Presidents Should Obey the Law

In Star Wars III: Revenge of the Sith, when Chancellor Palpatine transforms the republic into an empire, Senator Amidala remarks:
So this is how liberty dies . . . with thunderous applause.
But it can also happen in silent acquiescence. For decades now, successive Congresses have evaded their responsibility to make decisions about the deployment of U.S. armed forces abroad. I write about the latest instance of this, in Libya, in today's Britannica column:
Presidents have an obligation to obey the Constitution and the law. But one of the ways that separation of powers works is that each branch of government is supposed to jealously guard its prerogatives from usurpation by the other branches. Too often Congress ducks that responsibility, preferring to let presidents make decisions, make law, and make war without the involvement of Congress. As Arthur M. Schlesinger, Jr., explained in his book The Imperial Presidency, the expansion of presidential war-making power has been “as much a matter of congressional abdication as of presidential usurpation.” The president is derelict in his duty to obey the Constitution and the War Powers Resolution. And Congress is derelict in its duty to assert its constitutional authority. And I’m still wondering what’s happened to the antiwar movement, which ought to be loudly protesting not just the continuing wars in Iraq and Afghanistan but the newborn war in Libya.
As George Will said last week, "even if you think the War Powers Resolution is an unwise law—it is a law." And a former law professor who is now the president of the United States should obey the law. Will expanded on that point in his Sunday column, titled "Obama's Illegal War," in the old-fashioned print edition of the Washington Post. Full Britannica column here.

Posted on May 31, 2011  Posted to Cato@Liberty

How Fannie and Fed Caused the Crash

Economist John B. Taylor reviews Reckless Endangerment by Gretchen Morgenson and Joshua Rosner:
The book focuses on two agencies of government, Fannie Mae and the Federal Reserve. The mutual support system is better explained and documented in the case of Fannie, the government-sponsored enterprise that supported the home mortgage market by buying mortgages and packaging them into marketable securities which it then guaranteed and sold to investors. The federal government supported Fannie Mae — and the other large government-sponsored enterprise, Freddie Mac — by implicitly backing up those guarantees and by providing favorable regulatory treatment and protection from competition. These benefits enabled Fannie to rake in excess profits — $2 billion in excess, according to a 1995 study by the Congressional Budget Office. The book then gives examples where Fannie’s executives — Jim Johnson, CEO from 1991 to 1998 [and also top aide to Vice President Walter Mondale, campaign manager for Mondale, head of vice presidential selection for both John F. Kerry and Barack Obama, and chairman of both the Kennedy Center and the Brookings Institution], is singled out more than anyone else — used the excess profits to support government officials in a variety of ways with plenty left over for large bonuses: They got jobs for friends and relatives of elected officials, including Rep. Barney Frank, who is tagged as “a perpetual protector of Fannie,” and they set up partnership offices around the country which provided more jobs. They financed publications in which writers argued that Fannie’s role in promoting homeownership justified federal support. They commissioned work by famous economists, such as Nobel Prize-winner Joseph Stiglitz, which argued that Fannie was not a serious risk to the taxpayer, countering “critics who argued that both Fannie and Freddie posed significant risks to the taxpayer.” They made campaign contributions and charitable donations to co-opt groups like the community action organization ACORN, which “had been agitating for tighter regulations on Fannie Mae.” They persuaded executive branch officials — such as then Deputy Treasury Secretary Larry Summers — to ask their staffs to rewrite reports critical of Fannie. In the meantime, Countrywide, the mortgage firm led by Angelo Mozilo, partnered with Fannie in originating many of the mortgages Fannie packaged (26 percent in 2004) and gave “sweetheart” loans to politicians with power to affect Fannie, such as Sen. Chris Dodd of Connecticut. The authors write that “Countrywide and Fannie Mae were inextricably bound.”
But don't ignore the role of the Fed:
Early on the authors take on the Boston Fed, and in particular its research director Alicia Munnell, for using a study documenting racial discrimination in mortgage lending to justify the relaxation of credit standards, even though the study’s findings were found to be flawed by other researchers. And they criticize the very low interest rate set by the Fed when Alan Greenspan was chairman and Ben Bernanke was a Fed governor, saying it “contributed mightily to the mortgage lending craze,” adding that “with the Fed on a rate-cutting rampage, demand for adjustable-rate mortgages with relatively low initial interest costs had become incendiary.”
If you watched the HBO movie Too Big to Fail, you wouldn't get much sense that government actions -- easy money, the homeownership mania, HUD and Fannie's push to lend to non-creditworthy borrowers -- played a major role in the housing bubble and subsequent financial crisis. Sounds like this book would make good supplemental reading for viewers, along with Johan Norberg's Financial Fiasco.

Posted on May 29, 2011  Posted to Cato@Liberty

Communitarians and Libertarians

Communitarian "guru" Amitai Etzioni debated Roger Pilon at Cato two weeks ago. Also me, 18 years ago. And last week he had two postings at the Encyclopedia Britannica blog. I offer some thoughts on individualism, communitarianism, and implausible misrepresentations of libertarianism at the Britannica today.
When I hear communitarians like Etzioni describe the libertarian view of individualism, I wonder if they’ve ever read any libertarian writing other than a Classic Comics edition of Ayn Rand.... There’s no conflict between individualism and community. There’s a conflict between voluntary association and coerced association. And communitarians dance around that conflict.
Do you believe that "The libertarian perspective, put succinctly, begins with the assumption that individual agents are fully formed and their value preferences are in place prior to and outside of any society"? Of course not. Who would? Read the Britannica column to find out who says you do.

Posted on May 23, 2011  Posted to Cato@Liberty

Why Budgets Are Busted

Three stories in today's Washington Post help us to understand why governments around the world are facing unmanageable deficits. On the front page:
When Prime Minister Jose Luis Rodriguez Zapatero took power seven years ago, he and his Socialist Workers’ Party set out to perfect the welfare state in Spain. The goal was to equal— or even surpass — lavish social protections that have long been the rule for Spain’s Western European neighbors. True to his Socialist principles and riding an economic boom, Zapatero raised the minimum wage and extended health insurance to cover everything from sniffles to sex changes. He made scholarships available to all. Young adults got rent subsidies called “emancipation” money. Mothers got $3,500 for the birth of a child, toddlers attended free nurseries and the elderly got stipends for nursing care.
On page 3, a story about federal pensions, which still offer federal employees
a benefit lost long ago by many workers at private companies — a guaranteed retirement check paid largely by the boss. These traditional pensions, called defined-benefit plans, have long been an attractive feature of government work.
On the op-ed page, George Will notes that in 1975 then-governor Jerry Brown said that his plan was
To stand up to the special pleaders who are encamped, I should say, encircling the state capitol, and to see through their particular factional claims to the broad public interest.
Three years later, "Brown conferred on government employees the right to unionize and bargain collectively." Now, from prison guards to teachers, the public employee unions press for unaffordable spending and block efforts at reform. And again-governor Jerry Brown would rather raise taxes than stand up to the unions that helped elect him. As has been noted many times, politicians spend all the money that comes in when times are good. They don't put anything aside for the possibility of lean years. And they make commitments, like pensions and collective bargaining agreements, that will prove to be fiscal time bombs, exploding long after the next election. It looks like the long run is here.

Posted on May 22, 2011  Posted to Cato@Liberty

Progress toward Marriage Equality

The Gallup Poll reports today, "For the first time in Gallup's tracking of the issue, a majority of Americans (53%) believe same-sex marriage should be recognized by the law as valid, with the same rights as traditional marriages." Here's the history of Gallup's polling on the issue:

1996-2011 Trend: Do you think marriages between same-sex couples should or should not be recognized by the law as valid, with the same rights as traditional marriages?

Gallup notes that the shift results from a substantial increase in support among Democrats and independents in the past year, but support among Republicans didn't budge from 28 percent. The most striking number, though, is that support among young people 18-34 soared from 54 to 70 percent, mostly reflecting a shift among men, who are now almost as supportive as women. The new poll comes just two days after Cato's forum, "The Case for Marriage Equality: Perry v. Schwarzenegger," featuring the prominent lawyers David Boies and Theodore Olson, who represent the plaintiffs in a lawsuit seeking to strike down California's Proposition 8. Find video of the event here. The event also featured Robert A. Levy of the Cato Institute and John Podesta of the Center for American Progress, co-chairs of the advisory board of the American Foundation for Equal Rights, sponsor of the lawsuit. Read their Washington Post op-ed on the case.

Posted on May 20, 2011  Posted to Cato@Liberty

Fiscally Conservative, Socially Liberal Virginians

The Washington Post just did a major poll of Virginians and tantalizingly included this note in writing up the results:
In contrast to four years ago, about as many Virginians consider themselves to be liberal on social matters as call themselves conservative. Fiscal conservatism is on the rise, but on these social issues, it’s liberalism that’s ticked higher.
But those questions were not included in the published data. Thanks to the generosity of Post polling director Jon Cohen, I can report that the percentage of Virginians who said they were socially liberal or moderate and fiscally conservative went from 16 in 2007 to 23 in the latest poll. This reflects a small increase in the number of social liberals and a larger increase in the number of fiscal conservatives. And here are the tables on those questions: We've written about fiscally conservative, socially liberal voters before, notably here and here, and in relation to Virginia and in the Republican party. Apparently when you ask people, “Would you describe yourself as fiscally conservative and socially liberal?”, you get a higher percentage than when you ask the questions separately, as the Post did. When the Zogby Poll asked that question to actual voters in 2006, fully 59 percent said yes. Broader background on the "libertarian vote" here.

Posted on May 19, 2011  Posted to Cato@Liberty

This Time They Said, ‘We’re Going’

Two weeks ago I wrote about the documentary "Stonewall Uprising" and the line from a police official that caught my attention:
“This time they said, ‘We’re not going.’”
That’s how Seymour Pine of the New York Police Department’s Morals Division described the raid he led on the Stonewall Inn in New York’s Greenwich Village on June 28, 1969, and the unprecedented refusal of the gay men in the bar to hang their heads in shame and go silently into the paddy wagons. The “Stonewall riots” that resulted are generally regarded as the beginning of the gay rights movement in the United States. Last night on PBS's "American Experience," I saw another excellent documentary, "Freedom Riders," about the white and black civil rights activists who boarded Greyhound and Trailways buses in May 1961 to travel through the Deep South, sitting together and dining together during stops. For someone too young to remember the Freedom Rides, it was a shocking and eye-opening film. Watching the violence directed at these "outside agitators" -- a bus firebombed, people beaten, a mob threatening to burn a packed church -- as police and elected officials stood by and let it happen, brings home the plight of black Americans before the civil rights revolution. And may also shed some light on the question of whether America is more or less free than it used to be. At the Stonewall Inn, gays were ordered into paddy wagons, and “This time they said, ‘We’re not going.’” Without planning to, they started a social revolution. The Freedom Riders planned carefully. They took training in nonviolence. When the first Riders encountered violence throughout Alabama, other young people decided, in the words of Diane Nash, who had been a student at Fisk University, "It was clear to me that if we allowed the Freedom Ride to stop at that point, just after so much violence had been inflicted, the message would have been sent that all you have to do to stop a nonviolent campaign is inflict massive violence." So she and other young Nashvillians decided to get on buses and continue the effort. John Seigenthaler, a Nashvillian who was working for Attorney General Robert F. Kennedy, called Nash and said, in effect, Don't go to Alabama. It's too dangerous. People will get killed. And Nash responded that the students had all made out their wills, knew what they were facing, and were getting on the buses in the morning. Eventually federal marshals got the Freedom Riders out of Alabama and into Mississippi, where they were arrested and sent to the notorious Parchman Farm penitentiary to do hard labor on a chain gang. And then yet more Riders, from all over the country, got on buses and headed to Jackson, Mississippi. It's an incredible story of courage and conflict, one that demonstrates the value of nonviolent resistance in dramatizing moral issues. And although they didn't quite use this phrase, I kept thinking that, in spite of cautionary advice from their parents and from the Kennedy administration, This time they said, "We're going."

Posted on May 17, 2011  Posted to Cato@Liberty

Fiscal and Social Conservatives

Recently I criticized Sen. Jim DeMint for saying, "It’s impossible to be a fiscal conservative unless you’re a social conservative," and I noted that former governor Mike Huckabee had made similar points. Yesterday on "Fox News Sunday" Huckabee said, "all social conservatives I know are also fiscal conservatives. Not necessarily the other way around." Well, I can tell you one social conservative who isn't a fiscal conservative -- former governor Mike Huckabee. Here's what Cato's "Fiscal Policy Report Card on America's Governors" reported in 2006, at the end of Huckabee's tenure as governor of Arkansas:
Final-Term Grade, F; Final Overall Grade, D Thanks to a final term grade of F, Huckabee earns an overall grade of D for his entire governorship. Like many Republicans, his grades dropped the longer he stayed in office. In his first few years, he fought hard for a sweeping $70 million tax cut package that was the first broad-based tax cut in the state in more than 20 years. He even signed a bill to cut the state’s 6 percent capital gains tax—a significant pro-growth accomplishment. But nine days after being reelected in 2002, he proposed a sales tax increase to cover a budget deficit caused partly by large spending increases that he proposed and approved, including an expansion in Medicare eligibility that Huckabee made a centerpiece of his 1997 agenda. He agreed to a 3 percent income tax “surcharge” and a 25-cent cigarette tax increase. In response to a court order to increase spending on education, Huckabee proposed another sales tax increase. Huckabee wants to run for the GOP presidential nomination next year. He’s already been hailed as a viable big-government conservative candidate by some. That seems about right: Huckabee’s leadership has left taxpayers in Arkansas much worse off.

Posted on May 16, 2011  Posted to Cato@Liberty

What Hyman Roth Would Say about Government Waste

We often criticize a focus on government waste here at Cato. We point out that the real spending problem is the big-ticket programs, not "waste, fraud, and abuse." But a series of recent stories in the Washington Post, several of them in Sunday's paper, led me to write about government waste in today's Britannica column. I followed up on my previous post about the scandal of the Alaska Native Corporation (SBA 8(a)) preference program:
Not much, even though it was hardly the first time that the problems with the Alaska Native Corporations program had been noted. There was a Senate hearing, with the reassuring title of “Promise Fulfilled: The Role of the SBA 8(a) Program in Enhancing Economic Development in Indian Country,” where “Alaska Natives and a Small Business Administration official defended federal contracting preferences for Indian and Native firms.” No critics were invited to the hearing. After all, “The purpose of the hearing is to allow the SBA, ANCS, NHOs, Indian tribes, shareholders and other stakeholders the opportunity to demonstrate the importance and legitimacy of the program to Native communities in fulfilling self-determination and self-sufficiency,” as 49-year senator Daniel Inouye (D-HI) and Alaska’s own Sen. Mark Begich wrote in a letter to whippersnapper senator Daniel Akaka (D-HI), who has served in Congress for only 34 of his 86 years and chairs the Senate Indian Affairs Committee.
And I noted:
And for those who like big government, I have to say: This is the business you have chosen. If you want the federal government to tax (and borrow) and transfer $3.6 trillion a year, if you want it to build housing for the poor and give special benefits to Alaska Natives, if you want it to supply Americans with health care and school lunches and retirement security and local bike paths, then you have to accept that such programs come with incentive problems, politicization, corruption, and waste. Maybe it’s worth the cost.
More details here.

Posted on May 16, 2011  Posted to Cato@Liberty

Ayn Rand Sells Magazines

This article about donors who want to give colleges money with strings attached, published in Bloomberg Markets and splashed across a full page of the Sunday Washington Post, leads with the story of former BB&T chairman John Allison's campaign to get the books and ideas of Ayn Rand into college classrooms and is lavishly decorated with big photographs of Rand. Most of the story is actually about much less titillating demands -- donors who variously want a say in hiring the next football coach, a change in the school's tuition policy, a rejection of money from other donors. But apparently editors know that Ayn Rand's name can bring in the readers. So they act in their rational self-interest and put her name on the cover and her picture at the top of the page. At least the Post had the good sense to drop the dumb last line of the Bloomberg story: "As private donors gain more power on campuses, it’s just the kind of shift away from state control that Rand would applaud." Actually, giving private money to state institutions is not the sort of privatization that libertarians seek. (And Ayn Rand was a libertarian, whether she liked to admit it or not.)

Posted on May 15, 2011  Posted to Cato@Liberty

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