13 January 2010
Today’s Tabbloid
PERSONAL NEWS FOR craig.kirchoff+webnews@gmail.com
FISCALLY CONSERVATIVE BLOG FEEDS
Protectionism vs Human Rights
[Americans for Tax Reform]
JAN 12, 2010 05:03P.M.
As the Obama Administration continues to stall on job-creating free
trade agreements, Boston Globe columnist Jeff Jacoby has posted a
great column on the evils of protectionism: Here’...
FISCALLY CONSERVATIVE BLOG FEEDS
“Risk of Accidents
Ameliorated!” Doesn’t Sell
Papers [“Cato at Liberty”
Doesn’t Sell Papers]
JAN 12, 2010 05:01P.M.
By Jim Harper
What a headline on the Washington Examiner today! It’s a good
illustration of the propensity of media to overplay terrorism.
“Terror threat to city water,” the headline blares in large type.
“Chlorine changed to protect D.C., Va. supply.”
The actual story is about the Army Corps of Engineers’ switch from
chlorine gas to a liquid form of chlorine called sodium hypochlorite.
Gasseous cholrine is relatively more dangerous and difficult to contain if
it’s released, so the change is a prudent safety step.
It has as much to do with protecting against accidental release as any
terror threat. And an accidental release is not a threat to the water
supply; it’s a threat to people near the facilities or transportation
corridors where cholrine gas could be released.
The idea of terrorism may have gotten the Corps moving forward, but
nothing in the story says there was any specific threat by anyone to
attack the D.C. water treatment infrastructure.
This is a story about risks being ameliorated, and it’s pretty
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boring—except for the headline!!
FISCALLY CONSERVATIVE BLOG FEEDS
Supreme Court Lets Eminent
Domain Abuse Continue [Cato
at Liberty]
JAN 12, 2010 03:32P.M.
By Ilya Shapiro
Yesterday, the Supreme Court decided not take up an important takings
case, the infelicitously titled 480.00 Acres of Land v. United States. As I
blogged previously, Cato filed an amicus brief in the case in the hopes
that the owner of the “480.00 Acres of Land,” Gil Fornatora, would
ultimately receive the “just compensation” to which he is constitutionally
entitled. The Court also missed the chance to correct the pattern of due
process abuse that is apparently rampant in Florida. The case involved
the federal government maneuvering to unjustly drive down property
values before taking land for (legitimate) public use — in this case
expanding the Everglades — thus greatly diminishing the compensation
it was obligated to pay the owners. Fox News recently had a report about
the case, in which I briefly appeared.
Interestingly — and sadly – since the Fox News report, my voicemail and
email inbox has been receiving story after story of individuals who have
experienced injustices similar to that of Mr. Fornatora. While it is
unfortunate that this case has come to an end, the number of calls and
emails leads me to believe that more cases like this will be making their
way through the federal judiciary and that, eventually, this abuse will be
halted.
To that end, while Cato does not involve itself directly in litigation, on
the subject of takings and eminent domain abuse I can certainly
recommend our friends at the Institute for Justice and Pacific Legal
Foundation. Specifically on the type of “condemnation blight” at the
heart of the Fornatora case, feel free to contact PLF’s Atlantic (Florida)
office at (772)781-7787 or write to Pacific Legal Foundation, 1002 SE
Monterey Commons Blvd., Suite 102, Stuart, FL 34996. Steven Gieseler
was the attorney who presented the Fornatora case to the Supreme
Court, and who got me involved.
In other eminent domain news, George Will had an excellent column on
January 3 condemning the pernicious Atlantic Yards land grab that you
Today’s Tabbloid PERSONAL NEWS FOR craig.kirchoff+webnews@gmail.com 13 January 2010

can read about here. would suggest that the rising trade deficit has more to do with business
being poised for expansion than with consumers itching to go to the
mall.

FISCALLY CONSERVATIVE BLOG FEEDS Yet, media and politicians often characterize imports as a sign of
profligacy. They argue that balanced trade or a trade surplus should be
Cramer Will Run Against an objective of economic policy, and that policies designed to slow
import growth can accomplish more balanced trade. But imports and
Pomeroy [The Club for Growth] exports are also very much positively correlated. They rise and fall
JAN 12, 2010 03:30P.M. together. Imports are contained in domestic output, and a good chunk of
domestic output is exported. Buy more from abroad, and foreigners can
It Cramer said Monday. Cramer, whose term serving as one of three afford to buy more from us. Sell more abroad and we can afford to buy
members of the North Dakota Public Service Commission expires this more from foreigners. Stymie imports and you get stymied exports.
year, declined to say which office he will seek. But a well-placed source
said Cramer will announce his intentions for the House. My colleagues and I have joked in recent years that what we need is a
good recession to cause Americans to reexamine their feelings about
imports. Maybe that would mark a turning point in public opinion about
trade. Well, we may have been onto something. In recent months, as
FISCALLY CONSERVATIVE BLOG FEEDS we’ve been emerging from the Great Recession, the media’s reporting of
the trade figures has been more circumspect and more balanced.
Good News in the Rising Trade
The opening sentence in Martin Crutsinger’s Associated Press story
Deficit [Cato at Liberty] today is: “The U.S. trade deficit jumped to the highest level in 10 months
JAN 12, 2010 02:54P.M. as an improving U.S. economy pushed up demand for imports
(my emphasis).”
By Daniel Ikenson
There’s nothing like a good reminder of the pro-cyclicality of imports to
The U.S. trade deficit jumped to its highest level in 10 months, according help Americans reconsider their antipathy toward trade. However,
to data released by the U.S. Commerce Department this morning. What before concluding that we’ve fully turned the corner, there’s this passage
to make of this? from the same report:

Every month the Commerce Department publishes data on the value of “Through the first 11 months of 2009, the overall U.S. trade deficit in
U.S. exports and imports. And every month, the media do an absolute 2009 was running at an annual rate of $371.59 billion, down by nearly
hatchet job explaining the meaning of those data. As I’ve been arguing half from last year’s imbalance of $695.94 billion. That improvement
for a long time, careless reporting and inaccurate media analyses of (my emphasis) reflected a deep recession in the United States which cut
imports, exports, the trade balance (exports minus imports), the “Trade sharply into consumer demand for foreign products.”
Account” and the slightly broader measure of international trade activity
called the “Current Account” help explain the growing aversion of If an “improving” U.S. economy is associated with a trade deficit that
Americans to trade and trade agreements during the past decade. “jumped” in 2009 (as described in Crutsinger’s first passage), how can
an “improvement” in the trade deficit “reflect a deep recession in the
The media’s tendency to describe a rising trade deficit as bad news or United States,” as reported in his second?
imports as a drag on economic growth has reinforced misconceptions
that politicians perpetuate all the time: that exports are good; imports It’s time reporters adopted neutral terminology when describing the
are bad; the trade account is the “scoreboard,” and; the large U.S. trade trade account. The trade deficit “increased” or the trade deficit
deficit is proof that the United States is losing at trade. “decreased” are not only more objective descriptions, but more accurate
ones as well.
But the fact is that imports are very much pro-cyclical. They increase as
the economy grows and decrease when it contracts. One of the more
obvious reasons for this is that as personal consumption increases
(decreases), consumer demand for imports increases (decreases). But
another critical, but less discussed, reason is that U.S. producers rely
heavily on imported raw materials, components, and capital equipment.
As businesses starts to ramp up output, demand for imported
intermediate goods rises. Purchases of intermediate goods have
accounted for over half of all U.S. import value in recent years, which

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Today’s Tabbloid PERSONAL NEWS FOR craig.kirchoff+webnews@gmail.com 13 January 2010

FISCALLY CONSERVATIVE BLOG FEEDS a single “no” vote.

Obama’s Health Tax The conventional wisdom in Washington is that a health care bill is
inevitable. But if the growing fight over taxes is any indication,
Conundrum [Cato at Liberty] inevitability is overrated.
JAN 12, 2010 02:30P.M.

By Michael D. Tanner
FISCALLY CONSERVATIVE BLOG FEEDS
As President Obama is finding out, spending a trillion dollars on health
care reform is easy; paying for it is a bit harder. Pepsi Throwback and the Sugar
Both the House and Senate versions contain huge tax increases. But they Racket [Cato at Liberty]
take completely different approaches toward which taxes are hiked and JAN 12, 2010 02:27P.M.
who would pay them. And, as President Obama discovered in yesterday’s
contentious meeting with labor bosses, those differences will not be easy By Tad DeHaven
to resolve.

The Senate wants to slap a 40 percent excise tax on so-called “Cadillac”

insurance plans, that is plans with an actuarial value of more than
$8,500 for an individual and $23,000 for a family. The tax technically
falls on the insurance company that offers the plan, but there’s
widespread recognition that insurers will merely pass that tax on to their
customers in the form of still-higher premiums. The Congressional
Budget Office estimates that initially about 19 percent of insurance plans
would be subject to the tax, and union surveys suggest that it could hit as
many as 25 percent of union workers. Moreover, as inflation drives costs
higher, more and more plans will be subject to the tax. That is because
the threshold for the tax is indexed to general inflation not medical
inflation which runs higher.

As today’s Washington Post editorial points out, economists and deficit

hawks see this measure as one of the few cost-control provisions left in
the bill. Its goal is not just to raise some $150 billion in revenue over 10
years, but to discourage the type of “gold plated” insurance plans that
encourage over utilization and drive up costs. That is why the Obama
administration has endorsed this approach.
However, as labor leaders made clear in yesterday’s meeting with the
president, this middle-class tax hike is unacceptable. AFL-CIO president
Richard Trumka has even threatened to retaliate at the polls against
Democrats who vote for it. In addition, 124 House Democrats have
signed a letter opposing the “Cadillac tax.” With just a three vote margin,
House Speaker Nancy Pelosi cannot afford to have any defections from
tax opponents.
The House, on the other hand, has gone with a “soak the rich” strategy,
calling for a surtax on incomes of $500,000 or more a year. But
Democrats already plan to allow the Bush tax cuts to expire next year,
raising income taxes for millions of Americans. An income tax surtax on
top of that would mean marginal tax rates of more than 50 percent in
many states with devastating consequences for economic growth.
Moderate Democratic Senators like Ben Nelson (Neb.) and even liberals
from states with high cost of living like Chuck Schumer (NY) are unlikely
to go along with this tax. And, in the Senate, Democrats can’t afford even
This weekend while watching a football game with a friend, I saw a
commercial for Pepsi “Throwback.” This is a new product containing real
sugar instead of high-fructose corn syrup. My friend was incredulous
when I explained that soft drinks manufactured for sale domestically
generally don’t contain sugar because government protection of the U.S.
sugar industry from imports make its use cost-prohibitive.
I am intrigued that Pepsi would market a sugar-based product. In
perusing the Internet for news about it, I found countless stories
applauding the product but blaming Pepsi and Coke for continuing to
use inferior-tasting high-fructose corn syrup. For example, Pepsi
Throwback’s Wikipedia page states that soft drink manufacturers
switched to high-fructose corn syrup decades ago because of rising sugar
prices, but it doesn’t mention that government policy was behind the
price increases.
A Cato essay on agricultural regulations and trade barriers explains the
government’s sugar racket and its destructive effects. Here are the key
points:
• The federal government guarantees a minimum price for sugar in
the domestic market by maintaining a system of preferential loan

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Today’s Tabbloid PERSONAL NEWS FOR craig.kirchoff+webnews@gmail.com 13 January 2010

agreements, domestic marketing quotas, and import barriers.
• USDA data show that U.S. sugar prices have been more than twice
world market prices.
• The Government Accountability Office estimates that U.S. sugar
policies cost American consumers about $1.9 billion annually.
Such a bill is expected to provide an ‘umbrella’ – that is, to
put supports under sugar at a level where high-fructose corn
syrup will be at least reasonably profitable. Andreas
contributed heavily to the 1968 and 1972 campaigns of
Humphrey, Jackson and Nixon. With both parties covered,
ADM may reasonably anticipate some legislative help.” That
help came in the form of a new sugar bill in 1981.

• U.S. food industries that buy sugar are harmed by current sugar
policies. The employment in U.S. sugar growing is 61,000, which
compares to employment in U.S. businesses that use sugar of
988,000.
• According to a U.S. Department of Commerce report, for each
sugar growing and harvesting job saved through high U.S. sugar
prices, nearly three confectionary manufacturing jobs are lost.
For ADM, cheaper inputs (corn) plus a more expensive substitute (sugar)
equals nice profits at U.S. taxpayer and consumer expense.
Pepsi Throwback will only be available for U.S. consumers to enjoy until
February 22nd. After that, Americans looking for Pepsi or Coke with real
sugar in it will have to go to Mexico. Hopefully, Mexican politicians won’t
put up a wall along the border to stop Americans from sneaking into the
country and taking all their good soft drinks.

• Numerous U.S. food manufacturers have relocated to Canada

where sugar prices are less than half of U.S. prices and to Mexico
where prices are two-thirds of U.S. levels. FISCALLY CONSERVATIVE BLOG FEEDS

Chicago has been particularly hard hit, with many candy companies Tuesday Links [Cato at Liberty]
moving production abroad. One might think that our president, a JAN 12, 2010 11:59A.M.
Chicagoan, would be willing to take on the powerful domestic sugar
lobby. But as Dan Griswold discussed in October, Obama’s USDA By Chris Moody
ignored a plea from domestic sugar-using industries and kept quotas at
their current restrictive level. • Should the President be considered “America’s Daddy“? (Not
unless you think all American people should be treated like
What about high-fructose corn syrup? Government policy artificially children…)
increases the price of sugar, but its corn subsidies artificially reduce the
price of corn, which helps make high-fructose corn syrup more cost- • Cato President Ed Crane on Tucker Carlson’s new site, “The Daily
effective in products like soft drinks. Major high-fructose corn syrup Caller.”
manufacturers, such as Archer Daniels Midland, benefit from federal
programs and they spend lots of money lobbying policymakers to keep • Here comes the super judge…
them going.
• More bad news for Blackwater.
In his classic 1995 Cato policy analysis, “Archer Daniels Midland: A Case
Study in Corporate Welfare,” James Bovard recounts ADM’s long- • Podcast: “Government Workers’ Padded Paychecks” featuring
standing influence behind the government’s sugar racket: Chris Edwards.

Although ADM does not directly produce sugar, Congress and

the USDA have created a price umbrella under which ADM’s
production of high-fructose corn syrup – a sugar syrup – has
become immensely profitable. ADM got into corn fructose
production very heavily around 1974, just as sugar prices
peaked on world markets. After ADM invested heavily to
increase its capacity to produce high-fructose corn syrup
ninefold, sugar prices plummeted from 65 cents to 8 cents
per pound.

[ADM Chairman Dwayne] Andreas told Business Week in

1976, “If it was a mistake, I’d say it was my mistake.” Business
Week noted, “One industry source suggests that ‘Dwayne
looks at this as sort of a waiting game, basing his
unflappability on the predicted passage of a new sugar bill.’

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Today’s Tabbloid PERSONAL NEWS FOR craig.kirchoff+webnews@gmail.com 13 January 2010

FISCALLY CONSERVATIVE BLOG FEEDS *Steve Moore, WSJ senior economics writer
*Michael Linden, Center for American Progress
A Nice Little Reminder [Cato at
JOHN TAYLOR VS. BEN BERNANKE
Liberty]
JAN 12, 2010 11:54A.M. Stanford economics professor John Taylor will join us.

By Neal McCluskey CONGRESSIONAL BANK COMMISSION

CNBC’s Hampton Pearson will preview tomorrow’s hearing.
There hasn’t been much in the news about education over the last several
weeks, so there haven’t been many education entries here on INSTITUTIONAL INVESTORS SUE TO BLOCK GOLDMAN
Cato@Liberty. That should be changing soon, though, with the first BONUSES
round of state “Race-to-the-Top” applications due to the feds on January
19, and the Common Core State Standards Initiative expected to release *Jay Eisenhofer, co-managing partner of Grant & Eisenhofer
draft grade-by-grade mathematics and language-arts standards *Tom Curran, Ganfer & Shore Attorney
sometime this month.
Also…Florida GOP Senatorial Candidate Marco Rubio will be aboard.
To tide you over until those two monumental happenings occur, the New
York Times today offers a little piece about supposedly tough state “exit Please join us. The Kudlow Report. 7pm ET. CNBC.
examinations” that illustrates why you shouldn’t expect either R to the T
or national standards to produce any meaningful improvement in
academic outcomes. Quite simply, no matter how good or tough
“standards” and “accountability” sound, in government schooling they FISCALLY CONSERVATIVE BLOG FEEDS
will almost always end up evaded. After all, what incentive does anyone
have to set and meet high standards when they’re going to get paid no Tuesday’s Daily News [The Club
matter what?
for Growth]
JAN 12, 2010 10:48A.M.

FISCALLY CONSERVATIVE BLOG FEEDS A V-shaped economic recovery is on the way, says economists Brian
Wesbury and Bob Stein. AFL-CIO s export primacy. Economist Mark
On CNBC’s Kudlow Report Perry shows what it would be like if European countries were like U.S.
states. According to Freedom House, for the fourth year in a row,
Tonight [Larry Kudlow’s Money freedom has declined across the globe.

Politic$]
JAN 12, 2010 11:38A.M.
FISCALLY CONSERVATIVE BLOG FEEDS

Government-Subsidized Risk Is
a Bad Idea [Cato at Liberty]
JAN 12, 2010 08:37A.M.

By Daniel J. Mitchell

Kudos to Nicki Kurokawa, a former Cato employee, for this short but
This evening at 7pm ET:
substantive video explaining “moral hazard.” She notes that government-
subsidized risk played a pernicious role in the housing bubble and
NEW YEAR’S TAX ATTACK
financial crisis, and warns that “too big to fail” may create similar
problems in the future.
CNBC chief Washington correspondent John Harwood reports.

On to debate:

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Today’s Tabbloid PERSONAL NEWS FOR craig.kirchoff+webnews@gmail.com 13 January 2010

FISCALLY CONSERVATIVE BLOG FEEDS

My Solution to the Banker

Bonus Brouhaha [Larry
Kudlow’s Money Politic$]
JAN 12, 2010 07:35A.M.

I have a few thoughts concerning the burgeoning public backlash against

big banker bonus announcements expected in the weeks ahead. This
backlash of course stems from taxpayer fury over banks which were
rescued by taxpayer-financed TARP money.

A recent Rasmussen poll revealed that 61 percent believe the government

should regulate the level of pay and bonuses for company executives who
were on the public dole. However, if the bailed out banks do pay their
money back, then another 64 percent say the government should actually
stay on the sidelines and not regulate compensation.

Here’s my thought: the banks need to step up the plate, fess up, and
thank the American taxpayers for their largesse. It’s a public relations
move. They’ve never really done that. Taxpayers deserve a thank you.
That’s point number one.

Point number two: in June of last year, JPMorgan and Goldman Sachs,
joined by eight other banks, all paid down TARP. So, my humble opinion
is that these banks ought to receive their bonuses, whatever that number
may be, for the second half of the year, but not the TARP-ed up first half
of the year.

As for the other big banks like Citi, Bank of America, and Wells Fargo,
they didn’t de-TARP until the end of 2009. So why should they get any
bonuses at all? And if they do get any bonuses, these bonuses should be
minuscule.

In other words, let the banks that paid back their TARP money in June
take a half-year bonus. The ones that didn’t should forego 2009, and
look forward to 2010.