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www.freedomandprosperity.org |
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The views expressed by Andrew Quinlan and Dan Mitchell on this weblog are solely their own and are not necessarily those of their employers, The Center for Freedom and Prosperity Foundation and The Heritage Foundation, respectively. |
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The Market Center Blog |
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Observations and insights on the global fight |
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CF&P's Market Center Blog Archives |
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Wednesday, November 30, 2005 ~ 8:55 a.m., Dan Mitchell Wrote: Our base rightly expects Republicans to govern by the principles -- lower taxes, less government and more freedom -- that got them elected. Today, with Republicans controlling
both the legislative and executive branches of the federal government, there is a widening credibility gap between their political rhetoric and their public policies. What will happen to Republicans if these
freedom-loving, grassroots activists don't show up for work next fall? The elections earlier this month may be an indication of the answer. ...As the party of smaller government, Republicans will always have a
more difficult job governing than Democrats do. Government naturally wants to expand. It is always easier for politicians when both you and your political base truly believe that there is a new government
program to solve any problem, real or imagined. We will always have to work harder and be more entrepreneurial than our political opponents when it comes to implementing reforms. To succeed in the future, the
Republican Party must get back to basics. We need, in effect, another Republican takeover of Congress, reaffirming a commitment to less government, lower taxes and more freedom. As in 1994, this revolution will
be driven by the young Turks of the party -- the brave backbenchers more inspired by Reagan than the possibility of a glowing editorial on the pages of the New York Times.
Wednesday, November 30, 2005 ~ 7:22 a.m., Dan Mitchell Wrote: Clinton is gone from the White House, but the federalization laws of his administration - Goals 2000, School-to-Work, and Workforce
Investment - are still in place. President George W. Bush, who says the federal government has "a role to play in education," has merely
substituted labels more comforting to Republicans: standards, tests, and accountability. Now we find that the process is no longer just federalization; it's globalization. Who would have guessed that the
United Nations Educational, Scientific and Cultural Organization would be positioning itself to design curricula for U.S. schools? Former President Ronald Reagan withdrew the United States from UNESCO on
Dec. 31, 1984, because it was corrupt, anti-Western and a vehicle for far-left propaganda. Unfortunately, President George W. Bush rejoined UNESCO in 2003.
Tuesday, November 29, 2005 ~ 10:02 a.m., Dan Mitchell Wrote: In any rational insurance plan, coverage increases with increasing costs. But the likes of Senate Finance Committee Chairman Chuck
Grassley and House Speaker Dennis Hastert were determined to hand out a bit of money to all seniors, regardless of whether or not they really needed the help. The donut hole is their feckless attempt at cost
control. And the results are already in as to whether this was a political winner. Far from attracting senior gratitude or establishing GOP credibility on health care, these Republicans have set the stage for
decades of Democratic demagoguery about closing the donut hole and enriching the benefit. This is a perfect political-science-class illustration of why creating new entitlements can never work to the political
advantage of parties that pay even lip service to the goal of limited government. There will always be someone agitating for the entitlement
to be bigger. ...Politically, the worst is probably yet to come as private employers start ditching retiree drug coverage and throwing more people into the government system. And as costs for the program
inexorably increase, so will the pressure to raise taxes.
Tuesday, November 29, 2005 ~ 8:36 a.m., Dan Mitchell Wrote: ...the efficiency of the major Scandinavian economies is a myth. The Swedish and Finnish welfare states have been going through a long
period of decline. In the early 1990s they were virtually bankrupt. Between 1990 and 1995 unemployment increased five-fold. The Scandinavian countries have not been able to recover. ...By 2003
Sweden had fallen to 14th place from 5th in the prosperity index... According to OECD figures, Denmark was the 3rd most prosperous economy in the world in 1970, immediately behind Switzerland and the
United States. In 2003, Denmark was 7th. Finland did badly as well. From 1989 to 2003, while Ireland rose from 21st to 4th place, Finland fell from 9th to 15th place. Together with Italy, these three
Scandinavian countries are the worst performing economies in the entire European Union. Rather than taking them as an example, Europe's politicians should shun the Scandinavian recipes.
Monday, November 28, 2005 ~ 11:33 a.m., Dan Mitchell Wrote: ..the free-market policies of the U.S....could be put at risk by the...the Organization for Economic Cooperation and Development. ...the
Paris-based OECD is dominated by the nations of Old Europe. Founded in the 1960s as an academic group that primarily researched economic development, the body has transformed itself in the past few years into
a sort of booster organization for the high-tax high-regulation policies of European Union nations. As Dan Mitchell, economist and senior fellow at the Heritage Foundation has said, OECD seeks to "create an
OPEC for politicians" by hindering countries from lowering their taxes and regulatory barriers....An OECD official complained a few years ago
that tax competition "may hamper the application of progressive tax rates and the achievement of redistributive goals." ...The OECD's 2005
Economic Survey of the United States urged that the U.S. adopt a European-style value-added tax (VAT)... Groups like the OECD attempt to short-circuit this competition through a process that
now-United Nations Ambassador John Bolton referred to as a "worldwide cartelization of governments and interest groups." Writing in the Chicago Journal of International Law in 2000, Bolton asserted
that "the costs to the United States" in "reduced constitutional autonomy ... and limitations on our domestic and foreign policy options and solutions are far too great ... to be acceptable."
Monday, November 28, 2005 ~ 11:00 a.m., Dan Mitchell Wrote: In the Tax Reform Act of 1986 (TRA'86) the U.S. Congress lowered the top corporate income tax rate from 46 percent to 34 percent, the
largest reduction since the tax was enacted in 1909. This change, along with an earlier move in the United Kingdom, started a wave of corporate income tax reduction worldwide. One of the ironies of tax
policy during the Bush presidency is that five years of tax-cutting legislation have left the corporate income tax rate unchanged. Meanwhile, another wave of corporate income tax reduction has swept
around the world and is still underway. The United States is not the leader this time around. In fact, the U.S. is lagging behind and now has the highest combined statutory corporate income tax rate among
OECD countries.
Monday, November 28, 2005 ~ 10:14 a.m., Dan Mitchell Wrote: ...despite persistent claims that the region has tried the "free-market" model and found it wanting, Latin America is stubbornly stuck in a
statist time warp. When it comes to burdensome government and weak property rights, Latins don't fare as badly as Africans but their freedoms lag behind those in much of Asia and the former Soviet
satellites of Europe. ...Take for example Mexico...businesses face crippling regulation and inadequate legal protections, weakening the potential for market competition, investment and productivity gains.
...In the category of the World Bank report that deals with "hiring and firing," Mexico ranks 125th out of the 155 countries surveyed, not least
because it costs a firm almost 75 weeks of wages to fire a worker. Mexico also ranks 125th in "protecting investors"... In 25th place globally, Chile has the best business climate in the region but is
inexcusably behind Malaysia, Estonia and Lithuania. It badly needs to advance reforms undertaken in the 1980s, but instead the Socialist government of Ricardo Lagos has yielded to union activists by
increasing labor law burdens. ...Why hasn't democracy in Latin America produced change? The answer can be found in public-choice theory -- a school of economics made famous by Nobel Prize winner James
Buchanan. Public choice views politics as a market, where the highest bidders have the power to "purchase" what they want. Deregulation
may be best for the majority, but politicians don't have an incentive to do it when their most powerful, best-organized constituents -- the ones
who put them in office -- prefer the status quo. That includes not only labor unions but rich, established oligarchs and government bureaucrats.
Monday, November 28, 2005 ~ 9:45 a.m., Dan Mitchell Wrote: EU sugar prices will fall by 36 percent over the next four years...under a deal reached by European agriculture ministers on Thursday (24
November). ...The decision relaxes almost 40 years of protectionism for EU sugar beet farmers and comes in response to a World Trade Organisation (WTO) ruling in October. ...European sugar beet farmers
fear the move will destroy small businesses in new member states, which cannot compete... A spokesman for a large European sugar producer pointed out that "our profits will also fall." Meanwhile, fair
trade NGO Oxfam slammed the new accord for its disregard of small growers in developing countries. "The commission has hurled money at its member states to convince them to sign up, but has abandoned some
of the poorest countries to destitution," Oxfam's Brussels head, Luis Morago, said.
Sunday, November 27, 2005 ~ 11:51 a.m., Dan Mitchell Wrote: Congress is about to do severe harm to the U.S. economy if it fails to act in the next few months to stop three huge automatic tax increases.
...The dividend and capital gains rates were reduced to 15 percent in 2003. The estate (also called death or inheritance) tax got an overhaul in 2001, with gradual reductions over 10 years and complete
elimination set for 2010. But the dividend and capital gains cuts turn into pumpkins (reverting to their old top rates of 35 and 20 percent, respectively) at the end of 2008. And in 2011, the pre-2001 estate tax
reappears. Since backers lacked 60 Senate votes, all three of the cuts were only temporary. ...In a perfect world, an extension of the Big Three cuts could be part of comprehensive tax reform, along the lines
recently recommended by the Mack-Breaux Commission. Let's end tax breaks on real estate, health insurance, state taxes and other preferences and lower all rates to the 15 percent level. Then we'd see
fantastic economic growth in America, just in time to engage surging China, India and Japan. But I'd settle for a simple Hippocratic move:
extend the dividend and capital gains cuts by April, then force a vote on an estate-tax compromise just before the 2006 elections. Defuse the ticking time bombs.
Sunday, November 27, 2005 ~ 9:27 a.m., Dan Mitchell Wrote: Supporters of the theory of human origins known as "intelligent design" want it taught alongside the theory of evolution. Opponents will do
anything to keep it out of science classrooms. The disagreement is clear. But why does everyone assume that we must settle it through an ideological death-match in the town square? ...We're fighting because
the institution of public schooling forces us to, by permitting only one government-sanctioned explanation of human origins. The only way for
one side to have its views reflected in the official curriculum is at the expense of the other side. ...The sad truth is that state-run schooling has
created a multitude of similarly pointless battles. Nothing is gained, for instance, by compelling conformity on school prayer, random drug testing, the set of religious holidays that are worth observing, or the
most appropriate forms of sex education. Not only are these conflicts unnecessary, they are socially corrosive. Every time we fight over the official government curriculum, it breeds more resentment and
animosity within our communities. These public-schooling-induced battles have done much to inflame tensions... Fortunately, there is a way to end the cycle of educational violence: parental choice. Why not
reorganize our schools so that parents can easily get the sort of education they value for their own children without having to force it on their neighbors? ...the promotion of social harmony is an unusual
justification for replacing public schools with parent-driven education markets. Most arguments for parental choice rest on the private sector's superior academic performance or cost-effectiveness. But when
you stop and think about it, doesn't the combination of these advantages suggest that free markets would be a far more intelligent design for American education?
Saturday, November 26, 2005 ~ 3:31 p.m., Dan Mitchell Wrote: Canada's Minister of Finance Ralph Goodale has made the surprising decision to respond to concerns regarding income trusts and other
flow-through entities by announcing a reduction in personal income taxes on dividends ..."Reducing the tax individuals pay on dividends will encourage savings and investment and will help establish a better
balance between the tax treatment of large corporations and that of income trusts," explained Minister Goodale. "This action will benefit
Canadians and result in bottom-line tax savings for them," he added.
Saturday, November 26, 2005 ~ 1:18 p.m., Dan Mitchell Wrote: If I want to buy one of these remedies, I have to take the corresponding card to the pharmacist's counter, wait in line, show my ID and add my
name to a register. This procedure, required by an "emergency order" from Virginia Gov. Mark Warner, is supposed to prevent me from using
the pseudoephedrine in products such as Sudafed and Dayquil to cook up a batch of methamphetamine in my garage. If you're not lucky enough to live in a state with similar restrictions, fear not: Under the
Combat Meth Act, which Congress is expected to pass soon, you too can be treated like a criminal the next time you have nasal congestion, thereby doing your part to help achieve a drug-free society. ...According
to the Drug Enforcement Administration, some 80 percent of the illicit meth consumed in the United States comes from large-scale Mexican traffickers, who buy their pseudoephedrine in bulk rather than a couple
boxes at a time from CVS. Restricting retail access to pseudoephedrine may shift production away from small local labs and toward the big-time meth makers who already account for most of the supply, but
it's not likely to have a noticeable effect on consumption. ...Hard as this collateral damage is to justify, it pales in comparison to that suffered by
other innocent victims of the government's war on methamphetamine. Last summer, for instance, state and federal agents arrested 49 convenience store clerks and owners in Georgia on charges that they
sold pseudoephedrine and other supplies to informants posing as meth cooks. The supplies, including matches, charcoal, anti-freeze, coffee filters, aluminum foil, and cat litter, were all perfectly legal. The
charges, which carry penalties of up to 25 years in prison as well as fines and asset forfeiture, are based on the doubtful premise that the defendants knew or should have known what the fake customers were
pretending to be planning. ...This is the logic of the war on drugs. By criminalizing possession of a substance that is readily manufactured using innocuous everyday products, the government created the illicit
labs it is now trying to shut down by criminalizing the sale of those innocuous everyday products.
Saturday, November 26, 2005 ~ 11:23 a.m., Dan Mitchell Wrote: ...it's a matter of time before some jury somewhere says fat is McDonald's' fault. In a documentary that promoted the "dangers" of
fast food, Morgan Spurlock ate all of his meals at McDonald's for 30 days, saying "yes" whenever "Super size" fries were offered. "Super
Size Me" was a hit. It won awards from the Sundance Film Festival and the Writers Guild. As a result of his experiment, Spurlock says, he had trouble breathing, became hot and felt like he was having heart
palpitations. He gained 24.5 pounds, and his cholesterol shot up 65 points. Not good. But why was that McDonald's' fault? The same thing would happen if he ate that much at an elegant French restaurant. We
don't blame GM because cars lead us to avoid exercise, or ABC because TV invites us to be couch potatoes. ...The legal system should be reformed so people bear the consequences of their own bad choices.
The best solution would be to make people who file baseless lawsuits pay the costs of defending against them. "Loser pays," that system is
called, and that's the way it works in most of the civilized world. America's tort lawyers cleverly call loser-pays the "the English Rule,"
as if it's an odd British idea. It's not. It's the "Rest-of-the-World Rule." Only America suffers under the bizarre "American Rule," which allows
lawyers to sue again and again, while forcing others to pay. Loser-pays would bring some justice to their victims.
Friday, November 25, 2005 ~ 8:34 a.m., Dan Mitchell Wrote: When Bush ran for president in 2000, he proposed increasing federal funding for local public schools -- a dramatic departure from the
Republican platform of 1996, which called for abolishing the Department of Education. At the same time, however, Bush called for giving vouchers to students in persistently failing public schools so they
could attend private or religious schools, instead. This was supposed to be a payoff for conservatives if they acquiesced in increasing the size
and power of a federal agency not authorized by the Constitution. As soon as Bush was elected, he began backtracking on school choice. The day after he was inaugurated, White House Chief of Staff Andy Card
said, "Vouchers won't be a top priority of this administration." ...When Bush was campaigning in 2000, according to the Office of Management
and Budget, Department of Education spending was $33.9 billion. In 2005, it spent $70.9 billion. But long before 2014 rolls around, Republicans ought to leave President Bush's education policies and his
big spending behind. The Constitution left control and funding of local public schools to local government. That's where it still belongs.
Thursday, November 24, 2005 ~ 1:45 p.m., Dan Mitchell Wrote: Spanish Prime Minister José Luis Rodríguez Zapatero has announced that his government is seeking to steer through cuts in taxation for both
small and large companies which could go into effect from next year. In an attempt to bring Spanish company taxes more into line with international rates, Mr Zapatero stated at an event organised by The
Economist magazine in Madrid on Monday that taxation on small companies will be reduced to 25% and for large businesses to 30%. ...Mr Zapatero also announced that the government intends to reform
the personal income tax system to "reduce fiscal pressure on earnings" and to make taxation "simpler and fairer". With Ireland's company tax policy seemingly under attack from various quarters, Minister for Enterprise, Trade and Employment Míchéal
Martin told a conference in Australia this week that the government has no intention of increasing its flagship 12.5% rate of corporate tax. "To
be quite clear about this, the Irish corporate tax rate has been a key cornerstone of our economic policy - getting that tax rate down to
12.5pc and keeping it there...," Mr Martin stated during an Enterprise Ireland mission to Australia. ...As if the Irish government needed reminding that an increase in corporate tax is unlikely to be well
received by the large number of multinationals which have established operations in Ireland, Dell chief executive, Kevin Rollins warned in an interview with the Sunday Business Post at the weekend that the
computer giant would consider relocating if corporate taxes in the Republic increase. "Any time a cost goes up, we will reassess our position, particularly with tax," he said. Colombia last week said it is planning to cut corporate tax from 38.4% to under 30% by the end of the year in order to spur investment.
Finance Minister Alberto Carrasquilla said the government will ask Congress to reduce the tax rate, which is currently one of the highest rates of corporate tax in the region. Businesses have repeatedly begged
the government to reduce the tax rate to encourage both local and foreign investment in the country."In Colombia, the rate is the highest
in Latin America and it dissuades the investment's growth to be as high as in other countries in the region," said Eugenio Marulanda, head of the Confecamaras, a business grouping. Carrasquilla said the
government agrees with the business community. Russian President Vladimir Putin has stated that the government remains committed both to simplifying tax legislation and reducing the
tax burden... "All our plans in this sphere have one aim - to reduce the tax burden," Mr Putin told business leaders during his recent visit to
Japan. According to the President, taxation as a share of the Russian economy, at 34% to 35% of GDP, is lower than in Western Europe where the average is about 40%. However, he went on to add that the
government still plans to "reduce this yet further"... Since 2002, the Putin administration has reduced and abolished a number of taxes,
including turnover tax, payroll taxes, sales tax, and value added tax, which was recently cut to 18% from 20% and could be reduced to as low as 13% in the coming years. Deputy Finance Minister Sergei
Shatalov told reporters on Wednesday that a proposal to cut profit tax to 20% from 24% will also be put on the table within the next two years.
Thursday, November 24, 2005 ~ 11:46 a.m., Dan Mitchell Wrote: In a Gallup Poll conducted over the weekend, President Bush got low marks on every issue. His lowest, however, was "controlling federal
spending," with 71 percent disapproving of his performance on that point. A CNN/USA Today poll found the same thing. Bush scored lowest
(26 percent approval) on ... "controlling federal spending." ...What, exactly, have Republicans done that is so conservative? They've
tightened Washington's grip on education policy, expanded the welfare state, enhanced unnecessary farm and corporate subsidies, passed a
campaign finance "reform" law that lets the federal government silence citizens' political speech, refused to control immigration, grown the
federal budget faster than President Clinton did, and exploded the deficit.
Wednesday, November 23, 2005 ~ 8:37 a.m., Dan Mitchell Wrote: Whenever there have been sharp rises in gasoline prices, whether nationwide or locally in California, Senator Barbara Boxer has loudly
demanded an investigation of the oil companies. These repeated investigations over the years have repeatedly failed to turn up anything other than supply and demand. The real irony is that it has been
precisely liberals like Barbara Boxer who have been the chief obstacles to increasing the supply of oil because they are dead set against drilling
for oil in more places and against building more refineries. When you refuse to let supply rise to meet rising demand, why should you be surprised -- much less outraged -- when prices rise?
Tuesday, November 22, 2005 ~ 2:35 p.m., Dan Mitchell Wrote: ...let's not let politicians deceive us, and escape culpability, by defining inflation as rising prices, which would allow them to make the pretense
that inflation is caused by greedy businessmen, rapacious unions or Arab sheiks. Increases in money supply are what constitute inflation, and the general rise in the price level is the result. Who's in charge of
the money supply? It's the government operating through the Federal Reserve.
Tuesday, November 22, 2005 ~ 11:54 a.m., Dan Mitchell Wrote: Dennis Kozlowski stole $600 million from Tyco and got eight to 25 years in prison; Kofi Annan supervised more than $12 billion in
international theft and will stay in his job. All of which explains why allowing the United Nations to be in charge of running the Internet is a very bad idea. ...Today no organization or government controls the
Internet. ...Much of the rest of the world, gathered last week in Tunisia for the U.N.-hosted World Summit on the Information Society, wants to
take over that responsibility, or as European Union spokesman Martin Selmayr put it, the U.S. must "give up their unilateral control and
everything will be fine." ...Old Europe and the despotic nations want exactly that--international Internet content control. And they have
convinced the EU establishment that U.N. control of the Internet would be just and appropriate. ...The good news is that last Wednesday U.N. and U.S. representatives in Tunis agreed upon, and the World Summit
then adopted, a process that at least for the moment avoids U.N. control of the Internet. ...But the war against Internet freedom is far from over; Mr. Annan again demands international discussions of
"Internet governance issues" and says that change has become necessary regarding Icann Internet oversight. So first the U.N. and the
E.U. will seek Internet content control, and then perhaps the old U.N. idea of applying an international tax on e-mail messages.
Monday, November 21, 2005 ~ 7:00 a.m., Dan Mitchell Wrote: Commenting on the outcomes of the Melbourne Global Forum, Keith Johnston, Head of Policy and Communications at STEP Worldwide,
said: "...it is worrying that a large number of the other jurisdictions that attended the Forum for the first time, such as Austria, which is a
member of both the OECD and the European Union, continue to refuse to offer this endorsement. Other major finance centres, including Luxembourg and Belgium, also both OECD and EU members, refused
even to attend the Forum, let alone commit to the principles of exchange and information and transparency. There has also been no attempt to bring US states, such as Delaware and Wyoming, into the
process, despite these being in competition with major finance centres across the world."
Monday, November 21, 2005 ~ 6:14 a.m., Dan Mitchell Wrote: Robert Mugabe denounced plans to keep the current U.S.-based technical management of the 'Net in place. If the likes of Zimbabwe's
tyrant are against it, the rest of the world clearly should be for it. The upshot of the so-called "Tunis Agenda" is that the everyday Internet
user will see almost no change in how cyberspace works. That's quite an accomplishment on the part of American negotiators and allies such as Canada and Australia. Many observers had feared that this meeting
would end up giving birth to an intergovernmental body that would clog the 'Net with regulation and bureaucracy. It's true that the agreement does call for the U.N. to establish an Internet Governance
Forum next year. Importantly, however, it further says that this forum "would have no oversight function and would not replace existing arrangements, mechanisms, institutions or organizations."
Monday, November 21, 2005 ~ 3:47 a.m., Dan Mitchell Wrote: British environment secretary, Margaret Beckett, has suggested a u-turn in climate policies, suggesting voluntary targets for cutting
emissions when the Kyoto climate agreement ends in 2012. Environmentalists say that, without mandatory targets, the climate deal is effectively dead. ...She said it would be impossible to achieve
consensus on compulsory targets, according to UK Sunday paper the Observer. ...Last week a UN report concluded the EU as a bloc has achieved a reduction of only 1.4 percent in emissions from 1990 to
2003, far from the minus 8 percent target in 2012 that the Europeans have set themselves in the framework of Kyoto. Goals set by the EU to increase the share of renewable energy also seem to have failed.
Sunday, November 20, 2005 ~ 8:30 a.m., Dan Mitchell Wrote: The cost to taxpayers of Medicare Part D was initially estimated at $400 billion over the next 10 years, but that was soon revised to $520
billion and then $760 billion. Those first 10 years would be cheap compared with the following 20. The number of people eligible for Medicare will nearly double by 2030. Medicare is projected to rise from
12 percent of the federal budget to 25 percent by 2025, which is literally unsustainable because young taxpayers will not sustain it. ...Isn't insurance supposed to protect against surprisingly large expenses,
rather than routine outlays? Only a group of politicians would choose a policy that covers a generous 75 percent of the first $2,250 yet not one
cent of the next $2,850. Why are seniors compelled to have a zero or $250 deductible on Part D of Medicare and only a $110 deductible on Part B? When buying home or car insurance, smart shoppers would
choose a deductible of at least $500.
Saturday, November 19, 2005 ~ 3:46 p.m., Dan Mitchell Wrote: A senior member of the Hungarian Communist Workers' Party has received a one-year suspended sentence for wearing a red star, the
communist symbol which is banned under Hungarian law. ...Sporting communist or Nazi symbols is forbidden in Hungary. The red star was banned after Hungary threw off communism in 1989. British historian David Irving, who once famously said that Adolf Hitler knew nothing about the systematic slaughter of 6 million Jews, has been
arrested in Austria on a warrant accusing him of denying the Holocaust. ...If formally charged, tried and convicted, he could face up to 20 years in prison, said Otto Schneider of the public prosecutor's office.
Friday, November 18, 2005 ~ 6:26 p.m., Dan Mitchell Wrote: Prior to the decade of the 1930s, the wages of inexperienced and unskilled labor were determined by supply and demand. There was no
federal minimum wage law and labor unions did not usually organize inexperienced and unskilled workers. That is why such workers were able to find jobs, just like everyone else, even when these were black
workers in an era of open discrimination. ...The net economic effect of minimum wage laws is to make less skilled, less experienced, or otherwise less desired workers more expensive -- thereby pricing many
of them out of jobs. Large disparities in unemployment rates between the young and the mature, the skilled and the unskilled, and between different racial groups have been common consequences of minimum
wage laws.
Thursday, November 17, 2005 ~ 8:17 p.m., Dan Mitchell Wrote: ...the GOP plan reduces the increase in the federal budget by a microscopic 0.25% over the next five years. The new prescription drug
bill by itself adds some $300 billion to the budget over this same five years, or six times what this "deficit reduction" bill would save. ...For
the past five years federal spending on anti-poverty programs has increased by 41%. Medicaid...is scheduled to grow by 7.9% a year, and under the GOP plan it would grow by 7.5% a year. Either way the
program expands by more than double the rate of inflation through 2011. ...several areas, the Republicans actually expand entitlements. The Senate version would raise the cost of farm price supports by
extending the subsidy program for four more years past 2007, at a cost of $60 billion -- that is, more than the savings in this bill's first five
years. ...Midwestern Senators are also insisting on extending the milk program, which was supposed to expire this year and mainly benefits well-to-do dairy farmers. Northeasterners get $1 billion more for
low-income heating assistance -- which means that Uncle Sam will be subsidizing families to use more energy, while the feds spend billions in other agencies for energy conservation. There's even $130 million to
expand Medicaid for Alaska, which has become the Republican version of West Virginia as a state bathed in taxpayer subsidies.
Thursday, November 17, 2005 ~ 5:16 p.m., Dan Mitchell Wrote: 10 states already had laws banning the use of the government's power of "eminent domain" to evict homeowners in favor of private economic
development. Since then, at least two -- Texas and Alabama -- have followed suit. Taking private property to build a highway is one thing -- the Constitution's Fifth Amendment clearly provides for that. But
taking it to put up a mall is something else. Now the U.S. Congress is getting in on the act. The House this month overwhelmingly passed a bill that would withhold all federal economic development aid for two
years from states or localities that use economic development as a rationale for seizing private property. The vote was 376-38.
Thursday, November 17, 2005 ~ 3:53 p.m., Dan Mitchell Wrote: MILC was one product of the 2002 farm-subsidy bill, and even by farm-subsidy standards it is perverse. ...MILC makes direct payments to
farmers based on their production whenever the milk price falls below a certain level. What's more, MILC kicks in at a much higher level than the price-support program. The effect of this is that production is
encouraged by MILC even as prices are falling, which drives the price down toward the support level and prevents the shakeout that the price-support program is intended to allow. ...MILC distorts the market
and conflicts directly with other pre-existing subsidy programs. It has also cost close to $2 billion since its inception, nearly twice the $1
billion originally budgeted for it. ...Two billion dollars over three years may be a drop in the fiscal milk-bucket, but Republican lawmakers used
to insist on sunsetting government programs for a reason. Taxpayers have been MILCed enough by this particular boondoggle.
Wednesday, November 16, 2005 ~ 6:45 p.m., Dan Mitchell Wrote: ...the next German government ...manages to combine the worst ideas from both parties. Take the value added tax (VAT) for example. Before
the election, Ms. Merkel advocated raising it... The Social Democrats opposed the idea, saying it would dampen consumer demand. What was the outcome? Instead of raising VAT by just two percentage points, as
the Christian Democrats wanted, the new government will raise it by three points to 19%. ...It gets worse. The Social Democrats pushed through an all-time favorite among left-wing populists: high marginal
tax rates. The top rate for single households earning more than EUR250,000 (for couples the threshold is EUR500,000) will rise to 45% from 42%. Even the optimists among the Social Democrats don't
believe that it will "generate" much revenue but milking the rich apparently is always good propaganda. Most likely, though, it will drive out many of the country's most talented and productive people,
reducing growth and tax revenues along the way. ...Ms. Merkel is destined to make history on Nov. 22 by becoming the country's first female chancellor. If she doesn't manage to inject more of her original
free-market ideas into the coalition, that might be all she will be remembered for. The coalition agreement, signed by the German christian democrat CDU and the social democrat SPD parties, ...revives plans for a
ratification of the EU constitution, which was put on ice by EU leaders in June following a rejection of the new treaty by French and Dutch voters.
Wednesday, November 16, 2005 ~ 3:51 p.m., Dan Mitchell Wrote: Nothing the UN has inflicted on innovation and research and development is worse than its record on biotechnology applied to
agriculture and food production. The work of the UN's Task Force on Biotech Foods continues to be no more than bureaucratic slapstick -- in
which American taxpayers and scientists are getting the pies in the face. No serious, coherent defense of its work is even remotely possible. Its
scope is unscientific, and its projects largely pointless and gratuitous. ...The U.S. Government should pull the plug on this task force -- for the
good of food biotech, in the interest of sound public policy, and to save the United Nations from itself. More generally, federal officials should
pursue projects only if they will benefit American interests -- and oppose and reject those that don't. They should adhere to the simple principle that no agreement is better than one that damages the
long-term interests of the United States.
Wednesday, November 16, 2005 ~ 11:32 a.m., Dan Mitchell Wrote: How do you define insanity? Here's one way: The U.S. is importing millions of tons of man-made cement from the likes of Thailand and
China, including the costs of shipping it across the Pacific Ocean, because the federal government wants to limit cement imports from Mexico. ...right now the U.S. has a self-inflicted cement shortage. By
slapping a 55% anti-dumping duty on cement from Mexico, the Commerce Department is doing what three hurricanes could not: slowing the U.S. economy. This border tax was first levied in 1990, in
response to an anti-dumping petition filed by a group of U.S. cement producers that didn't like competing with Mexican companies. ...The Commerce Department has the power to suspend the dumping duties
against Mexican cement makers, and we know that the White House was considering this in the wake of Katrina. What's taking so long?
Tuesday, November 15, 2005 ~ 8:39 a.m., Dan Mitchell Wrote: ...the automobile is one of the two most liberating inventions of the past century, ranking only behind the microchip. The car allowed even the
common working man total freedom of mobility -- the means to go anywhere, anytime, for any reason. In many ways, the automobile is the most egalitarian invention in history, dramatically bridging the
quality-of-life gap between rich and poor. The car stands for individualism; mass transit for collectivism. Philosopher Waldemar Hanasz, who grew up in communist Poland, noted in his 1999 essay
"Engines of Liberty" that Soviet leaders in the 1940s showed the movie "The Grapes of Wrath" all over the country as propaganda against the
evils of U.S. capitalism and the oppression of farmers. The scheme backfired because "far from being appalled, the Soviet viewers were
envious; in America, it seemed, even the poorest had cars and trucks."
Monday, November 14, 2005 ~ 4:12 p.m., Dan Mitchell Wrote: In a recent speech at Georgetown University, Sen. Joseph Lieberman (D-Conn.) outlined forthcoming legislation to "set America free" from
"dependence" on imported oil. He wants to end both our pain at the pump and America's reliance on oil sheiks. But there's a catch. The bill
would empower politicians to determine how much gasoline we may use and which types of cars we may buy. This is freedom? Sen. Lieberman cites the devastation wrought by recent hurricanes and the consequent
surge in gasoline prices as proof not only of "how vulnerable our [energy] supplies have become," but also of why we must end dependence on foreign oil. That is silly. Disasters happen, and when
they do, they disrupt everything, not just motor fuel supplies. The hurricanes left millions of people without food, water, homes, medicines, and electricity. Does that mean we are overly reliant on
those essentials, or that government should try to "set us free" from such "dependence"?
Monday, November 14, 2005 ~ 1:33 p.m., Dan Mitchell Wrote: The French have enacted all of the economic policies that liberals would like to see implemented in this country. So, for example, jobs are
protected. If a French company employing more than 600 people wants to fire someone, it must endure administrative procedures that last an
average of 106 days. Because it is so difficult to fire employees, French companies are less willing to take risks in hiring. This hurts young, inexperienced workers disproportionately. Once unemployed, 40
percent of French workers can expect to remain so for more than a year. Not only are jobs hard to find, but joblessness is softened by generous benefits. Unemployment benefits range from 57 to 75 percent
of the worker's last salary and can last as long as three years (with a cap of 5,126 Euros per month). ...socialism is an insidious poison. The vast majority of French voters seem wedded to their
government-supplied goodies -- failing to recognize that their economic and therefore social lives are unraveling because of that dependence.
Sunday, November 13, 2005 ~ 10:14 a.m., Dan Mitchell Wrote: Top members of the Christian Democratic Union and the Social Democratic Party returned to the negotiating table one last time on
Friday afternoon and quickly hammered out an agreement to raise Germany's value-added tax on most purchases from 16 to 19 percent in 2007. The negotiators also agreed on a special wealth surtax of 3
percent on individuals who make more than 250,000, or $292,000, per year. The Free Democrats, Germany's free-market "liberals" and now
the largest opposition group in Parliament, criticized the larger groups for relying on "an orgy of tax hikes" to clean up the budget. "The
grand coalition will be very expensive for the citizens of Germany," the chairman of the Free Democrats, Guido Westerwelle, said in a written statement.
Irish internal market commissioner Charlie McCreevy has suggested tax harmonisation is not and will not be on the Brussels agenda whether
"by the front door or the back", stressing tax competition among countries is "healthy". In a speech given in Brussels on Thursday (10
November), Mr McCreevy said "National vetoes will be retained and competition between member states for inward investment - some of it tax based - will continue. Tax competition is a healthy spur to
governments across Europe," according to the Financial Times.
Sunday, November 13, 2005 ~ 9:09 a.m., Dan Mitchell Wrote: Republican disarray on Capitol Hill reached self-ramming speed yesterday, as both the House and the Senate abandoned key policy
priorities... In the Senate, Maine's Olympia Snowe helped to scuttle even a single-year extension of the current 15% tax rate on dividends and capital gains that is due to expire in 2008. Senate Finance Chairman
Chuck Grassley was thus forced to postpone a committee vote on extending a tax cut that has been crucial to an economic rebound that since mid-2003 has been marked by 10-straight quarters of nearly 4%
average growth. ...The chaos was even worse in the once-disciplined GOP House, where leaders had to pull their budget from the floor for lack of a majority. The immediate cause was the revolt of the 25 House
Members listed nearby, who signed a letter demanding that a provision to allow drilling in the Arctic National Wildlife Refuge be stripped from
the bill. These are many of the same Members who earlier threatened to bolt on the budget unless President Bush reimposed Davis-Bacon union wage levels on Gulf reconstruction projects. And they are some of the
same Members from the Northeast who demanded $1 billion more in subsidies for home heating this winter. Irony is apparently not their strong suit. ...America can survive these policy setbacks; the question is
whether the Republican majority will, or even should. If a GOP Congress can't vote to sustain its own wildly successful tax cuts, or to explore for more domestic energy, let's just turn Congress over to
Democratic Leader Nancy Pelosi and at least have truth in liberal advertising.
Saturday, November 12, 2005 ~ 3:57 p.m., Dan Mitchell Wrote: ...the most important domestic accomplishment of the Bush Presidency has been the tax cuts of 2003. The mystery is why Republicans have
been so reluctant to extend them, or for that matter even to defend them politically. ...We could understand if the tax cuts had failed to do what supporters promised, but they have done that and more. Almost
from the day in May of 2003 when it became clear they'd become law, the U.S. economy shifted into a higher gear -- to 4% average GDP growth from 2%. The stock market bounced back, corporate
investment revived, and unemployment declined to its current and historically low rate of 5%. Even the GOP's deficit-phobes should be happy, as federal revenue has soared -- by an astonishing $274 billion,
or nearly 15%, last fiscal year, suggesting that the tax cuts have been self-financing. The federal budget deficit fell by $100 billion last year, despite federal spending that increased at a roughly 7% rate.
Saturday, November 12, 2005 ~ 2:15 p.m., Dan Mitchell Wrote: Who wrote the following? "[I]t is possible that once residents gave up their handguns, San Francisco would be seen as an easy hunting ground
for criminals who have no intention of giving up their own pistols." Is it the NRA claiming that gun laws disarm law-abiding citizens and not
criminals? No. Amazingly enough it was the San Francisco Chronicle, one of the more liberal newspapers in the U.S., in an editorial arguing against Proposition H, the initiative that passed on Tuesday to ban
handguns in the city. ...the police came out against the gun ban. Besides discussing the increases in murder occurring in Washington, D.C. after
it instituted a handgun ban, the officers stated: "When we disarm honest, law-abiding citizens, we contribute to empowering criminals and endangering society-at-large." They directly acknowledged how
important it was for people to be able to defend themselves with a handgun when the police couldn't be there.
Friday, November 11, 2005 ~ 2:17 a.m., Dan Mitchell Wrote: The CEOs of the world's biggest oil companies will be paraded before a pair of Congressional committees today, as political props to take the
blame for high gasoline prices. Both parties will compete to throw the most stones. Meanwhile, the same Members will in their un-self-conscious wisdom claim to want the U.S. to become more
energy "independent." Since cognitive dissonance is a prerequisite for politics, no one should be surprised. And perhaps the spectacle will even
be useful if the Solons learn a few things about the oil industry. To wit, that roughly 75% of Exxon's oil profits are earned overseas, so they wouldn't even be subject to such East German concepts as the
"windfall profits" tax. Or that Exxon makes only about 15 cents on each gallon of product it sells -- which is higher than the five cents it
was making in recent years, but is hardly in the same league as, say, the profit margin of Microsoft. Exxon made about $1 billion in the U.S. in
the third quarter in large part because it sold some seven billion gallons of fuel products. And fortunately so for American drivers, who were
always able to buy gasoline -- albeit at higher prices -- despite having some 30% of U.S. refining capacity knocked out by back-to-back Gulf Coast hurricanes. Already gasoline prices are falling back to
pre-Katrina levels, thanks in part to the exertions of the same industry that the Members will denounce today. If Congress were this efficient, the U.S. government wouldn't be trillions of dollars in debt. ...windfall profits are a vital component to a smoothly operating economy. Windfall profits serve as a signal that there are unmet human
wants. Let's look at it with a simple example. Suppose there's a disaster wiping out food resources in Harrisburg, Pa., and I live in Philadelphia.
Prior to the disaster, bread prices in both cities were $2 a loaf. I buy a truckload of bread, cart it to Harrisburg and sell it for $20 a loaf,
earning huge windfall profits. When the word gets out that there are profits to be made, what do you think happens? If you said other people will start carting bread to Harrisburg, bakers will start working
overtime to produce more bread, people who formerly used their oven to bake cakes and pies will switch to baking bread, there'll be bread conservation in Philadelphia and elsewhere and eventually bread prices
will start to fall in Harrisburg and windfall profits would vanish, go to the head of the class. While some might find people earning windfall
profits objectionable, the result of their actions, getting more bread to Harrisburg, is precisely what's desired.
Friday, November 11, 2005 ~ 12:42 a.m., Dan Mitchell Wrote: Democrat Tim Kaine's defeat of Republican Jerry Kilgore shows what happens when the GOP loses credibility on taxes. Virginia is a state
that Mr. Bush twice carried comfortably. But the GOP divided over Democratic Governor Mark Warner's record tax increase last year, and Mr. Kilgore never said he'd repeal it. He tried to straddle the difference
between business lobbies who liked more money for roads and the rank-and-file who hated giving more to the government. The result was that there was little real difference between the candidates on fiscal
issues--and Republicans lose those campaigns nearly every time.
Thursday, November 10, 2005 ~ 12:05 p.m., Andrew Quinlan Wrote: The OECD was created to be a market-oriented think tank for 30 of the world's industrialised nations, but the international bureaucracy is now
controlled by countries such as France and Germany and is pursuing tax-harmonisation policies designed to stem the flight of capital from high-tax countries to low-tax countries. …The latest chapter in this
battle will take place in Melbourne next week. …The OECD is hosting a global forum so its bureaucrats can team up with representatives from
tax authorities of member countries, including Australia , in an effort to convince so-called tax havens to act as deputy tax collectors for
high-tax nations. (It is worth noting that this project is riddled with hypocrisy since many OECD member nations, such as the United States, the United Kingdom, Switzerland, Luxembourg, Austria, and
Belgium, are "tax havens", according to the OECD's own definition, yet they are not being asked to emasculate their attractive tax and privacy
laws.) …The OECD's anti-tax competition project is fundamentally inconsistent with good tax policy. Public finance experts almost universally recognise that an ideal tax system is characterised by low
tax rates and the absence of a bias against saving and investment. …Tax competition has helped encourage governments to shift policy in this direction. Simply stated, if politicians are afraid that jobs and
capital will escape across the border, they are more likely to lower tax rates and implement tax reform.
Thursday, November 10, 2005 ~ 11:10 a.m., Dan Mitchell Wrote: Europeans of all political persuasions have long shared a belief in the virtues of the "social market economy." By this, they meant a modified
capitalist system, characterized by considerable state intervention and the fabled "social safety net." It was an arrangement intended to
guarantee economic growth and prosperity, on the basis of harmonious labor relations, social cohesion and economic solidarity between the classes. Today, however, the European project is in shambles. ...The
future looks even bleaker. Structural problems are likely to limit EU growth to 11/2 percent at most by 2015 and even less thereafter. All this points to a sobering conclusion few in Europe are willing to admit:
The vaunted social market is at the end of the line in the information and globalization age.
Thursday, November 10, 2005 ~ 10:43 a.m., Dan Mitchell Wrote: George W. Bush...has transformed the GOP into a party that no longer believes in limited government and individual liberty but instead
advocates expanding the size, scope and authority of the federal government at a rate that even Democrats find shocking. There is no longer a small-government party in the nation's capital; there are just
different visions of what big government means. If this doesn't change, the entire GOP might sink with the Bush presidency. Mr. Bush's vision for governance shouldn't surprise anyone. In September, his chief of
staff, Andrew H. Card Jr., told a group of Republicans that Mr. Bush sees America as a "10-year-old child" in need of parental protection.
Examples of the "parent-in-chief" abound. According to a study by the American Enterprise Institute, inflation-adjusted discretionary spending
increased by 35.1 percent in Mr. Bush's first term, outpacing even the once-unfathomable benchmark of 33.4 percent set by Lyndon Johnson. He has increased funding for the Education Department by 67.6 percent
and usurped state power in education. He has pushed through the largest expansion of Medicare in history, signed tariffs on steel and increased the budget of every Cabinet agency. Even LBJ, Jimmy
Carter, and Bill Clinton could never claim such a feat.
Thursday, November 10, 2005 ~ 8:59 a.m., Dan Mitchell Wrote: Germany's economic performance in the past decade or so has been marked by slow GDP and productivity growth, weak job creation, high
unemployment and low rates of return on investment. ...Germany has begun to question the social market economy, with many voices calling for sweeping reforms that would shove Germany toward the Anglo
countries' free-market model. They want Germany to loosen regulation, cut spending and roll back social welfare programs. Economic restructuring got a lengthy airing as Germany marched toward its
recent, inconclusive national elections. ...The historical school thus gave Germany the intellectual rationale to plot a "third way" between
capitalism and communism, and the result was the German welfare state inaugurated in the late 1800s by Otto von Bismarck, the country's first chancellor. This ideology dominated German economic policy
between 1880 and 1948 and again since the late 1960s. The only break from the social market economy came after Germany's crushing defeat in World War II, and this relatively short period provides an interesting
object lesson about the potential for the Anglo-American model in Germany. ...On the evening of June 20, 1948, Erhard went on the radio to announce the particulars of what came to be known as "the bonfire
of controls." ...reform eliminated controls on prices and wages and reduced business and personal taxes. Within days, shops began to fill
with items for sale, the food shortages began to disappear and business investment returned.
Thursday, November 10, 2005 ~ 7:37 a.m., Dan Mitchell Wrote: France is one of the strongest defenders of the European Social Model. The main feature of the Model is a big state -- with high taxes, a
regulated labor market, public welfare monopolies and large social security systems. But after the events in Paris, isn't it about time that France too realizes that this is an anti-social model that we should
leave behind? The big state mentality clearly creates and worsens many of the conditions that lead to the kind of social desperation we're seeing in Paris. A regulated labor market creates unemployment. Those
without jobs do not feel secure, but neither do those with jobs; they know how hard it would be to find another one. The young people in Western Europe -- often with many years of education -- can't find work
and lose the hope for the future. The high taxes required to support the Model do not simply reduce people's opportunities to run their own lives, they also put a brake on growth. Economic activity is low and
living standards stagnant; and in several places they are deteriorating. Small businesses must pay high taxes and are extremely regulated, so that way to a better life is also shut for many.
Wednesday, November 9, 2005 ~ 11:13 a.m., Dan Mitchell Wrote: Brussels is set to produce a new "white book" on the EU's alcohol policy in early 2006, with a set of measures harmonising the rules on
use, sales and advertising of alcohol across the continent. It will also recommend a rise in member states taxes on alcohol, including wine and beer... The study was masterminded by Peter Anderson, a
consultant and former anti-alcohol activist, and will be presented later this month. "The evidence shows that a policy on alcohol in one country
can influence to a great deal the situation in other states. And there is therefore a sound argument for a common approach at the EU level," Mr Anderson told the EUobserver.
Wednesday, November 9, 2005 ~ 9:53 a.m., Dan Mitchell Wrote: When Democrats controlled Congress, such kangaroo courts were a common occurrence every time the world price of oil spiked.
Congressmen and senators ranted and raved for the cameras, while oil company executives were forced to sit silently and take it, with little if
any opportunity to respond. What is different now is that Republicans are doing exactly the same thing. Their purpose seems to be to prove to the American people once and for all that it makes absolutely no
difference which party controls Congress -- the same utterly stupid policies are pursued under both Republican and Democratic control. And Republicans wonder why their party's base is evaporating, with
many political analysts now predicting heavy losses for the GOP in next year's congressional elections. The ultimate in Republican idiocy is growing support for a windfall profits tax on oil companies. ...An
Internet search turned up no evidence that Gregg or any of the other dimwits calling for windfall profits taxes on the oil industry have also called for windfall profits taxes on the banking, pharmaceutical,
software, hotel or other industries that earned much more per dollar than the oil and gas industry. ...given George W. Bush's proclivity for signing every bill that comes out of Congress, no matter how
misguided, I have no confidence that he would veto another windfall profits tax should it reach his desk. Some political aide may explain that
it tested really well among focus groups and will add several points to his approval rating. Sadly, such arguments appear to have won him over in the past, as with the incredibly unwise Medicare drug benefit,
Sarbanes-Oxley bill and campaign finance legislation.
Tuesday, November 8, 2005 ~ 10:57 a.m., Dan Mitchell Wrote: State-directed capitalism may seem ideal for such American admirers such as Jeremy Rifkin, author of "The European Dream," and others on
the left. Yet it is precisely this highly structured and increasingly infracted economic system that has so limited opportunities for immigrants and their children. ...there is little emphasis on creating new
jobs... Since the '70s, America has created 57 million new jobs, compared with just four million in Europe (with most of those jobs in government). ...In France, joblessness among workers in their 20s
exceeds 20%, twice the overall national rate. In immigrant banlieues, where the population is much younger, average unemployment reaches 40%, and higher among the young. To make matters worse, the
elaborate French welfare state--government spending accounts for roughly half of GDP compared with 36% in the U.S.--also forces high tax burdens on younger workers lucky enough to have a job, largely to
pay for an escalating number of pensioners and benefit recipients. ...better-educated young Frenchmen and other Continental Europeans can opt out of the system by emigrating to more open economies in
Ireland, the U.K. and, particularly, the U.S. This is clearly true in technological fields, where Europe's best brains leave in droves. Some 400,000 European Union science graduates currently reside in the U.S.
Tuesday, November 8, 2005 ~ 9:37 a.m., Dan Mitchell Wrote: Speaking on Friday at a KPMG conference in County Kildare, Internal Market Commissioner Charlie McCreevy publicly broke rank with the
EC on the subject of corporate tax harmonisation. ...Mr McCreevy told the audience of accountants last week that... "There are some who argue that lower taxation in one Member Sate than in another doesn't
give a level playing field. But they are dreaming if they think that by levelling up the taxation levels across Member States, they would attract more inward investment or encourage more economic activity.
The harsh reality is that in the global economy in which we live, investment will flow to where it attracts the best return - Higher taxes across Europe would be followed by lower investment across Europe
and higher investment flows out of Europe. Tax competition between Member States is healthy in that it keeps pressure on governments to watch their domestic spending and keep their tax regimes
internationally competitive."
Tuesday, November 8, 2005 ~ 9:05 a.m., Dan Mitchell Wrote: ...the biggest French farming businesses pocket the vast majority of EU agricultural subsidies ...the top 15 percent of French farming
companies consume 60 percent of the direct payments from the EU's coffers. ...The findings are based on the European Commission's own statistics, Oxfam said. The charity's trade campaigner Celine
Charveriat commented: "This gives the lie to the French argument that it uses EU subsidies to support its small farmers. They plainly don't.
Most small French farmers, 70percent of them, get only 17 percent of the subsidies doled out by Paris. The CAP is a gravy train for Europe's
biggest, richest farmers" ...According to UK paper the Independent, prince Albert of Monaco also received EUR287,000 in CAP payments last year for his farm activities in France. ...It emerged that Dutch
agriculture minister Cees Veerman last year received around EUR190,000 for farms in the Netherlands and France. Slovak agriculture minister Zsolt Simon's company also allegedly trousered
around EUR200,000 euros in national farm subsidies in 2003. ...France is sticking to its guns on CAP so far, with French president Jacques Chirac threatening a veto if Brussels offers further subsidy cuts to WTO
partners.
Monday, November 7, 2005 ~ 11:15 a.m., Dan Mitchell Wrote: ...for most of the American elite, the "stagflation" of the 70s was viewed not as a decade-long dip in the economy, but instead as the new
and permanently lower plateau of economic performance. ...Reagan knew better. ...the supply-side tax cuts kicked in, combined with other Reaganite reforms, including spending cuts, the deregulation of the oil
industry, and tight money. The economy came roaring back... the gross domestic product of the country, adjusted for inflation, grew by more
than 30 percent in Reagan's eight years in office. Yet at the same time, in contravention of gloom-and-dooming Phillips-Curving Keynesians,
unemployment fell by a quarter during the Reagan 80s, and inflation fell by more than two-thirds. And of course, the economy has been booming ever since. ...it is hard to remember just how bad things were shortly before former Gov. Reagan became President. In 1980, President Jimmy Carter and
the liberal Democrats had led America into a series of disasters. Inflation was at 18 percent. Interest rates peaked at 22 percent. Unemployment was growing toward the deepest recession since the
Depression. The Soviet Union was on offense in Afghanistan, Angola, Mozambique, Grenada, Nicaragua and El Salvador. Intellectuals wrote about the death of democracy. There were gasoline lines everywhere
and people were told they should get used to rationing. President Carter addressed the nation and suggested our future was inherently limited, malaise was a condition we had brought on ourselves, and that
we should get used to lowering our expectations. ...Today's Republican Party would do well to regain the firm, courageous, "no pale pastels"
clarity which was the hallmark of Reagan's leadership. They would also do well to remember that Reaganism is about real change both at home and overseas and that real change requires upsetting the entrenched
interests feeding at the public trough.
Monday, November 7, 2005 ~ 10:51 a.m., Dan Mitchell Wrote: The Internet faces a grave threat. We must defend it. We need to preserve this unprecedented communications and informational
medium, which fosters freedom and enterprise. We can not allow the U.N. to control the Internet. ...Allowing Internet governance to be politicized under U.N. auspices would raise a variety of dangers. First,
it is wantonly irresponsible to tolerate any expansion of the U.N.'s portfolio before that abysmally managed and sometimes-corrupt institution undertakes sweeping, overdue reform.
Monday, November 7, 2005 ~ 9:32 a.m., Dan Mitchell Wrote: Adjusted for differences in price levels, per capita income in the United States now exceeds France by close to 40 percent. Germany and Italy
lag even further behind. ...If labor productivity in Germany and in the U.S. continues on the same path as from 1996 to 2003, per capita income in Germany will grow by only 44 percent by the time American
incomes double in 2026. Put differently, within a generation, Americans will enjoy twice the economic status that Germans do.
Monday, November 7, 2005 ~ 9:04 a.m., Dan Mitchell Wrote: Europe may be a great place to visit, but U.S. emigration to the continent is paltry-while the reverse flow from Europe to the United
States remains at consistently high levels even with the somewhat bothersome screenings imposed after 9/11. ...As in the past, immigrants from France, Italy, Germany and other parts of Europe continue to
come to America to participate in an economy that is more dynamic, healthier, and generally more open than what they are leaving behind. America's economic appeal has been broadened by Europe's long-term
competitive decline; its portion of world GDP dropped from 34 percent to 20 percent between 1913 and 1998, while the United States held its own at about 22 percent of global GDP (even amidst the Third World
boom of the last generation). Most recently, Europe's position has weakened considerably. Since the 1970s, America has created some 57 million new jobs, compared to just 4 million in Europe (with most of
those in government). For the last quarter century, the United States has enjoyed consistently higher rates of economic growth and productivity than European countries, and the gap has been widening.
The United States is now at the forefront in many critical global industries, particularly finance, technology, and entertainment. ...Europe's best brains are leaving in droves. Some 400,000 E.U.
science and technology graduates currently reside in the United States, and barely one in seven, according to a recent European Commission
poll, intend to return. "The U.S. is a sponge that's happy to soak up talent from across the globe," observes one Irish scientist. ...European
immigration to the United States jumped by some 16 percent during the 1990s. Europe's percentage of total immigrants to the U.S. rose crisply between 1998 and 2001. Visa applications dropped after 9/11, but then
increased last year by 10 percent. ...Today's westward human flow across the Atlantic is more critical to the future of the United States than mere numbers can indicate. In contrast to many of our other
immigrants, newcomers from Europe, particularly those under 40, tend to be highly educated. ...It is not surprising that ambitious young European professionals prefer the faster-paced economic environment
of the United States.
Sunday, November 6, 2005 ~ 10:02 a.m., Dan Mitchell Wrote: This panel -- its deliberations and report -- provided an unprecedented opportunity to publicize and advocate the cause of fundamental tax
reform of the sort that could expand our economy, meet our growing fiscal needs and provide a simplified, streamlined tax system for every American. This was a chance to scrap the Internal Revenue Code -- the
5-million-word monstrosity that costs American businesses and families billions of dollars and billions of hours to comply with -- once and for
all. The president gave the panel a golden opportunity to bring about vital, comprehensive reforms. Instead, it proposed an array of incremental policy tweaks of the kind that one might expect to be
presented in the president's annual budget. ...Recommendations such as the reduction of the mortgage interest deduction and elimination of the state and local tax deductions may have sound economic arguments on
their side, but they're an awfully bitter pill for Americans to swallow if all they get in return is a few deck chairs moved around on the Titanic.
Sunday, November 6, 2005 ~ 9:25 a.m., Dan Mitchell Wrote: Christian Democrat Union lawmaker Leo Dautzenburg, a member of the CDU team which is currently locked in negotiations with the Social
Democrat Party (SPD) over Germany's future tax and finance policies, told Bloomberg News in an interview this week that both parties have agreed that sales of corporate stakes in large German companies
should become subject to tax at a "moderate rate". A similar tax had been ...abolished by former Chancellor Gerhard Schroeder in 2000,
which meant that the sale of cross holdings has been free of tax since January 2002.
Saturday, November 5, 2005 ~ 2:18 p.m., Dan Mitchell Wrote: On Oct. 18, the FBI released the final data for 2004. It shows clearly that in the months after the law sunset, crime went down. During 2004
the murder rate nationwide fell by 3 percent, the first drop since 2000, with firearm deaths dropping by 4.4 percent. The new data show the monthly crime rate for the United States as a whole during 2004, and
the monthly murder rate plummeted 14 percent from August through December. By contrast, during the same months in 2003 the murder rate fell only 1 percent. Curiously, the seven states that have their own
assault-weapons bans saw a smaller drop in murders last year than the 43 states without such laws. States with bans averaged a 2 percent decline in murders. States without bans saw murder rates fall by more
than 3.4 percent. Indeed, that, too, suggests that doing away with the ban actually reduced crime. ...The media really should not have been so wrong about what was going to happen. Not a single published
academic study has ever shown that these bans have reduced any type of violent crime. Even research funded by the Clinton administration didn't find that it reduced violent crime.
Saturday, November 5, 2005 ~ 11:45 a.m., Dan Mitchell Wrote: By 52%-48%, Colorado voters have given GOP Governor Bill Owens and state lawmakers a green light to suspend the state's Taxpayer Bill
of Rights, aka Tabor. Tuesday's passage of Referendum C allows the state to keep (read: spend) an estimated $4 billion over five years... we aren't so gloomy, especially since the main selling point of Mr. Owens
and other Referendum C supporters was that Tabor needed to be fixed, not eliminated. The vote was remarkably close considering that all of the establishment guns were lined up on one side. The tax hike was to be expected, especially in light of the "spend, spend, spend" message pounded out by the Colorado power structure.
An unprecedented lineup insisted that the state would starve if taxpayers didn't fork over the $3.7 billion. The five "bigs"--Big Government, Big Business, Big Labor, Big Education and Big
Media--pushed the ballot issues with zealous unanimity. No editorial page withheld its endorsement. Industry groups and chambers of commerce whipped their members and wrote fat checks. The "yes"
campaign outspent the "no" side almost 4 to 1. The whiff of corporate statism was in the air. With such a phalanx, it's surprising the taxers'
winning percentage was so low. ...The losing side in this campaign, defiant as Davy Crockett, argued for low taxes, budget discipline and
Tabor with teeth. They had the spirit of '76, "Don't tread on me." Whereas the winners, with their panacea of unlimited spending, played
to the civic passivity that Tocqueville chillingly foresaw: Americans as but "a flock of timid and industrious animals, of which government is the shepherd." Exaggeration? You decide.
Friday, November 4, 2005 ~ 11:00 a.m., Dan Mitchell Wrote: The United Nations wants control of the internet. ...the UN has decided it has an information age power of eminent domain and can take over
any communications network of international scope. ...The August report ...decries "unilateral control by the United States government"
and the fact that the highest levels of the internet "perform their functions today without a formal relationship with any authority". In
other words, the real problem in the collective mind of the United Nations is not that the United States controls the internet, but that no one does. ...The United Nations either does not understand or is
willfully ignoring the fact that the lack of control of the internet is not a bug -- it's a feature! ...At this time, it is unlikely that the United States
will voluntarily allow the UN to force its way into a role in managing the internet. David Gross, the coordinator for international communications and information policy at the State Department has
said so in so many words; "we will not agree to the U.N. taking over management of the Internet".
Friday, November 4, 2005 ~ 9:41 a.m., Dan Mitchell Wrote: The EU commissioner for taxation and customs union wants to discontinue the "anomaly" of privacy for tax purposes. Switzerland's
decisive role in the implementation of the EU's Savings Directive by setting up an anonymous withholding tax on savings income for EU residents instead of exchanging information has obviously opened the
European Commission's appetite for more. Austria, Belgium, and Luxembourg, which were able to temporarily adopt the same system, had better watch out. Unsurprisingly, the Commission and Kovacs
claim they are not against financial privacy or tax competition. "The real issue is the right mix of policies needed to reach our common
objectives in the EU," Kovacs recently explained in Zurich, pledging to maintain "the unique European social model and EU's overall approach to sustainable development". As a former communist
apparatchik in Hungary and a current vice-chairman of the Socialist International, the EU commissioner just does not believe in low taxes. "An overall high tax burden may not be a deterrent to productive
investment," he tells us. So Kovacs is all for "banking secrecy", but only "as long as it does not stand in the way of proper exchange of
information, particularly for purely tax purposes". In other words, keeping your finances private is fine if tax authorities can access your
bank accounts and show them to each other. ...The issue here is not so much about an additional fraction of a percentage point of economic
growth as a result of "tax competition". It has more to do with every European's fundamental right to his or her own property. There is no
rationale for suppressing a person's legitimate freedom of exit from bloated EU welfare states and horrendous tax burdens. On the contrary: People wise enough to recognize their positive contribution to
society by preventing part of their hard-earned money from landing into depraved government hands should be applauded.
Friday, November 4, 2005 ~ 9:12 a.m., Dan Mitchell Wrote: Back when Jimmy Carter signed the windfall profits tax during the last oil crisis, the results were the opposite of what the politicians intended.
The first adverse result, as recently documented by the Congressional Research Service, was that oil companies reduced their U.S. domestic production by 1.5 million barrels a day, or by almost 6%. Exploration
for new supplies slowed because the tax, by design, snatched as much as a third of the profit from these investments. The second effect, as shown in a famous study by Harvard economist Joseph Kalt, found that
U.S. reliance on foreign oil increased (by between 8% and 16%) after price controls and windfall profit taxes. Many of those calling for this supertax on Big Oil are the same people demanding that the U.S.
become more energy "independent." These are contradictory policy goals. ...The "windfall profits" in boom years offset the down years in
much the same way that restaurants make "windfall" profits on busy Saturday nights and Girl Scouts make "windfall" profits selling
lemonade on the hottest summer days. Many Americans are selling their homes in this hot real estate market for two or three times what they paid for them. Do Messrs. Kucinich and Dorgan want to slap a windfall
profits tax on home sales? ...If Americans want reliable supplies of oil and lower gas prices, they had better hope oil companies aren't prohibited from making money selling it. There's an estimated five
trillion barrels of oil retrievable from the Earth. We can say with certainty that it will be entrepreneurs in the virtuous quest for profits,
not gassy politicians or talk-show hosts, who will put that fuel in our gas tank.
Thursday, November 3, 2005 ~ 11:45 a.m., Dan Mitchell Wrote: Recent studies, by Alan Auerbach of the University of California at Berkeley and others, suggest that true reform -- changing to a
broad-based income or consumption levy that taxes income only once -- could yield once-and-for-all annual household income gains of 9%. A key lesson from economic research is that the bulk of the gain from tax
reform comes from reducing the bias against saving and investment, which slows capital formation and wage growth. Some years ago, Jonathan Skinner of Dartmouth College and I concluded from empirical
studies that reducing the tax burden on saving can have significant positive effects on household saving. And, studying firms' investment decisions during previous tax reforms, Kevin Hassett of the American
Enterprise Institute and I estimated large effects of tax changes on business investment. The direction for saving-and-investment reform is clear. Any plan -- whether aiming for a broad tax on income or
consumption -- should remove investor-level taxes on dividends, capital gains and interest. That does not imply that capital income escapes taxation. All income would be taxed once -- wages at the household
level and business income at the business level.
Thursday, November 3, 2005 ~ 10:30 a.m., Dan Mitchell Wrote: Halloween arrived early in Colorado this year as supporters of a pro-tax ballot initiative rolled out scare tactics to dramatize the
allegedly dire consequences of a "no" vote at the polls this Tuesday. We hope Colorado voters look to see what's hiding behind the fright
costumes. …At stake here is the fight over the future of the famous Colorado Taxpayer Bill of Rights law, or Tabor, as it is now commonly called. Tabor was approved by voters in 1992 to end the tax and
spending cycle of the 1970s and 1980s. It restricts increases in the state budget to the rate of population growth plus inflation. Any tax revenue
collections above that cap are returned to taxpayers. … This battle of Tabor has gained national attention because the law has become a template for at least two dozen other states seeking to restrain their
own stampeding taxes. Colorado is a worthy role model: The tax cap is one of the main reasons that economists cite for the state moving to 10 percentage points above the national average in personal-income
growth in the period after Tabor, from five points below it in the years before Tabor. Despite the state's recent fiscal ills, a compelling case can
be made that the automatic tax rebates in the 1990s saved it from even worse budget misery. The $3.3 billion that was returned to taxpayers would otherwise have been spent, probably on new obligations that
would have created a permanently larger spending base. Jon Caldara, who is leading the "Vote No" campaign, points out that the rebates are
all that "prevented us from looking like debt-ridden California in the last few years." … Many Colorado voters will remember that when Tabor was first debated in 1992, its enemies trotted out the same
Armageddon rhetoric that they are using now. Then-Governor Roy Romer predicted that Tabor would be so devastating that stopping it was "the moral equivalent of defeating Adolf Hitler at the Battle of the
Bulge." That fiscal "holocaust" never happened.
Thursday, November 3, 2005 ~ 9:51 a.m., Dan Mitchell Wrote: A very unusual referendum took place in Brazil last weekend. 120 million voters were summoned to the polls to decide whether to ban the
sale of firearms. …the ban on guns proposed by the government was rejected by close to 65 percent of the population… it was a resounding condemnation of the failure of the Brazilian state to make true on the
primary claim of any government -- i.e. that it will protect the people. The vote was essentially an indictment of the Brazilian authorities -- at
all levels -- as the guarantors of social order. Brazilians massively supported the argument put forward by the spokespersons for the "no"
side that banning guns would deprive the population of protection against bandits because the police, that quintessential government institution, is simply not to be trusted. For too long the Brazilian
government has done all sorts of things it should have left to private initiative -- to the detriment of its basic functions. What has the result
been? Brazilians' everyday-life experience of their government spells meddlesome bureaucracy, abusive corruption, and the crowding out of opportunity -- and no effective protection against predation.
Wednesday, November 2, 2005 ~ 3:15 p.m., Andrew Quinlan Wrote: The EU has roughly the same GDP as the U.S. -- each producing almost 30 percent of the world's GDP. But the EU has a third again as many people as the U.S., and hence the average European only has about two-thirds the income of the average American. The 25 nation EU, taken as whole, is America's biggest trading and investment partner, far outstripping China or Japan. Thus Americans and Europeans have an enormous interest in each others' economic well-being, because an economic "cold" on one side of the Atlantic will almost always be "caught" on the other side. ... The high growth countries of Europe understand that high taxes, particularly on capital and labor, kill incentives and lead to economic stagnation. France, Germany and some others, fearing productive tax competition, have pushed for "tax harmonization," which is nothing more than a code word for a high tax cartel. The outcome of these tax and regulation struggles within Europe will determine whether Europe as a whole remains one of the two great economic powers on the globe, or slowly slips behind China and the other Asian countries. http://www.washingtontimes.com/commentary/20051030-100355-1298r.ht m
Wednesday, November 2, 2005 ~ 10:19 a.m., Dan Mitchell Wrote: The United States can demand that other developed countries put an end to their practice of free riding on American innovation. No wonder
France, Germany and Japan can keep health care costs so low. They let U.S.-based companies spend the vast sums required to get a drug approved for the market (an average of $1.3 billion in 2003) and then
use price controls and other anti-competitive devices to avoid paying the cost. A study of 11 OECD countries (France, Germany, Canada, Japan, etc.) by the Commerce Department has found that all rely on
pharmaceutical price controls, which prevent drug companies from charging a market-based price for their products. The low price is achieved through what economists call "monopsony power"--the power
that a single buyer (in this case a nationalized health care system) has over multiple sellers. Prices for patented drugs that are 18 percent to 67 percent less than U.S. prices, depending on country. …It's U.S.
consumers who are getting the shaft. We pay while they get a free ride. The benefit to American purchasers "if there were no price controls (in
Europe) is in the range of $5 billion to $7 billion per year," says the study. The drug policies in Europe, Japan and Canada are quite simply
a trade issue. It's not time to go to the World Trade Organization just yet, but the office of the U.S. trade representative should be exerting
pressure immediately in bilateral talks with countries like Germany. Counterproductive price controls must end. The health of the world is at stake.
Wednesday, November 2, 2005 ~ 9:43 a.m., Dan Mitchell Wrote: One of every four doctors in North America, Britain and Australia is an immigrant who attended a foreign medical school, contributing to a
"brain drain" that deprives poor countries of good medical care, researchers say. …The study comes on the heels of a World Bank report
this week documenting the mass migration of middle-class professionals from impoverished nations in the Caribbean, Africa and Central America. … Africa has just 600,000 doctors, nurses and midwives for
600 million people, yet wealthy nations continue "poaching" them, Drs. Lincoln Chen of Harvard University and Jo Ivey Boufford of New York University wrote in an accompanying editorial.
Wednesday, November 2, 2005 ~ 8:30 a.m., Dan Mitchell Wrote: Dutch witches are getting a tax break. A court has ruled that the cost of witchcraft lessons can be taken as a tax deduction. … The court found
on Sept. 23 that a witch can declare schooling costs if it increases the likelihood of employment and personal income. … Courses are held 13 weekends a year closest to a full moon when outdoor rituals are
practiced and potions boiled. Participants learn healing with herbs and stones, divination and fortunetelling with crystal balls and hieroglyphs, and how to make potions. The cost is $206 per weekend, including
reading material, lodgings and the tools needed for witchcraft. The full course of 13 weekends runs $2,678 and is open to women and men over 18.
Tuesday, November 1, 2005 ~ 11:10 a.m., Dan Mitchell Wrote: The private sector bears the major burden of the effort to choke off funding for terrorists. … Millions of prospective and current customers
are hampered by tougher compliance standards. … The compliance costs for financial institutions are substantial. … The total cost of complying with anti-terror financing regulations is difficult to
determine… According to a global study of about 200 banks last year by KPMG, those interviewed increased investments on anti-money-laundering activities by an average of 61% in the prior
three years. …Yet all this effort has yielded depressingly few tangible results. America's Treasury says more than 1,000 grand-jury subpoenas and more than 150 indictments have been handed down, although there
has been nothing like that many convictions. … Many experts, both in government and the private sector, admit that the chances of detecting terrorists' funds in a bank sufficiently far in advance of a planned
attack that it can be prevented are incredibly small. "In my view, it's hardly worth the effort," says one banking industry official in Europe.
Critics note that a number of terror attacks have occurred this year—in Saudi Arabia, Jordan, Russia, Egypt, Britain, Bali (again), not to mention Iraq—and they often seem to involve very little money. …
international regulators keep layering on new laws and recommendations in an effort to keep pace. The result is what Mr Passas calls a "regulatory tsunami". … experts admit that big financial
centres such as London and New York—by virtue of the huge money flows going through them—are probably still major hubs for laundered funds and terror financing. … For KPMG's Mr Dillon, the resources
already spent on the effort have handed a victory to the terrorists. "The cost to our global economy is so large, they've already had the effect they wanted," he says. "The increasing costs of compliance and
technology are a form of terrorism. We're damaging ourselves."
Tuesday, November 1, 2005 ~ 9:26 a.m., Dan Mitchell Wrote: Getting law-abiding citizens to disarm or register their weapons is easy. The hard part is taking guns away from criminals. Toronto's gangs
have no trouble getting the illegal drugs they sell. Since they are already involved in a criminal trade, why should we expect that the law would
keep them from acquiring guns to defend their turf? The experiences of the U.K. and Australia, two island nations whose borders are much easier to control and monitor, should also give Canadian gun
controllers pause. The British government banned handguns in 1997 but recently reported that gun crime in England and Wales nearly doubled in the four years from 1998-99 to 2002-03. Since 1996, serious violent
crime has soared by 69%: Robbery is up by 45% and murders up by 54%. Before the law, armed robberies had fallen by 50% from 1993 to 1997, but as soon as handguns were banned, the robbery rate shot back
up, almost back to 1993 levels. The crooks still had guns, but not their victims. The immediate effect of Australia's 1996 gun-control regulations was similar. Crime rates averaged 32% higher in the six
years after the law was passed (from 1997 to 2002) than in 1995. The same comparisons for armed robbery rates showed an increase of 74%. Outside of Canada and Europe, skepticism of gun-control laws'
effectiveness is widespread. It was the major reason why Sunday's referendum to ban guns in Brazil was defeated by an almost two-to-one vote. Despite progressively stricter gun-control laws in that country,
murder rates rose every year from 1992 to 2002. As in the U.K., the regulations simply tilted the balance of power in favour of criminals.
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