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Published: Sun, 17 Dec 2017 00:00:00 -0500

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What The GOP Tax Bill Means For Libertarians

Fri, 15 Dec 2017 16:47:00 -0500

With Republican tax reform almost a sure thing, the nation is poised to experience the most sweeping and significant changes to the tax code since the late 1980s. But are those changes—including lower corporate and individual rates, reductions in some longstanding deductions, and almost certainly trillions of dollars in new national debt—good from a libertarian perspective. Chris Edwards, director of tax policy at the CATO Institute, likes most of what he sees on the corporate side of reform. But when it comes to individual tax policy, he tells Reason's Nick Gillespie, "It's basically reassembling deck chairs on a really messy and horribly complex system." Edited by Ian Keyser. Cameras by Meredith Bragg and Mark McDaniel. Music by _ghost, lisenced under Creative Commons CC BY 3.0 US. Subscribe to our YouTube channel. Like us on Facebook. Follow us on Twitter. Subscribe to our podcast at iTunes. This is a rush transcript. Check all quotes against the audio for accuracy. Nick Gillespie: Hi, this is Nick Gillespie for Reason. Today we're talking with Chris Edwards. He's the Director of Tax Policy at the Cato Institute and we're talking about Republican tax reform and the implications for the economy and what it means for libertarians. Chris, thanks for talking to us. Chris Edwards: Thanks a lot for having me, Nick. Gillespie: Give us your general score card. Is this good? Is it bad? Is it somewhere in between? Edwards: The main driver here is the corporate tax reforms. The United States has the highest corporate tax rate in the world. The Republicans would slash the corporate tax rate down pretty dramatically down to 20% at the federal level. Gillespie: And that's from 35%? Edwards: From 35 down to 20%. That sounds pretty low, but actually the global average rate is only 24% today. If you think about the United States, we've got our federal rate, but we've got state corporate taxes on top up to about 10% or more. Even with the Republican cuts, we'd only just barely start getting competitive globally. That's the corporate stuff. Gillespie: Before we get to the individual side, with the corporate stuff, one of the things that opponents of tax reform say is, 'So, corporations make a huge amount of money. They're solelists literally and figuratively.' Why are we cutting taxes on corporations and what is the thinking behind that? Why is that a good thing? Edwards: You'll hear critics say, 'American corporations are usually profitable today. A lot of them are sitting on a big pile of cash. Why do they need tax cuts?' The reason is because corporations are forward looking. They think about building a new factory here versus in Mexico or China, and they look at that stream of future profits and they look at how much the government tax grab on that will be. They might be sitting on cash now, but the reason they're not investing it is because the U.S. corporate tax rate is so high. You cut the corporate tax rate, corporations at the margin, there would be more factories, more hiring will make more sense in the United States versus our competitors. They will invest more in the long run, and they'll build more factories. You build more factories, you got to hire more workers, the demand for U.S. workers will go up and then wages will rise. Gillespie: This sounds like Trump's, but this is Trump's nightmare, because then suddenly people from Mexico are going to start coming back to the United States instead of leaving, which is what's happening. Edwards: You know the demand for labor will go up a lot. The reality, Nick, is that even though the U.S. unemployment rate is pretty low now, our participation rate in the labor force has been falling, especially for middle-aged men for a number of decades now. We want to get a lot of those folks off the sidelines back in the workforce. I think the corporate tax cut really goes to that issue. Gillespie: There's also a shift, and I guess this affects both the corporate as well as the individual rates. The U.S. currently taxes on a global basis. Both plans would shift into a territorial basis.[...]

Political Journalists Have Themselves to Blame for Sinking Credibility

Fri, 15 Dec 2017 00:15:00 -0500

"Our record as journalists in covering this Trump story and the Russian story is pretty good," legendary reporter Carl Bernstein recently claimed. Pretty good? If there's a major news story over the past 70 years that the American media has botched more often because of bias and wishful thinking, I'd love to hear about it. Four big scoops recently run by major news organizations—written by top reporters and, presumably, churned through layers of scrupulous editing—turned out to be completely wrong. Reuters, Bloomberg, The Wall Street Journal and others reported that special counsel Robert Mueller's office had subpoenaed President Donald Trump's records from Deutsche Bank. Trump's attorney says it hadn't. ABC reported that candidate Trump had directed Michael Flynn to make contact with Russian officials before the election. He didn't (as far as we know). The New York Times ran a story claiming that K.T. McFarland, a former member of the Trump transition team, had acknowledged collusion. She hadn't. Then, CNN topped off the week by falsely reporting that the Trump campaign had been offered access to hacked Democratic National Committee emails before they were published. It wasn't. Forget your routine bias. These were four bombshells disseminated to millions of Americans by breathless anchors, pundits and analysts, all of whom are feeding frenzied expectations about Trump-Russia collusion that have now been internalized by many as indisputable truths. All four pieces, incidentally, are useless without their central faulty claims. Yet there they sit. And these are only four of dozens of other stories that have fizzled over the year. If we are to accept the special pleadings of journalists, we have to believe these were all honest mistakes. They may be. But a person might then ask: Why is it that every one of the dozens of honest mistakes is prejudiced in the very same way? Why hasn't there been a single major honest mistake that diminishes the Trump-Russia collusion story? Why is there never an honest mistake that indicts Democrats? Maybe the problem is that too many people are working backward from a preconception. Maybe newsrooms have too many people who view the world through an identical prism—which is to say they believe he stole the election with the help of Russians. And perhaps the president's constant lashing out at the media has provoked some newsrooms to treat their professional obligations as a moral crusade rather than a fact-gathering enterprise. For instance, the CNN reporters who wrote the DNC story, Manu Raju and Jeremy Herb, contend they had two sources who told them Donald Trump Jr. was offered encryption codes to look at hacked DNC emails. They both must have lied to them about the same date on the same email. CNN says that the duo followed "editorial process" in reporting the piece. This brings three lines of questioning to mind. First: Do news organizations typically run stories about documents they've never authenticated? If so, what other big stories over the past few years have been run based on unauthenticated documents? Can they point to a single story about the Obama administration CNN has written using a similar process? What part of CNN's editorial guidelines deals with this sort of situation? Second: Why would two independent sources lie about a date on the email to Trump Jr. if they didn't want to mislead the public? And how independent could they really be? How many stories regarding the Russian-collusion investigation has CNN run from these same sources? Three: If sources lie to you, why not burn them? There may be good reasons to avoid exposing a dishonest source. Perhaps it will scare away legitimate whistleblowers. Perhaps reporters want to preserve relationships with people like Adam Sch—er, with those in power—because they may help on other stories in the future. And at the end of the day, you're in contest for information. But these people have put the reporters' reputation—even their jobs—in danger. Moreover, they have engaged in a serious abu[...]

Amash, Massie, and Other Congress Members Demand Standalone Vote on Federal Surveillance Laws

Thu, 14 Dec 2017 13:40:00 -0500

Some federal intelligence surveillance powers are going to expire in just over two weeks, and a pack of congressmen and -women want to make sure that a renewal isn't simply shoved into an end-of-year spending bill. These 35 legislators have signed a letter to Speaker Paul Ryan (R-Wis.) and Minority Leader Nancy Pelosi (D-Calif.) calling for the House to consider renewal of this surveillance law separate from any other legislation. The list includes two names familiar to Reason readers, Reps. Justin Amash (R-Mich.) and Tom Massie (R-Ky.). Amash took the lead and put out a press release promoting the request. Section 702 of the Foreign Intelligence Surveillance Act (FISA) Amendments expires at the end of 2017. This part of the law authorizes the use of unwarranted secret surveillance against foreign targets outside of the United States. But it has also been used to collect data and communications from American targets within the U.S., again without warrants and without the citizens' knowledge. There have been pushes to put more concrete restrictions in Section 702 preventing the FBI and National Security Agency (NSA) from collecting and maintaining domestic communications without a warrant. There have also been rival pushes to either renew the law as it is or even declare that these agencies have the legal authority to snoop on Americans without warrants for certain crimes. (I went through the details of the bills bouncing around in this post.) The letter to Ryan and Pelosi reads in part: There may be temptation to attach reauthorization of the FISA Amendments Act to a large end-of-year legislative package, but doing so would undermine representative democracy by effectively precluding most members of Congress from being heard on the important issues it raises and preventing the public from finding out where their representatives stand. It also could further undermine public trust in the intelligence community by suggesting that one of its most heavily used statutory authorities could not have been reauthorized under regular order. None of these outcomes is desirable, and all are easily avoided by bringing reauthorization to the floor as a standalone bill. There are some Democrats in the mix, such as Reps. Jared Polis (D-Colo.) and Zoe Lofgren (D-Calif.), but about two-thirds of those who signed the letter are Republicans. The Republican leadership and the White House are the ones attempting to push through reauthorization without discussion or changes, so this GOP resistance is an important signal. Bloomberg notes that the House Freedom Caucus just warned Florida Republican Rep. Dennis Ross not to attempt to sneak Section 702 reauthorization into a disaster relief bill to help people in Florida, Texas, and Puerto Rico recover from hurricane damage. In the end, though, this Republican resistance is precisely why reauthorization is probably going to get shoved into an omnibus "must pass" bill. It seems very unlikely that standalone Section 702 can pass through the House without the stronger civil liberties protections that both the party leadership and the White House explicitly do not want. Meanwhile, any actual public debate over surveillance has become entangled in controversy over the circumstances by which the FBI snooped on people in President Donald Trump's campaign and whether biases against Trump and in favor of Hillary Clinton played a role in the surveillance. This whole case could have served as an example of exactly how these powers can be abused for political purposes and therefore should be scaled back, but that's not how it's playing out. If Section 702 is not renewed by the end of the year, the White House says it believes federal intelligence agencies can continue to use the snooping authorities the law grants until April before having to shut it all down.[...]

Grover Norquist: GOP Tax Bill Is Good Enough For Now (He's Planning to 'Whine Later')

Wed, 13 Dec 2017 16:11:00 -0500

Tax reform bills have been approved by both the Republican-controlled House and Senate. Most observers believe the different versions will be reconciled into legislation representing the most thoroughgoing and consequential changes to the U.S. tax code since the late 1980s. To get a sense of the good, the bad, and the ugly of tax reform (there's plenty of each) Reason's Nick Gillespie sat down with Grover Norquist, the longtime head of Americans for Tax Reform and arguably the most influential activist over the past 30 years when it comes arguing for lower taxes. Edited by Mark McDaniel. Introduction and graphics by Meredith Bragg. Cameras by McDaniel and Bragg. Music by Krakatoa, licensed under Creative Commons, CC BY-NC-SA 3.0 US. Subscribe at YouTube. Like us on Facebook. Follow us on Twitter. Subscribe to our podcast at iTunes. This is a rush transcript. Check all quotes against the audio for accuracy. Nick Gillespie: When the Senate passed its version of tax reform you wrote, "This is big, a bigger deal than Obamacare. Big job creation, big middle class tax cuts, big changes in an outdated tax code." What do you like about tax reform as it's shaping up generally? What are the large contours? Grover Norquist: There are things that happen immediately and then there's secondary effects. We eliminate the tax deductibility of state and local taxes. It's a pay for. Rates go down, broaden the base. Gillespie: That's in both the House and the Senate. Norquist: It's in the House and the Senate, they're the same. $10,000, you can deduct up to $10,000 of property tax at that state and local level but not income taxes. You go, okay, that's lower rates, broaden the base, who cares? What you just did was dramatically remove an incentive for higher taxes at state and local level. This reform packages is going to result in 1,000 tax increases that didn't happen at the state and local level and a 1,000 tax cuts that do. As California with a 13.3% top income tax rate, it's going to have to take that down. Gillespie: California's also a net donor to the federal government so is this going to kill the golden goose if California's a high tax state when people are wealthy there? They kick a lot of money into the federal government, shouldn't they be getting tax relief from the federal government? Norquist: No. Gillespie: Okay. Norquist: Because it is California senators and congressmen and New York senators and congressmen, New Jersey senators and congressmen and Connecticut senators and congressmen who vote for the very high tax rates at the federal level which is why those states are donor states. They also have politicians at the state and local level who have high taxes as well. They damage the country when they raise our personal income taxes for everyone in the country. But they also damage the whole country when their state politicians have high state taxes that are subsidized by being tax deductible at the federal level. Gillespie: What are the other tax expenditures or tax breaks that get lost here? That you're good about? The Senate version doesn't do anything with the mortgage interest deduction so it allows homeowners and the people who take the mortgage interest deduction overwhelmingly wealthy, they can deduct up to a million dollars or interest on loans up to a million dollars for two houses. The House version caps that at 500,000 for one. Which is better? And why shouldn't it be zero for this? Norquist: We should take it to zero. Some of these things are how far can you get. Any three senators could kill the whole project. There are limits to how far you can go. Any 25 congressmen can kill the whole project. When you begin to push around the edges and we called it pretty close in both cases. We had two votes to spare in the Senate and maybe 10, 15 votes to spare in the House and now we're going to do this again. Given the rules we were living under, the Senate rule, the Bird Law, and the fact that we had narrow majorities. This is a very goo[...]

Prostitution Ad Ban Creeps Forward, Threatening Social Media and Sex Workers

Tue, 12 Dec 2017 14:40:00 -0500

A measure making prostitution advertising a federal crime passed the House Judiciary Committee this morning. "This legislation is about more than just," said bill sponsor Rep. Ann Wagner (R-Missouri), promising that the changes would "wreak havoc" on "hundreds of websites." House Judiciary Committee Chairman Bob Goodlatte (R-Virginia) crowed that the bill "empowers prosecutors with new tools" to hold human traffickers accountable. But Goodlatte is lying—nothing in the bill addresses penalties for actual human traffickers. Instead, it would allow the government to treat websites and social apps as if they are human traffickers if bad actors should communicate through their digital platforms and tools. (For more about how this would work, see my post from yesterday.) The bill would also make posting or hosting prostitution ads a federal crime. If H.R. 1865 becomes law, the FBI would be able to prosecute Facebook, Twitter, Snapchat, Instagram, Craigslist, and myriad other sites where sex workers advertise and/or communicate with clients—even if the sexual exchange is only alluded to and never completed.* Goodlatte said that in crafting the legislation, he "consulted with local prosecutors, and also with the Department of Justice." Notably, he does not mention consulting with any sex workers, tech companies, sex-trafficking victims, or any groups that work directly with sex-trafficking victims. If he did, he might learn that digital advertising has revolutionized the sex trade, making it much more possible for women to work without the aid of abusive or controlling pimps; to screen clients before seeing them; and to generally take more control over their bodies, businesses, and personal safety. Meanwhile, it's also been hugely useful to law enforcement and families for finding victims of exploitation (something that would be all but impossible if street-based sex work were the only option or if traffickers start turning to the dark web.) But in the delusional minds of folks like Goodlatte and Wagner, everyone engaged in sex work will simply stop if there are no web-ad platforms and all the sex traffickers will simply let their victims go. (Drugs went away when we made those illegal, too, right?) So their goal is to eradicate any web platforms where sex buyers might communicate with sex sellers. After all, catching actual evildoers is too hard. "Advertisements rarely, if ever, will say the person advertised is a 'victim of sex trafficking,'" Goodlatte lamented. Easier for authorities to stop distinguishing between forced or underage prostitution and sex that free adults consent to have. More profitable, too. Wringing assets from petty pimps hasn't proven too valuable for the feds so far, but sites like Backpage and Facebook are much bigger fish. And Congress is always ready to approve a bigger net. During Tuesday's meeting, Rep. Jerry Nadler (D-New York) was the only committee member who expressed reservations about the bill, saying he was concerned that it had not been fully vetted, did not have support from surivors of sex trafficking or other relevant stakeholders, did not provide "appropriate protection for civil liberties," and could be redundant in light of a similar bill. Nadler asked that the committee refrain from voting the bill forward until more work could be done, but his colleagues did not agree. * This post previously stated that intent was not required for prosecution, which is incorrect. The original version of this bill, authored by Wagner, stated that nothing in the measure should "be construed to require the Federal Government in a prosecution, or a plaintiff in a civil action, to prove any intent on the part of the information content provider." But the version agreed to yesterday, authored by Goodlatte, says people or entities are only guilty if they use or operate a digital platform "with the intent to promote or facilitate the prostitution" (emphasis mine). The new language is [...]

Posting or Hosting Sex Ads Could Mean 25 Years in Federal Prison Under New Republican Proposal

Mon, 11 Dec 2017 15:55:00 -0500

Looking forward to a future when federal agents monitor Tinder? We won't be far off if some folks in Congress get their way. Under a proposal from Rep. Bob Goodlatte (R–Va.), anyone posting or hosting digital content that leads to an act of prostitution could face serious federal prison time as well as civil penalties. This is obviously bad news for sex workers, but it would also leave digital platforms—including dating apps, social media, and classifieds sites such as Craigslist—open to serious legal liability for the things users post. In effect, it would give government agents more incentive and authority to monitor sex-related apps, ads, forums, and sites of all sorts. And it would give digital platforms a huge incentive to track and regulate user speech more closely. Goodlatte's measure was offered as an amendment to another House bill, this one from the Missouri Republican Ann Wagner. The House Judiciary Committee will consider both bills on Tuesday. Wagner's legislation (H.R. 1865) would open digital platforms to criminal and civil liability not just for future sex crimes that result from user posts or interactions but also for past harms brokered by the platforms in some way. So platforms that followed previous federal rules (which encouraged less content moderation in order to avoid liability) would now be especially vulnerable to charges and lawsuits. The bill currently has 171 co-sponsors, including ample numbers of both Republicans and Democrats. Specifically, Wagner's bill would amend Section 230 of the federal Communications Decency Act, which says that websites and other online platforms should not be treated as the creators of user-posted content. What this means in effect is that these third-party platforms can't be sued or prosecuted for users' and commenters' illegal speech (or illegal actions resulting from speech)—with some major exceptions. Digital platforms do not get a pass for content they actually create "in whole or part," for instance. As it stands, states cannot generally prosecute web services and citizens cannot sue them when user-generated content conflicts with state criminal law. Rep. Wagner's bill—like the similar and more-hyped "Stop Enabling Sex Traffickers Act" (SESTA) in the Senate—would end this state and civil immunity for digital platforms in cases of "sex trafficking" or "sexual exploitation of children." But while that may sound like a small concession, it actually opens up a huge range of activity for liability. At the federal level, the above offenses encompass everything from the truly horrific and unconscionable (like sex trafficking by force) to things like sexting between teenagers. And at the state level, definitions can be even more varied and blurry. Wagner's bill doesn't just stop at carving out a new Section 230 exception. It also creates a new crime, "benefitting from participation in a venture engaged in sex trafficking," and makes it easy to hold all sorts of web platforms and publishers in violation. Any "provider of an interactive computer service" who hosts user-posted information "with reckless disregard that the information in furtherance of [sex trafficking] or an attempt to commit such an offense" could face a fine and up to 20 years in prison, the bill states. And nothing "shall be construed to require the Federal Government in a prosecution, or a plaintiff in a civil action, to prove any intent on the part of the information content provider." So in cases like, say, Hope Zeferjohn, the teen girl convicted of sex trafficking for talking to a younger teen on Facebook about prostitution, Facebook could be facing a federal charge for participating in a sex trafficking venture. Goodlatte's proposal, meanwhile, would work by amending the Mann Act, a century-old prohibition on transporting someone across state lines for prostitution. The new section would declare that "whoever uses or operates a facili[...]

GOP to Libertarian Legislator: Your It's a Wonderful Life Screening Is Against the Law

Tue, 05 Dec 2017 15:51:00 -0500

Could it be a crime to give your fellow Americans a chance to enjoy a theatrical screening of that modern American myth, It's a Wonderful Life? The Nebraska Republican Party thinks it is. Or at least it thinks it of political benefit to say it is, in their quest to unseat one of America's few sitting Libertarian state legislators, state Sen. Laura Ebke. Ebke switched her party allegiance from GOP to L.P. in 2016, and she's up for reelection as a Libertarian in 2018. The Republicans are running Al Riskowski, a man who formerly ran the Nebraska Family Alliance. That's a conservative activist group obsessed with the legalities of gambling, gender identity, suicide, and "human trafficking." Ebke sponsored two screenings of the movie to celebrate the revival of a local theater in her hometown that had gone under when the switch to digital projection swept the industry. On Friday, the state GOP denounced the events in a press release. "Not only is Ebke in potential violation of state law herself for attempting to bribe voters," the email declared, "but she is also putting those who attend the screenings at risk of committing a violation as well." By giving voters a free movie, the Republicans claim, Ebke is bribing voters. That's a class II misdemeanor under state law, punishable by six months in jail and a thousand-buck fine. And so is accepting such a bribe. Undeterred, Ebke held two more screenings in other towns after the threat went out, and she has two more planned ahead. In a phone interview today, Ebke says that "we read the rules" and that the Nebraska Accountability and Disclosure Commission (NADC) "says that it's acceptable to use campaign contributions for social events for constituents." She notes that the governor does something comparable when he hosts tailgate parties. "I consulted with my campaign treasurer, who is also an attorney, and he agreed. So we proceeded. When that email blast [from the state GOP] came out Friday, my first call was to the executive director of the NADC to make sure there wasn't something I was missing. He sort of laughed when I told him I was being accused of bribery. He said as long as there is no quid pro quo, that I'm not holding out popcorn until someone promised to vote for me," the shows are fine. Ebke says she isn't even talking politics at the screenings. "It was a pretty desperate effort on the GOP's part," she concludes. The Omaha World-Herald reports that the Republicans "are reviewing the situation to determine whether to pursue any legal action." While Ebke says the Republicans have done no real messaging against her—this silly stunt is their first big public swing at her so far—the state GOP has taken the unusual step of sending the governor and lieutenant governor out on the stumps with Riskowski, presenting the message that Nebraska needs "more conservatives" in the legislature. Ebke says neither she nor any constituent she's met takes this threat at all seriously, though she wouldn't put it past the GOP to go ahead and file some sort of complaint with the NADC. If they do, she's confident that it will go nowhere. Bonus libertarian perspective: TV host Kennedy explains why she digs It's a Wonderful Life in libertarian terms.[...]

Tax Bill Mixes Very Encouraging Developments With Very Disappointing Ones

Mon, 04 Dec 2017 15:20:00 -0500

What to make of the Tax Cuts and Jobs Act, the legislation passed by the Senate at 1:36 a.m. Saturday, by a 51 to 49 vote, with only Republicans in favor? Any final assessment has to await a conference with the House of Representatives that will attempt to bridge differences between the Senate bill and the one already passed by the House. For now, though, the legislation is a mixture of really encouraging developments and really disappointing ones. Encouraging is the reduction of the corporate tax rate to 20 percent from 35 percent. Politicians from both parties have long acknowledged that the U.S. corporate rate is so high that it hurts American competitiveness. President Obama in 2012 proposed reducing the rate to 28 percent, and eventually talked about a 25 percent rate for some manufacturers. A 20 percent rate, or even 22 percent, would be an improvement. It would still leave America's corporate tax rate higher than places like Ireland, where the rate is 12.5 percent. But it'd be a big step in the right direction, toward solving what even Obama acknowledged was a problem. The Senate waits until 2019 to deliver the 20 percent corporate rate, while the House bill puts it into effect in 2018. Also encouraging is the prospect—somewhat shocking, isn't it?—of politicians actually following through on a campaign promise. The potency of tax cuts as a political issue has been eroded over time by politicians who pledge them but fail to deliver. The Republicans haven't managed to achieve their long-promised repeal of ObamaCare. Successfully getting a tax cut passed into law after being elected in part to bring one about is almost enough to warm a voter's heart, or to restore a person's faith in government's ability to act on the signals sent by elections. It's an antidote to cynicism. Unfortunately, by that same standard, aside from the rate cuts, the content of the bill itself and the process behind it so far are pretty disappointing. The middle of the night, weekend, party-line vote is the sort of thing that Republicans complain about, with some merit, when Democrats control Congress. A full text of the 479-page bill was provided to senators only hours before the voting began, and it was full of hand-written cross-outs and marginal emendations. The Senate bill doesn't meaningfully simplify the tax code. A lot of Americans will need not just a journalist or a politician but an accountant or a tax lawyer to explain to them how it will affect them. There's an element of the whole thing that reminds me of the home renovation horror story about the guy who starts out replacing a doormat and winds up having to redo the entire kitchen—what project managers call "scope creep." The Republicans set out to lower the corporate tax rate. Once they did that, then rates for businesses organized in other ways looked low, so they had to lower those, too. And once that was done, budget rules meant they had to "recover" the "lost revenue" somehow, with a variety of minor adjustments, even tax increases. Together, those add up to lots of work for lobbyists and accountants. They can be revisited in coming years as a way to milk campaign contributions out of the interested parties. Particularly dangerous is the practice of a political party using the tax code to reward its backers and punish its enemies. Republicans, who now control the White House and both parties of Congress, may find it humorous or convenient to raise revenue by increasing taxes on a handful of well endowed universities with overwhelmingly liberal faculties, and on the mostly Democratic-leaning cities and states with high state and local income taxes. But there will come a time when the tables are turned, and Democrats will then be tempted to alter the tax code in a way that punishes Republicans. The GOP would be on higher ground if it stood on principle for a tax code that treats ev[...]

Today at SCOTUS: Does the Federal Ban on Sports Gambling Violate the 10th Amendment?

Mon, 04 Dec 2017 07:45:00 -0500

(image) The Professional and Amateur Sports Protection Act of 1992 made it illegal for "a governmental entity to sponsor, operate, advertise, promote, license, or authorize by law or compact" sports betting. In oral arguments today in the case of Christie v. National Collegiate Athletic Association, the U.S. Supreme Court will consider whether that federal law runs afoul of the 10th Amendment and its underlying principles of constitutional federalism.

On one side of Christie v. N.C.A.A. stands the state of New Jersey, whose voters amended the state constitution in 2012 in order to legalize sports gambling. Garden State lawmakers responded by partially lifting the existing state ban on the practice at casinos and racetracks.

On the other side of the case stands the National Collegiate Athletic Association, the National Basketball Association, the National Football League, the National Hockey League, and the Office of the Commissioner of Baseball, all of which seek to prevent the state's legalization efforts.

The sports leagues argue that New Jersey is illegally flaunting the Professional and Amateur Sports Protection Act and should be stopped. New Jersey argues that that federal law is overreaching and unconstitutional.

The outcome of the case is likely to turn on the Supreme Court's application of two precedents from the 1990s. In New York v. United States (1992), the Court held that "while Congress has substantial powers to govern the Nation directly, including in areas of intimate concern to the States, the Constitution has never been understood to confer upon Congress the ability to require the States to govern according to Congress' instructions."

Five years later, in Printz v. United States (1997), the Court continued in this vein. "The Federal Government may neither issue directives requiring the States to address particular problems, nor command the States' officers, or those of their political subdivisions, to administer or enforce a federal regulatory program." In short, "federal commandeering of state governments" goes against the Constitution.

The legal question at the heart of Christie v. N.C.A.A. is whether the Professional and Amateur Sports Protection Act, or PASPA, violates the anti-commandeering doctrine set forth in New York and Printz.

New Jersey argues that PASPA does violate the doctrine and should therefore be declared unconstitutional. "Under our Constitution," the state argues, "if Congress wishes for sports wagering to be illegal, it must make the activity unlawful itself. It cannot compel States to do so."

The sports leagues take the opposite view. "Congress' power to regulate gambling on a nationwide basis," the leagues maintain, "is as settled as its power to prohibit states from undertaking or authorizing conduct that conflicts with federal policy, and nothing in [New Jersey's] arguments calls either commonly exercised power into question."

Which side will prevail in this dispute, federalism or federal power? We'll get our first indications during today's oral arguments.

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Tax Reform Is on Track to Add $1 Trillion to the National Debt, Even After Accounting for Economic Growth

Thu, 30 Nov 2017 18:03:00 -0500

It's not yet a fait accompli, but Thursday was a good day for supporters of the GOP tax proposal. The bill, however, still doesn't come close to paying for itself. Sen. John McCain (R-Ariz.), considered a crucial swing vote on the measure, said he will support the bill. House leaders are reportedly preparing for a vote on Monday to go to a conference committee to iron out differences between their version of the tax bill (passed earlier this month) and the Senate bill. All that comes less than 24 hours after the first vote on the Senate tax bill—a motion to proceed to debate, a procedural step that's been anything but simple on other major GOP initiatives this year—including a drama-free "aye" from all 52 Republican senators. The only thing that slowed the tax bill's momentum was a new analysis from the Joint Committee on Taxation (a number-crunching cousin of the better-known Congressional Budget Office) showing, once again, that the GOP proposal will add about $1 trillion to the federal debt. This, even after accounting for increased economic growth from cutting corporate income taxes. Here's how the JCT spelled it out: All of those minuses show the one glaring flaw in the plan. Republicans mostly seem willing to ignore the defect, claiming increased economic growth will cancel out an estimated $1.4 trillion blow the plan will deal to the federal budget. The JCT report shows clearly that is not going to happen. Increased economic growth cancels out about $400 billion, leaving a $1 trillion shortfall. That's roughly in line with other estimates. When forecasted economic growth is factored in, the Republican proposal will cost about $500 billion, according to The Tax Foundation, a nonpartisan think tank. A separate analysis by the Wharton School at the University of Pennsylvania says the cost, including projected growth, will exceed $1.3 trillion. Here's a neat summary of various estimates, compiled by the Committee for a Responsible Federal Budget, which opposes the current tax plan because of how it will add to the debt. Projections are tricky things, with lots of moving parts. No one knows for sure what dynamic effects the tax changes will have on the economy, or what outside factors could drive growth—or trigger a recession—in the coming years. There are, however, no estimates, even from Republican sources, showing that tax bill cuts would fully pay for themselves. Instead, Republicans have responded to the estimates much the way Sen. John Cornyn (R-Texas) did today after the JCT analysis was released. .@JohnCornyn tells me re: JCT score "I think it's clearly wrong." Says growth projections are too conservative — Seung Min Kim (@seungminkim) November 30, 2017 In other words, close your eyes and wish really hard for the Economic Growth Fairy to make everything okay. It's a vision that you're tempted to believe in because it means you get all the benefits with none of the costs—which, in this case, are the tough political decisions about cutting spending—but it's not one that tracks with the real world or the economic and political history of the last 30-plus years. This isn't new. It's the same thinking that drove the passage of the Reagan tax cuts, properly understood as "tax deferrals," since the debt has to be paid back someday, as National Review's Kevin Williamson wrote in a memorable 2010 piece. The same thinking that drove the passage of the Bush tax cuts. Correcting this view, as Williamson wrote at the time, requires equating "spending" and "taxes" so that every dollar spent today means a dollar in taxes must be raised, either today or tomorrow. Unfortunately, that's not where we are right now. When the Bush tax cuts passed in 2001, the nation's debt-to-GDP ratio was 31 percent. Today, it's 77 percent. And Congress is about to add another $1 trillion [...]

Are Dry Stream Beds Navigable Waters of the United States?

Thu, 30 Nov 2017 08:30:00 -0500

The House Subcommittee on the Environment held a hearing yesterday on what its chairman called "one of the biggest federal overreaches in modern history." The Waters of the United States rule, passed by administrative fiat in June 2015, gave the federal government jurisdiction over nearly every river, lake, creek, estuary, pond, swamp, prairie pothole, irrigation ditch, and intermittent rivulet in the U.S. It's a regulation that can force a rancher to spend $40,000 trying to get permission to grade a road through a dry wash that carries water only during occasional summer rainstorms—and then give up rather than pour more resources into the fight. After the Environmental Protection Agency (EPA) issued the rule, 33 states and more than 70 private sector organizations immediately challenged it in the courts for being too broad. In October 2015, the U.S. Court of Appeals for the Sixth Circuit issued a nationwide stay on implementing the regulation. The purpose of the subcommittee meeting was to hear testimony on the current status of federal water regulations, their impact at the state level and to examine options for improving them going forward. Chairman Andy Biggs (R-Ariz.) said Wednesday, "Not only did the rule's flimsy definitions and underlying science mean that the agency had the ability to regulate private land, but it also placed significant financial burdens on some of our country's hardest workers." In her opening statement, subcommittee ranking member Suzanne Bonamici (D-Ore.) noted that the 1972 Clean Water Act was adopted because many states had failed to meet their responsibilties to keep their rivers, streams, lakes, and estauries clean, allowing them to become "dirty and polluted"; some waters, she noted, had even "caught on fire." She cited a January 2015 EPA study, Connectivity of Streams and Wetlands to Downstream Waters: "The scientific literature unequivocally demonstrates that streams, individually or cumulatively, exert a strong influence on the integrity of downstream waters. All tributary streams, including perennial, intermittent, and ephemeral streams, are physically, chemically, and biologically connected to downstream rivers via channels and associated alluvial deposits where water and other materials are concentrated, mixed, transformed, and transported." In other words, we all (intermittently) live downstream. The Clean Water Act instructs the EPA to "prepare or develop comprehensive programs for preventing, reducing, or eliminating the pollution of the navigable waters." Central to the fight over federal jurisdiction is the definition of just what "navigable waters" are. Under the rules promulgated under the Obama administration, the EPA thinks it's pretty much any water at all. Most people would interpret the phrase more narrowly. In February, President Donald Trump issued an executive order instructing the EPA to "consider interpreting the term 'navigable waters' a manner consistent with the opinion of Justice Antonin Scalia in Rapanos v. United States." Scalia's opinion noted that before the Clean Water Act passed, the courts had "interpreted the phrase 'navigable waters of the United States' in the Act's predecessor statutes to refer to interstate waters that are 'navigable in fact' or readily susceptible of being rendered so." He then argued that "on its only plausible interpretation, the phrase 'the waters of the United States' includes only those relatively permanent, standing or continuously flowing bodies of water 'forming geographic features' that are described in ordinary parlance as 'streams[,]...oceans, rivers, [and] lakes.'" Just how far the feds reached under prior administrations was illustrated in testimony by James Childton Jr.—the Arizona rancher who wanted to grade that road. His environmental [...]

Churchill's Antidote to Political Rage

Wed, 29 Nov 2017 12:00:00 -0500

"I've never in my adult life," observes David French, a writer for National Review, "seen so many people so angry about things they cannot control." The current hour is one of "defining people by their mistakes," he says, and "hating our ideological enemies." This is not new information. Many others across the ideological spectrum have uttered the same lament. But the laments have not diminished the volume of rage. To some degree the rage is understandable. People have plenty to be angry about. But much of the animosity seems out of all proportion. It is one thing to despise and vilify a foreign tyrant who tortures innocent children. It is something else again to despise and vilify someone who didn't vote for the same political candidate you did. You have to take politics extremely seriously for that. But as serious as politics might seem today, it cannot be more serious than it was in Britain in 1940—when the wrong political choices could threaten the nation's very existence. Two years before, Prime Minister Neville Chamberlain had signed the Munich Agreement, which ceded the Sudetenland to Hitler's Germany. Chamberlain returned to England boasting that he had achieved "peace for our time." A year later Hitler invaded Poland, and Chamberlain's name became synonymous with "appeasement"—which ever since has carried the stench of timorous naiveté. Munich itself has become both an argument by way of analogy and a cliché: Running a Google search about the Obama administration's "Iran deal" and "Munich," for instance, returns thousands upon thousands of results. This version of history is hard on Chamberlain and omits certain complexities. As Alex Massie reminded readers in The Spectator a few years ago, after the Polish invasion "Chamberlain actually declared war on Germany, rather than vice versa." Massie also cites the views of Winston Churchill on Munich: "Those who are prone by temperament and character to seek sharp and clear-cut solutions of difficult and obscure problems," Churchill wrote later, "who are ready to fight whenever some challenge comes from a foreign power, have not always been right. "On the other hand, those whose inclination is to bow their heads, to seek patiently and faithfully for peaceful compromise, are not always wrong. On the contrary, in the majority of instances, they may be right." Nobody had more reason to gloat "I told you so" over Chamberlain's miscalculation at Munich than Churchill, who had been warning about the German menace far longer than most people had cared to listen. And yet when Chamberlain died in 1940, Churchill delivered a eulogy at once clear-eyed and generous: "In paying a tribute of respect and of regard to an eminent man who has been taken from us, no one is obliged to alter the opinions which he has formed or expressed upon issues which have become a part of history," Churchill began. "In one phase men seem to have been right, in another they seem to have been wrong. Then again, a few years later, when the perspective of time has lengthened, all stands in a different setting. There is a new proportion. There is another scale of values... "It fell to Neville Chamberlain in one of the supreme crises of the world to be contradicted by events, to be disappointed in his hopes, and to be deceived and cheated by a wicked man. But what were these hopes in which he was disappointed? What were these wishes in which he was frustrated? What was that faith that was abused? They were surely among the most noble and benevolent instincts of the human heart—the love of peace, the toil for peace, the strife for peace, the pursuit of peace, even at great peril, and certainly to the utter disdain of popularity or clamour. Whatever else history may or may not say about these terrible, tre[...]

71 Percent of Millennials Say U.S. Politics Needs a Third Major Party

Wed, 29 Nov 2017 11:41:00 -0500

(image) The Republicans are a mess. The Democrats are a mess. And young Americans are increasingly unsure about aligning themselves with either one.

New research from NBC News and the University of Chicago polling group GenForward found millennials—poised to be the biggest voting bloc in 2020—overwhelmingly want more political options. A full 71 percent of the 18- to 34-year-olds polled said that America needs a third major political party.

The desire for a third-party option was seen across all races, genders, and partisan affiliations in the poll, which was conducted from October 26 to November 10. Respondents included a nationally representative sample of 1,876 people.

More than half of those surveyed (59 percent) had an unfavorable view of the Republican Party, and 42 percent had an unfavorable view of the Democratic Party. (This is with an overall margin of sampling error of plus or minus 3.92 percentage points.) Only 5 percent had a "very favorable" view of Republicans and only 10 percent had a very favorable view of Democrats.


Nearly three-quarters of men and 69 percent of women wanted more political-party options. Republican women were the least likely to want a third party, with just 55 percent agreeing. If you combine the race and sex categories, white male and black female millennials were the most likely to voice support for a third party: 80 percent of the former and 73 percent of the latter endorsed the notion.

Overall, white millennials were most likely to want a third major party, with 75 percent embracing the idea. But strong majorities were seen across all racial and ethnic groups, with 69 percent of blacks and Asians and 64 percent of Latinos agreeing. (The margin of sampling error for some of these groups was quite high—as much as plus or minus 8.75 points for Asian respondents.)

Asked about the 2018 congressional election, 43 percent said they are either not sure whether they plan to vote Democratic or Republican or do not plan to vote for candidates from either party; pollsters didn't press further to see if this indicated a lack of any plans to vote in 2018 or a desire to vote for a third-party candidate. Of these millennials in the neither/not sure category, 16 percent said they leaned more toward Republicans, 32 percent said they leaned more toward Democrats, and 50 percent said they didn't lean toward either.

Needless to say, the fact that so many people want a third party doesn't mean they want the same third party. Alas, the pollsters didn't inquire about just what sort of party people would like to see. Nor did they ask whether people want just one more party or a multitude. And they didn't include any questions seeking opinions on the parties that are already out there: the Libertarians, the Greens, and so on. The poll strongly suggests that young Americans want more options, but it won't tell you anything about what missing choices they have in mind.

Alabama Senate Election Shouldn't Be a Binary Choice

Wed, 29 Nov 2017 10:25:00 -0500

The Alabama Senate special election is less than two weeks away, and voters will have just two names on the ballot, Democrat Doug Jones and Republican Roy Moore. And although there's just one race on the ballot, Alabamans will still have the option to fill in a vote for "straight party." That option, used in general elections by voters who decide based purely on party affiliation, illustrates the structural problem with democratic politics in the U.S. Revelations about Roy Moore over the last month concerning accusations of inappropriate sexual contact with minors in the 1970s, which led many high-profile Republicans to rescind their endorsements, have left many Republican voters unenthusiastic about their choices. Although the state Republican party could withdraw Moore's name (meaning if he won, the election would not be valid), election law prohibits the replacement of a name less than 76 days before the election. Even worse, independent and third party candidates had to file by August 15, nearly four months before the election. There are at least four write-in candidates vying to provide voters another option in the special election, the most prominent of them being Lee Busby, a Marine colonel who was an aide to John Kelly when he served in Iraq. "I have no idea if the allegations against him true or not, but I don't see anything within his experience as a judge that qualifies him for the job," Busby said of Moore to The Daily Beast. "Alabama is not happy with the two choices we have down here. They are not appealing." None of these is more than an afterthought, leaving the democratic process in Alabama woefully unresponsive to voter demand. American consumers don't accept binary choices in almost any other sphere. Even with rivalries like McDonald's vs. Burger King or Coke vs. Pepsi consumers spend billions of dollars on many other fast food and soft drink companies. As Moore's problems pile up—two weeks ago Senate Majority Leader Mitch McConnell said Moore wasn't fit to serve in the Senate and said he wouldn't rule out expelling him—his support remains relatively steady. While Jones led by five points in one poll earlier this months, and Moore's Real Clear Politics polling average lead is just one point, the latest polling suggests that even as Moore's unfavorability rating ticks upward, he maintains a five to 10 point lead. Conservatives concerned about the crass turn the Republican party has taken, like those at the National Review, say Moore never should have received the nomination. The Democrats' reticence to make an example of either Sen. Al Franken or Rep. John Conyers could be helping Moore hold on to support. Both have been accused of sexual harassment by multiple women, and their resignations or expulsions would not put their party's control of their seats at immediate risk. Many of Moore's supporters, particularly evangelicals, may be sticking with him over concerns about abortion. At National Review, Alexandra Desanctis describes Jones as an abortion "zealot." In the end, the vast majority of Alabamans who bother to vote (and it won't be a lot of them—fewer than 600,000 of the more than 3 million registered voters in the state came out for the primary, and the general is less than two weeks before Christmas), will go with Moore or Jones. It's not hard to imagine partisan politics eventually resembling the 1996 Halloween Simpsons scene where, faced with the prospect of choosing between two space aliens in control of Bill Clinton and Bob Dole, voters still refused to consider a real human, Ross Perot. While some progressives argue for compulsory voting, were "none of the above" available, many political offices might remain vacant. How little voting m[...]

Maybe Not Libertarian, But There Are Some Things to Like in This Tax Reform

Wed, 29 Nov 2017 06:45:00 -0500

The Senate and House produced tax reform bills in the last few weeks, similar in important ways, but different enough that they could be lethal to the tax reform efforts. The House passed its version and we are waiting on the Senate to either pass or reject their own version. Before breaking down these proposals, it is worth remembering that our current system is horribly complicated, making compliance costs exorbitant. It is incredibly unfair, extending privileges to some at the expense of others. There is no equality before the taxman. Genuine tax reform would expand and simplify the tax base by getting rid of the thousands of loopholes to special interest groups. It would lower the top marginal rates and end the double taxation on saving and investment. It should restore some horizontal equity (two people making the same income paying the same taxes). It would also make as many provisions permanent—and predictable—as possible. Good tax reform would require the federal government to make adjustments in spending, the way states and the District of Columbia operate, so the amount of tax collected more or less covers spending for a given year. The Simpler Tax Code The House version goes after a large number of tax exemptions, breaks, credits and deductions that make our code so complicated and unfair. It takes some significant steps to reduce the mortgage interest deduction. It also gets rid of most—with the exception of a $10,000 deduction—of the state and local tax deduction (SALT). Pretty impressive moves considering ending tax deductions is usually where tax reform goes to die. The House plan doubles the standard deduction, meaning dramatically fewer taxpayers will itemize their taxes. The Senate plan also doubles the standard deduction. (an estimated 90 percent of filers making under $200K would now claim the standard deduction). It gets rid of SALT entirely, but is more timid on the mortgage interest deductions. Moreover, it preserves many of the tax breaks with which the House dispenses. And rather than making the tax changes permanent, it includes a sunset date of 2025 reverting the standard deduction, the estate tax, the child tax credit, SALT, the pass-through deduction, and individual tax rates to 2017 levels. Middle Class Tax Cuts President Trump's intention to give a real tax break to the middle class is counter-productive considering the middle class barely shoulders any of the income tax as it is. The top 10 percent of income earners—households making $133K, not $1 million as most assume—currently pay more than 70 percent of all income tax revenue. The middle quintile pays, on average, 2.6 percent of the federal income tax. And yet, in both the House and Senate plans the middle class receives the largest tax relief by reducing their marginal tax rates, increasing the child tax credit and doubling the standard deduction. The result is fewer taxpayers would be paying income tax at all, problematic from a small government perspective. It also means a more progressive income tax code than it already is. The House plan also effectively jacks up the top marginal rate for some high earners by using a 39.6 percent bubble rate on the first $90K earned by single taxpayers making $1 million and married taxpayers making $1.2 million and a 12 percent rate like everyone else. This is a perfect example of Republicans caving in to political pressure and implementing bad policies. Not that it will stop Democrats from calling it a tax cut for the rich. Lack of Spending Cuts Senate and House tax writers have been trying to pour two pounds of sugar into a one-pound bag to comply with reconciliation rules. Budget rules require that tax refo[...]