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IRS Abuses Past and Present

Chris Edwards — Fri, 17 May 2013 13:51 EDT

Chris Edwards

The stories coming out about IRS abuses of nonprofit groups are appalling. We will likely find out that arrogant and biased officials are to blame, as well as members of Congress who pushed them to be especially aggressive on conservative groups.

Past IRS abuses have stemmed from foul play by both politicians and bureaucrats. As Gene Healy mentions, numerous presidents have used the IRS as a political weapon. As for the bureaucrats, investigations during the 1990s revealed how IRS enforcement had run amok, with abusive tactics being used against small businesses and other taxpayers.

Some of the hearings were hair-raising, and the abuses led Congress to pass the IRS Restructuring and Reform Act of 1998. Useful links to hearing documents are here and here including Senator Roth describing the agency as having an “awesome power.” Washington Post coverage is here, including a story about how even President Clinton was “outraged” by the revelations of IRS abuse.

Going back further, this 1997 book by Shelley Davis describes some of the historical misdeeds and corruption of the IRS. This book review gives an overview of her investigations.

In recent years, efforts to close the “tax gap” have included proposals to augment the power of the IRS and increase the intrusiveness and compliance burden of tax rules. Yet Congress keeps raising tax rates and making the code more complex, which increases incentives for taxpayers to avoid taxes while reducing their ability to comply. Regarding the latest scandal—note that getting tax-exempt status is so valuable because the tax rates are so darn high.

This article by Bill Beach frames the tax gap issue: Congress can reduce the gap by either giving the IRS more police power or by reforms to cut rates and simplify the code. Hopefully the latest IRS scandal convinces Congress that the agency already has too much power. Thus the way to give Americans more freedom from the tax police and to also boost the economy is to scrap the current tax code in favor of a low-rate consumption-based system.

Poll: Already Scant Support for Obamacare Erodes

Michael F. Cannon — Fri, 17 May 2013 12:24 EDT

Michael F. Cannon

According to the latest Reason-Rupe poll:

The president’s health care law is losing public support… Only 32 percent of Americans say they liked the health care law when it was passed and still like it today. Seven percent liked the law when it was passed, but like it less now. Meanwhile, 45 percent disliked the health care law when it was passed and still dislike it. Four percent of Americans say they disliked the law when it passed, but like it more now.

These results are consistent with the Kaiser Family Foundation Health Tracking Poll, which has always reported a higher level of support for the law than other polls, yet whose latest results show support for Obamacare slipping to just 35 percent of adults.

DOJ vs. School Choice

Jason Bedrick — Fri, 17 May 2013 11:44 EDT

Jason Bedrick

Claiming that private schools in Milwaukee are discriminating against students with disabilities, the Department of Justice (DOJ) sent a letter to the Wisconsin Department of Public Instruction (DPI) demanding that private schools participating in the Milwaukee school choice program comply with Title II of the Americans With Disabilities Act. As Professor Patrick Wolf explains over at Education Next, the DOJ is wrong on the facts and wrong on the law.

Wolf is part of a team of researchers that has studied the Milwaukee school choice program over five years. Their statistical analysis “confirmed that no measure of student disadvantage—not disability status, not test scores, not income, not race—was statistically associated with whether or not an 8^th grade voucher student was or was not admitted to a 9^th grade voucher-receiving private school.” This is exactly what the law requires. Wisconsin law forbids discrimination on the basis of disability and requires schools participating in the voucher program to accept students on a random basis.

Moreover, the DOJ is wrong on the law in treating private schools participating in the program as though they were government contractors. As Wolf explains:

Private organizations normally are exempt from Title II of ADA but the DOJ argues that the law applies to private schools in the MPCP because the government is contracting with them to provide a public service (the education of K-12 students). This claim flies in the face of the facts and case-law surrounding the program. The voucher program does not involve any contracts, of any kind, between any government organization and the participating private schools. Students need to meet certain eligibility restrictions to participate in the program, as do interested private schools. Once both are deemed eligible by the state, students choose schools and government funds flow to the private schools based on the choices families have made and consistent with the laws governing the program, not based on any “contract.” In fact, the Wisconsin State Statute that governs the MPCP, §119.23, is entirely separate from Wisconsin State Statute §119.235 entitled “Contracts with Private Schools and Agencies.” Nothing could make the point clearer that the MPCP is not a case of government contracting for education services.

Wolf suspects that the DOJ’s letter came as a result of the Wisconsin DPI’s report that 1.6 percent of choice students have a disability. Since the DPI is not authorized to collect that information, they estimated the number of students with disabilities using the number of choice students given accommodations on the state accountability exam. However, as Wolf explains, that is a highly flawed proxy since only a minority of students with disabilities are given such accommodations. Wolf’s team of researchers estimated that the number of choice students with disabilities between 7.5 and 14.6 percent, with their best estimate being 11.4 percent.

The DOJ’s overreach may be unsurprising in light of other recent scandals, but it also sets a terrible precedent. Parents choosing to use their vouchers at private educational institutions do not render those institutions “government contractors” any more than grocery stores become “government contractors” when citizens use their EBT cards to purchase food there. The Obama administration’s unlawful and misguided attempt to hamper school choice programs with additional red tape should be vigorously resisted.

OECD Study Admits Income Taxes Penalize Growth, Acknowledges that Tax Competition Restrains Excessive Government

Daniel J. Mitchell — Fri, 17 May 2013 08:51 EDT

Daniel J. Mitchell

I have to start this post with a big caveat.

I’m not a fan of the Paris-based Organization for Economic Cooperation and Development. The international bureaucracy is infamous for using American tax dollars to promote a statist economic agenda. Most recently, it launched a new scheme to raise the tax burden on multinational companies, which is really just a backdoor way of saying that the OECD (and the high-tax nations that it represents) wants higher taxes on workers, consumers, and shareholders. But the OECD’s anti-market agenda goes much deeper.

The OECD has allied itself with the so-called Occupy movement to push for bigger government and higher taxes.
The OECD, in an effort to promote redistributionism, has concocted absurdly misleading statistics claiming that there is more poverty in the United States than in Greece, Hungary, Portugal, or Turkey.
The OECD is pushing a “Multilateral Convention” that is designed to become something akin to a World Tax Organization, with the power to persecute nations with free-market tax policy.
The OECD supports Obama’s class-warfare agenda, publishing documents endorsing “higher marginal tax rates” so that the so-called rich “contribute their fair share.”
The OECD advocates the value-added tax based on the absurd notion that increasing the burden of government is good for growth and employment.

Now that there’s no ambiguity about my overall position, I can admit that the OECD isn’t always on the wrong side. Much of the bad policy comes from its committee system, which brings together bureaucrats from member nations.

The OECD also has an economics department, and they sometimes produce good work. Most recently, they produced a report on the Swiss tax system that contains some very sound analysis, including a rejection of Obama-style class warfare and a call to lower income tax burdens.

Shifting the taxation of income to the taxation of consumption may be beneficial for boosting economic activity (Johansson et al., 2008 provide evidence across OECD economies). These benefits may be bigger if personal income taxes are lowered rather than social security contributions, because personal income tax also discourages entrepreneurial activity and investment more broadly.

I somewhat disagree with the assertion that payroll taxes do more damage than VAT taxes. They both drive a wedge between pre-tax income and post-tax consumption. But the point about income taxes is right on the mark.

Interestingly, the report also endorses tax competition as a means of restraining the burden of government spending.

Evidence also suggests that tax autonomy may lead to a smaller and more efficient public sector, helping to limit the tax burden and improve tax compliance… Efficiency-raising effects of tax autonomy and tax competition on the public sector have also been reported in empirical research with Norwegian and German data… Tax autonomy generates opportunities to choose the level of public service provision and taxation, although in practice such “voting with your feet” seems mostly limited to young, highly educated and high-income households. Decentralised tax setting also fosters benchmarking of the performance of jurisdictions belonging to the same government level by voters, even in the absence of “voting with your feet”.

The report also notes that tax competition has reduced corporate tax rates.

Tax competition is likely to have contributed significantly to lowering corporate tax rates in Switzerland over the past 25 years. Indeed, empirical evidence shows that the responsiveness of sub-national governments to tax changes of other subnational governments (“tax mimicking”) is the strongest in the case of corporate taxation (Blöchliger and Pinero Campos, 2011). …Progressive corporate income taxes harm incentives for businesses to grow. Since growing businesses are likely to be high performers in terms of productivity, such disincentives are likely to hit high-performing businesses the most, with losses to aggregate productivity performance, which has been modest in Switzerland relative to best-performing high-income countries.

P.S.: This isn’t the first time the economists at the OECD have broken ranks with the political hacks that generally control the bureaucracy. In a 1998 Economic Outlook (see page 166) they wrote that “the ability to choose the location of economic activity offsets shortcomings in government budgeting processes, limiting a tendency to spend and tax excessively.” And in another publication (see page 1), the economists noted that “legal tax avoidance can be reduced by closing loopholes and illegal tax evasion can be contained by better enforcement of tax codes. But the root of the problem appears in many cases to be high tax rates.” These passages sound like they could have been authored by Pierre Bessard!

P.P.S.: I hasten to add that none of this justifies handouts from American taxpayers to the Paris-based bureaucracy any more than occasional bits of rationality from the World Bank (on government spending), IMF (on the Laffer Curve), or United Nations (also on the Laffer Curve) justify subsidies to those organizations.

Never Mind the IRS, You'd Better Be Nice to Kathleen Sebelius

Michael F. Cannon — Thu, 16 May 2013 17:02 EDT

Michael F. Cannon

ObamaCare’s Independent Payment Advisory Board is everything its critics say and worse. It is a democracy-skirting, Congress-blocking, powers-unseparating, law-entrenching, tax-hiking, fund-appropriating, price-controlling, health-care-rationing, death-paneling, technocrat-thrilling, authoritarian, anti-constitutional super-legislature. Its very existence is testament to government incompetence. It stands as a milestone on the road to serfdom.

The Congressional Research Service has now confirmed what HHS Secretary Kathleen Sebelius pretends not to know but what Diane Cohen and I explained here:

[I]f President Obama fails to appoint any IPAB members, all these powers fall to Secretary of Health and Human Services Kathleen Sebelius.

That’s an awful lot of power to give any one person, particularly someone who has shown as much willingness to abuse her power as Sebelius has.

I would also like the Congressional Research Service to address a feature of IPAB that Cohen and I first exposed. According to the statute, we write:

Congress may only stop IPAB from issuing self-executing legislative proposals if three-fifths of all sworn members of Congress pass a joint resolution to dissolve IPAB during a short window in 2017. Even then, IPAB’s enabling statute dictates the terms of its own repeal, and it continues to grant IPAB the power to legislate for six months after Congress repeals it. If Congress fails to repeal IPAB through this process, then Congress can never again alter or reject IPAB’s proposals.

You read that right. For more, read our paper, especially Box 3 on page 9.

CRS, I’m interested to know what you think. Take a close look at the law and get back to me.

Republicans Slowly Catch Up to the 21st Century

David Boaz — Thu, 16 May 2013 16:04 EDT

David Boaz

Public opinion on gay marriage has changed a lot in recent years, perhaps more rapidly than on any other major issue. Yet as Jonathan Rauch noted last year, one demographic group has resisted that change: Republicans. As he wrote:

In moving as decisively as they have on gay rights, the Democrats are following the country….

But the dissenters have not vanished. Rather, they have holed up inside the Republican Party. According to polling by the Pew Research Center, two-thirds of Democrats and almost 60 percent of independents call same-sex relations morally acceptable; only a bit over a third of Republicans agree. White evangelicals, in particular, are unique among major demographic and religious categories (including Catholics) in their fierce disapproval of homosexuality, and these days the vast majority of them (70 percent, according to Pew) are Republican or lean Republican.

To put the matter bluntly, the Republican Party is becoming an isolated bastion of anti-gay sentiment. That is not because Republicans and conservatives are immune to the general trend toward acceptance of homosexuality. It is because the trend is slower among Republicans.

But in today’s Washington Post there’s some interesting evidence of movement among Republicans. A strong majority of voters in Virginia, a state that passed a gay marriage ban in 2006, and 40 percent of Republicans now say “it should be legal for gay couples to get married.” Note the changes from 2006 in this Post graphic:

Note especially that column in the lower right. How has public opinion in Virginia changed since the 2006 amendment vote? Support for gay marriage (or opposition to a ban) has risen by 13 points. Independents are up only 3 points. Democrats are up by 7 points, perhaps because of the endorsement of President Obama. And Republican support is up 25 points.

Last year, I called the sudden silence of Republican leaders on gay marriage “the sound of social change.” It looks like they knew which way the wind was blowing in their own base.

Debating Global Affairs in Doha

Doug Bandow — Thu, 16 May 2013 16:02 EDT

Doug Bandow

Qatar is much in the news, as the small Persian Gulf sheikdom attempts to extend its influence. It promoted revolution in Libya and is doing the same in Syria. Of course, the ruling family is less enthused with Iranian revolutionaries and looks askance at Shia democracy protestors in Bahrain. (So does the U.S., of course, which is threatening to bomb the regime in Tehran and has said little about Bahrain’s Sunni monarchy as it busily represses the country’s Shia majority.)

However, Qatar also engages in more mundane activities, such as hosting the annual Doha Forum, which brings together world leaders to discuss important international topics. Qatar takes the event seriously. Explains the official website: “Held in the presence of His Highness Sheikh Hamad bin Khalifa Al Thani, Emir of the State of Qatar, who will preside over the opening ceremony on May 20th, the forum will commence with an address by His Excellency Sheikh Hamad bin Jassim Al Thani, Prime Minister and Minister of Foreign Affairs.”

Lesser personages also participate, which explains why I’ve been invited to attend. I will be flying over this weekend. The conference begins on Monday and sessions will cover international politics and the global economy, Arabs and the changing world, global economic development, challenges facing new Arab democracies, international cooperation, human rights, and digital media.

I’m looking forward to the event and, frankly, even more to discussions outside of the formal sessions. It has been several years since I’ve been to Qatar, so it will be interesting to see how the country is adjusting to the Arab Spring. It also will be illuminating to compare Qatar to Dubai, another small but ambitious Gulf state, which I visited last week.

The Persian Gulf remains the fulcrum of important world events and potential American military intervention. In fact, my nephew has been deployed there in recent weeks, though hopefully will be returning home soon. Although travel to the region doesn’t turn one into an instant expert, it does help give a practical feel to events which too often are viewed primarily through the skewed prism of Washington.

After the AUMF

Christopher A. Preble — Thu, 16 May 2013 14:00 EDT

Christopher A. Preble

Georgetown University’s Jennifer Daskal, and Stephen Vladeck, an associate dean in the College of Law at American University, have posted a working paper (.pdf) regarding the 12+ year old Authorization for Use of Military Force (AUMF) at the Lawfare blog that is receiving, and deserves, some attention. The shorter version in today’s New York Times is receiving even more attention, presumably.

“After the AUMF” is written, in part, as a response to a Hoover Institution proposal (.pdf) that would replace the existing AUMF with, as Daskal and Vladeck describe it, “a new blanket framework statute authorizing the use of military force against as-yet-undetermined future terrorist organizations, and to delegate to the Executive Branch the authority to delegate those organizations against which such force may be used if and when the time comes.”

The crux of the Daskal-Vladeck critique rests on their claim that such a framework is unnecessary, and, worse, counterproductive. They explain that we should be trying to end, rather than extend, the war on terror, and that existing authorities (including many that have expanded since 9/11) are more than sufficient to protect the country against terrorist attacks. Should those authorities prove insufficient in the future (for example, if an as-yet-unknown terrorist organization materializes and plots attacks against the United States), Congress would retain the ability to pass a new AUMF–and would likely do so quite quickly, if past history is any guide. Lastly, they claim that the war frame, in general, undermines the nation’s counterterrorism goals by engendering hostility and resistance across a broad spectrum, from innocent civilians to heads of nation states, who resist being drawn into a never-ending war.

Although I am broadly sympathetic with the idea that we should move away from thinking of counterterrorism as a war, thus demanding a military response (about which I have written book chapters here and here), I believe that the most important of the Daskal-Vladeck objections revolves around the Hoover proposal’s apparent disdain for Congress, and its willingness to grant more power to the Executive Branch. The Hoover proposal claims that this would be an improvement over the current system, because it would give “the president the flexibility he needs to address emerging threats” and would “render more transparent and regularized the now very murky process by which organizations and their members are deemed to fall within the September 2001 AUMF.”

Elsewhere the Hoover paper claims that such a blanket predelegation of authority is required because “Congress probably cannot or will not, on a continuing basis, authorize force quickly or robustly enough to meet the threat.”

Daskal and Vladeck disagree. They counter that “no examples exist of cases where Congress either could not or would not provide the necessary authority–or why, in the interim, the President’s Article II authorities, criminal law, and other existing counterterrorism authorities weren’t sufficient to meet the threat.” On the contrary, the Congress has consistently demonstrated the ability and willingness to authorize wars quite quickly (too quickly, some might say), including within three days of the 9/11 attacks, and within five days of the supposed attack in the Gulf of Tonkin in August 1964. Thus, Daskal and Vladeck conclude, if a new terrorist group “were to emerge, nothing would or should stop Congress from providing a new, narrow and specific authorization to use force.”

They continue, with emphasis:

Proposals to delegate such future—and momentous—decisions to the President lack any historical precedent, and for good reason. It is Congress, not the Executive, that is given the authority under our Constitution to declare war. An authorization to use military force…should not be an ex ante delegation to the President to make unreviewable decisions to go to war at some future date. This is something our Founding Fathers understood well. Thus, proposals to delegate such a determination to the President threaten the carefully calibrated balance of powers enmeshed within the Constitution, essentially asking Congress to surrender one of its most important functions to the Executive.

This is an important and interesting discussion, and one that should not reduce to the predictable partisanship in Washington today. Some liberal Democrats agree with conservative Republicans that the president should be given more powers; other liberals and conservatives are joined in opposition to such suggestions. This timely–indeed, overdue–assessment of the powers that exist, and will be needed in the future, to deal with terrorist threats should and will be getting more attention in the weeks and months ahead.

Low Climate Sensitivity Making its Way into the Mainstream Press

Paul C. "Chip" Knappenberger, Patrick J. Michaels — Thu, 16 May 2013 12:36 EDT

Paul C. "Chip" Knappenberger and Patrick J. Michaels

When it comes to the press, the New York Times pretty much defines “mainstream.”

And Justin Gillis is the Times’ mainstream reporter on the global warming beat.

So it is somewhat telling, that his article on Tuesday, “A Change in Temperature,” was largely dedicated (although begrudgingly) to facing up to the possibility that mainstream estimates (i.e., those produced by the U.N.’s Intergovernmental Panel on Climate Change) of climate sensitivity are too large.

Readers of this blog are probably well aware of the reasons why.

Despite our illusions of grandeur, this blog isn’t the mainstream press –although we do seek to influence it. Maybe we are being successful.

Throughout Gillis’ article are sprinkled references to “climate contrarians,” and even the recognition of the effort by such contrarians to push the new science on low climate sensitivity to the forefront of the discussion to change the existing politics of climate change.

Gillis writes:

Still, the recent body of evidence — and the political use that climate contrarians are making of it to claim that everything is fine — sheds some light on where we are in our scientific and public understanding of the risks of climate change.

We at the Cato’s Center for the Study of Science are at the leading edge of efforts to present a more accurate representation of the scientific of climate change through our testimony to Congress, public comments and review of government documents and proposals, media appearances, op-eds, and serial posts on this blog, among other projects. We emphasize that current regulations and proposed legislation are based on outdated, and likely wrong, projections of future climate impacts from human carbon dioxide emissions from the use of fossil fuels to produce energy.

Gillis recognizes the positives of a low climate sensitivity value:

“…tantalizing possibility that climate change might be slow and limited enough that human society could adapt to it without major trauma.”

“It will certainly be good news if these recent papers stand up to critical scrutiny, something that will take at least a year or two to figure out.”

“So if the recent science stands up to critical examination, it could indeed turn into a ray of hope…”

But, the “mainstream” is slow to change. And so despite the good news about climate sensitivity, Gillis closes his article by pointing out that, in his opinion, the political response to climate change has been “weak” (contrary to our view), and that therefore:

Even if climate sensitivity turns out to be on the low end of the range, total emissions may wind up being so excessive as to drive the earth toward dangerous temperature increases.

Clearly we still have work to do, but there are signs of progress!

No Time for Mercantilist Posturing in Transatlantic Trade Talks

Daniel J. Ikenson — Thu, 16 May 2013 12:30 EDT

Daniel J. Ikenson

Pitched as a cure for Europe’s woes, salvation for the multilateral trading system, and the last best chance to restrain the Chinese juggernaut, the stakes are high for the upcoming Transatlantic Trade and Investment Partnership (TTIP) negotiations. Of course the primary objective of the TTIP is to reduce nagging impediments to commerce between the United States and the European Union. But success is far from a sure bet.

Given the numerous bilateral trade frictions that have eluded resolution for many years, the goal of a “comprehensive” agreement by the end of 2014 – the current target – is simply not credible. Success would require negotiators to lay down their calculators and spreadsheets, disavow the “exports good, imports bad” mantra of mercantilist doctrine on which they were raised, and act on behalf of their citizens instead of their domestic producer lobbies.

That outcome would be too good to be true, but there may be a certain genius to the tight timeframe: it will demand that negotiators forego excessive posturing and will limit the potential for ever-shifting political calculations to subvert progress. Regardless, success can only take the form of a less comprehensive agreement or, perhaps, a two-phased agreement where the first phase meets the 2014 deadline by achieving accord on relatively agreeable matters, while the tougher issues are relegated to a later train.

A recent paper co-published by the Atlantic Council and the Bertelsmann Foundation presented the results of a survey of American and European trade policy experts about the prospects for a successful TTIP agreement. More than half thought the negotiations would produce a “moderate agreement,” and most thought the agreement would take effect by the end of 2015 or 2016.

The relatively low hanging fruit – according to the Atlantic/Bertelsmann survey – includes the elimination or significant reduction of tariffs across multiple sectors. Averaging about 2 percent in the United States and 4 percent in Europe, tariffs are not huge impediments (on average), but their elimination would generate sizable gains because of the large volume of transatlantic trade. Agreeing to tariff cuts right away would inspire goodwill and inject momentum toward a successful outcome.

Ending restrictions on U.S. energy exports might also be among the terms of a 2014 agreement, but everything else that would reduce actual trade impediments is in the more-difficult-to-resolve category. “Regulatory process convergence across multiple sectors” and “significant convergence in regulatory regimes and standards for manufactured goods” were considered the most important issues in the Atlantic/Bertelsmann paper. But they were also viewed as among the most difficult to resolve.

To be meaningful, a 2014 agreement must include some form of regulatory coherence or mutual recognition of standards or processes. Overcoming regulatory divergences is presumed to be the source of the greatest potential gains, as it is enormously costly whenever businesses are compelled to meet different standards to participate in different markets. Many differences likely can be bridged through mutual recognition or convergence without any adverse impact on public health or safety and without crossing any red lines related to cultural preference or tradition.

Agreeing to a common standard for the length of electrical cords on household appliances (currently three feet in the U.S. and one meter in Europe), for example, would reduce production costs for appliance manufacturers and free up resources for other productive endeavors on both sides of the ocean without any public safety implications. Mutually recognizing the effective equivalence of each other’s drug approval processes would eliminate logistical redundancies, while saving industry excessive delays and billions of dollars, and reducing mortality and morbidity rates. There are hundreds, perhaps thousands, of similiar regulatory processes and standards that could be bridged through such mutual recognition or convergence.

To increase the probability of bridging these differences as part of a 2014 agreement, negotiators should consider a “negative list” approach, whereby all regulations and standards are considered candidates for reform unless and until specific exemptions are requested. This would give negotiators a better sense of the magnitude of the differences, and the public a better look at who is protecting what. One revelation is likely to be that U.S. and European regulators, seeking to preserve their bureaucratic fiefdoms, are the primary obstacles to reform.

Even in this globalized economy with transnational production and supply chains and growing import-dependent constituencies, trade negotiations are still conducted according to the mercantilist conception that improved foreign market access is the prize and conceded import market access is the cost of an agreement. The economic imperative of reform too often succumbs to the political objective of “winning” the negotiation – or avoiding the perception of having been outdueled. That’s a real shame because the real benefits of trade liberalization come from reducing your own barriers to trade and not from better access to foreign markets. Remember the AMC Pacer, the Ford Pinto, the Chrysler K-Car and other such “offerings” from Detroit in the 1970s before intensifying competition from Japan raised their game? Remember when the produce section of your grocery store was barrren in the winter? Remember when high-tech gadgets were luxury goods?

For real and enduring reform to take shape, the American and European publics must shed their complacency, challenge the status quo, and assert their rights to transact with whomever they choose, wherever they are located without having to contend with bureaucratic impediments designed to steer them to domestic sources. Success will have been achieved when the trade negotiator goes the way of the AMC Pacer.

Scandals Keep Eroding Our Faith in Benevolent Government

David Boaz — Thu, 16 May 2013 09:07 EDT

David Boaz

George Will, Michael Gerson, and our own Gene Healy are among the columnists who reminded us – in the wake of the IRS and AP snooping scandals – of President Obama’s stirring words just two days before the IRS story broke:

Unfortunately, you’ve grown up hearing voices that incessantly warn of government as nothing more than some separate, sinister entity. . . . They’ll warn that tyranny is always lurking just around the corner. You should reject these voices.

No road to serfdom here. Just us folks working together, to protect ourselves from sneaky reporters and organized taxpayers.

And now lots of people are noting that a series of scandals in government just might undermine people’s faith in government. John Dickerson of Slate writes:

The Obama administration is doing a far better job making the case for conservatism than Mitt Romney, Mitch McConnell, or John Boehner ever did. Showing is always better than telling, and when the government overreaches in so many ways it gives support to the conservative argument about the inherently rapacious nature of government….

Conservatives argue that the more government you have, the more opportunities you will have for it to grow out of control.

And Paul Begala, the Bill Clinton operative, notes:

This hurts the Obama Administration more than similar issues hurt the Bush administration because a central underpinning of the progressive philosophy is a belief in the efficacy of government. In the main almost all of the Obama agenda requires expanding folks’ faith in government, and these issues erode that faith.

“Faith in government” indeed. To paraphrase Oscar Wilde, putting your faith in government is, like a second marriage, a triumph of hope over experience.

But most particularly this week I’m reminded of Murray Rothbard’s comment in 1975 about what the era of Vietnam, Watergate, and stagflation had done to trust in government:

Twenty years ago, the historian Cecelia Kenyon, writing of the Anti-Federalist opponents of the adoption of the U.S. Constitution, chided them for being “men of little faith” – little faith, that is, in a strong central government. It is hard to think of anyone having such unexamined faith in government today.

Another 38 years later, it should be even more difficult to retain such faith.

Once More Unto the Treaty-Power Breach

Ilya Shapiro, Trevor Burrus — Thu, 16 May 2013 07:00 EDT

Ilya Shapiro and Trevor Burrus

The Carol Anne Bond saga continues. Now in her second trip to the Supreme Court—and with Cato’s support for the fourth time—Bond is still hoping to avoid federal punishment stemming from her attempts to get back at her erstwhile best friend for having an affair with her husband.

Bond, a microbiologist, spread toxic chemicals on her friend’s car and mailbox. Postal inspectors discovered this plot after they caught Bond on film stealing from the woman’s mailbox. Rather than leave this caper to local law enforcement, however, a federal prosecutor reached into his bag of tricks and charged Bond with violating a statute that implements U.S. treaty obligations under the 1993 Chemical Weapons Convention.

Yes, rather than being charged with attempted murder and the like, Bond is essentially accused of chemical warfare.

Bond challenged the federal government’s power to charge her with a crime, arguing that Congress lacks constitutional authority to pass general criminal statutes and cannot somehow acquire that authority through a treaty. Before a court could reach this issue, however, there was a question whether Bond could even make that argument under the Tenth Amendment, which reaffirms that any powers not delegated to Congress are reserved to the states or to the people. On Bond’s first trip to the Supreme Court, the Court unanimously accepted the argument, offered in an amicus brief by Cato and the Center for Constitutional Jurisprudence, that there’s no reason in constitutional structure or history that someone can’t use the Tenth Amendment to challenge the constitutionality of the statute under which she was convicted.

On remand to the Philadelphia-based U.S Court of Appeals for the Third Circuit, and now with standing to challenge that law, Bond raised the argument that Congress’s limited and enumerated powers cannot be increased by treaties. We again filed in that case in support of Bond. The Third Circuit disagreed, however—if reluctantly—based on one sentence written by Justice Oliver Wendell Holmes in the 1920 case of Missouri v. Holland, which has been interpreted to mean that treaties can indeed expand Congress’s powers. With Cato supporting her bid to return to the Supreme Court on that treaty power question, Bond’s case reached the high court.

Now, in a brief authored by professor Nicholas Quinn Rosenkranz and joined by the Center for Constitutional Jurisprudence, the Atlantic Legal Foundation, and former attorney general Edwin Meese III—in what we hope will be our final filing in the case—we argue that a treaty cannot give Congress the constitutional authority to charge Bond. Allowing Congress to broaden its powers via treaties is an astounding manner in which to interpret a document that creates a federal government of limited powers.

Not only would this mean that the president has the ability to expand federal power by signing a treaty, but it would mean that foreign governments could change federal power by abrogating previously valid treaties—thus removing the constitutional authority from certain laws. This perverse result makes Missouri v. Holland a doctrinal anomaly that the Court must either overrule or clarify. We also point out how the most influential argument supporting Holland is based on a clear misreading of constitutional history that has been repeated without question.

Although Holland is nearly 100 years old, there is thus no reason to adhere to a precedent that is not only blatantly incorrect, but could severely threaten our system of government. We’re in a constitutional quagmire with respect to the treaty power, one that can only be escaped by limiting or overturning Missouri v. Holland.

The Supreme Court will hear oral arguments in Bond v. United States in October.

What's at Stake in the IRS Scandal

Cato Editors — Wed, 15 May 2013 17:11 EDT

Cato Editors

The IRS scandal continues to widen and deepen with each passing. Cato has prepared a video that talks about the abuses of past administrations and the current dangers of having the federal government intervene in national politics.

The I.R.S. Abusing Americans Is Nothing New

IRS’s Soaring Budget and Refundable Tax Credits

Tad DeHaven — Wed, 15 May 2013 14:14 EDT

Tad DeHaven

Chris Edwards showed that the Internal Revenue Service’s budget has been soaring and the main culprit is refundable tax credits. The magnitude of refundable tax cuts is obfuscated in the IRS’s budget because only the refunded portion of the credit shows up as an outlay —the rest is recorded as a reduction in revenues.

The Congressional Budget Office released a handy report on refundable tax credits in January. The following table from the report shows the entire magnitude of the tax credit, separating between the refunded portion (outlays) and the reduction in revenues:

As Chris noted, the figure has dropped in recent years with the expiration of temporary “stimulus” tax credits. However, the upward trajectory is projected to resume due to refundable tax credits in the Affordable Care Act (a.k.a, Obamacare).

Big Sugar Tries to Protect Its Sweet Deal from "Big Candy"

David Boaz — Wed, 15 May 2013 14:07 EDT

David Boaz

We’ve written about the outrageous sugar import quotas here many times. And Chris Edwards wrote in March about the American Sugar Alliance’s ad in the Washington Post titled “Big Candy’s Greed.” But we couldn’t link to the ad because for some reason the American Sugar Alliance has not chosen to put a version of the ad on its website. But the Alliance ran its expensive quarter-page ad in the Post last week, so we’re now able to provide the public service of making it available online.

Note that what candy producers and other sugar users want is to be allowed to buy sugar from the world’s most efficient producers at world market prices—just like every company in a free market. This protectionist nonsense “Big Candy” is fighting has been going on for decades. In 1985, the Wall Street Journal and then the New York Times reported that the Reagan administration had slapped emergency quotas on “edible preparations” such as jams, candies, and glazes—and even imported frozen pizzas from Israel—lest American companies import such products for the purpose of extracting the sugar from them. Apparently it might have been cheaper to import pizzas, squeeze the tiny amount of sugar out of them, and throw away the rest of the pizza than to buy sugar at U.S. producers’ protected prices.

As Chris Edwards noted, a critic of Big Sugar quoted in this article summarized the sad reality of sugar growers: “They are unlike any other industry in Florida in that they aren’t in the agricultural business, they are in the corporate welfare business.”

Please enjoy “Big Candy’s Greed,” brought to you by the coddled, protected, price-supported, politically active U.S. sugar industry:

Government... IS... PEOPLE!

Andrew J. Coulson — Wed, 15 May 2013 12:53 EDT

Andrew J. Coulson

The Christian Science Monitor suggests this lesson be drawn from the Obama administration’s recent scandalpalooza:

Congress should use this IRS scandal to beef up civics education for federal workers as well as for public school students. Lesson No. 1: Government cannot restrict or discriminate against political causes that it disagrees with.

I think the scandals teach a different lesson: Government will misbehave because it, like Soylent Green, is made from people. Fallible, foible-ridden people. Therefore, government’s unique powers must be strictly limited to avoid miscarriages of justice.

One of these days, someone should build a nation on that lesson….

Three Questions about Government Spying on the Press

Julian Sanchez — Wed, 15 May 2013 11:00 EDT

Julian Sanchez

It’s heartening to see widespread outrage—both online and from members of Congress—about the news that Justice Department vacuumed up phone records spanning two months from 20 phone lines belonging to the Associated Press or its employees. This may not be a return to the bad old days of J. Edgar Hoover, who kept files of derogatory information about hostile journalists, but surveillance of the press—even in the course of otherwise legitimate investigations—always threatens to impede the vital check on government the Fourth Estate provides. A subpoena covering so many of a major news organization’s phone lines, including shared switchboard and fax numbers used by scores of reporters, for such an extended period, seems especially troubling in the context of this administration’s unprecedented war on whistleblowers. It’s effectively a warning that nobody who speaks to the press without White House approval—whether they’re leaking classified secrets or just saying things the bosses wouldn’t like—can count on anonymity. I’ll have plenty more to say about this soon, but a few key questions reporters and legislators ought to be asking:

DOJ regulations are supposed to require a careful balancing of investigative needs against First Amendment values before reporter records are sought, with advance notice to the press whenever possible. The AP is fairly certain its records were seized as part of a leak investigation aimed at uncovering the source of a story about a foiled terrorist plot—a story the AP itself sat on until they were convinced publication posed no national security risk. The administration itself was on the verge of announcing the same facts. Given that anonymous sources discussing classified matters with press are a routine and indispensable part of journalism, what made this investigation so urgent that it was necessary to use methods experts agree were far more broad and intrusive than the norm?
Read hyper-literally, those same DOJ regulations refer only to “subpoenas” directed at journalists themselves or seeking “telephone toll records.” And the DOJ’s own operational guidelines make quite clear that they do read the rules hyper-literally: They apparently are not held to apply to the myriad tools other than grand jury subpoenas at the government’s disposal, such as National Security Letters or administrative subpoenas. Does DOJ employ a similarly literal reading of “telephone toll records,” such that they’re not required to observe these rules when they obtain other electronic records, such as e-mail transactional data? The DOJ, recall, says they often don’t need warrants to read e-mail or Facebook chats, let alone review transactional metadata concerning such communications. So it seems odd that they would pull out all the stops when it comes to phone records, yet ignore the channels by which modern reporters probably conduct the bulk of their correspondence. Even if it would have been infeasible to access logs of AP’s e-mail transactional data without tipping them off (my understanding is they maintain their own e-mail servers), nearly every journalist has potentially revealing Facebook friend lists, personal Gmail accounts, Twitter direct message headers, and so on—some of which would be more targeted than records from phone lines shared by dozens of journalists. Was other data that DOJ believes to be outside the scope of their reporting obligations—either because it wasn’t obtained by “subpoena” or because it wasn’t “telephone toll records”—obtained in this case? More broadly, how much press data is obtained without notification because it falls outside these categories?
Thanks to a 2010 Inspector General report, we know a bit about the FBI’s use of “community of interest” data requests that sweep up call log data not just on a single target, but all the phones their target is in regular contact with—and maybe even the numbers those phones are calling too. After using this technique for years—sometimes literally by accident—FBI sought an Office of Legal Counsel opinion about whether the press notification rules applied when such requests were likely to indirectly pull in press records. In January 2009, OLC concluded they did—but since they ended up not getting the records in that instance, and the agent making the request apparently hadn’t understood quite what he was requesting, the FBI decided it didn’t need to tell anyone at the time. What, then, is the Justice Department’s current policy when it comes to information about press communications obtained indirectly through “community of interest” requests? Is any attempt made to ascertain when such requests have acquired reporters’ phone records, whether or not that was either intended or foreseen when the request was made? Since records in the FBI database are retained indefinitely for potential future data mining, even records the FBI doesn’t currently know belong to reporters could easily end up revealing patterns of press activity as a result of future analysis. Does DOJ think it must inform reporters when this happens, or is it only at the acquisition stage that the notice obligation applies? Has any broad effort been made to determine how many reporter records are in FBI databases, especially as a result of requests made before 2009?

Of course, whatever the answers to these questions, the Electronic Frontier Foundation is right to point out that the broader problem is that communications metadata isn’t entitled to much protection under either current Fourth Amendment jurisprudence or federal statute. This means the government can typically access metadata with little or no judicial oversight—and if you’re not a reporter there are no special rules requiring the government to ever notify you that your records have been swept up in some investigation. As technological change makes such metadata increasingly revealing—because nearly everything you do online leaves some digital trace, from which ever more detailed inferences can be drawn using sophisticated analytic tools—the problem is not just for press freedom: it’s a privacy problem for all of us.

Iran: Political and Religious Persecution Proceeds Apace

Doug Bandow — Wed, 15 May 2013 10:38 EDT

Doug Bandow

The Islamic Republic of Iran will soon hold a presidential election. The result is in doubt—the clerical elite itself is split—but the country’s overall direction unfortunately is not. Iran has a deteriorating human rights record. Although Tehran is not the bloodiest or most tyrannical government in the Middle East, repression is increasing and the space available to regime opponents is diminishing.

Most attention has been focused on the unpleasant potential of an Iranian nuclear weapon. There is good reason to maintain an active campaign to forestall such a prospect. However, war almost certainly is a worse option. Bombastic rhetoric is common in Tehran, but the diverse political and religious figures now bitterly battling over power and wealth seem pragmatic, not suicidal. There is no reason to believe that the United States (as well as Israel) cannot deter Iran even if the latter developed an atomic bomb.

Iran’s worsening religious persecution is far less publicized. As I note in my latest Forbes online column, Tehran has generated a not-so-enviable record in brutalizing religious minorities—Baha’is, Christians, Jews, Zoroastrians, and Sunni Muslims. Such behavior belies a lack of confidence in the dominant theology which underlies the regime.

Sadly, there isn’t a lot the U.S. government can do. But people of goodwill around the world might achieve more. As I argue in Forbes online:

The West’s leverage over Iran is minimal. Some activists have criticized the Obama administration for not doing more, but it is not clear what more could be done, given the sanctions already imposed regarding the nuclear issue.

There may be a better hope of using international popular pressure. Explained [Indiana University Professor Jamsheed] Choksy, “Despite their heavy-handed actions, the Islamic Republic’s hard-liners seek to present their rule as benevolent and humane,” and therefore the regime has been “exhibiting rising concern about negative public perceptions of its rule.”

Individuals, groups, and activists, especially those which have not been at the forefront of the campaign to sanction and even bomb Iran, should press the Iranian government and other entities, from media to business, and protest the manifold violations of human rights. Visiting officials should be embarrassed by protestors. The regime should understand that its fight against sanctions for its nuclear activities continues to be undermined by its brutality at home.

Ahmed Shaheed, the UN Special Rappoteur, confirmed that public pressure works. In March he noted that “At least a dozen lives were saved because of the intervention of international opinion.” More such action is needed.

In 1979 the Iranian people overthrew the Shah, a corrupt thug long supported by Washington. Alas, the Iranian revolution delivered even more tyranny. The Iranian people desperately await a revolution which actually liberates.

Encouraging Continued Reform in Burma

Doug Bandow — Wed, 15 May 2013 10:30 EDT

Doug Bandow

Burmese President Thein Sein will be visiting Washington next week. It’s the first trip by a Burmese head of state in nearly five decades and reflects the reform winds blowing through Naypyitaw.

Burma, or Myanmar, languished under brutal military rule for a half century before the armed forces moved into the background and created a nominal civilian government. Thein Sein is a former general and the retired junta leaders undoubtedly remain influential, though their exact role remains hidden.

Nevertheless, Burma has come far in the last couple of years. Many political prisoners have been released. Many restrictions over the media have been lifted. Nobel Laureate Aung San Suu Kyi has been freed from house arrest and elected to parliament. Fighting has ceased against many separatist ethnic groups. Naypyitaw has distanced itself from its former patron, China.

There’s still more to be done. Conflict with the ethnic Kachin continues to ravage parts of Burma, while Buddhist mobs have been conducting a different form of war against Muslim Burmese. Nor is it certain that the military is prepared to fully yield power in 2015, when the next election is scheduled. Indeed, Tomas Ojea Quintana, the United Nations Special Rapporteur on human rights in Burma, recently issued a report citing the need for additional reforms, which I discussed in a recent article in National Interest online.

Nevertheless, after spending years vying with North Korea for distinction as the world’s worst government, Burma now offers its people hope of liberating change. Ultimately enduring reform will come from inside Burma. But the West can help.

The best reward for Naypyitaw for continuing reform is steadily eliminating remaining economic sanctions. Foreign investment and trade will help moderate poverty, expand the middle class, and provide resources for democratic activism. Expanding the economic pie also would give government and security personnel a stake in a freer society in which their power is more limited.

But Washington and other democratic states should not bury Naypyitaw in foreign aid. Alas, history demonstrates that foreign “assistance” more often deserves to be called foreign hindrance, actually slowing reform and entrenching corrupt elites. Burma desperately needs a broader civil society as the foundation for a freer and more prosperous future.

There is a lot of bad news in the world today. Burma offers some welcome good news. Washington should use Thein Sein’s visit to encourage continuing political and economic reform.

The IRS Scandal: Hiding In Plain Sight

Walter Olson — Wed, 15 May 2013 09:17 EDT

Walter Olson

If you had asked me who would actually try to defend the behavior of the IRS employees, I would have guessed, “Oh, maybe someone at the New Yorker…. Jeffrey Toobin?” Bingo.

ABC News reports on the bewildering experience of Marion Bower after she sought exempt tax status for her Tea Party group, not expecting the process to drag on for two years:

The Ohio woman also did not expect that providing information about the books her group read would be part of the application process.

“I was trying to be very cordial, but they wanted copies of unbelievable things,” Bower told ABC News today. “They wanted to know what materials we had discussed at any of our book studies.” …

“They wanted a synopsis of all the books we read,” Bower said. “I thought, I don’t have time to write a book report. You can read them for yourselves.”

The thing is, the essentials of the IRS scandal were clear to anyone with eyes to see more than a year ago – before the intervening false denials by IRS officials, the more recent admissions and apologies, and the promises of house-cleaning from the President and leading Democrats. Here’s an AP story from March 2012 citing “instances in which the IRS has asked for voluminous details about [Tea Party] groups’ postings on social networking sites like Twitter and Facebook, information on donors and key members’ relatives and copies of all literature they have distributed to their members, according to documents provided by some organizations.” Here are more reports on IRS demands for transcripts of speeches and radio shows, donor lists, and the like. It is perhaps needless to add that many other groups seeking 501 (c)(4) status were not subjected to overbearing demands of this sort.

Regarding Jeffrey Toobin, it seems to me that there are two main possibilities. Either he is unaware that the IRS’s scrutiny of politically dissident groups has included these sorts of crushingly burdensome demands, in which case he has not made much of an effort to get up to speed on the story. Or he is aware of it, but sees nothing wrong enough with such demands to give him pause in his defense of the agency’s conduct.

Incidentally, Mrs. Bower of Ohio eventually figured out how to respond to the IRS’s demand for synopses of the reading materials provided to her group’s members. She sent them a copy of the U.S. Constitution.

Conspiracy Not Required

Trevor Burrus — Tue, 14 May 2013 14:41 EDT

Trevor Burrus

The recent revelation that the IRS targeted conservative political groups is now moving into the second stage of a DC scandal: the first is finding out what happened; the second is finding out how high up it goes. Although it is important to find out how many, if any, high-level officials are culpable, high-level participation is not necessary for libertarians to have a small “I told you so” moment.

But we should not try to oversell it. Some libertarians have an odd tendency to believe that government is more effective at doing bad things than at doing good things. At the extremes, this manifests as the “libertarian conspiracy theorist”—someone who oddly believes that, while government can’t effectively run health care, schools, or welfare programs, it can successfully orchestrate and cover-up massive conspiracies. But we don’t need high-level conspiracies to point out that abuses of power, even by low-level officials, can be expected. Moreover, as government grows larger it becomes both less accountable and more important to our lives, thus giving government officials both more leverage and more freedom to misbehave.

In his novel Child 44, a fascinating detective story that takes place in Stalin’s Russia, Tom Rob Smith tells of an encounter between a party-member doctor and the novel’s protagonist, a Muscovite police officer who was once a loyal party member but is slowly losing his faith. The officer is out sick and the doctor visits to see if he is really sick or just trying to avoid work. Shirking work is a grave offense, and the doctor’s judgment could destroy the officer and his wife. A bad report and they will go to the Gulag. A good report and they get to stay in their relatively comfortable apartment in Moscow. Knowing his power, the doctor makes unwanted advances towards the officer’s beautiful wife, telling her that “Ten minutes is hardly a high price to pay for the life of your husband.”

It is a chilling episode, and while I am certainly not comparing the U.S. government to Soviet Russia, there are some lessons to be learned. As much as we might like a sensational story implicating top-level officials, the most common form of government misconduct does not usually involve devious scheming by politicians. Instead, it is often both less insidious and more invidious—the cumulative effects of misconduct by less-accountable, low-level officials who enjoy immense power over small areas of our lives.

My father, an attorney, once told me he first started having vaguely libertarian thoughts after he began dealing with banking regulators. The regulators were relatively low on the chain of command, yet they held an incredible amount of power over their areas of concern, more than enough to make my father’s job very difficult. And they did. Similar stories happen all over the country, and sometimes they make it to the Supreme Court.

But most don’t usually make it to any court, much less the Supremes. The United States government is the most powerful organization the world has ever seen, and lower-level officials wield a small fraction of that power, which is still more than enough to make most people sit down and shut up.

I’m not saying that most government officials illegitimately use their power. I believe that the vast majority of government officials do not. I am saying, however, that many abuses occur and more can be expected if the government continues to grow larger and more powerful. It is simply too large an organization for anyone to control.

IRS Budget Soars

Chris Edwards — Tue, 14 May 2013 14:34 EDT

Chris Edwards

The revelations of IRS officials targeting conservative and libertarian groups suggest that now is a good time for lawmakers to review a broad range of the agency’s activities. Since the agency’s last overhaul in the IRS Restructuring and Reform Act of 1998, its budget has exploded from $33 billion to a proposed $106 billion in 2013.

Using data from the OMB budget database, I split total IRS outlays into two broad activities: administration and handouts. Administration includes tax return processing, investigations, enforcement, and other bureaucratic functions. Handouts mainly includes spending on “refundable” tax credits such as the EITC.

The chart shows that the IRS has become a huge social welfare agency in recent decades. Handouts have soared from $4.4 billion in 1990 to an estimated $91.1 billion in 2013 (red line). Handouts are down a bit in recent years because some of the refundable credits from “stimulus” legislation have expired. IRS administration costs have grown from $7.7 billion in 1990 to an estimated $15.3 billion in 2013 (blue line).

How should we reform the IRS budget? First, we should terminate the handout programs. That would save taxpayers more than $90 billion annually and cut the IRS budget by 86 percent.

The largest IRS handout is the refundable part of the EITC, which is expected to cost $55 billion in 2013. Many policymakers favor the EITC as a “conservative” handout program because it encourages people to work. But the EITC itself creates a discouragement to increased work over the income range that it is phased-out. It also adds to tax-code complexity and has an error and fraud rate of more than 20 percent.

The EITC is an example of how big government begets more big government. We certainly wouldn’t need the EITC incentive to work if we slashed all the taxes and welfare programs that currently encourage people not to work.

It’s a similar situation with other IRS handout programs, such as the $1 billion “Therapeutic Discovery” grant program. These grants are supposed to “produce new and cost-saving therapies, support jobs and increase U.S. competitiveness.” But it would be better to accomplish those goals by repealing the excise tax on medical devices and slashing the high 40 percent U.S. corporate income tax.

As for the $15 billion in spending on IRS administration, we could dramatically cut that cost with major tax reforms. In particular, a consumption-based flat tax would hugely simplify the code and greatly reduce paperwork costs of the IRS and taxpayers alike.

Looking ahead, the IRS budget is expected to balloon in coming years as the agency plays a key role in implementing ObamaCare. Unless the health care legislation is repealed, IRS outlays are expected to soar from $106 billion this year to $263 billion by 2023.

Is Kathleen Sebelius Barack Obama's Oliver North?

Michael F. Cannon — Tue, 14 May 2013 13:58 EDT

Michael F. Cannon

I blogged earlier about how HHS Secretary Kathleen Sebelius is unethically, and possibly illegally, shaking down industries she regulates to get them to fund ObamaCare’s implementation.

Sen. Lamar Alexander (R-TN), the ranking member of the Senate’s Health, Education, Labor, and Pensions Committee, says this is “arguably an even bigger issue [than] Iran-Contra,” and ably defends his position against the Washington Post’s Sarah Kliff.

Excerpts from Alexander’s comments:

[I]n Iran-Contra, you had $30 million that was spent by Oliver North through private organizations for a purpose congress refused to authorize, in support of the rebels. Here, you’re wanting to spend millions more in support of private organizations to do something that Congress has refused…

The cause in the first case was the cause of rebels in Nicaragua. And the cause here is to implement Obamacare. Congress has refused to appropriate more for that cause. The administration seems to be making a decision that’s called augmenting an appropriation. Its a constitutional offense that’s the issue…

If you read the report of the Iran-Contra select committee, it said that the executive cannot make an end run around Congress by raising money privately and spending it. That seems to be happening here. That was essentially the problem. There the money came from a different place, but if you look at my statement [the Iran-Contra report said] “a president whose appropriation requests were rejected by Congress could raise money from private sources or third countries for armies, military actions, arms systems, and even domestic programs.” [Emphasis added.] It’s the same kind of offense to the Constitution. It’s the same kind of thumbing your nose at Article 1…

If that’s what they’re saying…that Congress has refused to appropriate the money, then you can’t do it. That’s a curb on the executive.

Alexander has sent a letter to Sebelius requesting information about her extracurricular fundraising activities.

Jon Stewart on the IRS Targeting the Tea Party

Michael F. Cannon — Tue, 14 May 2013 12:48 EDT

Michael F. Cannon

Last night, the Daily Show’s Jon Stewart said of reports the IRS singled out tea-party groups for extra scrutiny, “This seems like a genuine scandal.” Then he turned on the funny: “In their defense, there is a good reason why people using the IRS to crack down on political enemies would not want Americans educated about the Constitution.” Best line: “Wait a minute. I didn’t realize apologies were sufficient in IRS-related issues.” Video below. (Beware: some racy language.)

The Daily Show with Jon Stewart

Mon - Thurs 11p / 10c

Barack Trek: Into Darkness

www.thedailyshow.com

Daily Show Full Episodes

Indecision Political Humor

The Daily Show on Facebook

In the very next segment, Stewart portrays HHS’s release of (wildly divergent) hospital chargemaster prices as an example of government doing things right, gives kudos to HHS, and laments that government doesn’t do more of that sort of thing. There’s only one problem. Outrageously high and divergent hospital prices are due to government policies that encourage patients to pay for more items through health insurance and that thereby destroy the cash market and any hope of competitive and transparent prices. So that episode is also an example of government failure.

The show’s Moment of Zen was this priceless clip of former IRS commissioner Douglas Shulman denying that his agency was on a tea-party witch hunt:

The Daily Show with Jon Stewart

Mon - Thurs 11p / 10c

Moment of Zen - The Nonpartisan IRS

www.thedailyshow.com

Daily Show Full Episodes

Indecision Political Humor

The Daily Show on Facebook

Some Empirical Evidence of IRS Political Manipulation

Tim Lynch — Tue, 14 May 2013 11:58 EDT

Tim Lynch

This morning Politico reports that there are plans for some congressional hearings into the unfolding IRS scandal. According to that report, these hearings will “probe whether the targeting of right-leaning groups is systemic or isolated.” In that connection, members of Congress (and others) should read this article from the Cato Journal, “Political Influence and the Internal Revenue Service.” Here’s an excerpt from the conclusion:

While history is replete with anecdotal evidence concerning the misuse of the Internal Revenue Service, this paper attempts to offer, to our knowledge, the first empirical evidence of systematic political manipulation. Findings reveal that the IRS is more active in states where noncompliance is more likely, but we also find evidence that political factors help shape enforcement patterns. For example, the IRS audits fewer returns in states whose representatives are members of congressional committees charged with IRS oversight. In addition, taxpayers in those states that gave Clinton greater political support were subjected to significantly fewer audits. Using 1995 audit rate data from the 63 IRS districts across the nation, we find that political factors offer significant explanatory power. In particular, a 10 percent increase in the vote for Clinton in the 1992 presidential election led to a 0.1 percent reduction in returns audited from the state. Thus evidence supports our hypothesis that both public-interest and private-interest motives shape IRS enforcement activity.

George Will has additional thoughts on the IRS matter:

The Post reported Monday that the IRS also targeted groups that ‘criticized the government and sought to educate Americans about the U.S. Constitution.’ Credit the IRS’s operatives with understanding who and what threatens the current regime.

Read the whole thing.