Today POLITICO Arena asks:

Is Marc Thiessen right that more GOP than Dem SCOTUS picks go awry?

My response:

Thiessen is absolutely right — more GOP than Dem SCOTUS picks go awry — but you have to be careful about what “going awry” means. Judging isn’t, or shouldn’t be, a “political” matter. Yet since the New Deal “constitutional revolution” that followed FDR’s infamous 1937 Court-packing threat, that’s what it’s too often been.

Democrats have understood and championed that. Indeed, they make no bones about reading the Constitution, which was written largely to limit government, as authorizing Congress to do almost anything. By contrast, Republicans have been uneven at best in reading the Constitution. Their initial reaction to the New Deal juggernaut arose only in the mid-1950s. Reacting to the Warren Court’s “rights revolution,” they called simply for “judicial deference” to the political branches, the very branches that were giving us ever more government. In the late ’70s, however, a more sophisticated “classical liberal” school began to emerge in Republican circles, calling for “judicial engagement” to better check out-of-control government, but it took some time before that view became a serious force. Yet it was clearly the force at the core of the opposition to ObamaCare.

The upshot for today’s question, however, is that this ambivalence — and, let’s be honest, obliviousness — among many Republicans about basic constitutional theory and history has led to a fractured and often uninformed judicial nomination process. Do we need any better example than George W. Bush’s selection of Harriet Miers, or his father’s selection of David Souter? To be sure, the dominant political and legal culture plays a part in explaining the differences between Republican and Democratic nominees. On balance, however, Democrats have had a better grasp than Republicans of their agenda and the methods needed to achieve it. But if the blowback Chief Justice Roberts is now receiving is any indication, that may be changing, and that would be good.

With all the fiscal troubles in Greece, Spain, Ireland, Portugal, and Italy, there’s not much attention being paid to Cyprus.

But the Mediterranean island nation is a good case study illustrating the economic dangers of big government.

For all intents and purposes, Cyprus is now bankrupt, and the only question that remains to be answered is whether it will get handouts from the IMF-ECB-EC troika, handouts from Russia, or both. Here’s some of what has been reported by AP.

Cyprus’ president on Thursday defended his government’s decision to seek financial aid from the island nation’s eurozone partners while at the same time asking for a loan from Russia, insisting that the two are perfectly compatible. …Cyprus, with a population of 862,000 people, last week became the fifth country that uses the euro currency to seek a European bailout… The country is currently in talks with the so-called ‘troika’ — the body made up of officials from the European Commission, the European Central Bank and the International Monetary Fund — on how much bailout money it will need and the conditions that will come attached. Locked out of international markets because of its junk credit rating status, Cyprus is paying its bills thanks to a €2.5 billion ($3.14 billion) Russian loan that it clinched last year. But that money is expected to run out by the end of the year.

So what caused this mess? Is Cyprus merely the helpless and innocent victim of economic turmoil in nearby Greece?

That’s certainly the spin from Cypriot politicians, but the budget data shows that Cyprus is in trouble because of excessive spending. This chart, based on data from the International Monetary Fund, shows that the burden of government spending has jumped by an average of 8.3 percent annually since the mid-1990s.

My Golden Rule of fiscal policy is that government spending should grow slower than economic output. Nations that follow that rule generally enjoy good results, while nations that violate that rule inevitably get in trouble.

Interestingly, if Cypriot politicians had engaged in a very modest amount of spending restraint and limited annual budgetary increases to 3 percent, there would be a giant budget surplus today and the burden of government spending would be down to 21.4 percent of GDP, very close to the levels in the hyper-prosperous jurisdictions of Hong Kong and Singapore.

Actually, that’s not true. If the burden of government spending had grown as 3 percent instead of 8.3 percent, economic growth would have been much stronger, so GDP would have been much larger and the public sector would be an ever smaller share of economic output.

Speaking of GDP, the burden of government spending in Cyprus, measured as a share of GDP, has climbed dramatically since 1995.

A simple way to look at this data is that Cyprus used to have a Swiss-sized government and now it has a Greek-sized government. Government spending is just one of many policies that impact economic performance, but is anyone surprised that this huge increase in the size of the public sector has had a big negative impact on Cyprus?

Interestingly, if government spending had remained at 33.9 percent of GDP in Cyprus, the nation would have a big budget surplus today. Would that have required huge and savage budget cuts? Perhaps in the fantasy world of Paul Krugman, but politicians could have achieved that modest goal if they had simply limited annual spending increases to 6 percent.

But that was too “draconian” for Cypriot politicians, so they increased spending by an average of more than 8 percent each year.

What’s the moral of the story? Simply stated, the fiscal policy variable that matters most is the growth of government. Cyprus got in trouble because the burden of government grew faster than the productive sector of the economy.

That’s the disease, and deficits and debt are the symptoms of that underlying problem.

Europe’s political elite doubtlessly will push for higher taxes, but that approach — at best — simply masks the symptoms in the short run and usually exacerbates the disease in the long run.

USTR has just announced that it will be bringing a WTO complaint against Chinese anti-dumping duties imposed on U.S.-made automobiles. According to USTR, these duties “appear to represent yet another abuse of trade remedies by China.”

One of the most important aspects of WTO rules is the disciplines they provide on anti-dumping duties, so as to prevent abuse. To the extent that WTO litigation can limit these abuses, it can be very useful. Of course, what would be even more useful is if everyone stopped imposing anti-dumping duties!

Right before leaving town for the summer, the Supreme Court ruled 8–1 that “Rethink Maybe” was the pop hit of the summer, overtaking last year’s remake of “Every Breath You Take”:

Rethink Maybe

I filed a brief with the Court,
Don’t worry, it’s rather short
Constitution and not tort,
But now you’re in my way

I’d trade my soul for a wish,
Limited powers it is
Nobody expected this,
But now you’re in my way

Blue-eyed stare was holdin’,
Black-robed, balls-strikes callin’
Then you started cavin’
Where you think you’re goin’, CJ?

Hey, John Roberts,
This is crazy,
Mandates aren’t taxes,
So rethink, maybe?

It’s hard to look right,
At you CJ,
Your op makes no sense,
So rethink, maybe?

I just read you,
The ruling’s crazy,
Read Article I,
And rethink, maybe?

The other justices,
Ruled on the law,
But you played politics,
So rethink, maybe?

You thought Congress was remiss,
But changed your mind after this
You gave me the Commerce Clause,
But still, you’re in my way

I beg, and argue and plead
Had foresight, reason indeed
I didn’t know how I’d feel,
But now it’s in my way

Blue-eyed stare was holdin’,
Black-robed, balls-strikes callin’
Then you started cavin’
Where you think you’re goin’, CJ?

It’s hard to look right,
At you CJ,
Your op makes no sense,
So rethink, maybe?

Hey, John Roberts,
This is crazy,
Mandates aren’t taxes,
So rethink, maybe?

It’s hard to look right,
At you CJ,
Your op makes no sense,
So rethink, maybe?

All other justices,
Ruled on the law,
Mandates aren’t taxes,
So rethink, maybe?

When you came onto the Court
I thought you so rad
My man-crush so bad
My man-crush so, so bad

Now thanks to you I’ll pay this tax
It made me so mad
But now I’m just sad
It makes me so, so sad

It’s hard to look right,
At you CJ,
Mandates aren’t taxes,
So rethink, maybe?

I just read you,
The ruling’s crazy,
Read Article I,
And rethink, maybe?

The other justices,
Ruled on the law,
But you played politics,
So rethink, maybe?

When you came onto the Court
I thought you so rad
My man-crush so bad
My man-crush so, so bad

Now thanks to you I’ll pay this tax
It makes me so sad
And you should know that

So rethink, maybe?

That’s my read of this.

ObamaCare gives HHS the authority to make unlimited grants to help states create Exchanges. But that authority expires on December 31, 2014. HHS just issued an announcement that they will issue grants right up to midnight on December 31—and that some of those grants will be so big that they will last for five years:

Q4: What is the last day that a State can spend its award?

A4: Grantees are encouraged to drawdown funding within their budget period (up to one year for Level One and up to three years for Level Two grants); however, at the recommendation of CCIIO’s State Officer and at the discretion of the Grant Management Officer, grantees may receive a no-cost extension that will allow them to spend funding up to the expiration date of the project period. At HHS’s discretion, a project period can be extended for a maximum of five years past the date of the award. Note, however, that all spending of §1311(a) funds awarded under a cooperative agreement must be consistent with the scope of the statute, FOA, and terms and conditions of the awarded cooperative agreement. [Emphasis added.]

The last sentence is there just to make sure no one suspects them of violating the law, wink-wink.

Since HHS can make unlimited grants in the first year that Exchanges are supposed to operate (2014), this means HHS is trying to pay for the operating expenses of some states’ Exchanges for six years (2014–2019).

Corporate welfare is a bipartisan problem, and it’s a problem at both the federal and state level. Yesterday, I discussed the recent demise of Obama-subsidized Abound Solar and the fact that Indiana Republicans were also involved in helping the company obtain taxpayer handouts. Adding insult to injury is another example of “crony capitalism” gone awry in Indiana.

The Indy Star recently reported on an attempt by the state’s Indiana Economic Development Corporation to pressure the city of Madison into subsidizing a manufacturing facility for a shady California businesswoman. The entire investigative report needs to be read in order to fully appreciate the incompetence displayed by the IEDC’s wannabe venture capitalists, but here are some excerpts:

Build us a 40,000-square-foot manufacturing facility, throw in some needed equipment — all for around $5 million — and we’ll create up to 200 new jobs. That was the pitch by a California businesswoman and her renewable energy company, Global Energy Solutions, to officials at the Indiana Economic Development Corp. and, ultimately, the city of Madison.

The company was searching for a site in Indiana — and the purpose of the IEDC, which reports to the Indiana secretary of commerce, is to lure jobs to Indiana and often provide incentives. IEDC officials did just that. They approved $1.5 million in tax credit and training incentives. They also began pressuring the city of Madison to act on the proposal — and quickly.

“Secretary of Commerce Dan Hasler asked me to send the following message,” an IEDC official emailed City Council President Laura Hodges. “If Madison is not going to take advantage of the job creation and investment opportunity being presented by Global Energy Solutions (and that’s OK), don’t further frustrate the company with delays. We do not want to lose this project for Indiana.”

In their rush to generate a favorable press release for Gov. Mitch Daniels, which is the IEDC’s real mission, IEDC officials apparently didn’t bother to look into the background of the character they were anxious to fork over taxpayer money to:

An Indianapolis Star investigation has uncovered numerous red flags regarding Global Energy Solutions and its president, Mynette Boykin — red flags that experts say raise questions about the IEDC’s due diligence on a project that would have cost local and regional taxpayers several million dollars:

Boykin claimed that another company of hers, Secured Capital Investment Group, would eventually commit $500,000 to the Indiana project, emails show. That company, however, forfeited its California business license in 2011 because it didn’t pay more than $40,000 in taxes.

Boykin noted in her business plan that DC Solar Solutions would be “working in collaboration” with her on the project. When The Star contacted the owners of DC Solar Solutions, they said they never agreed to work with Boykin.

Boykin filed for bankruptcy in 2005 with $1 million in debts. In April of this year, a company filed suit against her for an unpaid $100,000 loan.

The Star shared Boykin’s business plan with an industry expert, who called it “extremely amateurish” and questioned the validity and viability of the proposal.

The Star also determined that other parts of Boykin’s plan are identical to a sample business plan posted on the website bplans​.com. The sample plan was for a company that makes auto tools.

The good news is that, unlike the IEDC, the locals in Madison did some probing. As they should have given that the cost to the city would have been $4 to $5 million. When a presentation given by Boykin failed to impress Madison’s city council, it became clear that the deal was dead. That didn’t sit well with the IEDC’s representing bureaucrat:

Regardless, IEDC official Wanda Heath was there, and she addressed the council for the first time. She sounded irritated. “You could tell she wasn’t happy,” said Councilman Darrell Henderson, a Democrat.

She also made it clear that she felt that Madison council members weren’t doing their job properly. “She said, ‘You guys are moving way too slow; you’re making Madison look bad; this process should never take this long; no business is ever going to come to Madison being treated like this,’” said Councilman Rick Berry, a Republican.

“I really thought that was out of order,” another councilman, Republican Jim Lee, said. Lee told The Star that in his 12-plus years as a councilman, he had never before seen a representative from the state at an executive session. He felt like he and the other council members were being talked down to.

After leaving town, a defiant Boykin told the Star that “We will come to a different state. Probably right next to you guys.” Unfortunately, it’s not implausible that another state’s Department of Corporate Welfare will eventually come to her aid as this sort of scheming with taxpayer money is definitely not a problem that is unique to Indiana.

As America celebrates its independence, even we foreigners who live here have much to celebrate. (I’m a Soviet-born naturalized Canadian who’s lived in the United States my entire adult life—finally got my green card three years ago—and like most immigrants, do a job Americans won’t: defending the Constitution.)

Indeed, those of us who voluntarily chose to come here very much appreciate all that native-born Americans take for granted: the rule of law, equality under the law, self-government whose very limitation protects liberty, freedom of speech and religion, property rights, and enforceable contracts. It is these things that have allowed the United States to become the land of opportunity—which is why it’s so heartbreaking when the rule of law is undermined, self-government debased, and individual liberty subverted such as has been the case throughout the entire ObamaCare debacle.

In this 225th year of the Constitution—Cato will celebrate the anniversary at our Constitution Day Symposium in September—we all need to remember that our founding document, the codification of that grand experiment in self-government which began on July 4, 1776, cannot protect our liberties if we do not act to enforce it. Benjamin Franklin explained that what the Framers has created was “a Republic, if you can keep it.” How do we keep it? A quote attributed to Thomas Jefferson is the perfect response: “The price of liberty is eternal vigilance.”

How will you demonstrate your vigilance? I’ll be doing so by speaking briefly about my favorite Federalist Paper, number 51 (“If men were angels…” at the Alexandria Tea Party’s Fourth of July Celebration. Hope to see you there, in person or in spirit!