Wednesday, July 31, 2013

That's fun, let's do some more!

Doggy Dentist

A pretty good rain last night to help cool things off. My friend said it felt like fall this morning; unfortunately, we're not there yet. There was fog in the fields this morning when I walked the boys which was pretty and we've had good temps in the morning all summer - mostly 60s.

I'm holding auditions for the next read between now and when I get the new ones on Tuesday. Is it another Kearsley? Or next in series by Doherty, Hart, or Todd from the library? Gosh, it would be nice if the library shook loose the new Karin Slaughter or Brad Thor today.

Nothing on TV tonight for me so I can read whatever it winds up being while hanging with the boys and Steve has shooting. Stopped by Walmart on the way home to get a new iron. Mine died in mid session. Bah.Will figure something out for dinner -- guacamole?

Much love,
PK the Bookeemonster

Current Events - July 31, 2013

Obama's 'Grand Bargain' With Obama

He proposes tax reform with higher taxes and not much reform.

In Chattanooga on Tuesday, the latest stop on his economic inequality tour, President Obama made himself an offer he couldn't refuse. If Congressional Republicans agree to a corporate tax increase, he said, then he'll agree to spend more money on his favorite public-works projects. If Republicans bargain hard, will he also offer an expansion of ObamaCare as a sweetener?

We know this sounds like an exaggeration, but that's the essence of what the President proposed as what he called a new "grand bargain." Mr. Obama will agree to reform the corporate tax code—a GOP priority and one even the President claims to support—but only if the reform raises more revenue and only if he is allowed to spend that windfall on his priorities.

A White House press release clarified that the President would also like to raise taxes on individuals, not just businesses, while allowing federal spending to rise still higher. But showing they retain a sense of humor in the West Wing, the press release suggests that the President is willing to forgo this tax increase for now because he wants to "work with Republicans."

This isn't a serious proposal, and he knows it. It also isn't bipartisan, since he is offering a compromise with appeal to the ideological spectrum running from Elizabeth Warren to Chuck Schumer. Perhaps these are the only Members of Congress whom Treasury Secretary Jack Lew has in his iPhone.

The real bipartisan reform opportunity would be to get behind the chief Senate and House tax writers, Democrat Max Baucus and Republican Dave Camp. They've been holding hearings on tax reform for years, and Mr. Baucus has even invited all Senators to send him a list of tax provisions they'd like to retain and why.
The rub for Mr. Obama is that both men conceive of using whatever money they would raise from closing loopholes to reduce tax rates. This is crucial to getting rates as low as possible, especially given that the statutory U.S. corporate rate of 35% (plus state corporate taxes) is the highest in the developed world.

But it is also crucial to making reform politically possible. A reform that merely lowers rates a few percentage points has no chance of building enough support to overcome the opposition of companies and interests that will see their tax loopholes closed. 

The problem, as ever, is that Mr. Obama simply can't get over his ideological fixation to keep tax rates as high as possible. We say "ideological" because his own advisers concede that a 35% rate hurts U.S. business competitiveness. Even Japan, the last high-rate holdout among rich countries, is cutting its corporate rate. But recall the famous moment in the 2008 campaign when then Senator Obama was asked by ABC's Charlie Gibson if he would support higher capital gains tax rates even if they raised less revenue than lower rates. Mr. Obama said yes. 

On Tuesday, Mr. Obama at least conceded the need to transition "to a simpler tax system" for corporations. But his plan is to take the headline corporate tax rate of 35% down to only 28% for most companies, while eliminating deductions and creating a new minimum tax on foreign earnings so that corporations will actually pay a higher tax bill. The White House says that manufacturers will pay an effective tax rate of "no more than 25%," but that is also likely higher than the effective rate many of them are paying now. 

These columns certainly favor a simpler tax code, but compliance is merely one cost of our tax system. The bigger cost is money owed to the Treasury. Reducing the first while raising the other is not a game-changer for U.S. business or for economic growth. 

Even for businesses that might find the proposal intriguing, the simplification in Mr. Obama's plan seems to apply mainly to those that file under the corporate tax system. Most small business owners file under the rules for individuals, which are not being simplified under this plan and whose tax rates Mr. Obama raised substantially in January. Cutting corporate rates without doing so for small businesses will merely increase the opportunities for tax arbitrage. 

On the other side of Mr. Obama's grand bargain, he offered his usual grab bag of spending that would create more union jobs at high Davis-Bacon wages, more teachers, and more job training, though the federal government already runs more than 40 job-training programs that don't seem to do much training for real jobs. He also wants more subsidies for biofuels and electric cars—the ideas that worked so well in the first term. 

All of which suggests that the President's speeches aren't really about tax reform or the economy. They're about preparing the political ground for 2014. On that score, he adopted once again his charming habit of casting those who disagree with him as motivated purely by political spite. No wonder even Democrats want the President out of the room when they try to negotiate on immigration. He's a deal killer. 

Obama's Middle Class Malaise

The President’s speech at Knox College needs some close deconstruction because it sheds harsh light on a problem that has dogged his domestic policy agenda from the beginning: intellectual rigidity. The President, who has never worked a day in the private sector, has no systematic view of the way in which businesses operate or economies grow. He never starts a discussion by asking how the basic laws of supply and demand operate, and shows no faith that markets are the best mechanism for bringing these two forces into equilibrium.

Because he does not understand rudimentary economics, he relies on anecdotes to make his argument. He notes, for example, that the Maytag plant that used to be in Galesburg is no longer in operation—it closed in 2004—but he never asks what set of forces made it untenable for the business to continue to operate there. He never mentions that Maytag’s relocation of its manufacturing operations to Mexico may have had something to do with a strong union presence or the dreadful economic climate in Illinois.

Unfortunately, our President rules out deregulation or lower taxes as a way to unleash productive forces in the country. Indeed, he is unable to grasp the simple point that the only engine of economic prosperity is an active market in which all parties benefit from voluntary exchange. Both taxes and regulation disrupt those exchanges, causing fewer exchanges to take place—and those which do occur have generated smaller gains than they should. The two-fold attraction of markets is that they foster better incentives for production as they lower administrative costs. Their comparative flexibility means that they have a capacity for self-correction that is lacking in a top-down regulatory framework that limits wages, prices, and the other conditions of voluntary exchange.

Deconstructing Obama
Instead of suggesting policies to reduce the impact of government on production, Obama reverts into a lament for the lost middle class. He notes that our economic engine has, over time, “began to stall”:
Technology made some jobs obsolete. Global competition sent others overseas. It became harder for unions to fight for the middle class. Washington doled out bigger tax cuts to the rich and smaller minimum wage increases for the working poor. The link between higher productivity and people’s wages and salaries was severed—the income of the top 1% nearly quadrupled from 1979 to 2007, while the typical family’s barely budged.
In the course of a single paragraph, he hits on so many issues—and so many mistakes—that his elegant prose conceals. Obama speaks first of how the economic engine began to stall, but he offers no timeline. His general statement may square with the economic malaise of the Carter years, but it hardly describes the solid growth during most of the Reagan and Clinton years, as both presidents grasped, however imperfectly, that any expansion of the government footprint on the economy could dull the incentives to production.

The situation turned south the past ten years. The second George Bush administrative gave us No Child Left Behind and Sarbanes-Oxley, while Obama followed with Obamacare and Dodd-Frank. Such legislation offsets the many of the benefits from the Bush tax cuts, which, of course, Obama has undone. But his use of the phrase—the engine “began to stall”—conceals that he has no explanation of the ebbs and fall of the overall system.

His next sentence about technological change is every bit as otiose. Of course, technology makes some jobs obsolete. That’s something we should celebrate. Technology led to the automobile, ensuring the end of the horse and buggy era. At the same time, technology led to both better products and better jobs, and more of both. Joseph Schumpeter’s cycle of creative destruction explains these forces beautifully. Even Obama would not favor clamping down on the digital world in order to preserve jobs in the print media. Focusing on the negative consequences of technology obscures its far greater positives from innovation. It could easily lead government regulators to take a dim view of innovation.

Next, he takes on global competition. Of course global competition sends some jobs overseas, but it also can increase jobs at home whenever we organize our own production to decrease domestic obstacles to sales abroad. But in a global economy, what we cannot do is to expect our trading partners to structure their businesses and laws to subsidize American production in their own economies.

We have learned the benefit of free trade across state lines in the United States. It is imperative that we not forget that this same logic applies to free trade across nations, where again the principle of comparative advantage—let each nation specialize in the work where it is most efficient—offers the securest route to global and domestic improvement. The effort to shield individual workers from foreign competition comes at a cost to the system as a whole.

Unfortunately, the President cannot be open to international competition because of its crippling impact on domestic unions that work best behind a tariff wall. We should greet what he writes with deep apprehension: “It became harder for unions to fight for the middle class.” But the union movement does not represent the middle class. It receives dues only from its members, and it is only union members that receive union largesse in return. Other members of the middle class receive no assistance from unions, or are hurt by union activities. The President notes with some pride that “Airbus will build new planes in Alabama.” He might have added that Airbus chose Alabama because of its strong anti-union policies, which open up jobs for both middle class and poor people seeking economic advancement. Boeing relocated much of its business to South Carolina for the same reasons.

Indeed, it is critical to remember that today the greatest threat that unions pose to the economy does not come at the bargaining table but in the legislative arena where they work nonstop to block non-union rivals. One recent example of their job-busting behavior is The Large Retailer Accountability Act that just past the D.C. City Council by an 8 to 5 vote. If signed by Mayor Vincent Gray, it would mandate a $12.50 “living wage” imposed solely on new retailers with 75,000 square feet in space and a billion dollars or more per year in sales. This ad hoc scheme exempted current unionized businesses. Indeed it is explicitly targeted at the Wal-Marts, which has announced that if the law goes into effect, it will cancel at least three of the six new stores that it has planned for Washington D.C. proper. That would cost D.C. some 1,800 new jobs.

Like clockwork, the AFL-CIO supports this legislation on the ground that the law “would lift thousands of working families in Washington, D.C., out of poverty and support decent wages across the retail industry.” Dream on. The unpleasant reality is that the disappearance of these jobs will hurt the same poor people whom the President wishes to help.

Yet his speech offers not one hint that he is aware of the deep conflict between his abject fealty to union objectives and the poor people he wants to lift up. Yes there is an increasing gap between the rich and poor, but that gap won’t narrow if the President keeps plumping for a higher minimum wage that will block poor individuals, many of whom are African-American, from getting a toehold in the economy. No jobs at artificially high wages—which is what will happen, per Wal Mart—is no improvement over plentiful jobs at market wages.

No Obama speech is complete without lashing out at the tax cuts that Washington has doled out to the “rich.” On this point, he substantially overstates the increase in the income gap. Unfortunately, he also misses the key point that the higher rate structures have reduced income at the top, and thus the ability to fund the ever more lavish transfer programs that Washington wants to put in place. The President of course thinks that the new dawn is just around the corner, so long as we keep to his general program.

Indeed he constantly thinks of his greatest regulatory failures as his great successes. No other president has “saved the auto industry,” albeit by a corrupt bankruptcy process, or “taken on a broken health care system,” only to introduce a set of unworkable mandates that are already falling apart, or “investing in new technologies,” which tries to pick winners and ends up with losers like Solyndra. The great advances in energy have come from private developments, most notably fracking, and not from the vagaries of wind and solar energy, which no one has yet figured out how to store for future use when needed.

The President seems utterly incapable of seeing the downside to any of his policy choices. They are announced from on-high as all gain and no pain. In the face of stagnant growth, weak corporate earnings, and continued high unemployment, he shows not the slightest recognition that some of his programs might have gone amiss.

It is easy to see, therefore, why people have tuned out the President’s recent remarks. They have heard it all countless times before. So long as the President is trapped in his intellectual wonderland that puts redistribution first and regards deregulation and lower taxation as off limits, we as a nation will be trapped in the uneasy recovery that will continue to dog us no matter who is chosen to head the Federal Reserve.

Feds Juice Numbers, GDP Still Weak 1.7%

On Wednesday, the Commerce Department reported that the economy grew by 1.7% in the 2nd Quarter. This first estimate will likely be revised in the coming months. The final estimate for the 1st Quarter was revised downward from 1.8% to 1.1% in Wednesday's report. The economy remains essentially stalled. 

In mid-July, economists at major banks slashed their estimates of growth in the 2nd Quarter. The numbers reported by Commerce on Wednesday beat those reduced expectations. The markets, and many in the media, reacted positively to the news, which is evidence of the poor perception of the economy. In any other economic climate, 1.7% growth would be seen as a very weak number. The 2nd Quarter marks the fourth year of the economic "recovery" and ought to generate more growth. 

The numbers, however, may be even weaker than Wednesday's report. The Commerce Department, this month, changed how it reports GDP numbers. It now includes spending on intellectual property from artistic, literary and non-profit activity as fixed investments. Commerce noted that this change would increase GDP, as these items had not previously been counted in the nation's investments. 

The change, which increases the size of the economy, puts the 1.7% growth number in sharp relief. The addition of an entire new category of investment ought to have fueled a much higher growth number. In other words, the feds reconfigured how they calculate GDP in a manner that is positive to growth, yet actual growth was still a weak 1.7%. 

It is unclear what the GDP growth number would have been under the traditional measurement. Growth in personal consumption, the main driver of the economy, was considerably less than the 1st Quarter. As the 1st Quarter number as been repeatedly revised downward, it is likely that Wednesday's number will be lowered in the future.

For 4 years, pundits and the media have grasped for any sign that the economy is growing. We've repeatedly been told that the economy is on the cusp of robust growth. Hopes have been so diminished that Wednesday's juiced number of 1.7% growth looks like a recovery. Zero to flat growth is, it seems, the new normal.

Vacationer Obama's Favorite Vineyard "Vulture"

By Michelle Malkin
It's good to be the king ... of class warfare hypocrisy. While he lectures his political opponents about their neglect of middle-class America, President Obama is headed to Martha's Vineyard. Again. Because nothing spells populist like a $7.6 million, 9.5-acre estate owned by one of Chicago's wealthiest corporate financiers.

The sprawling summer manse of David Schulte is actually a downgrade from the Obama family's previous summer digs. The $21 million, 28.5-acre Blue Heron Farm that had hosted Obama and his massive entourage since 2009 isn't available for rental anymore because a British mogul snapped it up.

But don't be bumming. The Obamas won't be slumming. Schulte's Chilmark, Mass., complex boasts pond and ocean views, an infinity pool and a basketball court (natch!). Cell towers were installed around Schulte's home to boost phone service. The Vineyard Gazette reports that the Secret Service has 70 rooms booked nearby.

Homeowner Schulte deserves special attention. If this deep-pocketed donor and private-equity whiz were a Republican, the Occupy hordes and left-wing super-PACs would have made him a household name by now. The SEIU already would have picketed his private residence. Cher, Bette Midler and Chris Rock would be tweeting furiously about this privileged white robber baron in all caps.

Schulte, you see, earned his money in much the same way the demonized Mitt Romney did: through corporate restructuring and rescuing debt-burdened companies. He and his former partner, Sam Zell, have happily embraced the nickname "grave dancers" since the early 1990s. By 1993, their billion-dollar "vulture fund" based in Chicago had purchased all or part of Jacor Communications, the embattled media conglomerate; Sealy Corporation, the mattress empire; and the distressed Schwinn Bicycle Company.

The duo also scooped up Santa Fe Energy Resources (an oil and gas company) through a partnership and refinanced Revco D.S., the drugstore chain. Schulte called his financial playground "the land of broken dreams," according to the Los Angeles Times, which described the partners as "bottom-fishing."

Team Obama had plenty of brutal depictions for GOP private-equity mavens during the 2012 campaign: "Looter." "Corporate raider." "Greedy Gekko." "Heartless profiteer." Liberal media outlets likened Romney's cohorts to mobsters, strip miners and cannibals. "Bain was just like the Donner Party," comedian Stephen Colbert snarked. "They ate the weak."

Super-PAC Priorities USA Action, run by former Obama spokesman Bill Burton, teamed with shameless campaign mouth turned CNN talker Stephanie Cutter to smear Romney's private-equity record. They falsely accused Romney and Bain Capital of allowing laid-off steelworker Joe Soptic's wife to die of cancer -- even though she had insurance coverage after he lost his job, Romney was no longer with the company when Soptic's plant closed, and the wife died seven years after Romney's departure.

Like Schulte, Romney's Bain record includes many successful turnarounds that saved workers' jobs, pensions and health benefits -- including Staples and Sports Authority. When Democrats do it, it's creative capitalism. But when Republicans do it, it's a criminal enterprise.

The double standards are rich. But Obama's coffers are richer. Democratic demagoguery means never having to say you're sorry for throwing stones at glass houses, while vacationing in the compounds that "vulture capitalism" built.

Are We Rome Yet?

By John Stossel
Unfortunately, the fall of Rome is a pattern repeated by empires throughout history ... including ours?

A group of libertarians gathered in Las Vegas recently for an event called "FreedomFest." We debated whether America will soon fall, as Rome did.

Historian Carl Richard said that today's America resembles Rome.

The Roman Republic had a constitution, but Roman leaders often ignored it. "Marius was elected consul six years in a row, even though under the constitution (he) was term-limited to one year."

Sounds like New York City's Mayor Bloomberg. 

"We have presidents of both parties legislating by executive order, saying I'm not going to enforce certain laws because I don't like them. ... That open flouting of the law is dangerous because law ceases to have meaning. ... I see that today. ... Congress passes huge laws they haven't even read (as well as) overspending, overtaxing and devaluing the currency."

The Romans were worse. I object to President Obama's $100 million dollar trip, but Nero traveled with 1,000 carriages. 

Tiberius established an "office of imperial pleasures," which gathered "beautiful boys and girls from all corners of the world" so, as Tacitus put it, the emperor "could defile them."

Emperor Commodus held a show in the Colosseum at which he personally killed five hippos, two elephants, a rhinoceros and a giraffe.

To pay for their excesses, emperors devalued the currency. (Doesn't our Fed do that by buying $2 trillion of government debt?)

Nero reduced the silver content of coins to 95 percent. Then Trajan reduced it to 85 percent and so on. By the year 300, wheat that once cost eight Roman dollars cost 120,000 Roman dollars.

The president of the Foundation for Economic Education, Lawrence Reed, warned that Rome, like America, had an expanding welfare state. It started with "subsidized grain. The government gave it away at half price. But the problem was that they couldn't stop there ... a man named Claudius ran for Tribune on a platform of free wheat for the masses. And won. It was downhill from there."

Soon, to appease angry voters, emperors gave away or subsidized olive oil, salt and pork. People lined up to get free stuff.

Rome's government, much like ours, wasn't good at making sure subsidies flowed only to the poor, said Reed: "Anybody could line up to get these goods, which contributed to the ultimate bankruptcy of the Roman state." 

As inflation increased, Rome, much like the U.S. under President Nixon, imposed wage and price controls. When people objected, Emperor Diocletian denounced their "greed," saying, "Shared humanity urges us to set a limit." 

Doesn't that sound like today's anti-capitalist politicians?

Diocletian was worse than Nixon. Rome enforced controls with the death penalty -- and forbid people to change professions. Emperor Constantine decreed that those who broke such rules "be bound with chains and reduced to servile condition." 

Eventually, Rome's empire was so large -- and people so resentful of centralized control -- that generals in outlying regions began declaring independence from Rome.

At FreedomFest, Matt Kibbe, president of the tea party group FreedomWorks, also argued that America could soon collapse like Rome did.

"The parallels are quite ominous -- the debt, the expansionist foreign policy, the arrogance of executive power taking over our country," says Kibbe. "But I do think we have a chance to stop it."

That's a big difference between today's America and yesterday's Rome. We have movements like the tea party and libertarianism and events like FreedomFest that alert people to the danger in imperial Washington and try to fight it. If they can wake the public, we have hope.

The triumph of liberty is not inevitable, though. And empires do crumble. 

Rome's lasted the longest. The Ottoman Empire lasted 623 years. China's Song, Qing and Ming dynasties each lasted about 300 years. 

We've lasted just 237 years so far -- sometimes behaving like a republic and sometimes an empire. In that time, we've accomplished amazing things, but we shouldn't take our continued success for granted. 

Freedom and prosperity are not natural. In human history, they're rare.

Sending Out the Dupes

Just a week before Obama takes off on another multi-million dollar Martha's Vineyard vacation, he sends out a message to his Organizing for America troops entitled "Plans for August?"  

It's all part of a new ACTION August website launched this past Monday.

While Obama golfs, plays basketball, swims and attends an invitation-only gathering of radical Chavez-Castro loving pals like Charles Ogletree and Harry Belafonte, he wants volunteers out there attending town halls, "blizzarding" neighborhoods with flyers, and hosting house meetings. The kickoff for the designated days of action will be August 4, Obama's birthday. But there's too much on the agenda for one man to tackle. 

From Obama's latest OFA message:

There is only so much I can do on my own...I'm counting on you to be just as vocal -- to make sure the agenda that Americans voted for last year is front and center.
I know it's easy to get frustrated by the pace of progress...But it's not a reason to sit back and do nothing -- our system only works if you play your part. .So I'm asking you to speak up -- commit to do at least one thing in your community during August.

This is sociopathic. Right before Obama hops on Air Force One headed for Chilmark House, he sends an email to his dupes telling them not to "sit back and do nothing" for the rest of the summer.

And before that he cautioned an OFA audience that their efforts to push amnesty, Obamacare, climate change legislation and gun control as part of the August Action wouldn't be as glamorous as his election year campaigns.

Naturally it's not going to be as full of razzamatazz as the campaign... First of all, we don't have a billion dollars to spend. Second, there's something very clear about a campaign, an election date, hoping and targeting.

Campaign "razzmatazz?" Is this like sending out the minions under the guise of "letting your representatives know where you stand" but handing out absentee ballots as you go?

From Discover the Networks:

In September 2012, undercover reporters from Project Veritas went into OFA headquarters in a number of different U.S. cities and openly expressed their intent to commit voter fraud (by casting multiple absentee ballots in multiple states) on behalf of President Obama's reelection bid, and they were encouraged to do so by OFA representatives. Further, the undercover reporters asked the OFA representatives for numerous additional absentee ballots for friends who they said wished to engage in the same tactic. The OFAers happily supplied them with as many extra ballots as they requested. In one videotaped interaction, an OFA worker openly boasted that she herself was voting twice for Obama -- once in Minnesota and once in Florida. 

The OFA is nothing but another ACORN criminal setup, but Obama will count on his volunteers with no plans for August to do his dirty work while he bikes around in mommy jeans.

How ObamaCare Hurts Patients

The 340B program was meant to help about 90 hospitals buy drugs to treat the poor. Now 1,675 hospitals qualify.

President Obama promised to mend the failings in the American health-care system, and yet for cancer treatment, ObamaCare is taking a rotten feature of the old system and making it worse.

The Affordable Care Act expands a program called 340B, which siphons money from drug makers and insurers to subsidize certain hospitals. The program has been expanded as a way to offset some of the cuts that the law imposes on hospitals. One significant side effect: 340B is increasing the cost of cancer care—and harming its quality.

When the program began in 1992, its aim was to support hospitals that cared for many uninsured, indigent patients. Over the years, the program was radically broadened, gradually morphing into a government cash cow that hospitals of every description have learned to exploit. 

Under 340B, eligible hospitals are allowed to buy drugs from drug companies at forced discounts of 25% to 50%. The hospitals can then bill government and private insurers for the full cost of the drugs, pocketing the spread. The arrangement gives 340B-qualified hospitals a big incentive to search for patients and prescribe lots of drugs. The costlier the drugs, the bigger the spread. So expensive cancer drugs are especially appealing.

The original legislation creating 340B envisioned that only about 90 hospitals that care for a "disproportionate share" of indigent patients would qualify. But remember, this is a well-intentioned government program handing out money, with the usual result: By 2011, 1,675 hospitals, or a third of all hospitals in the country, were 340B-qualified. 

Even flourishing hospitals like the Hospital of the University of Pennsylvania and Duke University Health System feed off the subsidies. In 2011, Duke bought $54.8 million in drugs from the discount program and sold them to patients for $131.8 million, for a profit of $76.9 million—a substantial portion of the health system's 2011 operating profit of $190 million. Only one in 20 patients served by Duke's 340B pharmacy is uninsured. The rest have their prescription costs covered by Medicare, Medicaid or commercial insurers.

Now ObamaCare is encouraging even wider 340B abuses. The new health-care law expands 340B to cover cancer centers, new categories of hospitals and rural health centers. Since one of the ways that hospitals qualify for 340B turns on how many Medicaid patients they serve, ObamaCare's Medicaid expansion will also increase the number of 340B-eligible entities.

To goose the windfall, eligible hospitals are buying private oncology practices so they can book more of the expensive cancer drug purchases at the discount rates. More than 400 oncology practices have been acquired by hospitals since ObamaCare passed. Acquiring a single oncologist and moving the doctor's drug prescriptions under a hospital's 340B program can generate an additional profit of more than $1 million for a hospital. In the process, treatment of the doctor's patients is moved from an office setting to a hospital outpatient department.

As a result, between 2005 and 2011 the amount of chemotherapy infused in doctors' offices fell to 67%, from 87%, according to a new analysis of Medicare billing data done for community oncology groups. The share of Medicare payments for chemotherapy administered in hospitals (as opposed to outpatient oncology practices) increased to 41% in 2011, from 16.2% in 2005.

If these trends continue, the majority of cancer care will soon be delivered by hospitals. When the practice of oncology shifts to outpatient hospital clinics, the care is often less comfortable and convenient for cancer patients—and more costly.

Because the overhead for a hospital is higher than for a doctor's office, a patient treated in a hospital clinic incurs $6,500 more in costs than the same person treated in a private medical office, according to data from the Community Oncology Alliance. Patients who get chemotherapy at a hospital also face an additional $650 in co-pays and other out-of-pocket expenses. The price for infusing the drugs alone rises by 55%, according to an analysis of Medicare data. These inflated prices for cancer treatment inevitably drive up the cost of health insurance.

The Obama team has used informal "subregulatory guidance" to expand the 340B program still further. One big change came in March 2010 "guidance" that allows hospitals to contract with an unlimited number of neighborhood pharmacies to dispense drugs through them. There is no requirement that these "satellite" pharmacies have any geographic tie to the hospital. 

This has created an industry of middlemen who build vast networks of pharmacies, all to expand the number of 340B prescriptions that a hospital can capture. There are now more than 25,000 arrangements between such satellite pharmacies and 340B-qualified treatment sites, according to the Health Resources and Services Administration.

The definition of a "covered patient" for 340B purposes is so murky under other guidance that hospitals are able to buy and bill discounted drugs for patients when the hospital merely serves as a conduit and doesn't give direct patient care.

The regulatory loosening has led to a proliferation of abuse. The Health Resources and Services Administration, the federal agency that (nominally) oversees the program, recently audited 340B-eligible hospitals. The agency found "adverse findings" (like discounted drugs diverted or dispensed to ineligible patients) with almost half of the 34 institutions the agency examined. 

A separate report by the General Accountability Office shows that the money isn't being targeted for indigent patients, as required. As profits from the program rose, and oversight remained lax, more of the money has instead become a general revenue source for 340B-eligible hospitals.

To combat this sort of gaming, drug makers are tightening how they distribute cancer drugs, to make improper diversion more difficult. This drug-company strategy may stem some of the most rampant abuses, but it adds to the cost and complexity of the pharmaceutical supply chain. It's another way that 340B increases costs.

The 340B program doesn't print free money. The cost of the discounts are foisted onto patients and insurers, who are forced to pay higher prices that drug makers establish to offset the cost of the forced discounts.

One of the rationales behind the Affordable Care Act was that the law would end the gimmicks that distort incentives and drive up costs. In the case of the 340B program and its effect on cancer treatment, the law has only further distorted an already expensive gimmick.
The Government Scandal (You Haven’t Heard Of)

  The union officials who negotiate lavish contracts for government workers are paid with your taxpayer dollars.

By now it is well-known that public employee contracts with generous wage and benefits are bankrupting state and local governments across the country and encircling the necks of future generations with an anvil of debt. What is almost completely unknown is that the hard-nosed union officials who negotiate lavish contracts for government workers are often paid to do so with taxpayer dollars.

That is part of a widespread practice called “release time,” in which public employees are paid full-time wages and benefits by taxpayers, yet they report and answer not to government officials (or taxpayers) but to their unions. In turn, release time can be used for lobbying, campaigning, soliciting grievances, union recruiting, and negotiating for higher wages and benefits—all at taxpayer expense.
The practice was exposed in a 2011 report by Goldwater Institute investigative journalist Mark Flatten. He found that the City of Phoenix’s seven public employee union contracts included 73,000 hours of release time, at a total cost of $3.7 million. Most other cities around the nation, he found, also have release time.

So does the federal government, which calls it “official time.” In 2011, taxpayers funded 3.4 million hours of union work at a cost of $156 million. Among those diverted to union work from their government jobs are 17 air traffic controllers—16 of whom are paid six-figure salaries to do so—a wasteful extravagance that came to light when air traffic controllers were furloughed as part of the Obama Administration’s response to the federal budget sequester. Since then, it was reported that part of the backlog in processing claims at the Veterans’ Administration is attributable to—you guessed it—union release time.

Release time is now under attack. After the report on Phoenix release time was issued, my Goldwater Institute colleagues and I filed a lawsuit called Cheatham v. DiCiccio, challenging the release time provisions of the city’s contract with its police union, the Phoenix Law Enforcement Association (PLEA). We argue that release time violates the Gift Clause of the Arizona Constitution, which forbids gifts of public funds to private individuals, corporations, or associations “by subsidy or otherwise.” Because release time is so widespread, and because many state constitutions contain gift clauses, a favorable outcome in Cheatham could set a national precedent.

We chose the police contract as a test case for two reasons. First, that contract contains more generous release time provisions than any other in the City of Phoenix. Second, release time diverts scarce resources away from one of the City’s most important functions—public safety—to instead fund union activities.

Under the contract, six full-time police officers (who also happen to be PLEA’s top officials) are completely released from their police duties. They receive full-time pay and the same pension benefits as officers who risk their lives every day. Additionally, they receive guaranteed overtime from the City, as well as stipends and car allowances from the union. They report every day to union headquarters, they do not have to account for their time to the Police Department, and no one in the Police Department even knows where they are at any given moment.

Additionally, the union receives an annual “bank” of 2,000 hours that it can use to spring other officers from their police duties to perform union work.

In return, PLEA obligates itself to absolutely nothing. The union contends that release time contributes to a positive labor environment and that it provides valuable services such as representing officers in disciplinary proceedings. But in fact, the City has two officers on 24-hour standby for such “critical incidents”; and in other cities such services are paid for by union dues rather than taxpayer funds.

As for promoting good labor relations—well, maybe not. When Phoenix Police Chief Daniel Garcia recently implemented a new police uniform policy, the union was so incensed that it solicited dozens of grievances challenging it. The City’s taxpayers will pay the costs of both sides in the resulting legal process. Release time officers, who refer to the chief derisively as “Danny,” discussed hiring a private detective to tail him and to “break it off in his ass” if he met with other unions. When the chief asked certain officers to wear portable video cameras, PLEA urged them to refuse.

At the Legislature, release time officers lobbied in favor of the controversial S.B. 1070 immigration bill, which the City opposed, so that again taxpayers were funding both sides. They also support union-friendly candidates and ballot measures on release time.         

In spring 2012, Maricopa County Superior Court Judge Katherine Cooper issued an injunction against release time. Because some of the release time officers had been riding union desks instead of patrol cars for more than a decade, they had to attend police academy before returning to police duties.

But the contract expired a short time later, along with the injunction. When the City tried to roll back release time, or at least limit it to specified responsibilities, the union adamantly refused, threatening that its members would “torch this place” if its demands were not met. A new two-year contract, with increased wages along with continued release time, passed the City Council by a 4-4-1 vote, with the abstention counted as a yes.

Despite strong Republican majorities in the Arizona Legislature, efforts to curb release time are repeatedly blocked by House Speaker Andy Tobin and others because public safety unions are perceived to be Republican unions. (Release time for teacher unions, by contrast, was banned many years ago.) In addition to not being an especially principled position, it is factually wrong. Although police and fire unions do contribute to Republican as well as Democratic candidates, they also make large independent expenditures to elect Democrats and defeat Republicans. Thus Republican elected officials who support release time are enabling the use of taxpayer dollars to aid their adversaries.

Absent a legislative solution, the taxpayer plaintiffs again sought an injunction; and in April 2013, Judge Cooper granted it. She ruled that release time “diverts resources away from the mission of the Phoenix Police Department, which is the safety of the community,” and gives it to a private entity to use for its own purposes.

The decision is sure to be appealed. Astonishingly, the taxpayer plaintiffs are facing not only the City’s and union’s lawyer teams, but the usually conservative Judicial Watch as well. Although Judicial Watch has criticized release time in other contexts, it worked closely with PLEA to support S.B. 1070, and PLEA’s former president now serves as Judicial Watch’s regional coordinator. When the Goldwater Institute challenged PLEA’s cushy deal, Judicial Watch intervened to aid its ally.

But as more people learn about release time, it grows increasingly difficult to defend. Phoenix City Council member Sal DiCiccio voted for past union contracts without even realizing what release time meant. But since learning about it, he has become a fierce critic. “It’s shocking,” DiCiccio says. “Taxpayers should not be funding union activities. It should all come out of union dues.”

The unions worry that the taxpayers may have another silent ally: police officers and other public employees themselves. Curbing release time could lead to a proportionate increase in wages and benefits. How many public employees would willingly pay higher union dues so that some of their colleagues can sit at union desks, receive a double salary, and in the case of police officers, insulate themselves from the risks that otherwise would be inherent in their jobs? By clinging to taxpayer-funded release time, the unions are betting that few of their members would view that as a good investment. It’s an even worse investment for taxpayers.

The release time lawsuit has a long way yet to go. But the two injunctions are certainly promising. Like the vampire that dies when exposed to sunshine, so too does release time become more vulnerable as more people become aware of it and properly incensed by it.

More than half of unionized workers today are public employees. They already exercise outsized influence as they negotiate their contracts with fellow public employees. The taxpayers should not foot the bill for the rope with which the unions are hanging them.

Regionalism: Obama’s Quiet Anti-Suburban Revolution

The consensus response to President Obama’s Knox College speech on the economy is that the administration has been reduced to pushing a menu of stale and timid policies that, in any case, won’t be enacted. But what if the administration isn’t actually out of ideas? What if Obama’s boldest policy initiative is merely something he’d rather not discuss? And what if that initiative is being enacted right now?

A year ago, I published Spreading the Wealth: How Obama Is Robbing the Suburbs to Pay for the Cities. There I described the president’s second-term plan to press a transformative “regionalist” agenda on the country. Early but unmistakable signs indicate that Obama’s regionalist push is well underway. Yet the president doesn’t discuss his regionalist moves and the press does not report them.

The most obvious new element of the president’s regionalist policy initiative is the July 19 publication of a Department of Housing and Urban Development regulation broadening the obligation of recipients of federal aid to “affirmatively further fair housing.” The apparent purpose of this rule change is to force suburban neighborhoods with no record of housing discrimination to build more public housing targeted to ethnic and racial minorities. Several administration critics noticed the change and challenged it, while the mainstream press has simply declined to cover the story.

Yet even critics have missed the real thrust of HUD’s revolutionary rule change. That’s understandable, since the Obama administration is at pains to downplay the regionalist philosophy behind its new directive. The truth is, HUD’s new rule is about a great deal more than forcing racial and ethnic diversity on the suburbs. (Regionalism, by the way, is actually highly controversial among minority groups. There are many ways in which both middle-class minorities in suburbs, and less well-off minorities in cities, can be hurt by regionalist policies–another reason those plans are seldom discussed.)

The new HUD rule is really about changing the way Americans live. It is part of a broader suite of initiatives designed to block suburban development, press Americans into hyper-dense cities, and force us out of our cars. Government-mandated ethnic and racial diversification plays a role in this scheme, yet the broader goal is forced “economic integration.” The ultimate vision is to make all neighborhoods more or less alike, turning traditional cities into ultra-dense Manhattans, while making suburbs look more like cities do now. In this centrally-planned utopia, steadily increasing numbers will live cheek-by-jowl in “stack and pack” high-rises close to public transportation, while automobiles fall into relative disuse. To understand how HUD’s new rule will help enact this vision, we need to turn to a less-well-known example of the Obama administration’s regionalist interventionism.

In the face of heated public protest, on July 18, two local agencies in metropolitan San Francisco approved “Plan Bay Area,” a region-wide blueprint designed to control development in the nine-county, 101-town region around San Francisco for the next 30 years. The creation of a region-wide development plan–although it flies in the face of America’s core democratic commitment to local control–is mandated by California’s SB 375, the Sustainable Communities and Climate Protection Act of 2008. The ostensible purpose of this law is to combat global warming through the reduction of greenhouse gas emissions. That is supposedly why California’s legislature empowered regional planning commissions to override local governments and press development away from suburbs into densely-packed urban areas. In fact, the reduction of greenhouse gases (which Plan Bay Area does little to secure) largely serves as a pretext for undercutting the political and economic independence of California suburbs.

Essentially, Plan Bay Area attempts to block the development of any new suburbs, forcing all population growth over the next three decades into the existing “urban footprint” of the region. The plan presses 70-80 percent of all new housing and 66 percent of all business expansion into 150 or so “priority development areas” (PDAs), select neighborhoods near subway stations and other public transportation facilities. This scheme will turn up to a quarter of the region’s existing neighborhoods–many now dotted with San Francisco’s famously picturesque, Victorian-style single-family homes–into mini-Manhattans jammed with high-rises and tiny apartments. The densest PDAs will be many times denser than Manhattan. (See the powerful ten-minute audio-visual assault on Plan Bay Area at the 45-55 minute mark of this debate.)

In effect, by preventing the development of new suburbs, and reducing traditional single-family home development in existing suburbs, Plan Bay Area will squeeze 30 years worth of in-migrating population into a few small urban enclaves, and force most new businesses into the same tight quarters. The result will be a steep increase in the Bay Area’s already out-of-control housing prices. This will hit the poor and middle class the hardest. While some poor and minority families will receive tiny subsidized apartments in the high-rise PDAs, many others will find themselves displaced by the new development, or priced out of the local housing market altogether.

A regional plan that blocks traditional suburban development, densifies cities, and urbanizes suburbs on this scale is virtually unprecedented. That’s why the Obama administration awarded the agencies behind Plan Bay Area its second-highest “Sustainable Communities Grant” in 2012. Indeed, the terms of the administration’s grant reinforce the pressure for density. The official rationale behind the federal award is “encouraging connections” between jobs, housing, and transportation.

That sounds like a directive to locate new residents–poor and minorities included–in existing prosperous communities. In fact, HUD’s new emphasis on “connecting” jobs housing and transportation does more. In practice, bland bureaucratic language about blending jobs, housing, and transportation pressures localities to create Manhattan-style “priority development areas.” The San Francisco case reveals the administration’s broader intentions. Soon HUD and other agencies will begin to press localities directly, rather than through the medium of California’s new regionalist scheme. Replicating Plan Bay Area nationwide is the Obama administration’s goal.

The Enactment of Plan Bay Area was wildly controversial among those who managed to learn about it, yet went largely unnoticed in the region as a whole. One of the chief complaints of the plan’s opponents was the relative lack of publicity accorded a decision with such transformative implications. Critics called for a public vote, and complained that the bureaucrats in charge hadn’t been elected.

Another theme of critics was that “the fix” seemed to be in from the start. Input was largely ignored, opponents claimed, and public forums offered only the illusion of consultation. Although it’s gone largely unreported, that accusation is far truer than even the opponents of Plan Bay Area realize.

Here’s where the Obama administration comes in. Not only does acceptance of the administration’s $5 million grant make it next-to-impossible to de-densify Plan Bay Area, but the grant itself helps to fund “grassroots” supporters of the plan–leftist groups dedicated to radicalizing the scheme still further.

The administration’s “sustainable communities” grants generally require recipients to “partner” with local leftist community organizations. Opponents of Plan Bay Area often outnumber supporters at public meetings. Yet such supporters as are present–groups like TransForm, the Greenbelt Alliance, Marin Grassroots, and East Bay Housing Organization–are funded (or slated to be funded)with the help of the same federal grant that backs up the bureaucrats in charge.

Press accounts of the Plan Bay Area controversy generally say nothing about the financial interest that “non-profit” “grassroots” organizations have in passage of the plan, or about pressures on the bureaucrats in charge to maintain their government-mandated “partnerships” with these community organizations. So when opponents of Plan Bay Area complain about officials simply going through the motions of public consultation, they’re right. The deck is stacked, the fix is in. By way of the federal grant, many of the “grassroots” groups that support Plan Bay Area are actually partners of the decision makers (the Metropolitan Transportation Commission and the Association of Bay Area Governments). The Obama administration’s role in all this, while generally unnoticed, is substantial.

If you complain that the regional bureaucracy behind Plan Bay Area undercuts democracy and local control, you’ll be told that local governments retain full authority over land-use within their jurisdictions. In reality, Plan Bay Area subverts that control, and the Obama administration plays a role here as well. The Metropolitan Transportation Commission (one of the two agencies in charge of Plan Bay Area) doles out state and federal transportation assistance. Now that Plan Bay Area has been formally approved, MTC can withhold billions of dollars in federal aid from suburban jurisdictions that refuse to densify, leaving local bridges and highways in disrepair. One of the core goals of the Obama administration’s Sustainable Communities Initiative is to use federal transportation aid as a stick to force regionalist planning on unwilling suburbs.

Recalcitrant suburbs can also be brought to heel by lawsuits claiming violations of federal fair housing law. California’s SB375 facilitates such suits by placing the burden of proof on local jurisdictions accused of housing discrimination. Such legal claims are often brought by leftist community organizations of the type currently funded through the Obama administration’s grant.

When criticism of Plan Bay Area reached a crescendo in suburban Marin County–the center of public opposition to the plan–the bureaucrats pared back their demands for densification in a few resistant municipalities. Obama’s HUD responded by charging that failure to assign more multifamily housing to suburban jurisdictions could violate federal fair housing law. So what looks like a softening of Plan Bay Area’s demands on a few suburban municipalities may ultimately be reversed. By publicly declaring suburban non-cooperation with Plan Bay Area a potential violation of federal housing law, and by funding organizations that could sue to bring resistant suburbs into compliance, the Obama administration is serving as a key enforcer of this controversial scheme.

All of which returns us to HUD’s controversial new regulation expanding the obligation of recipients of federal aid to “affirmatively further fair housing.” When HUD Secretary Shaun Donovan announced that rule change, he acknowledged that it wasn’t really focused on preventing “outright discrimination and access to the housing itself.” The Obama administration is using traditional anti-discrimination language as a cover for a re-engineering the way we live. The real goal is to Manhattanize America, and force us out of our cars.

The Plan Bay Area precedent makes it clear that HUD will use data on access to housing, jobs, and transportation to press densification on both urban and suburban jurisdictions. With the new HUD rule in place, municipalities will be under heavy pressure to allow multifamily developments in areas previously zoned for single-family housing. The new counting scheme, which measures access to housing, jobs, and transportation, will simultaneously create pressures to push businesses into the newly densified areas, and to locate those centers near transportation hubs. In effect, HUD’s new rule gives the federal government a tool to press ultra-dense Plan Bay Area-style “priority development areas” on regions across the country.

HUD’s new rule also allows the creation of regional housing consortia. Although the choice to join such regional housing partnerships would technically be voluntary, the administration will be able to use the same combination of legal threats and funding leverage we’ve seen in San Francisco to pressure municipalities to join the consortia.

Over the next few years, select Regional Planning Grants funded under the Obama administration’s Sustainable Communities Initiative will be issuing regional development plans guided by the same philosophy that informs Plan Bay Area. So even in states without California-style regionalist legislation in place, a federally-funded structure with the potential to override local control, block suburban development, and force densification will be created. The Obama administration’s goal is to use legal and financial carrots and sticks to press Plan Bay Area clones on regions across the country through its federally-funded Regional Planning Grant program. The new HUD rule will be folded into this broader strategy. (I lay out the structure, philosophy, and history of that strategy in Spreading the Wealth.)

When Secretary Donovan announced the sweeping new HUD rule, he said: “Make no mistake: this is a big deal.” He’s right. Yet the mainstream press has ignored the change, as well as the broader story behind it. Recognizing the politically explosive nature of its regionalist plans, the Obama administration does little to connect the dots for the public at large. Above all, the president himself avoids this issue, although it’s deeply embedded in his administration’s policies.

Obama isn’t actually out of bold ideas. They’re simply too controversial for him to discuss. The time has come for a national debate on the Obama administration’s regionalist policies.

E-mails Suggest Collusion Between FEC, IRS to Target Conservative Groups

Embattled Internal Revenue Service official Lois Lerner and an attorney in the Federal Election Commission’s general counsel’s office appear to have twice colluded to influence the record before the FEC’s vote in the case of a conservative non-profit organization, according to e-mails unearthed by the House Ways and Means Committee and obtained exclusively by National Review Online. The correspondence suggests the discrimination of conservative groups extended beyond the IRS and into the FEC, where an attorney from the agency’s enforcement division in at least one case sought and received tax information about the status of a conservative group, the American Future Fund, before recommending that the commission prosecute it for violations of campaign-finance law. Lerner, the former head of the IRS’s exempt-organizations division, worked at the FEC from 1986 to 1995, and was known for aggressive investigation of conservative groups during her tenure there, too.

“Several months ago . . . I spoke with you about the American Future Fund, a 501(c)(4) organization that had submitted an exemption application the IRS [sic],” the FEC attorney wrote Lerner in February 2009. The FEC, which polices violations of campaign-finance laws, is not exempted under Rule 6103, which prohibits the IRS from sharing confidential taxpayer information, but the e-mail indicates Lerner provided that information nonetheless: “When we spoke last July, you had told us that the American Future Fund had not received an exemption letter from the IRS,” the FEC attorney wrote.

The timing of the correspondence between Lerner and the FEC suggests the FEC attorney sought information from the IRS in order to influence an upcoming vote by the six FEC commissioners. The FEC received a complaint in March 2008 from the Minnesota Democratic Farmer Labor Party alleging that the American Future Fund had violated campaign-finance law by engaging in political advocacy without registering as a political-action committee. The American Future Fund responded to that complaint in June 2008, telling the commission that it had applied for tax exemption in March of that year and was a “501(c)(4) social-welfare organization that was organized to provide Americans with a conservative and free-market viewpoint and mechanism to communicate and advocate on the issues that most interest and concern them.” According to the e-mail correspondence, a month after receiving the American Future Fund’s response, the FEC general counsel’s office — which is prohibited under law from conducting an investigation into an organization before the FEC’s six commissioners have voted to do so — contacted Lerner to investigate the agency’s tax-exempt status.

The FEC general counsel’s office, in its recommendation on the case, apparently didn’t tell the agency’s commissioners about how it had obtained the information about the group’s tax-exempt status. Recommending that the commissioners prosecute the American Future Fund, the general counsel’s office wrote, “According to its response, AFF submitted an application for tax-exempt status to the Internal Revenue Service . . . on March 18, 2008.” The footnote to that sentence reads, “The IRS has not yet issued a determination letter regarding AFF’s application for exempt status. Based on the information from the response and the IRS website, it is likely that the application is still under review.” In fact, an FEC lawyer knew that the organization had yet to obtain tax-exempt status because Lerner provided the confidential information. 

The general counsel’s report was issued in September 2008, but it was over five months before the six FEC commissioners voted, in late-February 2009, on whether to prosecute the American Future Fund for violations of campaign-finance laws. (The typical lag time between the submission of a general counsel’s recommendation and a commission vote is about a month, according to a source familiar with the workings of the commission.) As the vote approached, on February 3, 2009, the FEC lawyer went back to Lerner for an update on the status of the American Future Fund’s application. “Could you please tell me whether the IRS has since issued an exemption letter to the American Future Fund? Also if the IRS has granted American Future Fund’s exemption, would it be possible for you to send me the publicly available information and documents related to American Future Fund?”

Despite the recommendations of the general counsel’s office, the six FEC commissioners split on whether to pursue the American Future Fund’s case and voted six-to-zero to close the case.

House Ways and Means Committee chairman Dave Camp and oversight-subcommittee chairman Charles Boustany are calling on the IRS, in the wake of these revelations, to provide all communications between the agency and the FEC between 2008 and 2012. “The American public is entitled to know whether the IRS is inappropriately sharing their confidential tax information with other agencies,” Camp and Boustany write in a letter they will send to acting IRS administrator Danny Werfel on Wednesday.

The FEC enforcement attorney also inquired about the tax-exempt status of another conservative organization, the American Issues Project. “I was also wondering if you could tell me whether the IRS had issued an exemption letter to a group called the American Issues Project? The group also appears to be the successor of two other organizations, Citizens for the Republic and Avenger, Inc.” Also sought were “any information and documents that would be publicly available in relation to the American Issues Project, Citizens for the Republic, or Avenger, Inc.” 

It’s time for ‘zero for zero’ farm subsidies

We are approaching the DC’s sleepy season. Congress will soon adjourn for the summer. President Barack Obama will take that opportunity to jet off on his monthly vacation — this time in middle class Martha’s Vineyard. So for a time, our freedoms and our wallets will be just a little bit safer.

People (should) use downtime to rest, recharge — and reflect on next steps. On the farm bill, the next steps are — or should be — obvious.

After its first ever failure in the House, and the House’s subsequent passage of reform-free food-stamp-free subsidies, we stand in limbo and soon to be adjourned

Agricultural markets have been global for decades now, while our policy, embodied in the farm bill, has remained myopically domestic. This navel-gazing has resulted in myriad subsidies and short-sighted policies, and a perpetual back-and-forth between America and other countries doing the exact same protectionist thing.

So we now have a global farm market where most nations have Tetris-esque barriers to entry. High protectionist walls, with new pieces falling into place and in the way each respective legislative session.

So instead of perpetuating the same fifty-plus year failed policy — or adding to it — we should work to tear down the barriers that have been built.

It’s called zero-for-zero. Where we approach the planet and say “You get rid of your trade barriers, and we’ll get rid of ours.” In other words, we have zero protectionism — and so does everyone else. Right now, it’s being proposed for sugar.

“In attempting to reform and improve sugar policy in the United States, … the zero for zero approach … holds an as yet untried avenue that could possibly break the stalemate,” writes Mark Hartley in a recent study.

“Consider that there are more than 100 sugar producing countries worldwide, and there are also basically 100 different sugar policies, each of which includes various forms of government intervention,” he continues. “[A] free market approach rewards the best and most efficient business people and not the most heavily subsidized producer,…[zero for zero] could stabilize domestic and ultimately world market sugar prices … [Getting] government out of markets creates free markets, and free markets lead to free and fair markets, and that, in the final analysis, is where world sugar needs to be.”

There’s beauty in its simplicity. Obviously it will take a bit of international cooperation to get it off the ground, but as the late, great Ronald Reagan said, “There are no easy answers — but there are simple answers.”
Then again, how has the last half century, spent trying to unilaterally restore a domestic free market in agriculture, gone?

Florida Republican Congressman Ted Yoho has put forward on zero-for-zero a “Sense of the House” resolution, ”Expressing the sense of Congress that all direct and indirect subsidies that benefit the production or export of sugar by all major sugar producing and consuming countries should be eliminated.”
Again, simple. It thus far has thirteen co-sponsors. And it is that rarest of DC occurrences — bipartisan. Eight other Republicans and five Democrats have signed on.

Their Congressional colleagues should join them in support of a modernized, free-market approach. And We the People should let them know they should.

There’s an old joke:

Patient: “Doctor, it hurts when I do this.”
Doctor: “Don’t do that.”

When it comes to the Farm Bill, we’ve been doing what hurts for fifty-plus years. Let’s not do that anymore. Let’s instead work on something that will actually work — a global free market.
Yes, That Is a Spy in Your Pocket: Federal Appeals Court Approves Warrantless Cellphone Tracking
On Tuesday a federal appeals court ruled that police do not need a warrant to obtain historical location data from cellphone companies because the Fourth Amendment does not protect such information. The U.S. Court of Appeals for the 5th Circuit concluded that the Supreme Court's "third party doctrine," which holds that people have no reasonable expectation of privacy in information they voluntarily disclose to others, applies to cellphone geolocation data, despite the wealth of personal details they can reveal. That means such records have only as much protection as Congress or state legislatures choose to provide. The 5th Circuit's decision comes less than two weeks after the New Jersey Supreme Court ruled, based on the privacy clause of that state's constitution, that police generally do need a warrant to obtain cellphone location data. This is the first time a federal appeals court has squarely addressed the issue.
 Under the Stored Communications Act, law enforcement agencies can obtain court orders requiring production of cellphone records based on "specific and articulable facts showing that there are reasonable grounds to believe" the records are "relevant and material to an ongoing criminal investigation." Under the Fourth Amendment, the standard for a search warrant is stricter: "probable cause" to believe that evidence of a crime will be discovered. The case heard by the 5th Circuit involved three applications for court orders covering two months of cellphone location information for specific customers. The court was asked to decide whether the "specific and articulable facts" standard is constitutionally deficient.

No, it is not, the court decided, because the Fourth Amendment does not apply to cellphone location data, which are just another example of the "business records" that the Supreme Court has said can be perused by the government at will in the absence of statutory restrictions. After all, the court reasoned, people should know by now that connecting their wireless calls requires transmitting their locations to their cellphone companies. Since no one is forced to use a cellphone, anyone who chooses to do so is voluntarily disclosing his whereabouts to a third party, thereby losing any reasonable expectation of privacy in that information.

According to this logic, people are not allowed to share information with others for limited purposes and still retain Fourth Amendment protection against government snooping. It's all or nothing. Buy a cellphone, and you automatically consent to having the government track your every move (except when prohibited by statute). You cannot opt out. And once this line of reasoning catches on, it will become a self-fulfilling prophecy, since people living under a government that has such broad surveillance powers cannot reasonably expect that their comings and goings will remain private.

The 5th Circuit's decision sits uneasily with U.S. v. Jones, the 2012 decision in which the Supreme Court said police need a warrant to track a car by attaching a GPS device to it. Although the majority opinion in Jones hinged on the physical intrusion required to install the device, five justices expressed the view that the breadth of information generated by tracking someone's car for a month was enough to trigger Fourth Amendment protection. If you have a reasonable expectation of privacy in the whereabouts of your car for the last month, surely you have a reasonable expectation of privacy in the whereabouts of your cellphone for the last two months. The 5th Circuit declined to draw that inference:
[Supreme Court] precedent, as it now stands, does not recognize a situation where a conventional order for a third party's voluntarily created business records transforms into a Fourth Amendment search or seizure when the records cover more than some specified time period or shed light on a target's activities in an area traditionally protected from governmental intrusion. We decline to create a new rule to hold that Congress's balancing of privacy and safety is unconstitutional.
Justice Sonia Sotomayor's concurring opinion in Jones, calling upon her colleagues to reconsider the always questionable and increasingly alarming third party doctrine, is looking more perceptive every day. That doctrine makes not just cellphone location data but all sorts of remotely stored information, which nowadays includes a tremendous amount of sensitive material, vulnerable to government snooping unless legislators decide otherwise.

You can read the 5th Circuit's ruling here. Ron Bailey pondered the surveillance potential of cellphones in the January issue of Reason. Last year I asked, "Is That a Spy in Your Pocket?"

Why We Always Lose, and the Need for 21st Century Conservatives

Ever since the 1930s, or perhaps the times of Woodrow Wilson and the progressives, we’ve ceased to function as a constitutional republic governed by our founding laws.  Instead we have transitioned into a pure democracy government by majority rule.  The tyrannical rule of a majority of the political class, in conjunction with the lack of courage from those who claim to represent We the People, has bequeathed us with a losing equation for almost a century.

There is an imbalance of power inherent in the political system of any pure democracy, in that the forces of tyranny have a built-in advantage over the defenders of freedom. It takes but one legislative or administrative victory for statism to succeed in guiding society on an indelible path towards socialism.  As long as the media and societal institutions manipulate 51% of the population to elect 51% majorities for any big government proposal, they secure a permanent victory.  The forces of freedom are never strong enough to overturn a government intervention once the dependency takes root.

On the other hand, we don’t have the ability to perpetuate the lack of government intervention.  Even if we succeed in blocking a proposal, they will try a second, third, or fourth time until they are successful.  Hence, when liberals failed to institute a government takeover of healthcare in 1993, they tried again the next time they won unfettered power, and achieved their dream.  If our approach to governance is to consummate liberal programs into law when we have a seat at the table, we will never slow the inexorable slide into socialism.

We have approximately 77 welfare programs, and the best we can do is offer some minor tweaks.

We have government-run healthcare for seniors and complete federal control over our retirement, yet those two failed programs have become untouchable.

We have officious federal involvement in agriculture, housing, education, energy, and local transportation, yet all we can do is nibble around the edges.

We stand today at the precipice of enacting the worst government program ever.  We have two choices: we can continue funding Obamacare, only to find ourselves discussing modest tweaks to the law in 10 years from now – not unlike the way we are forced to approach Medicare now.  Or we can end the cycle of big government by forcing a fight to the death over this cancer to our country before it take effect.  It is that simple.  There are no other options.  Anyone who opposes the defund effort before the law takes effect is essentially admitting that Obamacare will become enshrined into the welfare state forever.

Some figures in the beltway conservative intelligentsia are scoffing at the idea, asserting that we will have better opportunities to get rid of Obamacare.  Others ask why we are not pushing budget brinkmanship over other conservative policy priorities if we think it will work with Obamacare.  These people are overlooking several factors:
  • Timing: Social Security and Medicaid have been around for years.  The ship already sailed on those programs.  We can and should push for reforms when we obtain more power in Washington, but they are not nearly as pressing as Obamacare.  The exchanges will open in October; if we don’t have this fight now, we will never get rid of the law.  The least we can do is prevent a new program from taking root.
  • Public opinion: Unfortunately, much of the welfare state is quite popular, a testament to the success of dependency-driven policies – something we are trying to preempt with Obamacare.  We can’t force brinkmanship over Medicare reform.  Obamacare, on the other hand, is an electoral albatross for Democrats.  If they want to shut down the government in order to throw people off their insurance and chase doctors out of the field, let them have at it.
  • 2014 Landscape: To begin with, we never lost anything as a result of the ’95 government shutdowns.  We gained seats in the Senate in ’96, and I don’t think anyone can suggest that Bob Dole lost the presidential election because of the shutdowns.  The battle for the Senate next year will be fought unprecedentedly on red state territory – Alaska, South Dakota, Montana, North Carolina, Louisiana, and Arkansas.  Republicans are favored to retain or expand control over the House due to redistricting and the clustered nature of the modern-day Democrat coalition.  Moreover, Obama’s ubiquitous unpopularity with white voters will exacerbate that problem in a mid-term election turnout.  We should welcome a fight over Obamacare in any state, certainly in red states and districts.
The battle over Obamacare is shaping up to be the Waterloo for the GOP establishment.  The Republican Party of the 20th century has largely failed us.  They have given in to the ineluctable self-perpetuating cycle of government.  There are a number of 21st century conservatives waiting in the wings to pick up the shambles left behind by the failed party of the past.  They will ignore us at their own risk.

Hollywood Goes Hoo-Hoo for Hillary

Hillary Clinton is not that fascinating a person. According to those who have spent time with her, she's harsh and demanding. According to those who haven't -- like her husband -- she's a delight. But Hollywood is going psycho for the former secretary of state, pumping out a veritable cornucopia of Hillary propaganda in preparation for her anointment in 2016.

First, there's an NBC miniseries in the works, retelling the period of Clinton's life when she transformed from pseudo-wronged first lady to secretary of state. The miniseries will span the time period from 1998 and the Lewinsky scandal forward. In an eminently sycophantic bit of casting, the lovely Diane Lane will be playing the significantly less lovely Mrs. Clinton. The press statement on the miniseries sounds like a logline from Hillary's prospective gravestone: "Clinton's life as a wife, mother, politician and cabinet member." The mini-series is slated to premier in 2015. Undoubtedly, it will ignore Hillary's Machiavellian manipulations with regard to the "vast right-wing conspiracy," her alleged anti-Semitic slurs, her carpetbagging, her accomplishment-free tenure in the Senate and her dramatically unsuccessful term as secretary of state. Don't even bother asking about Benghazi.

But that's only Hollywood's first step. Next, Tinseltown will be releasing a biopic of Hillary from her early life, when she was going out with Bill Clinton and hanging around in the Nixon administration. The author of the script, one Young Il Kim, says the movie is "really a journey of a woman who was torn between her personal desires and her professional ambition." The script itself is said to be on the ridiculous side, with a scene in which Hillary and Bill "devour" each other (that fictional meal may have been one of the only two Bill ever had with Hillary): a line in which Hillary tells Bill "I love you and I want to f--- you," and an explanation of why Hillary wears pantsuits. Starlets including Carrie Mulligan, Scarlett Johansson, Amanda Seyfried and Reese Witherspoon have reportedly been considered to play Hillary.

Finally, there's a Hillary documentary produced by Oscar-winner Charles Ferguson and funded by CNN. CNN expects the documentary to show up in theaters before broadcasting on the most trusted name in news. Or, rather, in snooze.

There's only one problem with all of this: Hillary just isn't that interesting. The media virtually universally threw Huma Abedin under the bus over the past two weeks after she attempted to imitate Hillary to save her embattled penis-tweeting husband, Anthony Weiner. She didn't get away with it, not because she's not Hillary -- she's as close to Hillary as it's possible to get -- but because her husband isn't Bill. And that's the sad truth about Hillary: She's been riding her husband's coattails for decades. If she were Hillary Rodham rather than Hillary Clinton, she'd be in the same boat as Nancy Pelosi or Barbara Boxer or any other myriad number of powerful women with no shot at the presidency -- and no love in Hollywood.

The Hollywood love affair with Hillary is truly a love affair with Bill that never ended -- only instead of chocolates and flowers, Hollywood is preparing to blow tens of millions of dollars on failed mash notes to the prospective 2016 nominee. Hollywood is willing to sacrifice that cash to see a Hillary presidency, which shows how truly partisan a town Hollywood is. But at least we'll get to see a lot of pantsuits for the next three years.