CF&P E-mail Update, December 18, 2004

The Market Center Blog

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Freedom and Prosperity
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Center for Freedom and Prosperity's E-mail Update

1) Milton Friedman calls for smaller government

2) EU accused of "Financial Terrorism."

3) Good primer of Social Security reform

4) A better Social Security system

5) Make the supply-side tax cuts permanent

6) Richard Rahn:  Competitive currencies are best option to eliminate exchange rate fluctuations

7) Economic Freedom in America: Ranking the 50 States

8) Senate Democrat leaders wants to get rid of income tax, warns against US becoming like Europe

9) Anti-money laundering laws impose huge costs and generate scant benefits

10) Rampant tax evasion in France

11) Financial Times editorializes for flat tax

12) U.S. is losing race for lower corporate tax rate

13) OECD calls for increase in corporate tax burden

14) Dan Mitchell's Speech in Holland: Europe Must Reduce Burden of Government to Achieve Lisbon Strategy

15) The Problem with Democrats and the Problem with Republicans

16) Great Example of Government Waste

 

1) Milton Friedman calls for smaller government

Writing for the Wall Street Journal, Nobel Laureate Milton Friedman urges policy makers to continue Reagan's agenda for smaller government and more freedom.

[Excerpt from Dr. Friedman's commentary:]

Reagan's election brought the growth in government non-defense spending to a halt. As of 2003, government non-defense spending equaled 30% of national income, the same as it was in 1983. Government intervention through regulation and controls did fall somewhat during Reagan's presidency, but has since resumed its steady rise. ...We have largely won the battle of ideas... we have succeeded in stalling the progress of socialism, but we have not succeeded in reversing its course. ...That is the overriding non-defense task for the second Bush term -- as President Bush clearly recognizes. [Link to full article below:]

December 9, 2004, The Wall Street Journal, By Milton Friedman, The Battle's Half Won
http://online.wsj.com/search#SB110255773839695254   (subscription required)

CF&P Market Center Blog:
http://www.freedomandprosperity.org/blog/2004-12/2004-12.shtml#103

 

2) EU accused of "Financial Terrorism."

Deputy David Jones, a Member of the States of Guernsey, is sick of the heavy handed tactics of the European Union. David Jones says that the EU is using "financial terrorism" to force the bankrupt policies of old Europe on the "buoyant and well regulated economies" of the low-tax countries around the world.  Deputy Jones writes in part.

[Excerpt from Deputy David Jones' comments:]

The French Finance Minister's obsession with tax harmonisation across the EU has now seen him consorting with others, in what can only be described as flagrant economic terrorism, the purpose, to force harmonisation further up the EU's agenda. Given that EU tax laws cannot be altered without the agreement of all the member states, has sparked a flurry of activity by certain EU finance Ministers to step up their campaign to have the right of veto removed, their behaviour in this matter can only be likened to a bunch of terrorists launching a campaign in order to scupper resistance by those who have no wish to sign up to the horrifying and unworkable concept of tax harmonisation. ... Financial terrorism is now apparently an acceptable weapon used to impose the will of the failed stagnant economies of the EU on successful buoyant and well regulated economies of the offshore finance centres around the globe. The New Oxford English dictionary defines terrorism as "the use of violence and intimidation in pursuit of political aims" I can think of no better description to describe the methods used to impose the so called bi-lateral agreements recently demanded by the EU.  ... The EU knows that it cannot compete for business with its present high tax rates, while at the same time watching investment in Europe decline, so with it's usual unimaginative zeal, they have decided that their only course of action is to extinguish competition elsewhere, wherever it exists. The European cartel can only work if all avenues of choice are choked off to businesses and citizens resident within the EU. The current opening salvo from the EU on corporation tax is just one of many deliberate actions to come, the ultimate aim of this economic terrorism is to erode the competitive business climate built up over several years by the offshore dependencies, to the point where financial business takes flight to other less well regulated jurisdictions outside the EU.  … Now that the EU has seen that these acts of economic terrorism are producing results, I fully expect shortly a new set of demands to be put on the table with the same revolver placed along side them. We will in the future have to be much more robust in defending our right to be different. The new European constitution signed recently by Blair and Straw shows the disdain they have for the democratic process,  considering that the referendum on this subject ought to have been put to the British people first. [Link to full article below:]

November 2004, Deputy David Jones -- Pilots Lodge, Guernsey. Article for the European Journal : EU Tax Terrorism
http://www.freedomandprosperity.org/blog/david_jones.pdf

CF&P Market Center Blog:
http://www.freedomandprosperity.org/blog/2004-12/2004-12.shtml#033

 

3) Good primer of Social Security reform

A Wall Street Journal editorial and accompanying column by the President's chief Economic Adviser explain why personal retirement accounts are necessary.

[Excerpt from Wall Street Journal editorial:]

The notion was that Social Security would nick a little bit off everybody's paycheck with a payroll tax and then redistribute that money to anybody over retirement age. The holding pen for this pay-as-you-go transfer was called, brilliantly if dishonestly, a "Trust Fund." Demography made the whole arrangement work for a long time. In the 1930s there were 41 workers for every one retiree; the payroll tax could thus be set at a low rate -- about 2% for the first $3,000 of earnings. It was quite a deal for the beneficiaries -- the average rate of return for people retiring in 1940 was 114%. And like all income redistribution programs, Social Security presented politicians with lots of incentives for sweetening. In the 1950s, Congress started increasing both benefits and the number of people covered. At the same time, however, the demographics were turning sour. Life expectancy was rising to the 78 years it is today, from 69 years for men born in 1940. And fertility rates were declining, from 2.2 children per woman in 1940, to a peak of 3.7 in 1957, to two per woman right now. No surprise, then, that the ratio of workers to retirees began to fall -- in 1950, it had dropped to 16 workers to one retiree and now it is just three to one. Payroll taxes have had to rise accordingly -- they are now 12.4%. And real rates of return have gone into a free-fall; real returns for workers born in 1960 and retiring in 2025 are less than 2%.[Link to full article below:]

[Excerpt from Dr. Mankiw's article:]

Without reform, we will face little choice but vastly higher taxes and the resulting drag on economic growth. For example, putting Social Security permanently on a sustainable basis through a higher payroll tax would involve raising the tax rate from 12.4% of wages up to the earnings limit to 15.9% -- an increase of $1,400 for a family making $40,000 a year. Delay only makes the required tax increases even larger. Such large tax increases would have adverse effects on the overall economy. Ed Prescott, the most recent winner of the Nobel Prize in economics, has shown that a large part of the difference in performance between our economy and those in Europe is that Europeans work less because they are taxed more. Raising taxes to solve the Social Security shortfall would, in essence, make the U.S. economy more like those of Europe. That is not the direction we should be heading. ...In the upcoming debate over alternative proposals, everyone should be careful to avoid the sophistry of those opposed to reform. In particular, we should be wary of comparisons between a new, reformed Social Security system and current law. The benefits now scheduled for future generations under current law are not sustainable given the projected path of payroll-tax revenue. They are empty promises. Unless a listener is discerning, empty promises will always have a superficial appeal. [Link to full article below:]

December 16, 2004, The Wall Street Journal: Review & Outlook, The Social Security
http://online.wsj.com/article/0,,SB110315966081601640,00.html?mod=opinion&ojcontent=ote p (subscription required)

December 16, 2004, The Wall Street Journal, By N. Gregory Mankiw,
http://online.wsj.com/article/0,,SB110316027904101665,00.html?mod=opinion&ojcontent=ote p   (subscription required)

CF&P Market Center Blog:
http://www.freedomandprosperity.org/blog/2004-12/2004-12.shtml#162

 

4) A better Social Security system

The current government-run retirement system leaves workers completely depending on political promises. As the Wall Street Journal explains, personal accounts are a necessary component of reform:

[Excerpt from WSJ article:]

Social Security benefits are not guaranteed. Just like all entitlement programs, they can -- and have been -- changed by Congress. The Social Security administration itself says so and so did the Supreme Court when it ruled, in Flemming v. Nestor, that workers and retirees have no legal claim to benefits. Regardless of how much in taxes they have paid into the system. But here, too, a solution is at hand. Look no further than Plan Two offered by the President's Commission to Strengthen Social Security, in 2001. This plan would allow workers to divert 4% of their payroll taxes, up to $1000, to personal accounts. Workers who decide to open personal accounts would forego a portion of their traditional Social Security benefit -- depending on the amount of payroll taxes they diverted. That offset however does not get the system to solvency. For that, Plan Two changes the way benefits are allowed to grow. How? You guessed it, by replacing the computation of benefits via wage indexing to a policy under which initial benefits would grow from one cohort to the next at the rate of price increases. Thus, workers with identical real wages would receive the same real benefit, regardless of age difference. [Link to full article below:]

November 23, 2004, The Wall Street Journal, By Susan Lee, All You Need To Know About Social Security: The Dismal Science
http://online.wsj.com/article/0,,SB110117497648381576,00.html?mod=opinion&ojcontent=ote p   (subscription required)

CF&P Market Center Blog:
http://www.freedomandprosperity.org/blog/2004-11/2004-11.shtml#238

 

5) Make the supply-side tax cuts permanent

The Wall Street Journal opines in favor of permanent tax cuts - especially for the tax cuts that improve incentives to work, save, and invest. Extending the pro-growth tax cuts is especially critical if lawmakers want more economic growth.

[Excerpt from Wall Street Journal:]

...the tax cuts at issue are precisely those that helped to lift the economy out of its doldrums after they passed in mid-2003. The quarterly GDP figures tell the tale. While the first round of Keynesian, phased-in Bush tax cuts in 2001 did little, round two focused on boosting the incentives that would invigorate the economy's animal spirits. We doubt Republicans would be sitting on larger House and Senate majorities if they hadn't passed those lower rates. Nonetheless, the 15% rate on capital gains and dividends expires at the end of 2008, while the marginal-rate cuts on income expire in 2010. Some Republicans are asking what's the rush, since those expiration dates are still a ways off. But investors have to think long term, and if they conclude that those lower rates are going to expire they will plan accordingly. Not extending those cuts would mean a substantial tax increase, and its impact on investment and growth would be felt long before 2008. [Link to full article below:]

December 16, 2004, Wall Street Journal Review & Outlook Editorial, Tax Cut Worryworts: There will never be a better time to make the tax cuts permanent than now.
http://www.opinionjournal.com/editorial/feature.html?id=110006034

CF&P Market Center Blog:
http://www.freedomandprosperity.org/blog/2004-12/2004-12.shtml#163

 

6) Richard Rahn: Competitive currencies are best option to eliminate exchange rate fluctuations

Richard Rahn explains that monopolistic national currencies necessarily result in exchange rate fluctuations, even if central bankers genuinely are trying to do the right thing by seeking price stability.

[Excerpt from Dr. Rahn's commentary:]

A currency is supposed to provide a benchmark to determine the relative value of goods and services. So long as the major central banks use different and elastic benchmarks, the world will suffer from exchange rate instability. Neither Alan Greenspan, nor the leaders of the European Central Bank or the Bank of Japan (and even yours truly) know how to properly define money or determine how much should be supplied. What is to be done? The great and Nobel Prize-winning economist F.A. Hayek provided the answer for us more than 30 years ago: Governments should give up their monopoly over money. If the market could operate freely, private parties would compete to provide the "best" money. Ultimately, we might end up with a global commodity basket standard, a gold standard or some other measure that best provides the functions of money. Governments would still need to define the appropriate measure for tax and government payments, but private parties could contract in whatever "money" they wished to for all goods and services, including labor. For private monies to compete effectively, all capital gains' taxes would need be eliminated from currency transactions. Short of this reform, destructive exchange rate swings probably will continue to plague the world. [Link to full article below:]

December 7, 2004, The Washington Times, By Richard W. Rahn, Euro vs. $ myths
http://www.washingtontimes.com/commentary/20041206-085213-6624r.htm

CF&P Market Center Blog:
http://www.freedomandprosperity.org/blog/2004-12/2004-12.shtml#084

 

7) Economic Freedom in America: Ranking the 50 States

The Pacific Research Institute has just released a thorough study measuring the level of economic freedom in the 50 states. Not surprisingly, their statistical analysis confirms that economic freedom means more prosperity.

[Excerpt from Pacific Research Institute's study:]

Tenth in 1999, Kansas has assumed the lofty spot as the nation's most economically free state, followed closely by Colorado and Virginia. Idaho, at the top of the 1999 list, remains high at fourth. Rhode Island, Connecticut, California, and New York bring up the rear. ...Turning to the states that made the biggest progress from 1999 to 2004, we found that Arizona advanced 14 places, and Colorado, Maine, Oklahoma, and Oregon each jumped 12 places. In contrast, Mississippi fell 19 places, Alabama 14, and Illinois, Kentucky, Ohio, and South Dakota each sank 10 spots. ...We constructed an economic model that explains the level of state annual income per capita in 2000... The regression results, robust across specifications, show that more economic freedom is associated with higher income per capita across the U.S. states. The results are virtually identical if economic freedom rankings are substituted for economic freedom scores. The statistical analysis shows that a 10-percent improvement in a state's economic freedom score yields, on average, about a half-percent increase in annual income per capita. ...Relative to the freest state, Rhode Island residents suffered the largest reduction in annual income per capita due to their loss of economic freedom, $3,607, followed by Hawaii at $2,963, and New York and New Jersey at around $2,400 each. The national average was $1,161. This might not sound like much, but over a 40-year working life at a conservative 3 percent interest rate, this translates into $87,541 that would have otherwise gone into the pocket of an average working American. Rhode Island also had the highest effective "oppression tax," 13.17 percent, followed by Hawaii at 11.36 percent, Maine at 7.61 percent, and New York at 7.45 percent. The national average was 4.42 percent of income. State institutions have a substantial impact on income levels across the U.S. states. Economic freedom matters significantly. [Link to full article below:]

November 2004, Pacific Research Institute, by Ying Huang, Robert E. McCormick and Lawrence J. McQuillan, U.S. Economic Freedom Index: 2004 Report
http://www.pacificresearch.org/pub/sab/entrep/2004/econ_freedom/index.htm

CF&P Market Center Blog:
http://www.freedomandprosperity.org/blog/2004-11/2004-11.shtml#254

 

8) Senate Democrat leaders wants to get rid of income tax, warns against US becoming like Europe

Senator Harry Reid of Nevada comes for a state with no income tax. Moreover, Nevada companies are some of the best tax planning vehicles in the world. Not surprisingly, Senator Reid has a much friendlier attitude toward tax reform - though he specifically warned on Meet the Press that America should never be like Europe and have both a consumption tax and an income tax.

[Excerpt from Meet the Press transcript:]

The income tax code, as we know it, is tough, it's unworkable. You know, we couldn't put the code on this desk. And I think we should work towards simplifying it.  We had a pretty good program, Bradley-Gephardt, where we had three tax structures, but, of course, we changed that.  Congress changed that and now it's more complicated than ever. What I am concerned about that's happening with the talk that's coming from 17th and Pennsylvania Avenue is that they're talking about having a consumption tax and an income tax. That's the worst of all worlds.  That's what they have in Europe where you have an income tax and you add on that the value-added tax. It's a terrible system.  So what I say is if we can figure out a way to make our tax less burdensome and if we could go to a consumer based tax, I think it would be wonderful. But the transition rules of that are very difficult and I have looked into that. It's extremely difficult. [Link to full transcript below:]

December 5, 2004, NBC News' Meet the Press, Guests: Sen. Harry Reid (D - NV), President Ghazi al-Yawar of the Interim Government of Iraq
http://www.msnbc.msn.com/id/6646457/

CF&P Market Center Blog:
http://www.freedomandprosperity.org/blog/2004-12/2004-12.shtml#073

 

9) Anti-money laundering laws impose huge costs and generate scant benefits

The UK-based Times reports on a new study showing that compliance burdens imposed by regulators now account for 15 percent of total costs for financial companies. Such costs might be acceptable if they generated a concomitant benefit, but there is no evidence that anti-money laundering laws put a noticeable dent in either crime or terrorism.

[Excerpt from Times article:]

The cream of the City lined up to lambast the Financial Services Authority (FSA) yesterday, accusing the regulator of forcing ever-heavier compliance costs on them. The financial watchdog's regime placed "too great a burden" on firms, prevented the offering of new products and services and was detrimental to consumers, the Financial Services Practitioner Panel, an FSA monitoring body, concluded. No fewer than 29 per cent of all City firms, including banks, brokers, advisers and fund managers, complained that compliance now accounts for more than 15 per cent of their total costs, according to a survey commissioned by the panel, which comprises 14 senior City figures. Smaller retail firms were even harder hit, with 36 per cent of them saying that compliance expenses had breached the 15 per cent level. ...On costs, firms were not so much concerned about the levy imposed on all City firms as the level of investment in staff and systems to ensure they were compliant. The majority said the cost was "excessive" and only one firm in ten thought the expense was reasonable. Nine out of ten think compliance costs will continue to rise. Many also attacked the FSA's cost-benefit analysis for underestimating the cost of new rules and overstating the likely benefits. [Link to full article below:]

December 17, 2004, The Times (London), By Patrick Hosking, City attacks FSA over costs burden
http://business.timesonline.co.uk/article/0,,9063-1406264,00.html

CF&P Market Center Blog:
http://www.freedomandprosperity.org/blog/2004-12/2004-12.shtml#182

 

10) Rampant tax evasion in France

The UK-based Times reports on widespread tax-dodging in France, an inevitable consequence of an oppressive tax system. Many of France's successful people are moving overseas - and those that don't wind up fighting with a greedy government. No wonder the French government is seeking tax harmonization. The politicians foolishly think that people won't escape if the rest of the world is forced to live under the same wretched system.

[Excerpt from the Times article:]

Florent Pagny, 43, one of France's biggest pop stars, is defending himself in the appeal court against a tax-evasion conviction which got him a suspended prison sentence and £30,000 fine last January. He is the latest in a line of French celebrities convicted of "forgetting" to declare large chunks of income: about £300,000 in his case. Since avoiding tax is a French national sport, to use the words of Jacques Delors, a former Finance Minister, celebrity miscreants often enjoy sympathy. However, Pagny, who styles himself a left-wing rebel, has made his case a national cause by scoring a smash hit with a song casting himself as a heroic martyr to the greed of the tax man. Called Ma Liberté de Penser (My Freedom of Thought), the song tells the taxman: "Seize my wife, the sofa, the microwave, the fridge . . . I can empty my pockets on to the table. They have long had a hole in them. But you can't take away my freedom to think." ...The problem for le fisc, as the inland revenue is nicknamed, is that "everyone else" does not pay their dues to the state in France, which is one of the world's most-taxed nations. Plain evasion is estimated to cost the state £31 billion a year. Hairdressers and restaurateurs for example, were alleged in a recent study to declare only 50 to 55 per cent of their income. President Chirac's admission two years ago that he used stacks of cash to pay for holidays and air tickets added to a widespread belief that the elite might not be eager to declare everything. ...Another big loss of state revenue comes from a growing exodus of the rich, including a roll-call of France's showbiz and sports stars, to lower tax territories. Switzerland tops the list of tax havens, then Britain and the United States. ...An estimated £7.6 billion was lost between 1997 and 2002 to Switzerland, whose estimated 100,000 French tax exiles include Charles Aznavour, Amelie Mauresmo, the tennis star, and Alain Prost, the former Formula One champion. Some try more exotic locales. Pagny now lives in Patagonia. Jean-Christophe Mitterrand, the son of the late President, who was sentenced to 13 months suspended for tax evasion on Wednesday, failed to convince the court that he was resident in Mauritania. [Link to full article below:]

December 10, 2004, The Times (London), by Charles Bremner, French pop star refuses to sing to taxman's tune
http://www.timesonline.co.uk/article/0,,3-1396523,00.html

CF&P Market Center Blog:
http://www.freedomandprosperity.org/blog/2004-12/2004-12.shtml#154

 

11) Financial Times editorializes for flat tax

Though it is not known as a free-market newspaper, a recent editorial in the Financial Times correctly notes that high tax rates undermine growth and encourage evasion. The editorial specifically praises the pro-growth flat tax reforms in Eastern Europe.

[Excerpt from Financial Times article:]

If you tax something, you will get less of it: if you subsidise something, you will get more of it. Britain seems far from recognising these incentive effects in aspects of fiscal policy, as this week's pre-Budget report showed. ...Try as the Treasury might, there is no stopping the anti-avoidance treadmill - as fast as one loophole is closed, another opens. High taxes encourage the transformation of income and capital gains into tax-free pension contributions or dividends taxed at lower rates, or their diversion into stripped corporate bonds or options. Raising the level of taxation on income means less income to tax - though not necessarily less income for the taxpayer. ...Many of the countries in transition from planned economies to the market have recognised the impact of these perverse fiscal incentives. Faced with large-scale tax evasion and avoidance, countries in eastern Europe and the former Soviet Union have introduced low, flat-rate taxes with minimal allowances and exemptions. This has boosted revenues, made them more attractive to inward investors and entrepreneurs - and less attractive to the tax advisers who are among the main beneficiaries of high taxation. ...As many of the new market economies have recognised, lower tax rates and fewer exemptions are good for raising revenues - and good for encouraging business. [Link to full article below:]

December 6, 2004, Financial Times
http://news.ft.com/cms/s/d16f56f0-4598-11d9-8fcf-00000e2511c8.html   (subscription required)

CF&P Market Center Blog:
http://www.freedomandprosperity.org/blog/2004-12/2004-12.shtml#064

 

12) U.S. is losing race for lower corporate tax rate

Richard Rahn's column in the Washington Times catalogues the dramatic shift to lower tax rates around the world. In many nations, the corporate tax rate is less than 20 percent. Sadly, America is not competing in this race. Indeed, the U.S. corporate tax rate is even higher than the corporate tax rates in welfare states like France and Germany.

[From Richard Rahn's article:]

Many countries, seeking higher economic growth and employment, have sharply cut their tax rates. Ireland cut its corporate tax rate from 43 percent to only 12 1/2 percent, attracting investment from around the world and, in turn, becoming not only one of the fastest-growing but one of the wealthiest economies in Europe. The new market economies of Eastern Europe seeking high growth and rapid job creation have also been cutting their corporate tax rates. Slovakia, Lithuania and Poland have a 19 percent corporate rate; Hungary 16 percent; Slovenia and Latvia 15 percent; and Bulgaria just announced it will move to a 15 percent rate next year. Montenegro, not to be outdone, announced it will go to a 9 percent rate. Estonia has become the champion by going to a zero rate on reinvested profits. As a result of this competition, even France (34 percent) and Germany (38 percent) have been forced into modest corporate tax reductions, giving them lower rates than corporations face in the United States. American companies now have an average 40 percent rate (including state corporate taxes), and only very poorly performing Japan with its 42 percent rate is higher. [Link to full article below:]

December 1, 2004, The Washington Times, By Richard W. Rahn, End corporate income tax
http://www.washingtontimes.com/commentary/20041130-084445-1131r.htm

CF&P Market Center Blog:
http://www.freedomandprosperity.org/blog/2004-12/2004-12.shtml#016

 

13) OECD calls for increase in corporate tax burden

In a bizarre move, the OECD has once again allied itself with left-wing fringe groups and is calling for companies to pay more tax than is legally required. This new attack on tax planning seeks to demonize taxpayers who legally structure their affairs to minimize the amount of money transferred from the productive sector of the economy to government.

[Excerpt from the Business Day article:]

In the US, avoiding taxes has been dubbed unpatriotic. In the UK, the Inland Revenue has compared it with drinking and driving. Tax avoidance is firmly on the agenda of the "corporate social responsibility" movement, says the Organisation for Economic Co-operation and Development (OECD). ...Does aggressive tax planning put a company's reputation as a good corporate citizen at risk? Or is it simply minimising costs a duty to shareholders? ...The effort expended on reducing tax bills is partly due to the growing emphasis on shareholder value. Moreover, globalisation has created new opportunities for tax avoidance. But the tax-planning industry defends its methods vigorously and cites globalisation in its defence. Many in the tax-planning business believe tax should be a matter of law, not morals. "Taxation is no more than legalised confiscation of someone else's money," argues Stephen Edge of law firm Slaughter & May . He thinks companies if not individuals are justified in seeking to minimise their bills. Scepticism about tax morality has a long tradition. "Taxes are enforced exactions, not voluntary contributions," said a US judge in 1947. "To demand more in the name of morals is mere cant." ...The OECD's Jeffrey Owens thinks that the emergence of nongovernmental organisations intent on exposing largescale tax avoiders could eventually achieve a change in attitude comparable to that achieved on environmental and social issues: "Tax is where the environment was 10 years ago." [Link to full article below:]

November 24, 2004, Business Day (South Africa), by Vanessa Houlde, Tax and a tale of modern morality
http://www.bday.co.za/bday/content/direct/1,3523,1757527-6078-0,00.html

CF&P Market Center Blog:
http://www.freedomandprosperity.org/blog/2004-12/2004-12.shtml#013

 

14) Dan Mitchell's Speech in Holland: Europe Must Reduce Burden of Government to Achieve Lisbon Strategy

[Excerpt from speech:]

European Union politicians in March 2000 committed to make Europe, "…the most dynamic and competitive knowledge-based economy in the world capable of sustainable economic growth with more and better jobs and greater social cohesion and respect for the environment." While this "Lisbon Strategy" is a noble goal, there is no chance that Europe will achieve this goal by 2010. Indeed, Europe if falling further behind the United States in terms of per capita economic output and – if present trends continue – soon will have to worry about Asia.

In hopes of rejuvenating the Lisbon Strategy, a "High Level Group" chaired by a former Dutch Prime Minister was appointed to develop strategies to boost growth. Unfortunately, the subsequent "Kok Report" can only be described as a missed opportunity.

The good news is that the Report acknowledges a problem. It admits that Europe is falling behind – and that demographic changes will make things worse. The Kok Report also admits that Europe will face even more pressure in the future since international competition is becoming more intense. Some of the comparative figures (which, curiously, were not included in the Report) are startling. For instance: [Link to full article below:]

December 2004, Edmund Burke Foundation, By Daniel J. Mitchell, The Kok Report: Europe's Missed Opportunity
http://www.burkestichting.nl/content/en/lecturemitchell.html

 

15) The Problem with Democrats and the Problem with Republicans

Democrats: Pete du Pont explains for Opinionjournal.com that many Americans don't trust Democrats because Democrats don't trust people:

[Excerpt from Gov. du Pont's commentary:]

Liberals see themselves as self appointed Robin Hoods, but they are seen by red-county Americans as taking from the productive and giving to the indolent. They look down on average Americans as misguided and too dumb to know what is good for them and their families. Since such people are unlikely to make the right decisions, a wise government must do it for them. And of course the bigger the government, the better. An equally serious friend on the other side of the political spectrum says the acrimony of the past four years may have been intensified by social issues, but it is the economic issues that are determining the outcome of elections. He believes the liberal left may actually be winning on the social issues--that gay rights and stem-cell research, for example, are trending in their direction--but that liberals have suffered a wholesale rout on their economic beliefs. They were wrong about communism (it was an economic failure), wrong about socialism (it didn't work either), wrong about the welfare state, wrong about high taxes and government regulation of economic matters. [Link to full article below:]

November 29, 2004, The Wall Street Journal, By Pete du Pont, Pursue Happiness, Vote GOP: The real reason Republicans win.
http://www.opinionjournal.com/columnists/pdupont/?id=110005941

Republicans: The Wall Street Journal warns that the GOP is being corrupted by power. By approving wasteful spending and pork-barrel projects, many voters may wonder why they should bother voting Republican.

[Excerpt from WSJ editorial:]

Democrats discovered a provision that would have given Members of Congress access to individual tax returns. The intention was apparently to let Congress inspect IRS performance, but the language was so sloppy that it would have allowed the intrusion into taxpayer privacy. Republicans tried to remove the language by voice vote with few Members in attendance last week, but Democrats unsurprisingly demanded a recorded vote to extend the GOP's political embarrassment. This is what happens when no one but a few staffers really knows what is in a bill that is 3,646 pages and more than a foot high. We remember, circa 1994, when Republicans denounced Democrats for not reading the bills that they passed. Now the GOP is guilty of the same practice, which is a recipe for all sorts of secret pork and mayhem getting into law. ...Democrats have also learned to skewer Republicans for their individual "earmarks," which by one account total 18,000 this year and add up to $22 billion. These pork-barrel classics -- e.g., $1 million for a "Wild American Shrimp Initiative" -- obscure the larger truth that this year's spending bill is actually the first in years to show some restraint. Domestic non-defense discretionary spending will rise by less than 2% in Fiscal Year 2005. But what many voters will remember instead is that Republican incumbents are as spendthrift as Democratic incumbents. ...With control of the House, Senate and White House, Republicans are now going to be held accountable for Congress's decisions. If they talk like conservatives but spend like Democrats, voters may decide to elect the real thing. [Link to full article below:]

November 29, 2004, The Wall Street Journal:  Review & Outlook. Budget Trap
http://online.wsj.com/article/0,,SB110168227858785138,00.html?mod=opinion&ojcontent=ote p (subscription required)

CF&P Market Center Blog:
http://www.freedomandprosperity.org/blog/2004-11/2004-11.shtml#294

CF&P Market Center Blog:
http://www.freedomandprosperity.org/blog/2004-11/2004-11.shtml#293

 

16) Great Example of Government Waste

A Florida newspaper has a great expose on the rampant waste, fraud, and abuse at the Federal Emergency Management Agency (FEMA). Ideally, a bunch of bureaucrats will be fired for this fiasco, but the more likely result is that they will get bonuses.

[Excerpt from Sun-Sentinel article:]

Government aid for Hurricane Frances bought Miami-Dade County residents rooms full of furniture, new wardrobes and thousands of appliances, including microwaves, refrigerators and sewing machines, even though the brunt of the storm missed the county. With damage limited primarily to a few fallen trees and power lines, residents claimed Frances destroyed 5,260 television sets and 1,440 air conditioners, according to records from the Federal Emergency Management Agency. Disaster relief paid for lawn mowers, vacuum cleaners, space heaters and cars.

FEMA paid $4,500 for one resident's funeral, even though the county medical examiner recorded no storm-related deaths. In six instances, FEMA blamed damage on "ice/snow." ...The Labor Day weekend storm made landfall in Martin County, more than 100 miles north of Miami-Dade. ...At the Old Hickory Bar, a check-cashing and liquor store in Liberty City, manager Eddie Thornton, who is also a landlord, said he was surprised when one of his tenants arrived to cash a $4,700 FEMA check for damage at one of his properties. "I own the place and I know there wasn't no damage," Thornton said. "I put the shutters up." He estimated his store has cashed as much as $500,000 in FEMA checks. ...As the cause of damage, inspectors cited "tornado-wind" for 195,909 items, although the National Weather Service recorded no tornados in the county during Frances. The top sustained winds reached 47 mph, less than a tropical storm. Inspectors blamed "sewer backup" in 14,644 instances. The Miami-Dade County Water and Sewer Department knew of no problems. [Link to full article below:]

November 21 2004, South Florida Sun-Sentinel, By Sally Kestin, Megan O'Matz, John Maines and Luis F. Perez, Miami-Dade cleans up on FEMA aid
http://www.sun-sentinel.com/news/local/southflorida/sfl-fema21nov21,0,547662.story

CF&P Market Center Blog:
http://www.freedomandprosperity.org/blog/2004-11/2004-11.shtml#237

 

Best regards,
Andrew Quinlan
Center for Freedom and Prosperity
President
202-285-0244
quinlan@freedomandprosperity.org
www.freedomandprosperity.org

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