307 U.S. 433, 454–55 (1939), isolates the judiciary from policy disputes the Constitution assigns to the democratic process.
By its nature, global warming is exactly the sort of policy question traditionally entrusted to the political branches: it is wholly unsuited to individualized justice based on links between particularized emissions and particularized effects, its proposed remedies are much disputed and likely to be the result of inevitably arbitrary compromise, sovereign negotiations with foreign actors play a crucial role, and so forth. As the courts have long recognized, one does not generate a case for judicial action simply by piling atop each other the propositions “something needs to be done” and “the political branches have not done it.” Indeed, the Obama administration itself has more or less invited the Supreme Court to dismiss the action on political-question grounds.
The Cato Institute filed an amicus brief urging the Supreme Court to review the American Electric Power case and then filed another amicus brief on the merits. Anyone interested in how the complexities of the Court’s “political question” doctrine apply in this case should read — in addition to Ilya Shapiro’s blog posts here and here — this new article in the Federalist Society’s publication Engage by Megan L. Brown of Wiley Rein LLP, who has served as Counsel of Record to the Cato Institute in its amicus briefs in this area. Brown provides a thorough explanation of why all three of the major warming suits fail the justiciability test, why Justices Kennedy and Breyer may be worth watching as “swing” votes in AEP, and how the new case affords the court a chance to revisit its problematic pro-regulatory holding in Massachusetts v. EPA (2007). (More from Brown in this Christian Science Monitor op-ed.)
Also worth reading on this subject: Harvard professor Laurence Tribe, by no means known as a general skeptic of environmental regulation, who has assisted the defense side in this litigation and explains some of the reasons in a new Boston Globe op-ed.