Right-Wing Think Tank Review - 3/29/07

Heritage Foundation (Sourcewatch profile here)

Free Trade Is Dead, Long Live Free Trade
By Tim Kane
WebMemo No. 1409, pub. 3/27/07

Kane's article assesses the implications of increased skepticism in Congress toward unrestrained free trade agreements. At stake, Kane argues, is the success or failure of the Doha round of World Trade Organization talks. More immediately, the issue is whether Congress will renew the president's trade promotion authority (TPA), which is set to expire on June 30. Noting that the previous renewal, in 2002, passed the House with only a thin majority, Kane worries that a growing protectionist mood in Congress will doom the TPA, thus undermining President Bush's efforts to successfully conclude the Doha round: "Will Congress grant American negotiators the authority to close this multilateral deal?"

The article recounts increased Republican support for measures like the ones blocking the Dubai Port World bid last year, punishing China for pegging the yuan to the dollar, or requiring country-of-origin labeling on imported produce. It also blames "special interest groups ... notably European agribusiness" for "scheming to abort" Doha. But Kane reserves special criticism for what he calls "conditional trade deals" pushed by American politicians:

"Yes, Peru, Americans will trade ‘freely' with your citizens on the condition that you do X, Y, and Z." This is not the American way; conditional interstate commerce among the United States was made unconstitutional in 1789 precisely because the Founding Fathers recognized the pettiness and gross inefficiency of protectionism.

The analogy is a bit confounding, since Congress of course has the authority to regulate interstate commerce - states may not set their own conditions because American citizens are fully enfranchised in a federal government that has the authority to do so. That government in fact has a long history of enforcing labor and environmental standards - the very sorts of "conditions" that Kane is denouncing. There is, of course, no overarching sovereign authority on the global level.

Nonetheless, from a progressive perspective there are strong arguments for supporting the success of the Doha round. American trade can be made both freer and fairer: for instance, Daniel Tarullo has argued that, by easing some of its domestic agricultural subsidies, the US can both increase American farmers' access to global markets and help improve the lives of farmers in the developing world - which, in turn, would be good for global security. However, as Tarullo notes, the Bush administration "has never shown more than pro forma support" for the Doha round; meanwhile, its strategy of "competitive liberalization," meant to build demand for multilateral trade negotiations through a series of bilateral and regional agreements (such as CAFTA), has accomplished little more than creating distractions and polarization in the trade debate.

Tarullo argues that senior Administration officials should be more involved with the Doha talks. To do so, however, they will need to work with a Democratic Congress. The Administration shut out Democrats during the CAFTA debate, but it can no longer avoid compromise, especially as it is seeking TPA renewal. Contra Kane, labor and environmental standards will be necessary parts of any comprehensive multilateral trade agreement. It is politically unrealistic - a fantasy - to believe otherwise. However, Kane's article attempts to make the case against such standards anyway.


Advancing Freedom in Iran
by Steven Groves
Backgrounder No. 2019, pub. 3/26/07

Groves argues that "there is still an opportunity to bring about peaceful democratic change in Iran." The primary obstacle to such change, according to Groves, is Iran's constitution: "a cancer that must be excised." The constitution renders Iranians' efforts to elect reformers futile, because it creates so many mechanisms for the mullahs to reject the democratic will of the people - for instance, through the authority of the Guardian Council to vet all presidential candidates and to veto any legislation the Council deems contrary to the precepts of Islam. Therefore, says Groves, "the United States should focus its funding and public diplomacy efforts toward supporting a national referendum on Iran's constitution."

Groves criticizes "unrealistic diplomatic 'grand bargains,'" which would seek comprehensive solutions to the multiple disputes between Iran and the West. Such efforts unrealistically assume that there is anything that can persuade Iran to abandon core policy objectives such as the acquisition of nuclear weapons. Moreover, the "grand bargain" approach would "do little to nothing to advance freedom, democracy, and human rights for the Iranian people."

Instead, says Groves, US policy should turn on a re-interpretation of the 2006 Iran Freedom Support Act, which regulated US sanctions against Iran and financed democracy-promotion efforts.

Regrettably, the act stated that U.S. policy was merely “to support efforts by the people of Iran to exercise self-determination over the form of government of their country.” As an official policy position, this statement rings hollow. The United States supports the efforts of the people of every nation in the world to exercise self-determination over their form of government. Instead, the U.S. government should state explicitly what the Iran Freedom Support Act only implies: The United States supports a peaceful democratic transformation of the Iranian regime.

This policy would mean using the funding authorized by the Act to "unite the various groups interested in constitutional reform" under a "Rainbow Civil Movement," to support internet outreach and the dissemination of printed material advocating a constitutional referendum, and to "covertly provide cellular phones and other communications devices" to Iranian dissidents.

Groves argues that congressional legislation relating to Iran should "clearly state that the United States government supports a democratic transformation of the Iranian regime." He also advocates for increased public diplomacy efforts, including increasing the amount of "serious analysis and programming" on Radio Farda - or establishing an alternate station for this purpose. Finally, Groves insists on the need for stronger efforts to "squeeze Iran financially," both on behalf of the US Treasury Department, and European nations, who should end government-backed export guarantees that account for an important part of Iran's trade.

The idea of suspending European export guarantees for Iran has been raised by numerous commentators, including Timothy Garton Ash at the Guardian, and Nile Gardiner at Human Events Online. Both of these articles were written in response to the Iranian seizure of 15 British sailors. It's instructive to compare Gardiner's article - which was also posted at Heritage's website - with the Groves piece. Each rejects diplomatic engagement with the regime. Gardiner, however, uses the current hostage crisis as an opportunity to ramp up the right's already-aggressive rhetoric, calling Iran's latest move "a hostile act of war." Without any sense of irony or acknowledgment of the rhetoric churned out by hawks during the build-up to the invasion of Iraq, Gardiner neatly reprises the very same claims:

Iran poses the greatest threat to global security of our generation, and the West must be ready to meet the challenge with strength and determination. Not since the rise of Nazi Germany and Communist Russia has the free world been faced with such a grave danger from a state actor. While the use of force is always a last resort, the United States, Great Britain and their allies must be prepared to disarm the Iranian regime if it refuses to back down, with or without the backing of the UN Security Council.

It is left to the reader to decide whether Groves is simply a more serious analyst than Gardiner, or whether the two articles represent different formulations of the same underlying approach to Iran.


American Enterprise Institute (Sourcewatch profile here)

Arnold, Rush Battle for the Republican Party's Soul
By Kevin A. Hassett
Pub. 3/26/07; also pub. at Bloomberg.com.

Hassett reviews the recent contretemps between California governor Arnold Schwarzenegger and right-wing blowhard Rush Limbaugh. Observing that "the Republican party is at a historical crossroads," Hassett suggests that the Limbaugh-Schwarzenegger dispute perfectly illustrates the major debate within the GOP. And "only one side can win."

The controversy is rooted one of the most fundamental dilemmas in democratic politics: how to balance effectiveness with principle. Because, as Hassett notes, there have been no politicians since Reagan with the political skills to sell unpopular conservative ideas to the general public, Republicans are forced to decide between compromise and ideology.

Hassett notes that Schwarzenegger's recent move to the left, which has included hiring a Democratic chief of staff, agreeing to an increase in the state minimum wage, tackling carbon emissions, and developing a health care program, "has boosted his popularity." The governor's latest job approval ratings are 11 points higher than they were in 2005. However, says Hassett, "popularity might come at the expense of principle." And it is this "sell out" of conservative principle that has led extremist conservatives like Limbaugh to harshly criticize Schwarzenegger.

The governor's response was that "Rush Limbaugh is irrelevant." Unfortunately for the Republican party, however, that does not in fact appear to be the case. Hassett forecasts that the GOP's presidential primary debates will largely involve rehashing the very same kind of dispute - and he believes that, both in those debates and in the general intra-party debate, the Limbaugh faction will win. In other words, the Republicans, with a model for the resurgence of their party on prominent display in California, will reject it and instead choose to further marginalize themselves. (It should be noted that Hassett himself seems to approve of this scenario.)

One final note on the stakes involved: Hassett actually puts this dispute into an important context when he suggests the "compromisers"

will argue that the country urgently needs to come together to address long-run problems such as the entitlement programs that are headed for financial ruin. That can only be done, it will be argued, if Republicans are willing to compromise with Democrats.

As this blog and other observers have repeatedly pointed out, the United States is indeed heading toward a major debate over its fiscal priorities, including taxation and entitlements. Milton Friedmanite movement conservatives are focusing on a showdown over the entire tax code - and, by implication, the future of American entitlements - in 2011. One way or another, there is a major budget gap that will need to be addressed. If the Rush Limbaugh ideologues do indeed triumph over the Schwarzenegger "compromisers," it will have important effects on the politics of the great budget debate when that time comes.

Labels: Iran, Republicans, Right Wing Think Tank Review, trade

  ¶ Posted by Paul Curtis 9:30 AM 0 comments

  Die, Blogger, Die

And no, I don't mean "The, Blogger, The." So I missed a tag in the Think Tank Review and thus lost half my post, along with an hour and a half I could have spent in all kinds of other, less thinky activities.

I know, save your work, and I also know, stop complaining and get off Blogger already. Still.

So the post was reconstructed to include the main piece. What was lost? Short versions:

"Make English our Official Language": Newt Gingrich thinks the linguistic sky is falling, but doesn't produce any evidence that Americans are particularly culturally fragmented, nor does he propose a solution to the real problem with ESL education: the fact that "over 90% of the need for English as a Second Language classes goes unmet." (Link via The Right's Field.) His list of recommendations seems to be aimed not at solving a policy problem but at reasserting a conservative voice in the immigration debate. And you can't help but notice that it also seems intended to depress immigrant (and thus Democratic) voter turnout.

"Tortured Credibility": Anne Applebaum turns up - at the AEI website! - to denounce the use of torture from a practical perspective. She points out that the Khalid Sheik Mohammed "confessions" have been met with indifference and skepticism around the world. And even if he wasn't tortured, the extrajudicial means used to confine and interrogate him undermine the legitimacy of any confession. The lesson?

[I]t is not merely immoral to operate outside the rule of law; it is also ineffective and in fact profoundly counterproductive: There is no proof that it produces better information but plenty of evidence that it has discredited the United States.

Given AEI's influence in conservative policymaking circles, it's heartening to see this piece at their website.

Labels: Blogger sux, immigration, Newt Gingrich, Right Wing Think Tank Review, torture

  ¶ Posted by Paul Curtis 12:22 PM 0 comments

  Right-Wing Think Tank Review: 3/22/07

American Enterprise Institute (Sourcewatch profile here)

Gore on the Rocks
By Steven F. Hayward
Pub. 3/21/07; also pub. in National Review.

Hayward's article attempts to establish the idea that there is a "backlash" under way, in the scientific community and among the general public, against climate change "alarmism." Celebrating the fact that "public opinion has barely budged" on climate change, Hayward uses Al Gore as a foil for various denialist assertions.

He begins by citing William Broad's recent article in the New York Times, which purported to show a backlash against the former Vice President's climate change lobbying "'from rank and file scientists' who 'have no political ax to grind.'" (See here and here for criticism of Broad's piece). Hayward goes on to quote Mike Hulme, a British climatologist who sounds a reasonable note of caution about the dangers of always assuming worst-case scenarios. The article then distorts the sense of Hulme's statement by following it with a quote about "internal backlash" from Kevin Vranes - who is also cited in the NYT piece, and who, critics have noted, has published very little peer-reviewed work on climate change.

Hayward then argues that the recent report of the UN's Intergovernmental Panel on Climate Change (IPCC) "undermines many of Gore's most spectacular claims" [emphasis mine]. Citing, for instance, Gore's warning about the possibility of a 20-foot rise in sea level, Hayward uses the IPCC's more limited conclusions to criticize outlier claims about the effects of global warming, without noting that the report itself affirms extremely strong evidence for anthropogenic influence on climate.

Like a number of other conservative writers, Hayward cites the recent British documentary The Great Global Warming Swindle as evidence of a scientific "backlash" against warnings about climate change. Critics have noted that the program offered little more than the usual debunked denialist claims; one of the scientists featured in the program, meanwhile, has stated that Channel 4 misled him about the nature of the documentary and distorted his opinions.

Hayward and other conservative writers are focusing on examples of extreme rhetoric from non-scientist climate change activists, then conflating the more cautious language of actual scientists with discredited denialist claims, to impute the existence of a "backlash" against warnings about global warming in general. Using certain activists as a straw man, Hayward is attempting to attach denialism parasitically to actual science. As RealClimate.org has warned,

Much of the sensationalist talk in the public discourse (and to which the scientists in the piece, and we, rightly take exception) are not the pronoucements of serious scientists in the field, but distorted and often out-of-context quotes that can be further mangled upon frequent repetition. We have often criticised such pieces (here, or here for instance) and it is important to note that the 'shrill voices of doom' referred to by Mike Hulme were not scientists, but campaigners.

Yet we cannot expect conservative think tanks to make the same distinctions.

Meanwhile, Hayward also attempts to portray a backlash against climate change campaigners among the general public. Again, he resorts to ridicule of Al Gore, criticizing Gore's "profligate energy use" (here we see the synergy of the conservative think tanks and right-wing media/attack operations). At the same time, Hayward mades an important political point - one which progressives should carefully consider:

Liberals in the 1960s and 1970s never comprehended how damaging "limousine liberalism" was to their cause. They seem even more oblivious to the self-inflicted wounds of "Gulfstream liberalism." Whatever the intricacies of climate science, middle-class citizens understand that Gore wants them to use less energy and pay more for it, while he and his Hollywood pals use as much as they want and buy their way out of guilt, like a medieval indulgence [Emphasis mine].

Carbon offsets have a emerged as a way for people to use market-like mechanisms to mitigate the environmental harm caused by their personal energy use. This is a laudable idea, but it has the potential to be politically disastrous. It implies that burdens will not be equally shared, and could allow cultural and class-based resentments to undermine serious efforts at emissions reduction. It structures emissions reduction much as the Union's ill-conceived military draft was structured during the Civil War: theoretically, anybody can buy out of it, but in practical terms, only the wealthy can do so. Carbon offsets are not technically hypocritical, but they are deeply hypocritical on a symbolic level.

[Remainder of post lost]

Labels: American Enterprise Institute, global warming, Right Wing Think Tank Review

  ¶ Posted by Paul Curtis 9:36 AM 3 comments

  Right-Wing Think Tank Review - 2/28/07

American Enterprise Institute (Sourcewatch profile here)

Deja Vu: Repeating Past Mistakes with North Korea
By Nicholas Eberstadt and Christopher Griffin
Pub. 2/26/07; orig. pub. in the San Diego Union-Tribune 2/25/07.

The authors condemn the recent six-party agreement in Beijing, which will provide North Korea with fuel oil and other assistance, in return for the communist state's promise to begin dismantling its nuclear programs. This accord, says Eberstadt and Griffin, "was a strategic blunder masquerading as a diplomatic triumph."

According to the authors, this "capitulation in Beijing" represents a retreat from Washington's previous insistence on "complete, verifiable and irreversible denuclearization," and it is likely to create a wedge between the United States and its partners. While the Koreans consented to freezing their plutonium program at Yongbyon, they refused to discuss their highly enriched uranium (HEU) program - "the discovery of which sparked the current round of North Korean nuclear brinkmanship." Moreover, the agreement fails to address the nuclear weapons already manufactured by North Korea. Yet the Koreans may have conceded just enough to string the process along, so that "only the most blatant breach of faith is likely to rupture the six-party talks in the near term" - otherwise, "international pressure" will "keep the agreement alive." Thus any attempt by Washington to strengthen the terms of the accord will be met with resistance from Seoul and Beijing. Meanwhile, by failing to resolve the issue of Japanese citizens abducted by North Korean agents, the agreement may end up alienating America's most reliable ally in the region.

How can Washington recover from this self-inflicted setback? As a first step, when North Korea presents its list of nuclear programs in 60 days, the Bush administration must be prepared to reject any document that does not include a complete accounting of the HEU program... Only American pressure can keep the issue alive.

The United States might also make any move toward removing North Korea from the list of state sponsors of terrorism contingent upon the satisfactory resolution of the abductee issue. [...]

Looking beyond the six-party framework, Washington should consider a policy that leverages U.S. strengths against North Korean weaknesses. As North Korea depends on international extortion to survive, the United States should follow Japan's lead and refuse to support the failed North Korean economy until Pyongyang delivers real progress on denuclearization and other issues. Cooperation with Tokyo to increase pressure against Pyongyang's proliferation and counterfeiting activities is a vital measure. And pushing Beijing to facilitate the flow of North Korean refugees though its border along the Yalu River would deliver both humanitarian and strategic dividends.

The pact has been criticized from both right and left, though a number of observers have noted that, given Washington's weak bargaining position, the agreement was the best that could have been expected. The larger problem, as this article explains, is that hardliners like Eberstadt and Griffin have weakened the American position by pushing an approach that has backfired repeatedly. Indeed, there might be no need for this "defeat without a war" - or for similar concessions that may have to be granted to Iran - had neoconservative ideologues not encouraged American policies that have only given "rogue states" incentive to withdraw from negotiations and build up nuclear arsenals as protection from American attack.


Table Talk
By Michael Rubin and Danielle Pletka
Pub. 2/21/07; orig. pub. in the Wall Street Journal, 2/21/07.

Rubin and Pletka are leading neoconservative hawks who have been pushing for confrontation with Iran for some time. Their article, written in anticipation of last week's deadline for Iran to suspend uranium enrichment, condemns those calling for dialogue with Tehran - arguing that Iran uses "engagement" as cover for advancing the interests of the hard-line clerical leadership. European negotiations with Iran, say the authors, failed to slow the pace of Tehran's investment in nuclear and conventional arms, nor its export of weapons to terrorist groups. No amount of effort to identify and strengthen "reformists" within Iran will change this basic fact, they say:

Western efforts to game the Iranian system, in short, misunderstand the nature of politics in the Islamic Republic. Politicians rise and fall, but the supreme leader’s authority remains supreme. Rhetoric notwithstanding, the president is more figurehead than commander. Factional differences add color to the Iranian scene, and there are nuances in economic and social policies. But politicians do not alter the regime’s ideological underpinnings.

The article seems clearly aimed as a rebuttal to those who have pointed out that Iran's hardliners stand to benefit from any American attack. On the contrary, say Rubin and Pletka, there is no substantive difference between Tehran's "reformists" and hardliners, and anyway, "dialogue and the attendant relaxation of U.N. sanctions will strengthen and validate the Ahmadinejad regime." The authors are eager to abandon engagement, and they argue that more dialogue will only get in the way of tougher sanctions:

Those eager to sit down with Tehran say that dialogue does not mean abandoning sanctions. This is hardly serious. Washington has already offered and delivered inducements to the regime--a clear path to World Trade Organization accession and spare aircraft parts--in exchange for behavior modification. In response, Tehran has offered no confidence-building measures. All that remains are direct talks, and even there, Washington has dropped the price from ending Iran’s nuclear program to a temporary suspension of enrichment.

[...]

To change course now would signal the impotence of international institutions and multilateral diplomacy. History shows that when the supreme leader believes Western resolve is faltering, Iran will be more defiant and dangerous. Now is not the time to talk. If Washington and Europe truly believe in the primacy of multilateralism and diplomacy, now is the time to ratchet up the pressure.

The authors do not explain why, as in North Korea, "ratcheting up the pressure" would not merely add to the incentive for Iran to develop nuclear weapons as quickly as possible. Nor do they acknowledge that the "inducements" Washington offered in June 2006 were not rejected out of hand, but because they ignored the security questions at the heart of the Iranian negotiating position. Essentially, Rubin and Pletka conflate the idea of engagement with the Bush administration's current incoherent Iran policy, then offer a false dichotomy between this and a strategy of "ratcheting up the pressure," clearly intended to push the United States and Iran closer to war.


The Heritage Foundation (Sourcewatch profile here)

Don't Count on the Security Council to Curb Iran's Nuclear Ambitions
By James Phillips
WebMemo No. 1370, pub. 2/26/07.

Phillips offers a look at what "ratcheting up the pressure" might mean:

The United States must push hard for stronger sanctions against Iran, not only at the Security Council but also directly with European and Japanese allies, who have considerable untapped leverage over Tehran. Relying solely on U.N. sanctions, which are likely to be diluted and delayed by Russia and China, will be to too little, too late. Unless the European Union and Japan agree to withhold foreign investment, strategic trade, and technology from Iran, there is little chance that Iran's nuclear ambitions will be stopped, short of war.

The article was written after it had become clear that Tehran had ignored the Security Council's February 21 deadline to suspend nuclear enrichment. Phillips argues that the new sanctions under consideration at the UN, while "long overdue," are "far from sufficient to convince Iran's radical Islamic regime to change its behavior." The primary problem, says Phillips, is that China and Russia are likely to use their veto power to limit the strength of any sanctions passed through the Security Council:

Washington cannot depend on the U.N. to take decisive action. Both Moscow and Beijing have a vested interest in protecting Tehran from sanctions that would disrupt their growing economic and military ties.

Thus, argues Phillips, the US should organize efforts to "exploit Iran's Achilles heel, its faltering economy." Specifically, American policy should target foreign investment, loans, and technology and trade deals - as well as imposing a travel ban on Iranian leaders. This would be coupled with "public diplomacy programs to explain to the Iranian people the growing costs of their leaders' stubborn refusal to abide by Iran's treaty commitments."

Gary Hufbauer and Jeffrey Schott have argued that sanctions are extremely unlikely to be effective as a tool for stopping Iranian nuclear development. To have any real impact, the sanctions would have to be as complete as those imposed upon Iraq during the 1990s. However, as in Iraq, this would largely have the effect of punishing the Iranian people rather than the regime, while "inflam[ing] Iranian nationalism" rather than undercutting the government. Moreover, the Iraqi sanctions came at a time of low oil prices, which lessened their pain for the rest of the world - by contrast, Iran would be positioned to retaliate against sanctions by driving up the price of oil to more than $100 per barrel - which would be politically unsustainable both in the United States and for any international cooperative effort, and which could plunge the world economy into recession.

If Hufbauer and Schott are correct, than an analysis like the one presented by Phillips, Rubin, and Pletka would place the United States in a very dangerous position - for these authors suggest that harsh sanctions are the only alternative to war. One might even argue that their papers could be seen as an exercise in self-fulfilling prophesy - by pursuing a strategy that shuns engagement in favor of stronger sanctions, the United States would be propelled down a path that would lead inevitably to war.

Joseph Cirincione and Andrew J. Grotto of the Center for American Progress have produced an in-depth report on American strategy options with regard to Iran. They analyze the shortcomings in various possible approaches - including the one advocated by neoconservative intellectuals - and argue for a strategy of "contain and engage" that could slow Iranian nuclear development in the short term, while opening up possibilities for comprehensive arrangements in the long term. It's worthwhile reading for those who take the Iranian problem seriously - but who believe that the neoconservatives are seriously wrong.

(All emphasis mine)

Labels: American Enterprise Institute, Foreign Policy, Heritage Foundation, Iran, North Korea, Right Wing Think Tank Review

  ¶ Posted by Paul Curtis 8:51 AM 0 comments

  Right-Wing Think Tank Review - 2/21/07

Once again I was unable to get into Blogger all morning. Soon as I get a few bucks together this blog's moving to Typepad. Anyway, enjoy. If that's the right word.

Heritage Foundation (Sourcewatch profile here)

"More: The crying need for a bigger U.S. Military"
Article by former U.S. Senator Jim Talent
Pub. 2/20/07; Orig. pub. in National Review, 3/5/07.

Recently-defeated Senator Talent makes the case for a significant and sustained increase in defense spending, both in FY 2008 and over the long term (the "4% for Freedom Solution").

After repeating the conservative narrative of Carter's weakness and Reagan's Cold War-ending strength, Talent suggests that, currently, "the situation facing the U.S. military is grave."

[T]he Army is too small, the Navy and Marine Corps may well be too small, and much of the equipment in all the services is too old and increasingly unreliable. Without a substantial increase in procurement spending, beginning now and sustained over the next five to ten years -- an increase measured not in billions but in tens of billions of dollars per year above current estimates -- the U.S. will be unable to modernize its forces to the degree necessary to preserve its security with the necessary margin of safety.

Talent calls President Bush's FY 2008 budget an "important first step" toward raising military spending, but insists that this is not enough: "[B]oth ends of Pennsylvania Avenue also need to adopt a rule that the core defense budget should never sink below 4 percent of the nation's GDP."

The current military, argues Talent, is both "too small and too old" to meet the requirements of the current official national defense strategy, which requires the capacity to simultaneously defend the homeland, maintain four peacekeeping engagements, and fight two major regional wars. Moreover, says Talent:

The military is entering a crucial phase of recapitalization. Beginning with the next budget, and intensifying over the next five to ten years, the services are scheduled to field the new platforms that will anchor American security for the next generation. No one can say that this spending is not needed or that it can be delayed any further. The Army must modernize and replace almost its entire capital stock of fighting vehicles. The Navy must buy new DDG-1000 destroyers, ramp up procurement of Virginia-class submarines, and buy large numbers of littoral combat ships and the next-generation cruiser. The Air Force must buy its new superiority fighter, the F-22, as well as Joint Strike Fighters or equivalent aircraft. In addition, the Air Force must fund its strategic-airlift requirement, design and build a new tanker, and develop an interdiction bomber to replace the B-52, an aircraft almost 50 years old.

All of this means that "the services cannot possibly meet their crucial requirements without an average budget over the next five to ten years that is at least $30 billion higher per year." Starting with the military's own requests and working backwards, Talent casts this 'missing' $30 billion as a "procurement deficit," to which he adds a further $4 billion required to add two more divisions to the active-duty Army (bringing the total to twelve). Thus:

to sustain our military at the level necessary to protect our security, we must increase procurement, personnel, and support spending by at least $34 billion above the FY 2007 budget.

Where to find these additional funds? Talent suggests that "$1 or $2 billion" each year could be saved through procurement reform - cutting down on the $1,000 toilet seats. But what he's really got in mind is something much more fundamental.

Talent is acting as the spokesmodel for a broader Heritage Foundation effort: the "4% for Freedom Solution." Currently, says Talent,

"the U.S. spends only 3.8 percent of its GDP on the core defense budget....That is far lower than during the Cold War, and almost a full percentage point less than was spent even during the Carter years. America's economy is so powerful that even after years of underfunding military procurement, the U.S. could still recapitalize and sustain its military strength by enacting the $34 billion increase I mentioned earlier, and maintaining defense spending at no less than 4 percent of GDP thereafter.

And here is where Senator Talent makes the agenda clear:

The 4% for Freedom Solution would also have a positive impact on our long-term fiscal position. First, it would focus debate about the deficit squarely where it belongs: on the entitlement programs. Even a glance at the government's budget shows that growth in entitlement programs, not in defense or other discretionary spending, poses the real long-term threat to solvency. If Congress reforms entitlement spending, there will be more than enough money for defense; if Congress fails to get entitlements under control, then funding defense on the cheap will not save the country from bankruptcy.

Curiously missing from Senator Talent's essay is any mention of the Bush tax cuts, which have already forfeited $1.7 trillion of revenue, and, if made permanent, would cost an additional $1.8 trillion by 2014 - amounting to $400 billion/year in lost revenues by that time. Meanwhile, the Iraq war - the greatest strategic disaster in American history, which Senator Talent has enthusiastically supported - is currently costing the United States over $8.4 billion per month. Responsible fixes for these Republican blunders would generate more than enough funds to cover the extra $34 billion Talent believes should be added to our defense spending.

Judging by the evidence at hand, it is difficult to conclude that Heritage and Senator Talent are serious about responsibly funding our military. They seem primarily interested in using pro-military sentiment to lock the country into a confrontation over entitlement spending, at a time when our deeply flawed tax structure is propelling us toward a fiscal crisis.


"A Better Answer for Education: Reviving State and Local Policymaking Authority"
Lectures by U.S. Senators John Cornyn and Jim DeMint
Heritage Lecture No. 994, pub. 2/20/07; originally delivered 1/8/07

Michel Franc introduces the Senators by nothing that "today marks the fifth anniversary of the signing of the No Child Left Behind law." More to the point, Congress will have to re-authorize the law in this session. Conservatives widely believe that NCLB was a bill that started out with good intentions, until it was hijacked by "liberals" who gutted the school choice provisions, leaving NCLB as little more than an exercise in massive increasely increasing the federal role in education.

FRANC: For example, there are 3.9 million students in schools eligible for limited public school choice, but because of roadblocks and bureaucratic hurdles put up by the schools, fewer than 1 percent of those chil­dren have actually managed to get those services. The regulatory burden has gone up in the absence of all these choice revisions, and one study by the Office of Management and Budget in the White House found that the No Child Left Behind law has added an additional 6.7 million hours of paperwork, recordkeeping, and reporting requirements for state and local authorities.

Thus Senators Cornyn and DeMint will discuss options for re-conservatizing the legislation.

Cornyn cites Thomas Jefferson and the principle of federalism to frame his argument for "moving the decision-making power out of Washington and closer to parents and teachers." Despite 25% growth in federal spending on K-12 education over the past five years, "America continues to fall behind, both competitively and academically." Cornyn calls for "allowing the states the flexibility and free­dom to establish their own guidelines," free from federally-mandated bureaucracy. To this end, he and DeMint have introduced the "A-PLUS Act of 2007," which would "revitalize our edu­cation system in America by wisely applying the les­sons of federalism, this time in an education context."

Dan Lips, another Heritage analyst, described the Senators' proposal:

The DeMint-Cornyn plan -- called the Academic Partnerships Lead Us to Success or “A-PLUS” Act -- would allow states to opt-out of No Child Left Behind. These states would enter into a contractual agreement with the federal government, under which they would be free to control federal education funding and use it however state leaders believe would improve student achievement and assist disadvantaged students. In exchange, states would maintain performance transparency by measuring student achievement through state-directed assessments.

In essence, then, the bill would be aimed in part at reducing bureaucracy costs - but also at giving control of education policy to state lawmakers, who would, presumably, be free to experiment to their hearts' delight with vouchers and charter schools, the twin pillars of the conservative effort to undermine public education.

DeMint's comments further develop a rather perplexing argument made by the conservatives. Declaring his commitment to "developing the individual," DeMint goes on:

But that does not necessarily mean that we are committed to government-run and politically man­aged schools, particularly from the federal level, and I'm afraid that over the past several decades, our commitment has moved from developing the capabilities of the individual to a commitment toward government control of education at the federal level. [...]

You can almost peg the beginning of the decline in our edu­cation system to when the federal government began to support it. We're losing ground to other countries, and we have been for a long time. We're spending now, if you add capital costs in just about every state, well over $10,000 per student, and we continue to lose ground. [...]

The way I see it, as someone who used to be not only in research, but in quality develop­ment in consulting companies for years, you can't have quality development with a top-down approach, particularly if decisions are made at mul­tiple levels as we have with education at the local, state, and federal levels.

What is strange about this argument is that the countries to whom the United States is losing ground - DeMint cites China and India, but you might also add European nations - all have highly centralized, nationally-funded education systems. It may be true that federal spending on education has increased, and it may be true that, at the same time, standards have fallen. But correlation, as we edukated folk know, does not equal causation. In fact, the evidence from the rest of the world very much suggests that too much federal involvement in education is almost certainly not our problem. In fact, one might argue, given that state boards of education have a propensity towards politically-driven foolishness to the detriment of real learning, perhaps our problem is too much state and local power over education.

Labels: education, Heritage Foundation, national defense, Right Wing Think Tank Review

  ¶ Posted by Paul Curtis 12:33 PM 0 comments

  Right-Wing Think Tank Review: 2/13/07

American Enterprise Institute (Sourcwatch profile here)

"Good Medicine for the Tax Code"

'Short Publication' by Joseph Antos, "Wilson H. Taylor Scholar in Health Care and Retirement Policy" at AEI.

This article, published in AEI's online magazine American.com on Jan. 25, praises President Bush's "bold" health care proposal, which

would help lower-income people buy health insurance while putting the brakes on runaway health spending. Unlike his last big initiative—the Medicare drug benefit—the new proposal will have the support of conservatives and deserves the support of liberals.

Antos says that the plan would address a "defect" of tax policy: the employer-based health insurance deduction. Many liberals have also argued that the deduction, and the employer-based health care system it supports, is problematic (see for instance this article by Ezra Klein). But Antos goes on to make a surprising claim: that this system is the primary cause of inequality in America:

As a result, the more income workers receive as health care, the more income they get to keep free of taxes.... That differential has led to a shift in employee compensation away from taxable wages, toward non-taxable health benefits. Consequently, workers are not seeing their wages increase despite a booming economy. Most of the increase in labor productivity over the past few years has been eaten up by health benefits.

Your humble reviewer is not an economist, but in an era of skyrocketing corporate profits and massive increases in executive compensation, this seems like a rather brazenly absurd claim. However, if it provides a narrative by which conservatives can simultaneously co-opt the inequality debate and the health care debate, it's worth watching.

Antos goes on to repeat a number of other conservative claims about the Bush plan and about health care in general. In this analysis, the primary issue is cost control, and the best way to control costs is to allow individuals to decide how to spend their health care dollars. Moreover, argues Antos, the plan would be "mildly redistributional, favoring those with lower incomes" (by contrast, the Center for American Progress points out that "most uninsured Americans pay low or no taxes and would get a smaller benefit from this plan than higher-income Americans").

"The President’s proposal," says Antos, "gives workers and firms a new reason to ask whether their insurance is right for them, but it would not impose change from above." This seems to be the conservative position on health care in a nutshell. However, if it appears to lack urgency, liberals should nonetheless be careful to note that it does indicate a developing conservative attempt to seize the agenda in the health care debate.


Manhattan Institute (Sourcewatch profile here)

"Consumerism: A Prescription for Change"

Op-Ed by David Gratzer; originally published in the San Francisco Examiner.

Gratzer celebrates prescription drug programs by Wal-Mart and other pharmacy chains, arguing that they offer a low-cost, free-choice alternative to the "paternalism" of those who agree with Howard Dean that "there is no such thing as an informed consumer of health care." This "revolution," made possible by the internet (which is "empowering people with information and options"), is "potentially transformative."

Echoing Antos, Gratzer says that "one of the biggest problems with American health care is its cost." The reason for high medical costs? "Third-party payership." Gratzer cites Health Savings Accounts as "a step in the right direction" toward fixing this problem.

HSAs, of course, are the centerpiece of the conservatives' emerging effort to address the health care crisis (or, alternately, to prevent the Democrats from addressing the health care crisis). As Fred Barnes wrote a few weeks ago, they've already been authorized and need only to be promoted. See this fact sheet from Families USA for an analysis of how HSAs may in fact represent a step backwards in American health care. If it all sounds suspiciously like "private Social Security accounts" to you - you're not wrong.


Heritage Foundation (Sourcewatch profile here)

"Don't Rush to Judgment on UN IPCC Global Warming Summary" (WebMemo No. 1351)

Article by Ben Lieberman, Senior Policy Analyst in the Roe Institute for Economic Policy Studies at Heritage

Lieberman continues the conservative effort to put the brakes on the global warming consensus, this time in response to the summary of the UN Intergovernmental Panel on Climate Change Fourth Assessment Report ("IPCC Report"). "It's just a summary," Lieberman cautions, and "the full scientific debate over the report has not yet begun." Moreover, "IPCC summaries are written at the direction of political appointees representing member nations" - thus, presumably, opening the door to an attack on the summary's credibility. This seems to fall squarely within the conservative strategy of asserting controversy in order to muddy the waters and delay action.

While acknowledging that the summary indicates an increasingly solid consensus that human action has been causing climate change, Lieberman argues that

This upward revision in the certainty that mankind has impacted the climate should not be confused with an upward revision in the predictions of consequent harm.

The more important questions have always been the extent of warming, the seriousness of the consequences, and what responsive policies make sense.

Moreover, he suggests that the report has "backtracked" on a number of key claims - for instance, de-emphasizing the "hockey stick" model of recent dramatic climate change, and dramatically revising estimates of future sea-level rise (this post from RealClimate debunks similar claims made by Christopher Monckton).

Lieberman once again returns to the conservative "neo-denial" argument that emissions limits as called for by the Kyoto protocols would be too expensive and would have little effect.


Cato Institute (Sourcewatch profile here)

"Live with Climate Change"

Article by Patrick Michaels, Senior Fellow; appeared as an op-ed in USA Today on Feb. 2, 2007.

Michaels joins in the defeatist conservative neo-denial framing of climate change: yes, it's happening, but "actually 'doing something' about warming is a daunting endeavor." And, par for the course, he pairs this statement with an argument for a solution combining technology development and just getting used to it:

The stark reality is that if we really want to alter the warming trajectory of the planet significantly, we have to cut emissions by an extremely large amount, and — a truth that everyone must know — we simply do not have the technology to do so. We would fritter away billions in precious investment capital in a futile attempt to curtail warming.

Consequently, the best policy is to live with some modest climate change now and encourage economic development, which will generate the capital necessary for investment in the more efficient technologies of the future.

This is a significantly more defeatist position even than that of Samuel Thernstrom and Lee Lane, who at least argue for some government action on R&D and a carbon tax. Michaels, in the best tradition of glib laissez-faire complacency, prefers to let the market take care of the problem.

Labels: Ben Lieberman, David Gratzer, global warming, health care, Joseph Antos, Patrick Michaels, Right Wing Think Tank Review

  ¶ Posted by Paul Curtis 11:54 AM 2 comments

  Right-Wing Think Tank Review - 2/6/07

Cato Institute (Sourcewatch profile here)

"Libertarian Voters in 2004 and 2006" (Cato Policy Report: Jan/Feb 2007)

Article by David Boaz, executive vice president of the Cato Institute, and David Kirby, executive director of America's Future Foundation.

Boaz and Kirby use poll data to show that the 2004 and 2006 elections have found "libertarian-leaning voters" moving increasingly into the Democratic column. While it's generally understood that Republicans lost heavily among independents in 2006, the authors seek to show that libertarians "may be the largest bloc of such independent-minded swing voters." If this is the case, if "libertarians are a bigger share of the electorate than the much-discussed 'soccer moms' or 'NASCAR dads,'" and if their votes are up for grabs, then parties should seek to address specifically libertarian concerns in order to win elections.

However, the article, in my analysis, is not entirely convincing on two important - and related - levels:

1. Defining "libertarian voters," and


2. Determining what motivated these voters in '04 and '06.

The authors report that they have selected questions from a number of polls about American political attitudes, arriving at results that suggest that about 14% of American voters can be "classified as libertarians." However, they do not disclose specifically what those questions are. They also rely on data from a poll they themselves commissioned from Zogby International, which identifies 15% of voters as "libertarian," but they don't provide or link to the full results of this poll (For more on questions regarding Zogby's special-interest polls, and specifically those commissioned by Cato, see this Chris Mooney article from the American Prospect).

Boaz and Kirby report that, in 2004, "the libertarian vote for Bush dropped from 72 to 59 percent, while the libertarian vote for the Democratic nominee almost doubled." They continue:

It’s not hard to imagine why. Bush’s record on federal spending, centralization of education, expansion of entitlements, the war in Iraq, executive authority, the federal marriage amendment, and civil liberties was certainly sufficient to dissuade many libertarian voters.

This, however, fails to distinguish among these potential motives, providing no indication of whether "libertarian" voters were more displeased by the war in Iraq or by "centralization of education."

The trend continued in 2006:

After two more years of war, wiretapping, and welfare-state social spending, we found similar patterns in 2006. In the Zogby survey, 59 percent of libertarians voted for Republican candidates for Congress, and 36 percent voted for Democrats. Comparing those results to the last off-year election in 2002, we find a 24 percentage point swing to the Democrats.

An interesting note: as measured by Boaz and Kirby, "The libertarian vote is about the same size as the religious right vote measured in exit polls, and it is subject to swings more than three times as large."

The authors' Zogby poll apparently does provide a breakdown of these voters' motivations in 2006:

Libertarians who said the war in Iraq was the most important issue voted 64-31 for Democratic congressional candidates. Libertarians who stuck with Republican candidates were most likely to describe terrorism or security as the most important issue. Libertarians for whom federal spending was the most important issue were most likely to vote for third-party candidates: 39 percent Democratic, 38 percent Republican, 22 percent other.

Once again, however, the authors do not provide the raw numbers. How many of those libertarians said the war in Iraq was the most important issue? How many cited federal spending? Of course, those numbers, representing the opinions of 15% of respondents to a poll of 1,012 voters, would be subject to a margin of error of roughly 10%. Based on the information Boaz and Kirby provide, it's difficult to extrapolate that there is a significant swing vote motivated directly by opposition to "welfare-state social spending." To be fair, the authors mostly avoid making any claims that would privilege economic motives over others. But we should be cautious about rushing to assume that, if libertarian voters are swinging elections, politicians should therefore make it a priority to focus their attacks on entitlements. Indeed, for instance, one of the surveys cited by the authors, the 2004 Pew Values poll, indicated a sharp drop in anti-government sentiment since 1994, and a corresponding rise in public support for the idea of a social safety net.

And who are those libertarian voters, anyway? Again, the authors are appropriately cautious:

Certainly we are not claiming that 15 percent of American voters have the deep and well-informed commitment to liberty and limited constitutional government of Cato Sponsors or Reason magazine readers. Rather, we include both individuals who would self-identify as libertarian and individuals who hold generally libertarian views but may be unfamiliar with the word.

The authors recognize the limits of ideological self-identification polls, which are in my view the least useful measure of public political attitudes. Of course, it behooves them to recognize this, as "only 9 percent of voters with libertarian views identify themselves that way."

Thus, they ask an additional question:

We asked half the sample, “Would you describe yourself as fiscally conservative and socially liberal?” We asked the other half of the respondents, “Would you describe yourself as fiscally conservative and socially liberal, also known as libertarian?”

The problem is that this question also relies on self-identification, only at another level. It's still left to the respondent to interpret the meaning of "liberal" and "conservative." And this allows for a tremendously broad interpretation: no wonder that 59% of respondents answered "yes" to the first question. "Fiscally conservative and socially liberal" is a phrase that has frequently been used to describe Howard Dean - and many of the "Deaniacs" who were lampooned as wacky leftists; it could also apply to many, if not most, of the posters at Daily Kos - including Markos himself.

The authors themselves admit that this number is "overinclusive," though they find it "encouraging." I am still unclear as to how they then arrived at the 15% figure - I couldn't find where they had reported any further screening questions. Boaz and Kirby provide some interesting indications that the libertarian constituency, such as it is, may increasingly operate as a swing vote. But the who, why, and how much of this story remains far from clear.


Heritage Foundation (Sourcewatch profile here)

"Bush Budget Reins in Entitlement Costs" (WebMemo no. 1341, 2/5/07)

Article by Brian M. Riedl, "Grover M. Hermann Fellow in Federal Budgetary Affairs in the Thomas A. Roe Insitute for Economic Policy Studes at the Heritage Foundation."

Riedl praises the president's budget for its "focus on entitlements."

The impending retirement of 77 million baby boomers will trigger a $39 trillion tsunami of unfunded entitlement costs over the next 75 years.[1] The good news for the younger Americans who will pick up this tab for retiring baby boomers is that President Bush's budget begins to seriously address this challenge by proposing real reforms that could slice $8 trillion from Medicare's total unfunded liability.

Specifically, Riedl is pleased with the proposal to require wealthy retirees to pay higher premiums, as well as to modify the "market basket" of Medicare payment plans, so as to pay less money to doctors and hospitals over time. However, he indicates that Medicare is still fundamentally flawed from a conservative perspective, arguing, as many conservatives do, in favor of a "defined contribution" scheme that would de-collectivize it.

Riedl also defends Bush's request to extend his notorious tax cuts:

By increasing incentives to work, save, and invest, reduced tax rates played a key role in the expanding business investment, job growth, and the stock market gains that have powered recent years' economic growth.

(By contrast, this article suggests that the tax cuts have not resulted in increased business investment or in higher wages for American workers.)

The article also further indicates how the right will frame the battle over extension of the tax cuts: as a fight over a tax increase:

Letting the tax cuts expire--or worse, repealing them--would be a major tax increase for millions of Americans. [...]

The federal budget's problems do not stem from Americans being undertaxed, but rather from Washington spending too much. In order to prevent one of the largest tax increases in American history, Congress should follow the President's lead by extending the current tax policies.

Of course, when they were proposed, the cuts were only supposed to be temporary - so one could argue that it was Bush himself who "planned" this massive tax "increase."

As for who this "increase" will primarily affect, see this study.

Labels: Brian Riedl, Budget, Cato Institute, David Boaz, David Kirby, electoral politics, Heritage Foundation, libertarians, Right Wing Think Tank Review

  ¶ Posted by Paul Curtis 11:03 AM 2 comments

  Right-Wing Think Tank Review - 1/22/07

So this may become another regular feature, probably on Mondays. It'll be more limited in scope (and less snarky) than the regular Friday roundup of conservative magazines. I only want to sample some of what is being churned out in the intellectual factories of the right - all the better to recognize the ideas when they reappear in the National Review or the Weekly Standard (and later on Fox News and in the right-wing radio/blogosphere). I'll stick to papers that seem to be seriously about advancing new conservative policies and strategies, as opposed to those which merely repeat old arguments for the record, or which are in danger of becoming quickly irrelevant. Thus, for instance, I won't be commenting on any of the numerous pieces attacking the Democrats' minimum wage bill, since the success of the bill is at this point almost a foregone conclusion. The point is not to rebut, but to observe.

With that, our first piece:


American Enterprise Institute (Sourcewatch profile here)

"A New Direction for Bush Administration Climate Policy"

Article by Samuel Thernstrom, former Director of Communications at the Bush administration's White House Council on Environmental Quality, and Lee Lane, former executive director of the Climate Policy Center.

This article represents a substantially different conservative position on global warming than the traditional denial. Written in anticipation of President Bush's State of the Union - which is expected to include initiatives to limit greenhouse gas emissions - the piece is aimed at encouraging the lame-duck Bush administration to develop climate policies that will preclude Bush's successor "from reengaging, in some form or another, with the Kyoto system."

The authors do not deny the reality of global warming - possibly indicating that the right is shifting to an understanding that such denial is no longer politically tenable. Instead, the point is to develop a conservative approach to dealing with global warming. This approach is twofold:

1. Emphasize the long term.

At least three times, the authors use the phrase "the long-term challenge of climate change." As they say, "a long-term alternative to Kyoto may help lessen its appeal."

"Rapid emissions reductions," such as those called for in the Kyoto Protocol and the McCain-Lieberman Stewardship Act, are criticized as not doing enough to confront the problem - in other words, the argument is that, while global warming is real, near-term emissions reductions would not have enough impact on warming to justify their economic cost. Rather, the authors focus on technology development as the key to solving the problem (though they also mention, more than once, geoengineering or even just trying to figure out how to "adapt" to global warming). They propose a major commitment to clean energy technology research and development - interestingly, they argue that this is an area in which government investment is more appropriate than private-sector efforts.

2. Coopt the emissions debate by proposing a carbon tax as an alternative to emissions trading.

While the primary effort is to recast global warming as a long-term problem to be solved primarily through technological development, in the short term the authors realize that "politics demand action ... [A] 'do nothing until the technology ripens' policy is simply not credible." Thus, the best option is to adopt an emissions policy while conservatives can still count on having a conservative in the White House:

[I]f for no other reason than to cut off momentum toward economically inefficient Kyoto-style emissions trading policies, the Bush administration needs to reconsider its long-standing opposition to mandatory greenhouse gas emissions controls. Federal emissions limits are now inevitable; the only question is which president will craft them.

To this end, the authors recommend a tax on emissions - a carbon tax - instead of allowing a market in emissions trading. This, too, represents an interesting development, since conservatives have vocally opposed a carbon tax in recent years (for more on this, see Tim Noah's piece at Slate). To Thernstrom and Lane,

a carbon tax would apply moderate, even pressure across the economy to limit emissions ather than selectively raising the cost of politically unpopular forms of energy production and consumption, such as automobiles and power plants.[7] A carbon tax may seem anathema to the Bush administration, but as several economists (including AEI’s Kevin A. Hassett) have noted, carbon tax revenues could be used to finance reductions in the marginal rates of other taxes.[8] The net result would be a revenue-neutral tax reform, not increased taxation.

Properly structured, such a tax reform could stimulate the economy, rather than depress it as emissions trading would.

The authors also suggest that, if emissions trading is inevitable, Bush should insist on a "safety valve" provision that would set a limit on the cost of emissions credits.


Hoover Institution (Sourcewatch profile)

"Legislate in Haste, Repent at Leisure"

Article by Stephen M. Bainbridge, Professor of Law at UCLA

Bainbridge's article comes as part of a new wave of conservative attacks on the Public Company Accounting Reform and Investor Protection Act ("The Sarbanes-Oxley Act," or SOX). (To be fair, it isn't only Republicans who have been calling for at least some "reform" of SOX provisions.) His principle criticism is that the Act - and particularly its Section 404, which requires internal control disclosures to be included in corporations' annual reports - is imposing an undue financial burden on firms. In public corporations, Bainbridge argues, directors now have incentive to insure themselves against liability by overspending shareholders' money on "hiring corporate governance consultants, lawyers, investment bankers, auditors, and so on" to advise on SOX compliance. This means that compliance costs - especially auditing - have skyrocketed, a burden which especially affects "smaller public companies."

Bainbridge concedes that many of these were one-time costs taken on to get corporate procedures into initial compliance with SOX, but argues that "many will recur year after year," as corporations work to maintain their internal control paper trails.

Additionally:

On the one hand, SOX has discouraged privately held corporations from going public. On the other hand, many publicly held corporations are going private. SOX thus reduces investor choice, makes many investments less liquid, and in the long run likely discourages entrepreneurship by denying start-ups access to financing in the capital markets. By raising the cost of access to the capital markets, SOX will likely retard economic growth.

[Update: See this piece by Robert Reich at the American Prospect for a contrary view on the "going private" claim.]

Bainbridge's other complaint is that, by federalizing and standardizing laws regulating corporate governance, SOX discourages state-by-state "experimentation" and imposes a "one-size-fits-all" model for internal controls on companies whose own "needs" may differ.

Bainbridge also responds to a defense of SOX by New York Times columnist Joseph Nocera - though Bainbridge does not address all of Nocera's points.

The sustained assault on SOX - which also includes critics who argue that the Act is driving businesses out of American capital markets - seems to be having an effect, as "reform" of the law is widely anticipated, though Reuters notes that the regulatory reforms under consideration may provide some relief for small companies, but are unlikely to reduce costs significantly for large corporations.


Heritage Foundation (SourceWatch profile)

"Congress Should Reject New Taxes and Curb Exploding Entitlements"

Article by Stuart M. Butler, Vice President of Domestic and Economic Policy Studies at Heritage and described by Sourcewatch as "the 'mastermind' of privatisation during the 1980s" and Alison Acosta Fraser, director of the Roe Institute for Economic Policy Studies.

This 'Web Memo' is a conservative wish list for the 110th Congress - Congress won't adopt Butler and Fraser's recommendations, but they do help frame the conservative economic platform in the post-100 Hours phase of the new Congress.

The recommendations are:

• Reject tax rate increases and impose no new taxes;
• Reject any increase of the Social Security wage cap;
• Make the Bush tax cuts permanent; and
• Fix and then repeal the Alternative Minimum Tax (AMT).

Grappling with the AMT is going to be a difficult but necessary task for Congressional Democrats, and it's worth noting a conservative position on the question. Butler and Fraser argue for providing immediate relief by indexing the tax to inflation, which would limit the number of families falling under the AMT in the upcoming year.

In the longer term, they propose simply abolishing the AMT - a position they share with the liberal Center for American Progress. The difference is that Butler and Fraser oppose any effort to replace the lost revenue - which could cost $1 trillion over the next ten years, severely worsening federal deficits. Is this simply "starve the beast" rhetoric or an effort to stake out a position that will insulate wealthy taxpayers from absorbing the cost of fixing the AMT?

Labels: American Enterprise Institute, AMT, global warming, Heritage Foundation, Hoover Institution, Right Wing Think Tank Review, Sarbanes-Oxley, taxes

  ¶ Posted by Paul Curtis 10:18 AM 2 comments