17 November 2009

17 November 2009
Today’s Tabbloid
PERSONAL NEWS FOR lgn@limitedgovernmentnetwork.com
FISCALLY CONSERVATIVE BLOG FEEDS FISCALLY CONSERVATIVE BLOG FEEDS
Taking Over Everything (2) ATR Endorses “Health Savings

[Cato at Liberty] Account Expansion Act of
NOV 16, 2009 07:48P.M.
2009” [Americans for Tax
“My critics say that I’m taking over every sector of the economy,”
President Obama complained to George Stephanopoulos back in Reform]
September. And I responded: NOV 16, 2009 05:13P.M.
Not every sector. Just ATR sent the following letter to Congressman Jeff Flake (R-Ariz.) today:
On behalf of Americans for Tax Reform, I write to congratulate you for
• health care sponsoring H.R. 3971,...
• energy
• local schools FISCALLY CONSERVATIVE BLOG FEEDS
• banks A Handy PATRIOT Act Cheat

• insurance companies Sheet [Cato at Liberty]
NOV 16, 2009 04:52P.M.
• automobile companies
While there are a slew of USA PATRIOT Act reform bills buzzing about
• compensation at financial firms Capitol Hill, the focus in Congress is now on two chief contenders,
reported out by the House and Senate judiciary committees respectively.
• newspapers The very very short version is that the Senate version renews expiring
PATRIOT powers with very few modifications, and that the House
• the internet version includes an array of moderately more robust civil liberties
safeguards. As Kevin Bankston of the Electronic Frontier Foundation has
And now check out the lead story in Sunday’s Washington Post: argued cogently, these differences are really far less important than the
need to reform the FISA Amendments Act, which vastly expanded the
Federal Oversight of Subways Proposed surveillance powers of the National Security Agency, in effect permitting
the Bush administration’s program of warrantless wiretapping to
The Obama administration will propose that the federal proceed with some cosmetic trappings of oversight. Still, the House bill
government take over safety regulation of the nation’s does go some ways toward restoring the quaint notion that government
subway and light-rail systems, responding to what it says is should pry in to the private records of its citizens only when some
haphazard and ineffective oversight by state agencies. evidence exists to provide grounds for individualized suspicion.
Not everything. But more and more. So much that even the growing The Obama administration, alas, has decided to back the Senate’s bill,
opposition can’t keep up with it all. though the Justice Department also expressed “concerns” about the
handful of actually-substantive checks on government spying power, and
made clear that it intends to continue “working with the Committee” to
gut those before the bill reaches the floor. For those with a taste for the
gory details, Wired points to CDT’s handy dandy cheat sheet comparing
the main provisions of the two bills.
1
Today’s Tabbloid PERSONAL NEWS FOR lgn@limitedgovernmentnetwork.com 17 November 2009
That leads to a very familiar, but nonetheless dispiriting, conclusion: in

education, a blizzard of rhetoric is all it takes to blind people to reality.
FISCALLY CONSERVATIVE BLOG FEEDS
Minnesota Budget Shouldn’t be

Based on Money Politicians
House Key Vote Alert - ‘Doc Fix’
Hope to Have [Americans for
[The Club for Growth]
Tax Reform] NOV 16, 2009 04:39P.M.
NOV 16, 2009 04:45P.M.
Year after year states build their budgets around what they expect to
KEY VOTE ALERT
raise in tax revenue for the upcoming fiscal year. This means that states “NO” to “Doc Fix” (H.R. 3961)
budget revenue for programs and services with money they...
The Club for Growth urges all members of the

FISCALLY CONSERVATIVE BLOG FEEDS U.S. House to vote “NO” on the so-called
Medicare Physician Payment Reform Act of
Fed Ed Snow Job [Cato at 2009, otherwise known as the “Doc Fix” bill (H.R.
3961). A vote on this proposal is expected later
Liberty] this week. This key vote will be part of our 2009
NOV 16, 2009 04:43P.M. Congressional Scorecard.
When you get to the top of a mountain, what do you find? Other than This bill is not offset with any spending
maybe a mountain goat, or the frozen remains of an ill-fated previous cuts so the overall tab will recklessly add
climber, snow, that’s what. That’s why it’s almost appropriate that the over $200 billion over ten years to the
Obama administration’s Race to the The Top Fund, as I have written national debt. This is also a deceptive
before and write again in this new op-ed, is essentially a snow job. And it attempt to hide the true cost of health care
seems to be a particularly blinding one. reform.
To qualify for Fund dollars, states have to make hardly any meaningful Reasonable people can argue about the merits of a
changes to their education systems. For the most part they just have to “doc fix”, but fiscal prudence demands that it not
submit plans for how they could conceivably do good stuff. Moreover, add one penny to the national debt. This bill
the same “stimulus” that furnished the $4.35 billion for Race to The Top needs to have a full offset of spending cuts to meet
supplied roughly 20 times that amount to protect the abysmal, that requirement. Also, it’s clear that Senate
obese education status quo from recessionary pressures. Nonetheless, leaders are stripping this bill out of
many conservatives, including former House Speaker Newt Gingrich, are comprehensive health care reform legislation in
going out of their way to lionize Obama & co. for their reform efforts. order to avoid the task of selling an expensive
proposal to the public that breaks the President’s
Why the cross-spectrum adulation? One problem is certainly that some revenue neutral pledge. When it comes to
conservatives have given up on real reform — universal school choice overhauling one-sixth of the national economy,
and getting the feds out of education — in favor of being seen as “doing the American people are entitled to honesty and
something” from Washington. Probably more important, though, is that transparency from their elected leaders in
Race to the Top is constantly being festooned in brash, combative Washington.
rhetoric about pushing what are actually relatively minor — but
still disliked by teacher union — improvements such as linking educator
pay to student performance and increasing charter schools. (For a taste
of the hyperbole, check out Secretary of Education Arne Duncan’s
opening commentary from Sunday’s Meet the Press.) That Race to the
Top falls far short of actually doing even these very limited things seems
not to matter.
2
FISCALLY CONSERVATIVE BLOG FEEDS relationship. Access to housing, jobs, new goods, and the possibility of
minor improvements in life, all depend on a well documented support of
Cuban Blogger Yoani Sanchez the revolution through attendance of mass meetings and membership in
the communist party, for example.
Keeps Speaking Truth to Power
Or through personal relationships with those in power. Sanchez
[Cato at Liberty] describes how young women long ago began prostituting themselves to
NOV 16, 2009 02:36P.M. high ministry or military officials in exchange for non-monetary goods or
privileges. Such “courtesans of socialism” later turned to traditional
prostitution with the arrival of currency convertibility in Cuba. Sanchez
also optimistically describes the role that technology, especially the
internet, is playing in creating spaces of liberty. In a country where
people increasingly feel the regime’s days are numbered, such exercises
of personal freedom can be powerful.
Even Obama’s Make-Believe

Jobs Are Not Real [Cato at
Liberty]
NOV 16, 2009 01:38P.M.
It’s the 490th anniversary of Havana today and the Cuban government
has arranged for celebratory activities. Ordinary residents of Havana and The White House recently began claiming that the “Recovery Act” had
all Cubans who cherish their civil and human rights have less to “created or saved” 640,000-plus jobs. This turns out to have been a
celebrate, however, as Cuban blogger Yoani Sanchez regularly reminds political mistake, in part because even sympathetic reporters understand
us. Sanchez has become a major irritant of the regime because of her that the “jobs saved” measure allows for creative accounting. But the
penetrating posts about the absurdities and injustices of everyday life in White House also erred by providing (supposed) details about the jobs
communist Cuba. You can see her blog in Spanish here, and in English that were created. This made it very easy for reporters and other curious
here. people to do a bit of fact checking, which has generated a spate of stories
showing that the White House’s numbers are wrong, even using make-
Just over a week ago, in an incident that was widely reported in the believe methodology. The Washington Examiner has put together a very
international press and that reveals the threat to the Cuban regime of the useful interactive map which links to many of the news reports
growing Cuban blogger movement, Sanchez was assaulted in Havana by debunking the Administration’s fraudulent numbers.
plain-clothed government agents. Though she was forcefully beaten, she
and her friends managed to fight back and get away. More than that,
they took pictures of their assailants and of the incident for posting on
the blog, prompting the government thugs to leave the scene. One photo
of an agent features the caption “She is covering her face…Perhaps afraid
of the future.” Another photo features Sanchez pursuing her assailants
with the caption: “They have watched us for decades. Now we are
watching them.” Very smart.
As it happens, last week we posted a beautifully written paper by Sanchez

(in Spanish) on Cato’s Spanish-language web page, www.elcato.org. (The
paper just won a prize in an essay contest in Mexico organized by TV
Azteca at which my Cato colleague Juan Carlos Hidalgo was a judge.)
Her essay, “Liberty as a Form of Payment,” describes the fraudulent deal
that Castro promised when he came to power. In exchange for liberty,
Cubans would be better off culturally, economically, and in other ways.
Sanchez describes the reality of social control under communist Cuba in
which the real exchanges occur as a consequence of the power
3
The New Threats to Free Speech Monday Links [Cato at Liberty]

NOV 16, 2009 12:17P.M.
[Cato at Liberty]
NOV 16, 2009 12:26P.M. • Report: New threats to free speech.
In a new Policy Analysis, Cato Research Fellow Jason Kuznicki examines • The politics behind the health care overhaul.
the ongoing threats to free speech both at home and around the world,
from hate-speech laws in the United Kingdom and Canada and • Mass corruption in Afghanistan. Malou Innocent: “Washington has
university speech codes in the United States, to the Cairo Declaration on already surged into Afghanistan once this year. The United States
Human Rights in Islam: should not spend more American blood and more of its ever-
diminishing financial resources to prop up Karzai’s ineffectual
The result is not more happiness, but a race to the regime.”
bottom, in which aggrieved groups compete
endlessly with one another for a slice of government • A government takeover of health care is not pro-choice — for
power. Philosopher Robert Nozick once observed that anyone: “Whatever your views on abortion, the fight over abortion
utilitarianism is hard-pressed to banish what he termed in the Obama health plan illustrates perfectly why government
utility monsters—that is, individuals who take inordinate should stay out of health care. When the government subsidizes
satisfaction from acts that displease others. Arguing about health care, anything you do with that money becomes the voters’
who hurt whose feelings worse, and about who needs more business. And rather than allow for choice between different ways
soothing than whom, seems designed to discover—or of doing things, the government typically imposes the preferences
create—utility monsters. We must not allow this to happen. of the majority — or sometimes, a vocal minority — on everybody.”
Instead, liberal governments have traditionally relied on a • Podcast: “A Proposed Beat Down for Banks“
particular bargain, in which freedom of expression is
maintained for all, and in which emotional satisfaction is a
private pursuit, not a public guarantee. This bargain can
extend equally to all people, and it forms the basis for an FISCALLY CONSERVATIVE BLOG FEEDS
enduring and diverse society, one in which differences may
be aired without fear of reprisal. Although world cultures ATR and CFA to House: Pass
increasingly mix with one another, and although our
powers of expression are greater than ever before, the TARP Accountability and
these are not sound reasons to abandon the liberal
bargain. Restrictions on free expression do not make Disclosure Act [Americans for
societies happier or more tolerant, but instead make
them more fractious and censorious. Tax Reform]
NOV 16, 2009 11:49A.M.
Read the whole thing.
As a possible extension of the TARP program looms, the House is set to
vote on a measure that will bring more transparency and accountability
into the program this week. An amended version of H....
4
Dollar Crisis [Cato at Liberty] Monday’s Daily News [The Club

NOV 16, 2009 11:31A.M.
for Growth]
Over the weekend, Liu Mingkang, a senior Chinese official, blasted the NOV 16, 2009 11:20A.M.
economic policies of the Obama Administration. He identified low
interest rates in the U.S. as the cause of “massive speculation” that was The New York Times cuts union jobs and replaces them with non-
inflating asset bubbles around the world. The U.S. dollar is being used in unionized labor.
what is known as a carry trade and is borrowed cheaply to finance the
purchase of real estate in Asian cities like Hong Kong and Singapore. The A government agency says House health care bill will increase costs.
easy money policies of the Fed are also fueling a boom in commodity
prices. A neighborhood in Brooklyn with $600,000 apartments is declared
‘blighted.’
The ordinary American, if not the political class, recognizes that neither
the Fed’s monetary actions nor the trillions in spending have helped WSJ Editorial: “How to return $200 billion to the Treasury.”
them. Unemployment is in double digits. Former senior Bush economic
adviser Larry Lindsey is reported to have estimated that Americans’ net Economist Greg Mankiw discusses supply, demand, and health care.
worth has dropped $13 trillion since the beginning of the recession in
December 2007. Americans suffer while speculators profit. For the record, Deroy Murdock reminds us that Dede Scozzafava is no
GOP moderate.
We are on the cusp of a dollar crisis. President Jimmy Carter faced a
similar crisis in his presidency. Carter ousted his own choice for General Motors is going to accelerate the repayment of their bailout
Chairman of the Fed and appointed Paul Volcker to that position. money.
Volcker recognized that the dollar crisis needed to be ended and
instituted painful but necessary sound money policies. President Reagan Virginia’s Department of Transportation has paid over $60,000 in court
re-appointed Volcker and together they restored American prosperity. costs and appraiser fees to avoid paying $30,000 in an eminent domain
Volcker advises President Obama and can explain to the president why case. It has been expensive for VDOT because their own lawyers have an
he must act now. overload of eminent domain cases.
“The results of a new survey suggest that one-fifth of UK-based

entrepreneurs earning more than GBP150,000 are planning to flee
FISCALLY CONSERVATIVE BLOG FEEDS Britain in search of countries with more favorable tax rates”
Centers for Medicare and IBD Editorial: America’s corporate tax to grind.
Medicaid Services Report On

Obamacare [Americans for Tax
Reform]
NOV 16, 2009 11:25A.M.
Last Friday, the the non-partisan and independent Centers for Medicare
and Medicaid Services, the agency in charge of running Medicare and
Medicaid, issued a report analyzing the effect of Obamacare i...
5

The aforementioned panel will debate.
The High Cost of European
“HEALTHCARE WILL PASS THE SENATE”
Union Bureaucracy [Cato at Sen. Judd Gregg (R-NH) will join us with his perspective.
Liberty] BULL/BEAR DEBATE

NOV 16, 2009 11:13A.M.
*(bull) Jack Ablin, Harris Private Bank Chief Investment Officer
The clever folks at the Taxpayers Alliance in the United Kingdom have a *(bear) Joe Battipaglia, Stifel Nicolaus Market Strategist
new video documenting some of the wasteful European Union programs
that are imposing a heavy burden on average people. Please join us. The Kudlow Report. 7pm ET. CNBC.
On CNBC’s Kudlow Report How Is Sotomayor Doing? [Cato

[Larry Kudlow’s Money at Liberty]
NOV 16, 2009 10:47A.M.
Politic$]
NOV 16, 2009 11:03A.M. I was one of those who opposed the nomination of Sonia Sotomayor to
the Supreme Court, mainly because the pick was based on race and
gender rather than merit and she was disingenuous and obfuscatory at
her confirmation hearings. Well, the Court still hasn’t decided any cases
argued with Justice Sotomayor on the bench — and the first term isn’t
always indicative of the kind of jurist a new justice will be – but we do
have some early statistics about her performance.
It turns out that, unlike her next most junior colleague, Justice Alito —
who hung back early in his tenure while learning the rhythms of the
Court – Justice Sotomayor has not been a shrinking violet in her
This evening at 7pm ET:
questioning of advocates. Indeed, according to a National Law Journal
tally, during the 13 November arguments that just concluded, she asked
BEN BERNANKE’S SPEECH:
146 questions (or 11.2 per case), which is even ahead of where Chief
An eye on the Fed, dollar & gold
Justice Roberts was at this point in his career. And, because Sotomayor
speaks more often than her more reserved predecessor, Justice Souter,
Panel:
she has made a “hot” bench even hotter.
*Steve Liesman, CNBC senior economics reporter

By another indicator, however, Sotomayor ranks at the bottom of the
*Peter Morici, University of Maryland Robert H. Smith School of
Supreme Court table: Apparently her questioning has not yet generated a
Business Professor; U.S. International Trade Commission Fmr. Chief
single laugh (as measured by such indications in the argument
Economist
transcript). Not surprisingly, Justice Scalia leads in that department — as
*Andy Busch, BMO Capital Markets; CNBC Contributor
he long has, both in absolute and per-question terms – with the Chief
*David Goldman, Associate Editor First Things Blog
being the only other justice in double figures. Joining Sotomayor with a
goose-egg so far this year are Justices Ginsburg and Thomas (who hasn’t
OBAMA IN CHINA
asked a question since 2006). If you’re curious about last year’s final
The China challenge & currency buzz
standings, see here.
CNBC chief Washington correspondent John Harwood will join us from

For what it’s worth, all this accords with the sense I’ve gotten from the
Beijing.
handful of times I’ve been to the Court for oral argument so far this
term. To my mind, Sotomayor is still acting as a Court of Appeals judge
CHINA CURRENCY DEBATE
— or maybe even a district judge – asking simpler questions about the
Yuan a strong dollar?
factual record or procedural history rather than the broader issues the
6
Court tends to grapple with. And therefore I’ll go out on a The health-care reform proposals now before Congress could
counterintuitive limb here to predict that, as Sotomayor settles into her further strain state budgets because they would expand
new role, her questioning will become less frequent but more Medicaid, Genest said.
substantive.
Genest said Congress should overhaul Medicaid, now funded
jointly by state and federal governments but run by the states.
The federal government should cover more of the costs, give
FISCALLY CONSERVATIVE BLOG FEEDS states more flexibility or even make a drastic switch and
let federal officials take over Medicaid completely, he said.
Federal Assumption of
“If you want to imagine a crisis, as a thought experiment,
Medicaid Costs [Cato at Liberty] imagine all 50 states writing a letter to the federal
NOV 16, 2009 10:43A.M. government saying, ‘We’re no longer providing Medicaid.’
That would get Congress’ attention. And that’s about the only
From the standpoint of Americans who prefer less government, one of real leverage we have,” Genest said.
the worst developments of the 20th century was the federal subsidization
of state and local spending. The result has been bigger government at all Current health care legislation in Congress threatens to increase state
levels. Medicaid represents the largest portion of federal money to the Medicaid spending. In the House passed bill, the federal government
states. The states administer their own Medicaid programs, but the would pick up 100 percent of Medicaid’s expansion until 2015 when it
federal government picks up 50 to 83 percent of the tab depending on a would drop to 91 percent. However, the future is unpredictable and it’s
state’s income. The estimated price tag of the federal share for fiscal year not hard to imagine a future Congress keeping it at 100 percent federal
2009 is $260 billion. funding.
One result of the federal government paying for half or more is that it According to the Congressional Research Service, the House bill also
encourages the states to expand enrollment and benefits. It also makes it contains a provision that could be intended to create a justification for
politically difficult to cut state Medicaid spending because of the greater federal assumption of state Medicaid spending:
accompanying loss of federal dollars.
H.R. 3962 would require GAO to study federal matching
A 2007 analysis on the exorbitant future costs of Medicaid by Jagadeesh payments made to state Medicaid programs to make
Gokhale illustrates how the program’s price tag has skyrocketed since its recommendations on the FMAP formula to Congress. By
creation in 1965 (see chart here). Over the decades, the states expanded February 15, 2011, GAO would be required to submit a report
their programs whenever the economy was growing and the tax revenues based on this study assessing the effect on the federal
were flowing. When the economy went into recession and the revenue government, states, providers, and beneficiaries of making
dried up, the states generally didn’t scale-back benefits and sometimes the following changes to the FMAP formula: (1) removing the
they asked for bailouts from the federal government. The 2009 stimulus 50% floor or 83% ceiling, or both and (2) revising the current
package provided an estimated $87 billion in federal Medicaid money for FMAP formula to better reflect state fiscal capacity, state
the states. efforts to finance health and long-term care services, and to
better adjust for national or regional economic downturns.
If the economy remains stagnant over the next few years and state tax
revenues fail to rebound, further pressure will mount on the federal See this essay on the need for a return to fiscal federalism.
government to continue bailing out state Medicaid programs. The
nightmare scenario would be for the federal government to assume the Update: The Washington Post reports this morning that the House
full costs of Medicaid under state pressure. health care reform bill contains an additional $23.5 billion Medicaid
bailout for the states. The provision would extend by an additional six
California Gov. Arnold Schwarzenegger’s budget director, Michael months (through 2011) the stimulus legislation’s “temporary” increase in
Genest, recently raised the idea: the federal government’s share of total Medicaid spending.
Genest, who is retiring at the end of the year, warned that

California’s budget problems will persist even after the state
works its way through this recession. He singled out Medi-
Cal, the state’s Medicaid health-care program for the poor, as
unaffordable for the state. If the program’s costs continue to
climb 8 percent a year, the state will have little money left for
anything other than schools and debt service by 2040, he
said.
7
The Remnants of “War on

Terror” [Cato at Liberty“War on
Terror”]
NOV 16, 2009 10:37A.M.
Former New York City mayor Rudy Giuliani appeared on Fox News
Sunday this weekend to argue against the Obama administration’s plan
to try some alleged terrorists in New York courts. He did not acquit
himself well.
Giuliani argued, for example, that criminal defendants aren’t tried “at
the scene of the crime.” Criminal defendants are almost always tried in
the jurisdictions where their crimes took place (not at the actual crime
scene, of course). Giuliani’s insistence on misstating basic criminal
procedure showed that he was twisting to score points against the
administration. This is inappropriate political use of terrorism issues.
But Chris Wallace roasted Giuliani—with quotes from Rudy Giuliani. Of

prosecuting the 1993 World Trade Center bombers, Giuliani said: “[Y]ou
put terrorism on one side, you put our legal system on the other, and our
legal system comes out ahead.” Giuliani said that the trial of Zacharias
Moussaoui shows “that we can give people a fair trial, that we are exactly
what we say we are. We are a nation of law.”
As he did during his failed presidential campaign, Giuliani appears

caught in a terror-warrior time warp. He criticized the Obama
administration for eschewing the regrettable phrase “war on terror,” and
he betrayed no awareness of what has dawned since 9/11 on the rest of
the country: Terrorism seeks overreaction on the part of victim states.
Cool, phlegmatic prosecution of terrorists deprives them of rhetorical
victories that empower them by drawing others to their side.

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17 November 2009

FISCALLY CONSERVATIVE BLOG FEEDS FISCALLY CONSERVATIVE BLOG FEEDS

Taking Over Everything (2) ATR Endorses “Health Savings

• local schools FISCALLY CONSERVATIVE BLOG FEEDS

• banks A Handy PATRIOT Act Cheat

That leads to a very familiar, but nonetheless dispiriting, conclusion: in

Minnesota Budget Shouldn’t be

budget revenue for programs and services with money they...

The Club for Growth urges all members of the

FISCALLY CONSERVATIVE BLOG FEEDS

Even Obama’s Make-Believe

As it happens, last week we posted a beautifully written paper by Sanchez

FISCALLY CONSERVATIVE BLOG FEEDS FISCALLY CONSERVATIVE BLOG FEEDS

The New Threats to Free Speech Monday Links [Cato at Liberty]

FISCALLY CONSERVATIVE BLOG FEEDS FISCALLY CONSERVATIVE BLOG FEEDS

Dollar Crisis [Cato at Liberty] Monday’s Daily News [The Club

“The results of a new survey suggest that one-fifth of UK-based

Medicaid Services Report On

FISCALLY CONSERVATIVE BLOG FEEDS

Liberty] BULL/BEAR DEBATE

FISCALLY CONSERVATIVE BLOG FEEDS FISCALLY CONSERVATIVE BLOG FEEDS

On CNBC’s Kudlow Report How Is Sotomayor Doing? [Cato

*Steve Liesman, CNBC senior economics reporter

CNBC chief Washington correspondent John Harwood will join us from

Genest, who is retiring at the end of the year, warned that

FISCALLY CONSERVATIVE BLOG FEEDS

The Remnants of “War on

But Chris Wallace roasted Giuliani—with quotes from Rudy Giuliani. Of

As he did during his failed presidential campaign, Giuliani appears

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