I’ve already bragged that the Cato Institute is America’s best think tank, highlighting the fact that we took the lead in battling against Obama’s faux stimulus at a time when many were dispirited and reluctant to fight big government.

I’m biased, of course, so I’ll understand if you discount what I say. But I hope you’ll agree that my colleagues have put together an excellent video response to the President’s state-of-the-union speech.

As part of my contribution to the video, beginning around 6:35, I debunk the President’s class-warfare tax agenda by citing IRS data from the 1980s to explain that higher tax rates don’t necessarily mean higher tax revenue.

After a night’s sleep, here are a few additional observations on the President’s remarks.

• I was disappointed, but not surprised, that he repeated the economically foolish assertion that Warren Buffett pays a lower tax rate than his secretary.
• I also was not surprised that he didn’t say much about jobs and the economy. These four charts show he doesn’t have much to brag about.
• It was also noteworthy that he didn’t spend much time talking about Obamacare, which suggests that White House pollsters understand that government-run healthcare isn’t very popular.
• It was equally revealing that he didn’t spend much time on the so-called income inequality issue. Redistribution was implicit in what he said, to be sure, but the Occupy-Wall-Street crowd is probably disappointed that he didn’t explicitly embrace their agenda. More evidence that the pollsters played a big role in this speech.
• I’m definitely not surprised that he talked about eliminating Osama bin Laden. Kudos to the Commander-in-Chief.
• I was amazed that he had the gall to say “no bailouts,” particularly given his support for TARP, the Dodd-Frank bailout bill, and the giveaway to GM and the auto unions. And if the GM bailout is supposed to be a success, I’d hate to see his definition of failure.
• And I was stunned that he could talk about the housing meltdown and mortgage crisis without mentioning the Federal Reserve, Fannie Mae, or Freddie Mac. Sort of like analyzing World War II and pretending Germany and Japan didn’t exist.

Since most of the previous observation are critical, I want to stress that I’m not being partisan. I also was disappointed in the Republican response. Was the GOP smart to showcase a governor who was part of the big-spending Bush Administration? Especially one who has said nice things about the value-added tax?

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“If you wanted to destroy a city’s housing – short of bombing – the best way to do it is rent control,” says Cato legal associate Trevor Burrus.

While most cities in America long ago got rid of rent control, New York remains a bastion of government-mandated limits on what landlords can charge renters. About 50 percent of New York’s rental market is affected by rent control or rent stabilization, policies that keep rents artificially low and produce housing shortages, higher overall housing costs, and all sorts of corruption.

The court case Harmon v. Kimmel may finally bring an end to rent control laws that have been on the books in one form or another since the 1940s. James D. Harmon owns a building in Manhattan where the tenants are paying rents that are about 60 percent below the going market rate. After losing various legal battles at lower levels, Harmon has petitioned the Supreme Court to hear his argument that rent stabilization is a form of takings that should be prohibited under the Constitution. The Court has not yet announced whether it will hear the case but has asked the state and city of New York to respond to Harmon’s argument.

Cato’s Burrus wrote a friend of the court brief on the case and explains why rent control and rent stabilization are bad at promoting affordable housing and abridgments of economic freedom. (more…)

By refusing to set up a health care insurance exchange system that could be used to advance ObamaCare regulations, Gov. Bobby Jindal has cut a path that other state officials should follow, argue analysts with the Cato Institute.

However, other leading figures within Gov. Jindal’s own Republican Party remain divided on this question. Governors Rick Scott (R-Fla.), Scott Parnell (R-Alaska), Susana Martinez (R-N.M.) and Rick Perry (R-Texas) have all expressed opposition to an exchange system in their states. But Gov. CL “Butch” Otter of Idaho, Rep. Bill Cassidy (R-La.), and other GOP officials, disagree.

They view the exchange system as a viable tool for advancing patient-centered, market-friendly health care reforms that can lower costs and expand consumer choice. Earlier this month, the U.S. Department of Health and Human Services (HHS) released a set of proposed rules that “set minimum standards” for the exchanges.

But the suggested guidelines are so incomplete and uncertain that states cannot make an informed decision on whether they should participate, said Bruce Greenstein, Louisiana’s secretary for the Department of Health and Hospitals (DHH).

Greenstein supports Gov. Jindal in his decision to remain outside of the exchange system. “This is very good policy on the part of Gov. Jindal for today, and tomorrow it will be seen by the rest of the market as very forward thinking, and very savvy in terms of the way we move forward and protect the market of health insurance in Louisiana; we need to be able to access high quality insurance products at a good cost,” Greenstein said. “We continue to be very prudent in our approach.”

However, Cassidy, who is a medical doctor and a vocal opponent of the federal health care law, said in an interview that it may be advantageous for states to put their own “imprimatur” on a health care exchange before federal officials advance new regulations.  He cited the Utah system, which is already up and running, as a model for what might work in Louisiana and other states.

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Here’s a new video from the Cato Institute that looks at the “Cut, Cap, and Balance” proposal, and analyzes that budget reform in the broader context of the debt-limit fight and America’s looming fiscal crisis.

The video features my commentary, along with the sage analysis of my Cato colleague Chris Edwards. We make two simple points. First, fiscal reforms are necessary because America faces a Greek-style fiscal crisis if we leave the federal budget on autopilot.

Actually, America’s collapse will be worse since we won’t get a bailout from the IMF. Yet this doesn’t seem to bother President Obama, who apparently views the debt-limit fight as an opportunity for class-warfare demogaguery and transparent efforts to seduce the GOP into a suicidal tax-hike deal.

Second, the fiscal reforms that are necessary should be very feasible since they actually involve relatively modest spending restraint. Genuine spending cuts would be preferable, of course, but merely slowing the growth of spending can put America on a sustainable path.

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In the year that has passed since the Supreme Court decided Citizens United v. FEC, the liberal elites have waged a war against the First Amendment.  Liberal politicians including President Barack Obama and Senator Harry Reid, liberal media corporations like the New York Times, and labor unions have joined together to support restrictions on speech and liberty.

Their proposals for “reform” have fallen flat, in large part because they have been exposed as efforts to chill the Freedom of Speech.  These attacks on the First Amendment have used populist rhetoric in an attempt to silence corporate speech.  These efforts to silence corporations are difficult to reconcile when one sees that the New York Times, a media corporation, published a new proposal for “reform” authored by the founder of a non-profit corporation, aimed at silencing speakers that do not support their liberal world view.

In the April 4, 2011 edition of the New York Times, David Callahan launched an ideological attack on the boogeymen de jour, Charles and David Koch.  Callahan sets the tone of his article by attacking the Koch brothers for “conceal[ing] the recipients of their largess.”  In order to prevent this from occurring, Callahan would “require all nonprofit organizations that engage in political advocacy to reveal their donors.”

While Mr. Callahan alleges the current system can be utilized by the left and the right, he seems particularly offended by David Koch’s support of “ideologically driven organizations like the Cato Institute.”  Callahan argues that such groups should be treated differently from other not-for-profit organizations.

(more…)

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On today’s edition of Coffee and Markets, Brad Jackson and Francis Cianfrocca are joined by Dan Mitchell to discuss the Federal reserve, free banking, monetary policy and more.

We’re brought to you as always by BigGovernment and Stephen Clouse and Associates. If you’d like to email us, you can do so at coffee[at]newledger.com. We hope you enjoy the show.

Related Links:

Time to End the Fed? The Origin of Central Banking and Possible Alternatives
End the Fed: More than Just a Bumper Sticker Slogan?
Dan Mitchell and the CATO Institute
Dan’s Blog: International Liberty

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“…to the end it may be a government of laws and not of men.”

John Adams, Samuel Adams and James Bowdoin, Constitution of the Commonwealth of Massachusetts, 1780

In a blatantly unconstitutional move, the Feds have let McDonalds off the hook from some of ObamaCare’s requirements. This violation of the Equal Protection clause is just one more reminder, as if we needed it, that D.C. is now completely ignoring the rule of law and deciding issues based on political pressure and pull.

“McDonald’s and 29 other firms have received waivers from a requirement to up the minimum benefit covered by insurance, making it possible for their employees to continue to buy low-cost coverage. But thousands of other workers are not exempted and will not be able to afford the government’s idea of good insurance.

Starting next year, insurers will be required to cover up to $750,000 in costs, ratcheting up over the next few years so that coverage must be unlimited by 2014. The administration calls that a consumer protection, but it only protects you if you can afford it.

Firms that hire low-wage workers, such as McDonald’s, can offer “mini-med” plans that provide lower benefits than a typical comprehensive health plan at a correspondingly lower cost. By far the most popular mini-med plan offered by McDonald’s costs $24.30 a week and covers doctor visits, hospital stays, and some prescription drugs, up to $5,000 each year.

Raising the benefit cap to $750,000 would put insurance out of reach for workers who clearly want coverage. They are buying that insurance with their own money, without the government telling them they have to. Fortunately, they can now keep that coverage, at least for next year.

True, that’s always gone on. But it used to be hidden, and when discovered heads rolled. Or, at least newspaper headlines made the perpetrators uncomfortable. Now, it’s done in the open and without apology. Though Sebelius did offer this quasi-defense: “We can’t waive a regulation that doesn’t exist.”

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The CATO Institute has released its 2010 Fiscal Policy Report Card on America’s Governors, offering praise for some and criticism for many.

At the front of the pack are three Republicans and one Democrat: Gov. Mark Sanford (R-S.C.), Gov. Bobby Jindal (R-La.), Gov. Tim Pawlenty (R-Minn.) and Gov. Joe Manchin (D-W.Va.).  Each of the four earned an “A” rating from CATO, besting their fellow governors by as much as 55 points according to CATO’s scoring mechanism.

Sanford, once considered a top GOP 2012 presidential prospect, led the A-grade recipients.  CATO notes that Sanford has proposed implementing a flat tax in South Carolina, phasing out the state’s corporate tax, and adopting a firm spending cap.  The report card write-up also called Sanford’s budgets “very frugal.”

Jindal, who many Republican insiders expect to consider a run for the presidency in 2016 has “a solid record on both his tax and his spending policies” according to CATO.

Meanwhile, Pawlenty, the subject of much media speculation regarding a possible presidential bid of his own, earned praise from CATO for his record on spending, and holding down general fund expenditures in particular.

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Carla Main wrote an outstanding book called Bulldozed.  A veteran journalist, she brought to life a heart-wrenching, true-life tale of eminent domain abuse in a Texas fishing town.  She told the truth.  And for that, she’s being sued.

Today, Carla is fighting back.

This morning, Carla asked a Texas appeals court to dismiss a defamation lawsuit filed against here by a developer involved in the Texas case.

Some background:

The Texas developer behind this abuse project is H. Walker Royall.  As the video makes clear, millions of taxpayer dollars later, the project is now an epic debacle.

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I”m biased, of course, but I’m very proud of the Cato Institute for its principled defense of individual liberty and limited government. Cato stood up against the so-called stimulus when others were quiet. Cato was against Obamacare, even back when it was called Romneycare. Now, we’re leading the fight on restraining Leviathan. The image below is our new full page ad on cutting wasteful programs, agencies, and departments – and asking Obama to fulfill his promise on reducing needless spending. Click here for a full-size version. And check out the Downsizing Government website put together by my colleague Chris Edwards.

The case for limited government is growing stronger each day. A Harvard economics professor just published a column about his research about the pro-growth benefits of spending cuts. Another column compared today’s anemic expansion with the strong growth under Reagan. And another economist recently reviewed America’s long-run fiscal danger caused by entitlement programs.

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On June 5, Andrew Coulson posted a disturbing graph at Big Government:

He showed that public education costs are skyrocketing while student achievement remains flat.  In another graph in the same post, he showed that the public school bureaucracy is growing TEN times as fast as the student body.

The bottom line:  The growth and cost of the education establishment is out of control, while the quality of public education is in desperate need of improvement.

Regarding the latter, just how bad can things be?  Check out this brief video clip:

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Even though the Obama Administration claimed that squandering $800 billion on so-called stimulus would  keep the joblessness rate below 8 percent, the unemployment rate today is almost 10 percent. There are many reasons for the economy’s tepid performance, including a larger burden of government spending and the dampening effect of future tax rate increases (tax rates will jump significantly on January 1, 2011, when the 2003 tax cuts expire).

A closer look at the unemployment data, though , suggests that minimum wage laws also deserve a big share of the blame. In this Center for Freedom and Prosperity video, a former intern of mine at the Cato Institute (continuing a great tradition) explains that politicians destroyed jobs when they increased the minimum wage by more than 40 percent over a three-year period.

Mr. Divounguy is correct when he says businesses are not charities and that they only create jobs when they think a worker will generate net revenue. Higher minimum wages, needless to say, are especially destructive for people with poor work skills and limited work experience. This is why young people and minorities tend to suffer most – which is exactly what we see in the government data, with the teenage unemployment rates now at an astounding (and depressing) 26 percent level and blacks suffering from a joblessness rate of more than 15 percent.

Since the video is focused on economics, it does not examine why politicians would enact legislation that destroys jobs.

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Given the strong prospects for GOP resurgence in the upcoming elections, and the intimate connection which said resurgence is sure to have with the fortunes of the Tea Party Movement, it is no surprise that advice is presently being offered to that movement from all sides. The most recent instance of that advice comes from Cato Institute scholar John Samples, who has released a video under the aegis of the Institute entitled “Advice to Tea Partiers.”

Advice to Tea Partiers

Samples is also the author of the book The Struggle to Limit Government, a political history book which convincingly makes the case for a libertarian resurgence within the GOP grounded on Reaganite principles. The video, which in some ways is a much simplified version of the book, offers five points of advice, many of which are well-taken, but some of which are grounded more in wishful thinking than in actual political savvy.

On that note, the video begins with the dubious statement that because of the “spending” and “expansion of government” that was present during the Bush years, “the Republican Party is part of the problem.” This is a lead-in to point 1, entitled “Republicans Aren’t Always Your Friends.” Samples points out, correctly, that when Reagan’s budget director David Stockman tried to get much-needed budget cuts through the White House, all the various department heads opposed these cuts even as they worked under one of the most spending-averse Presidents since Calvin Coolidge. He takes this as evidence that the culture of entrenched programs in Washington can corrupt everyone, Republicans included.

On this much he is right. However, it’s worth noting that part of the issue with Reagan’s cabinet was also that it had to be selected in order to pass a Democrat-controlled Senate confirmation process, and thus was probably more moderate than anything Reagan envisioned. Thus, the conclusion that can be drawn from Samples’s video is not that mistrust of Republicans is the right option, but rather that mistrust of Democratic legislatures is the right option, for even under Republican presidents, such legislatures can wreak havoc on the agenda of limited government.

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There are two distinct sectors in the economy: the private sector and the government sector.  The private sector is the productive part of the economy.  Competition in the private sector promotes greater efficiency, productivity and innovation than the public, or government, sector is capable of.  Yet it is government employees who are the highest paid and have the most job security.  This helps explain why so many states are facing acute, budgetary crises.

A new report by Chris Edwards of the Cato Institute highlights the sharp disparity between public and private compensation.  Despite producing very little compared to their private counterparts, public sector employees of state and local governments averaged 45 percent more per hour in wages and benefits.  And because government never shrinks, public employees are “rarely terminated for cost-cutting or job performance reasons.”

\Unionization appears to be a factor in public sector pay.  With a few exceptions, Edwards shows that the states with the highest public pay advantage also have the highest share of union workers.  But whatever the cause may be, the excessive pension plans provided by states has placed taxpayers in a virtual stranglehold.  Unless cuts are made, they are the ones who will have to pony up to provide for public sector workers.

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Just came across some rather grim analysis of the economic impact of massive, ongoing federal budget deficits from a group of prominent economists. It’s a little dated (2004) but still highly relevant considering that the deficit situation has dramatically worsened since then. Some highlights:

Substantial ongoing deficits may severely and adversely affect expectations and confidence, which in turn can generate a self-reinforcing negative cycle among the underlying fiscal deficit, financial markets, and the real economy:

• As traders, investors, and creditors become increasingly concerned that the government would resort to high inflation to reduce the real value of government debt or that a fiscal deadlock with unpredictable consequences would arise, investor confidence may be severely undermined;
• The fiscal and current account imbalances may also cause a loss of confidence among participants in foreign exchange markets and in international credit markets, as participants in those markets become alarmed not only by the ongoing budget deficits but also by related large current account deficits;
• The loss of investor and creditor confidence, both at home and abroad, may cause investors and creditors to reallocate funds away from dollar-based investments, causing a depreciation of the exchange rate, and to demand sharply higher interest rates on U.S. government debt;

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After checking a few federal spending reports, economist Chris Edwards has revealed exactly how much money ACORN received over the past few years from taxpayers.

According to the database, taxpayers supported ACORN to the tune of more than $12.5 million from 2003 to 2007.

Edwards says cutting off ACORN is only the beginning:

ACORN’s share of overall federal subsidies is tiny, but as thousands of similar organizations have become hooked on 1,800 different federal subsidy programs, a powerful lobbying force has been created that propels the $3.6 trillion spending juggernaut. ACORN’s own website touts its lobbying success in helping to pass various big government programs. So cutting off ACORN is a start, but just a small start at the daunting task of cutting back the giant federal spending empire.

And just how are we going to cut back the “spending empire”? For starters, here’s a department-by-department guide to cutting the federal government’s budget.