The Heritage Foundation has a chart up on its blog, showing defense spending as a percentage of gross domestic product and declaring that “Obama plan cuts defense spending to pre‑9/​11 levels.”

This is a standard rhetorical device for defense hawks (see the Wall Street Journal editorial page, Mitt Romney and lots of others) so it’s worth pointing out that it’s misleading. The unfortunate truth is that Obama is increasing non-war defense spending this year and seems likely to increase it at least by inflation in the near future.

It’s true that defense spending will probably decline as a percentage of GDP, assuming the economy recovers. But that’s because GDP grows. Ours is more than six times bigger than it was in 1950. Meanwhile, we spend more on defense in real, inflation adjusted terms, than we did then, at the height of the Cold War. The denoninator has grown faster than the numerator. 

By saying that defense spending needs to grow with GDP to be “level,” you are arguing for an annual increase in defense spending without saying so directly. That’s the point, of course.

To be straight with readers, charts that show defense spending as a percentage of GDP should either show GDP growth over time or include a line that shows defense spending in real terms. Otherwise they fail to demonstrate that the decline in defense spending as a percentage of GDP is a consequence of growing GDP, not lower spending.

Here’s a chart from the Congressional Budget Office’s report, “The Long Term Implications of the Current Defense Plans,” that does this.

The assumption in analysis like Heritage’s is that defense spending should be a function of economic growth, not enemies and strategies for defending against them. It’s easy to point out that this is strategically and fiscally foolish. And it’s worth noting, as I have on many occasions, that we face a benign threat environment and can cut defense spending massively as a result.

But there is something weirder going on here that warrants mention. Arguing that wealth creation should drive defense spending is to attempt to divorce the military from its strategic rationale. That’s an implicit acknowledgement that defense spending is not for safety. High military spending in this worldview is either an end in itself or a partisan or cultural tool. That’s not much of a revelation, I guess.

Pat Michaels and I have written an op-ed on the climate change bill due for a vote tomorrow in Congress, and our opinions on its provisions are summarized pretty well there. In short, the bill appears to offer very little in the way of reduced global warming in return for harm to the domestic economy and to international relations.

Yesterday’s New York Times energy and environment section (online) contains an article picking up on the increasingly harmful trade-related parts of the bill. Apparently the House Ways and Means Committee is trying to assert language that would make imposing carbon tariffs more likely than did the original Energy and Commerce Committee bill, bad enough that it was.

So what say you, Rep. Charles Rangel (D‑NY), chairman of the House Ways and Means Committee and a powerful voice on trade?

[Rangel] downplayed the significance of his proposals. “I don’t think there will be many changes there,” he said. “There are just provisions in there that deal with trade and the poor. It’s not changes, it’s just vacuum.”

Assuming the quote was not taken out of context, for the leading House voice on trade to be so dismissive of important (if somewhat under-the-radar) provisions is irresponsible to say the least.

Senate Finance Committee chairman Max Baucus (D‑MT) has announced that he has reached agreement on scoring a series of options that will reduce the cost of his health care reform bill to just $1 trillion over the next 10 years. Whew. Now we can all rest easy.

Still, no agreement on the tax increases needed to pay that $1 trillion though.

President Obama is meeting today with a bipartisan group of lawmakers to talk about reforming our broken immigration system. The challenge for both parties will be whether they can overcome opposition within their respective bases to expanding legal immigration.

For Republicans, the chief opposition remains the faction of talk-radio-driven conservatives who just don’t like immigration, period, especially when it comes from Latin America. For Democrats, who now run Washington, the chief opposition to allowing more foreign workers to enter the country legally is represented by organized labor.

As the Wall Street Journal reports this morning, advocates of immigration reform “worry that Democrats will defer to the AFL-CIO on the issue of legal immigration. The labor confederation has opposed a robust guest-worker program or higher levels of legal immigration, fearing they would depress wages. A larger labor presence would splinter the coalition of business and pro-immigration groups that embraced past immigration efforts, only to see them falter in the Senate.”

As I’ve argued consistently in the past, immigration reform is not worth pursuing if it does not include expanding future flows of legal immigrants, both highly skilled and lower-skilled workers. If Congress confines itself to legalizing the 8 million or so workers already here illegally, with a vow to get tougher on enforcement, then we are just repeating the mistake of the 1986 Immigration Reform and Control Act.

We will know if President Obama and Democratic leaders in Congress are serious about fixing the problem of illegal immigration if they face down their labor-union allies and embrace a workable, market-oriented expansion of legal immigration. Otherwise, we are in for more futility, frustration and failure.

Security guru Bruce Schneier comes down on the strictly pragmatic side in this essay called “Fixing Airport Security.” Because of terrorism fears, he says, TSA checkpoints are “here to stay.” The rules should be made more transparent. He also argues for an amendment to some constitutional doctrines:

The Constitution provides us, both Americans and visitors to America, with strong protections against invasive police searches. Two exceptions come into play at airport security checkpoints. The first is “implied consent,” which means that you cannot refuse to be searched; your consent is implied when you purchased your ticket. And the second is “plain view,” which means that if the TSA officer happens to see something unrelated to airport security while screening you, he is allowed to act on that. Both of these principles are well established and make sense, but it’s their combination that turns airport security checkpoints into police-state-like checkpoints.

The comments turn up an important recent Fourth Amendment decision circumscribing TSA searches. In a case called United States v. Fofana, the district court for the southern district of Ohio held that a search of passenger bags going beyond what was necessary to detect articles dangerous to air transportation violated the Fourth Amendment. “[T]he need for heightened security does not render every conceivable checkpoint search procedure constitutionally reasonable,” wrote the court.

Application of this rule throughout the country would not end the “police-state-like checkpoint,” but at least rummaging of our things for non-air-travel-security would be restrained.

I prefer principle over pragmatism and would get rid of TSA.

Cato health care experts Michael D. Tanner and Michael F. Cannon provided live commentary Wednesday night for ABC’s “Prescription for America,” a special program from within the White House on Obama’s health care reform proposal.

You can watch the program, and follow along below.

For more, visit Health​care​.Cato​.org.

As my colleague Michael Cannon discusses below, in today’s WSJ Online, Carl Bialik examines the data on how many Americans do not have health insurance. Discussions like this one will be rehashed repeatedly during the coming health care debate, but they miss the crucial point: the U.S. should not expand government subsidy for health insurance whether the number of insured is 46 million or just 46.

The economics argument for subsidizing health insurance rests on the claim that private insurance markets do not provide fairly priced insurance. This is allegedly because insurers cannot distinguish the good health risks from the bad health risks and thus price insurance at a level only the bad risks are willing to pay.

This claim of “asymmetric information” is incredibly unpersuasive: absent regulation to the contrary, an insurance company can require any medical tests it wants and learn an insurance applicant’s health at least as well as the applicant. It can also condition coverage on relevant behavior, such as not smoking or maintaining a reasonable weight.

The problem is thus that insurance companies can determine all too well who is a good health risk and who is not, so they will price insurance accordingly if the law permits. This strikes many people as unfair, so they want to subsidize insurance for those born with unhealthy genes.

If insurance subsidies had few unintended consequences, this might be a reasonable form of social insurance. The problem is that subsidizing insurance exacerbates moral hazard, the tendency of people with insurance to consume too much health care. This is a crucial reason for rapidly increasing health expenditures.

Policy must therefore accept a trade-off: subsidizing health insurance will increase some people’s perceptions of fairness, but it will make the health care market less efficient.

A reasonable balancing of these two concerns suggests subsidizing insurance for the truly poor, but no more. In fact, the U.S. already does that via Medicaid. The uninsured are mainly people with too much income to qualify for Medicaid, or people eligible but fail to apply. Thus expansion of subsidized insurance to the currently uninsured, whatever their number, is likely to generate substantial inefficiency relative to any increase in “fairness” it creates.