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June 26th, 2009 Weekly Update

June 26th, 2009 by Adam Axvig

The Minnesota Free Market Institute Weekly Update
Friday, June 26, 2009

Rep. Peterson Flip Flops on Cap and Trade. We Should Ask Ourselves, Why?

Apparently in Congress, Midwestern sensibility only takes you so far. Tuesday night, Minnesota 7th District Congressman, Collin Peterson, struck a deal with California Congressman Henry Waxman to guarantee the votes to pass the Waxman-Markey Cap and trade bill. Peterson, chairman of the House Agriculture committee, under pressure from the White House and House Speaker Nancy Pelosi, compromised with Waxman. Politico, a DC based news organization, highlights the terms of the compromise:

“Under the deal they announced Tuesday evening, the U.S. Department of Agriculture will oversee the offset program for farmers, and the House will seek further guidance from the Obama administration about the appropriate role for the Environmental Protection Agency. And Waxman has agreed to ask the EPA to roll back its new requirements that farmers offset rural land developed in other countries. Both were major sticking points for rural members and the many agriculture associations opposed to the bill.”

The controversial Waxman-Markey bill, which aims to reduce greenhouse gas emissions by 80% by 2050, has had plenty of opposition from farm state and rust belt lawmakers. Crippling to industry and agriculture; the bill may indeed prove very controversial for Peterson’s constituents. The western Minnesota district’s economy is based heavily on agriculture, if Peterson’s compromise does not adequately shield farmers from the provisions in the bill, it could have disastrous effects on the district’s economy.

The bill is also predicted to have far reaching effects on the industrial sector as the price of energy soars under the energy mandates. The underlying premise in any cap and trade scheme like the one contained in this legislation essentially amounts to a new federal carbon tax. The non-partisan Congressional Budget Office sources put the cost of compliance in 2020 at $110 billion. Input costs would rise as not only as a factory’s energy costs go up, but any external source of materials would have the tax embedded in, with inflationary effects to the general economy. The Federal government would retain sole control over the price of this carbon tax, giving the Congress and the White House an unprecedented amount of power over private industry.

In the weeks leading up to yesterday, Peterson had been one of Waxman-Markey’s most vehement Democrat critics, publically criticizing the bill, but he has since pledged his full support. Minnesotans should be asking basic questions about the whole idea of Cap and Trade and the massive precedent it sets in expanding the ability of the Federal Government to intervene in the economy by directly and overtly picking winners and losers. They will be basing these choices on completely subjective (inevitably political) criteria. The type of horse trading exhibited by Rep. Peterson this week is a case in point and should make even the most politically cynical among us stop to think and reflect about the path that we are on.

Pat Anderson is President of the Minnesota Free Market Institute

Single-Payer Model Actually Inhibits Improved Health Care

There is one point about a single-payer health-care system on which Dr. Oliver Fein and I agree – there’s not enough of a definition for the public to make an assessment about what a single-payer health-care system really is. In a recent MinnPost piece ["Medicare 2.0: Doctors group urges health care for all," by Casey Selix], Fein, president of Physicians for a National Health Care Program, provides a set of six principles that “really define what single-payer is.” Indeed they do. But when one examines logically the six principles Fein lays out, one realizes that as well-intentioned as is his desire for universal health care, the single-payer model can’t get us there, it actually inhibits improved health care – and, ironically, to establish a manufactured “right” to health care a single-payer system destroys the unalienable right of individuals to make their own health-care decisions.

Let’s look at Fein’s principles in detail, contrasting them with a free-market health-care system, keeping in mind that the health care system we have today is NOT a free-market system but a heavily regulated managed-care system – single-payer-lite.

Read more of Single-Payer Model Actually Inhibits Improved Health Care at the Minnesota Free Market Institute web site.

Craig Westover is a Senior Policy Fellow at the Minnesota Free Market Institute.

Must Read

The Cap and Tax Fiction. Wall Street Journal (subscription may be required)

Wall Street Journal Editorial neatly summarizes the economic issues at stake if the Waxman-Markey Cap and Trade Bill passes. They call it ”what is likely to be the biggest tax in American history”

In Case You Missed It from the Minnesota Free Market Institute

King Banaian SCSU Scholars

John LaPlante State House Call

Craig Westover

The Minnesota Free Market Institute Weekly Update is edited by Margaret Martin

The Minnesota Free Market Institute conducts research and advocates for
policy that limits government involvement in individual affairs and
promotes competition and consumer choice. By analyzing the actions of
the past and applying the enduring lessons of the free market, the
Minnesota Free Market Institute creates policy options for the future.
To donate click here.

In This Issue

Rep Peterson Flip Flops on Cap and Trade, We Should Ask Ourselves Why?

Single-Payer Model Actually Inhibits Improved Health Care

Must Read

In Case You Missed it from the Minnesota Free Market Institute

Support Us!

The Minnesota Free Market Institute accepts Paypal.

Now More than ever, your contributions are needed to help us defend Conservative Principles and Free Markets!

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June 19th, 2009 Weekly Update

June 19th, 2009 by Adam Axvig

The Minnesota Free Market Institute Weekly Update
Friday, June 19, 2009

Guest Post: Cap and Trade Draws An Ace – Rebuilding The House of Cards

by Doug Williams, Bogus Gold

The scariest thing you’ll read this week is something you’ll probably be tempted to overlook. It is this:

Carbon Emissions Linked To Global Warming In Simple Linear Relationship

Damon Matthews, a professor in Concordia University’s Department of Geography, Planning and the Environment has found a direct relationship between carbon dioxide emissions and global warming. Matthews, together with colleagues from Victoria and the U.K., used a combination of global climate models and historical climate data to show that there is a simple linear relationship between total cumulative emissions and global temperature change.

Big deal, you might say. All those already upon the Global Warming bandwagon have been acting like this was already known for a couple of decades now. That’s how we came up with the “carbon dioxide is pollution” nonsense. That’s how we got ideas floating around like “carbon taxes” and “Cap and Trade” schemes.

Well yes, but… No one is seriously proposing a flat out carbon tax simply because opposition to it is a political no-brainer. People like to vote for taxes on other people. It’s political suicide to be the politician (or the party) who wants to raise everyone’s taxes….

Read the rest of the post here.

WCCO Asks Good Question, Gives Bad Answer

Jason DeRusha of WCCO thought it a “Good Question” – Can Government Budget Like a Family? His good source was Jay Kiedrowski, senior fellow at the University of Minnesota’s Hubert H. Humphrey Institute for Public Affairs and Commissioner of Finance under Gov. Rudy Perpich.

“It’s a simplistic metaphor, but it can be very misleading,” Kiedrowski said, and I got interested. I couldn’t agree more. “Families and government need to plan for the future budgets. They need to show discipline in sticking to guidelines,” he said. So far, so good. Kiedrowski went on the make these points:

A family can’t make use of deficit spending.

Individuals do not have ongoing capital expenses.

Families aren’t limited to spending cuts; they can “raise revenues” by working more hours or taking a second job. Government can raise revenues by raising taxes.

There are no ripple effects when an individual cuts spending. When government cuts spending, the effect is felt across the country and the world.

Wow. That from a former Commissioner of Finance? Not only are the above statements economically dubious, Kiedrowski leaves out the fundamental difference between family budgeting and government budgeting – the little distinction that families have unlimited possibilities while government is limited by constitutional restraint.

Quickly let’s look at Kiedrowki’s points.

Families and individuals do make use of deficit spending; they call it “borrowing” because there is an expectation that it will be paid back. Economists tell us that over our lifetimes our consumption level remains fairly stable while income varies. Just starting out in life, we spend more than we earn, borrowing for things like education, first cars and first homes. In mid-life we borrow for those “ongoing capital expenses” Kedrowski doesn’t thing we have – the new roof on the house, the unexpected auto replacement, adding a room addition. Later in life, living on fixed incomes, we again spend more than we earn, relying on savings rather than debt to cover the difference – which brings us to Kiedroski’s revenue issue.

Families cannot simply “raise revenues.” They can certainly pursue that option, but individuals do not have the power to force their employers to provide overtime or to force someone to hire them part-time on weekends because they have a “revenue shortfall.” Government has that power. A legislative vote, a governor’s signature and “Presto!” instant revenue.
Drawing a link, which Kiedrowski ignores, when government chooses to raise taxes to pay for its revenue shortfall, it makes it more difficult for individuals and families to pay back the loans they assumed to get ahead. Legislating people into a higher tax bracket punishes education, saving and upward mobility.

Finally, claiming that there are no ripple effects when individuals cut spending, including reducing spending because of tax increases, begs the question, where does government get its money?

Government cannot create wealth. Government cannot spend any amount unit it first takes it from productive citizens. This is a classic case of the seen versus the unseen: The consequences of massive government spending are easily seen; unseen are the negative consequences of revenue that went to government projects instead of to other areas of the economy were the money left with individuals and families. The same on the spending side: the consequences of a million people spending a $100 on myriad things they need is difficult to see; a $100 million government project is a ribbon-cutting opportunity, regardless of its usefulness.

After all that fuzzy economics, Kiedrowski misses the main reason the metaphor doesn’t work – governments and families have different obligations and potential. The phrase “government should live within its means” is most dangerous. It implies in good times, government can do more. That is not the case. Government has specific constitutional obligations, which ought to be fully funded, but it is limited by constitutional restraint not to exceed those obligations. If government has more revenue that it needs in good times, then it is over taxing, not experiencing an opportunity to increase services.
WCCO posed a good question; Kiedrowski provided a less-than-adequate answer.

Craig Westover is a Senior Policy Fellow at the Minnesota Free Market Institute.

Event: Another Rip In The Economic Fabric – 21 Jun 2009

There’s another rip in the economic fabric heading our way. So in a Potpourri Politics and a Pint, we’ll talk a little about cap-and-trade, unintended consequences and the economic house of cards we find ourselves hiding under.
Details:

What: Lively discussion and good company

Where: Politics and a Pint at the Contented Cow in Northfield Minnesota (Location)

When: 6-7:30PM, 21 Jun 2009

References:
Guest Post: Cap and Trade Draws An Ace – Rebuilding The House of Cards, by Doug Williams, Bogus Gold

Dude, Where’s My Cap-And-Trade Primer?, by David Kestenbaum and Steve Inskeep

Meet Cap ‘n Trade, “Cap and Trade is the linchpin of the government’s effort to curb carbon emissions. Senior Editor Paddy Hirsch explains how the cap and trade model works.”

Must Reads

Proposed Financial Regulations from the Treasury Department

Senator Tom Coburn’s “100 Stimulus Projects: A Second Opinion”

Net and Gross posted by King Banaian at SCSU Scholars

Web News

My sincere apologies to our readers for the website outage over last weekend. It was an issue with a software “upgrade.” We are back up and running again. Thank you for your patience.

-Adam Axvig

In Case You Missed It from the Minnesota Free Market Institute

King Banaian SCSU Scholars

State House Call

Craig Westover

National School Standards? Can’t. So, Ought Not.

The Minnesota Free Market Institute Weekly Update is edited by Margaret Martin

In This Issue

Guest Post: Cap and Trade Draws An Ace – Rebuilding The House of Cards

WCCO Asks Good Question, Gives Bad Answer

Must Reads

In Case You Missed it from the Minnesota Free Market Institute

Support Us!

The Minnesota Free Market Institute accepts Paypal.

Now More than ever, your contributions are needed to help us defend Conservative Principles and Free Markets!

Facebook users can also contribute to our Cause.

MN Free Market Institute on the Web

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June 12th, 2009 Weekly Update

June 12th, 2009 by Adam Axvig

The Minnesota Free Market Institute Weekly Update
Friday, June 12, 2009

Cities Cry Poverty While Handing Over $8.5 M over to Lobbyists

With Governor Pawlenty’s veto of LGA funds, line item vetos
of local pork projects and looming unallotment, local government officials have
gone to the media to cry poverty. The Brooklyn Center Police Department no longer staffs it’s lobby outside of business hours the Star
Tribune tells us. Some local government officials have made ominous predictions of higher property taxes to close the gap.

This week we learned that local units of government (Cities and Counties, school districts and other public entities) spent $8.5 Million on lobbying at the State capitol in 2008. That’s an increase of nearly
10% when compared to the previous year.
Local government associations spent another $4.6 million on
lobbying. That lobbying is paid for with
dues that cities and towns pay from their revenues.

Businesses, families and individuals throughout Minnesota
are cutting their expenses and trying to save money. We are in a
recession. Growth is negative and unemployment
is up. But not for the business of government apparently. No, in these challenging times, it’s more
important than ever for them to argue
for higher taxes to preserve and grow their budgets. And while
the threat of higher property taxes is not an empty one, it’s important to note
that money that comes from the state taxpayer to the local government is money
with less accountability. The local taxpayer can see how the money is
spent and is better able to voice a complaint or even vote local politicians
out of office if they disagree with them.

Government lobbying government can only end up one way, with
bigger and bigger government and higher and higher taxes to pay for it all.

Pat Anderson is President of the Minnesota Free Market Institute

Bachmann was Right, This is “Gangster Government”

Asking for a little
honesty from critics of GOP Rep. Michele Bachmann is a naïve hope, but absent
honesty, we might at least expect some more intelligent criticism than this
found in a recent Minnesota Independent article:

“Rep. Michele Bachmann took
to the floor of the House of Representatives twice Tuesday, likening the United
States to the Titanic and lambasting “gangster government” for meddling in
carmakers’ affairs – though she boasts on her Web site of doing the same auto
dealership-advocacy she decries Democrats for.”

This “analysis” demonstrates
the total lack of understanding of free market economics by progressives who
equate “auto dealership-advocacy” with being pro-business or being pro-free
markets. Bachmann was not criticizing Democrats’ (or her own) dealership
advocacy, but she was indeed blasting government policies that make that
un-American (my word, not Bachmann’s) activity necessary.

In her remarks
on the House floor, Rep. Bachman cited a Democrat Senator who arranged a meeting
between an auto dealer and GM, which resulted in the dealership getting a
disfranchising reprieve. She also noted that Democrat Barney Frank was able to
arrange a meeting for a GM dealer with the same result. She, too, sought help
for a local GM Dealer.

“When I was on the phone today
for over an hour with one of my local dealers,” Bachmann said, “the very first
thing out of her mouth was this: She said, ‘This is the most un-American thing I
have ever seen in my life. I can’t believe that I lived to see the day that my
country would come to this point where, having my dealership for 90 years, I get
a letter FedExed to me that tells me I have until Friday to sign this document
to not only give up my company that was made worthless–worth $15 million, made
worthless overnight–now GM is demanding
that she hand over her customer list, her service customer list to
GM.’”

The point Rep. Bachmann is
making is not that Democrats and Republicans should not be working on behalf of
auto dealers; she was lamenting and lashing out that such action is necessary.
Instead of building business by providing the best products and services (and
investing resources in doing so), the American auto industry now operates in a
gangster-like environment in which it is more profitable to “invest” in elected
officials than in one’s own effort.

“The Federal Government has set
up a new cartel and private businesses now have to go begging with their hand
out to their local–hopefully well politically connected–Congressman or their
Senator so they can buy a peace offering for that local business,” said
Bachmann. “Is that the kind of country we are going to have in the
future?” she asks.

“We need to call this for what
this is,” Bachmann added. “We need to call this for what this is. Call it out.
The American people need to get outraged and figure out that it could be them
next.”

Bachmann is right. What is
happening in this country is not capitalism. It is not free market economics. It
is not “necessary” to save either capitalism or free markets. “Gangster
government” is the blatant exploitation of fear, uncertainty and doubt spawned
by an economic crisis created by decades of government meddling in the economy.
It is “the law perverted” as Frederick Bastiat wrote in “The Law.” It is the
destruction of the fundamental principles upon which this country was founded –
the primacy of individual sovereignty, the sanctity of private property and the
rule of law.

This is, paraphrasing a line
from Barry Goldwater, no time for moderation in defense of
liberty.

Craig Westover is a Senior Policy Fellow at the Minnesota Free Market Institute.

Should Enid pay for Eagan’s Bike Trails?

A million dollars doesn’t even qualify as lost-in-the-sofa
money in the federal budget if you look only at the numbers. But it sends many
other political and economic signals, none of them good.

According to This Week newspapers, the city of Burnsville has
its hands out for a $1 million federal grant so that it can develop a biking
trail along the Minnesota River. One member of the city council expressed her
enthusiasm for the project by that the area gives people the opportunity for
“great bird watching.”

For its part, the city of Eagan is seeking a million of its
own for similar purposes.

Have we, as a nation, gone mad?

Why should the people of Burlington, Vermont pay for a bike
trail in Burnsville? Or the people of Enid, Oklahoma, pay for a trail in Eagan?

In a column I wrote last week for the Saint Paul Legal Ledger, I argued for the phase out of Local Government Aid. There are at least
two good reasons. One is that it expands overall government spending beyond
what people would otherwise rationally pay. The other reason, and it’s related
to the first, is that it reduces the accountability of local officials, who can
say to residents “Look at all the good things we’re doing for you,” while
having their decisions subsidized by someone else.

A similar logic applies when the U.S. government transfers
money from one state to another for simply local projects. Further, it
diminishes the political significance of states as entities with their own,
unique powers (Tenth Amendment, anyone?), and puts us further down the road to
the day when states are merely administrative units of a national government.

Political decentralization has many benefits, including
offering a safety valve. (How high would Minnesota taxes be if legislators didn’t
have to keep in mind the more favorable tax climates of South Dakota, Texas,
Florida and so forth?)

I understand why local officials would seek federal grants.
To paraphrase an advertising slogan used by state lotteries everywhere, “Someone’s
going to win; why not you?” But when we win, we also lose.

John LaPlante is a Policy Fellow at the Minnesota Free Market Institute

Must Read

Karl Rove. How to Stop Socialized Health Care Wall Street Journal (Subscription may be required)

Karl Rove offers 5 simple arguments against socialized health care, why it won’t work, why it will bankrupt the country and why it will destroy the healthcare system while claiming to make it better for everyone.

In Case You Missed It from the Minnesota Free Market Institute

King Banaian SCSU Scholars

John LaPlante

Time to Phase Out LGA

State House Call

David Strom davidstromshow.com

Craig Westover

National School Standards? Can’t. So, Ought Not.

The Minnesota Free Market Institute Weekly Update is edited by Margaret Martin

In This Issue

Cities Cry Poverty While Handing $8.5 M Over to Lobbyists

Bachmann was Right, This is “Gangster Government”

Should Enid Pay for Eagan’s Bike Trails?

Must Read

In Case You Missed it from the Minnesota Free Market Institute

Support Us!

The Minnesota Free Market Institute accepts Paypal.

Now More than ever, your contributions are needed to help us defend Conservative Principles and Free Markets!

Facebook users can also contribute to our Cause.

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May 29th, 2009 Weekly Update

May 29th, 2009 by Adam Axvig

The Minnesota Free Market Institute Weekly Update
Friday, May 29, 2009

Why We “Need” an Hispanic Woman on the Supreme Court.

The Obama administration and the progressive left is making
much of Supreme Court nominee Sonia Sotomayor’s ethnic background and gender,
effectively making them relevant qualifications for the a seat on the Court.
Indeed, her comment — “I would hope that a wise Latina woman, with the richness
of her experiences, would more often than not reach a better conclusion than a
white male who hasn’t lived that life” – might come to dominate her confirmation hearing.

Predictably, conservatives have jumped on that remark, making
the point that the statue of Lady Justice is appropriately blindfolded, that a
judge is supposed to adjudicate the law as it is written, not make policy from the bench. Conservatives have resurrected their fidelity to the text of the
Constitution in the face of Sotomayor’s clear “living Constitution”
jurisprudence.

In those arguments, conservatives, as correct as they are,
are missing a key point: The ideal of federalism has changed. Federalism is no
longer thought of as a division of power between the federal government and the
states; federalism is now accepted as a balance of power among various interest
groups administered by the federal government. In that context, group
representation is power, and balance requires every group be represented. In
that context, we “need” an Hispanic woman on the Court.

In my Pioneer Press column
this week I wrote about interest-group liberalism – a political philosophy
accepted by both Democrats and Republicans, liberals and conservatives and the
majority of Americans. Both left and right have accepted the two fundamental
principles of interest-group liberalism: Government is a positive force and a
champion of good, and virtually all interest-group demands are legitimate. What
that means is when push comes to shove, despite the rhetoric, Democrats and
Republicans are more interested in delivering for their constituencies than
standing on principle, the blindfolded lady notwithstanding.

Case in point: the “Job Creation through Entrepreneurship
Act” ensures benefits for veterans and small business – two conservative
interest groups. It also includes benefits for women and Native American
businesses and establishes a new grant program for Small Business Development
Centers. A little something for everyone. The bill passed the House 406-15.

Wouldn’t a truly neutral judge, based on the Constitution,
invalidate a law that used public funds to create private benefits for multiple
interest groups by expanding the federal bureaucracy and deficit spending? Yet
all but 15 Republicans voted for it.

The Sotomayor confirmation may well be beyond GOP control;
what GOP legislators vote for is certainly not. Eyes, beams and specks come to
mind.

Craig Westover is a Senior Policy Fellow at the Minnesota Free Market Institute.

A Good Time for a Pause in State Spending Spree

Both legislative leaders and opinion leaders have criticized
Gov. Tim Pawlenty for “not compromising” with the legislature-for refusing to
increase marginal tax rates. But as citizens are making do with less, it’s time
for state and local governments to do the same.

Let’s review a few of the ways in which the recession is
already affecting people in the private sector-that is, people who pay for
government.

We’re getting pink slipped. Nationally, unemployment is at a
25-year high, and the possibility statistic may increase is haunting everyone
who is not a government employee.

We’re taking furloughs. Companies that prefer not to lose
workers, especially highly skilled ones, are using furloughs. A survey earlier
this year by the firm Watson Wyatt Worldwide Inc. found that 17 percent of
companies had used furloughs. Some companies are using both furloughs and other
temporary pay cuts, together with layoffs, to survive the recession.

We’re watching our dollars and buying less. We’re shopping
less at Best Buy and more at Wal-Mart, replacing vacations with “staycations,”
and repairing consumer products rather than replacing them.

On the other hand, the recession isn’t so bad if you work for
government. That’s because it has been a tale of two workforces, one subject to
the vagaries of the market and the other not.

John LaPlante is a Policy Fellow at the Minnesota Free Market Institute

Must Read

Millionaires Go Missing. Wall Street Journal Editorial.

The must read of the week is this article from the Wall Street Journal exposing how Maryland’s “soak the rich” strategy to create a special surtax on millionaires backfired when millionaires simply vanished from the tax rolls. Although some probably disappeared with paper losses in the market downturn, it’s entirely likely that made bottom line decisions to change their residency–something that’s easy to do if you have multiple homes in multiple states anyway, as many wealthy people do.

In Case You Missed It from the Minnesota Free Market Institute

Craig Westover

Interest-Group liberalism – Root, Root, Root for the Home Team

John LaPlante State House Call

King Banaian SCSU Scholars

David Strom davidstromshow.com

The Minnesota Free Market Institute Weekly Update is edited by Margaret Martin

In This Issue

Why We “Need” an Hispanic Woman on the Supreme Court

A Good Time for a Pause in State Spending Spree

Must Read

In Case You Missed it from the Minnesota Free Market Institute

Support Us!

The Minnesota Free Market Institute accepts Paypal.

Now More than ever, your contributions are needed to help us defend Conservative Principles and Free Markets!

Facebook users can also contribute to our Cause.

MN Free Market Institute on the Web

Web Site

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Facebook

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May 15th, 2009 Weekly Update

May 15th, 2009 by Adam Axvig

In This Issue

Rally at the Capitol Planned for Monday, May 18th

Tax Reform and Economic Growth

Budget Hawks 3: The Final Showdown is May 14

Must Reads

In Case You Missed it from the Minnesota Free Market Institute

Rally at the Capitol Planned for Monday May 18th

Stay tuned for details about a rally at the capitol for the final hours of the official Legislative session at 5 PM on Monday, May 18. This may be your lst chance to let your voice be heard as Legislators rush to beat the deadline. The 11th hour is when the deals get cut and your money gets spent so this will be a don’t miss opportunity.

Tax Reform and Economic Growth

The title of St. Thomas economics professor John Spry’s opinion in the Pioneer Press, “If Minnesota were serious about growth, we’d widen the tax base and lower the rate,” is almost as significant as the piece itself. In an excellent piece, Spry argues for reform of the tax code by eliminating some inefficient taxes altogether and cutting rates on other taxes while broadening the tax base by removing some sales tx exemptions. He makes his case based not on ideology, but on sound economic principle.

As I noted in a previous newsletter, “ought” as in “the Legislature ought to do such and such to achieve such and such a result” implies “can” – that the “such and such” the Legislature proposes “can” actually accomplish the objective it intends. Unlike moral and social engineering tax reform proposals, Spry’s tax reform proposals based on economic principles bridge the gap between “ought” and “can”: The Legislature “ought” to make reforms that enable economic growth, and Spry’s proposal “can” achieve that objective.

The point is this: The concept of “tax reform” is meaningless without an achievable objective. Intent does not endow achievability. The missing link in most of the tax reform proposals coming from the Legislature is the economic principle leading from the reform to the outcome.

Spry makes the connection between specific tax reforms and economic growth and by doing so implicitly defines the tradeoffs that his reform proposals require. If one doesn’t like those tradeoffs – a broader sales tax base, for example — fine; but understand that altering the reform means collecting revenue someplace else, less efficiently, and a consequent dampening of economic growth. As the article title says, “If Minnesota were serious about growth …” and as it implies, “if not ….” Economic principles always prevail over intentions; “can” always prevails over “ought.”

Craig Westover is a Senior Policy Fellow at the Minnesota Free Market Institute.

Budget Hawks 3: The Final Showdown is TODAY at 5pm

Join us for the third event which is timed to coincide with the end of the legislative session on Thursday, May 14 from 5-8 PM at Trocaderos in Minneapolis. Cash bar but munchies will be provided. See the flyer here for details on free parking and for more information about the event. Although it’s not required, you can RSVP on facebook here.

Must Reads

David Frum. “The cap and trade racket.” This Week.

If you haven’t followed the Cap and Trade Debate, this article gives an excellent primer on how it masks the makings of a corrupt racket and a direct transfer of wealth from some industries to others, underwritten by taxpayers and ratepayers.

In Case You Missed It from the Minnesota Free Market Institute

Pat Anderson was on WCCO this week, providing a contrary view to protesters against Budget Cuts at the capitol. Video available here.

Craig Westover

Warren Buffett, One Word: Nationalization.

John LaPlante State House Call

King Banaian SCSU Scholars

Notable Quotes

The only difference between a tax man and a taxidermist is that the taxidermist leaves the skin.
Mark Twain

The ultimate result of shielding men from the effects of folly is to fill the world with fools.
Herbert Spencer, English Philosopher (1820-1903)

There is no distinctly native American criminal class…save Congress.
Mark Twain

What this country needs are more unemployed politicians.
Edward Langley, Artist (1928-1995)

A government big enough to give you everything you want, is strong enough to take everything you have.
Thomas Jefferson

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April 24th, 2009 Weekly Update

April 24th, 2009 by Adam Axvig

The Minnesota Free Market Institute Weekly Update
Friday, April 24, 2009

In This Issue

DFL Lawmakers to all Taxpayers: Guess What? You’re Rich!”

State’s New TAP-MN Web Site a Small First Step Toward Transparency

EPA Carbon Ruling: Constitution Optional

Must Reads

In Case You Missed it from the Minnesota Free Market Institute

DFL Lawmakers to all Taxpayers: “Guess What? You’re Rich!”

After months of posturing and trying to make the case for tax increases, the DFL finally came clean and laid out their proposal to raise billions on everything from tobacco and alcohol sales to increased income taxes on 85% of Minnesotans.

Need to sell your snowmobile to keep your family afloat, well now you would have to charge sales tax and file numerous forms with the Department of Revenue.
Have kids in daycare? You will pay more in taxes.
Want to donate a kidney to your diabetic brother? Well the DFL wants to give you a tax increase for your generosity.

They obviously don’t get it. With a housing market in the dumps, the DFL budget calls for eliminating part of the mortgage interest tax deduction. Um, aren’t we trying to get people to BUY homes?

In making their case the past few months, the DFL talked about “raising taxes on the rich”. We warned that their definition of “rich” includes just about every Minnesotan. From our analysis, the only folks who don’t get a tax increase are those who don’t own anything, live in public housing, don’t smoke or drink and certainly don’t work. Oh, and I suppose you are alright if you already own a car. There are no gas tax increases this time.

Pat Anderson is President of the Minnesota Free Market Institute

State’s New “TAP-MN” Web Site a Small First Step Toward Transparency

Governor Tim Pawlenty and Minnesota Management and Budget unveiled the new “Transparency and Accountability Minnesota Project” website last month. According to the TAP-MN front page, the website “provides a powerful new way for the public to access information about state government spending. ” Governor Pawlenty himself heralded the site by saying, “Taxpayers are paying the bills and they should have the ability to easily look at the state’s checkbook.”

The TAP-MN site is a database of state expenditures with a front end that allows a user to search by vendor, spending category, source of funding and state agency as well as narrow their search by other parameters like the year of the expense.

It has its limitations. The first one is the URL. http://www.mmb.state.mn.us/tap Got that? Better bookmark it because it’s not easy to remember. Other states like Nebraska have come up with convenient URLs like http://nebraskaspending.com/ . Do you use a browser other than Microsoft Internet Explorer? Too bad, the TAP-MN website will not work for you. Also, once you get on the site, you will find that that some spending is hidden due to “privacy” issues, most notably, checks issued to individuals.

Another problem is that since we do not yet have consistent transparency down to the local government level, when the state sends checks to local government, the trail goes cold for citizens interested in what local governments are doing with their state tax dollars. Some cities and counties are better than others in reporting their budgets in detail. Some do only the minimum required by law. There are other quasi-government entities with limited fiscal reporting requirements, such as “development corporations” and “port authorities.” Opacity rather than transparency is a better descriptor at those levels of government.

Margaret Martin is a Policy Fellow at the Minnesota Free Market Institute.

EPA Carbon Ruling: Constitution Optional

Amid the self-destructive lunacy of the Environmental Protection Agency’s declaration of carbon dioxide as a pollutant that threatens public health and welfare, the New York Times reports this gem:

Clean Air Act, Congress is engaged in writing wide-ranging energy and climate change legislation that could pre-empt any action taken by the agency. President Obama and Ms. Jackson (E.P.A. administrator Lisa) have repeatedly said that they much prefer that Congress address global warming rather than have the E.P.A tackle it through administrative action.”

Read More

Craig Westover is a Senior Policy Fellow at the Minnesota Free Market Institute

Must Reads

Waste, Fraud, Abuse. Investors Business Daily. This editorial describes how Federal TARP money meant to bail out the banks is being wasted through ill considered policies and sweetheart deals like ccommerical real estate contract offered to Sen. Dianne Feinstein (D-CA) husband’s company by the FDIC. When everybody’s part of government there are no conflicts of interest?

Larry Kudlow. The Death of Democratic Capitalism. CNBC’s Kudlow, who has been somewhat optimistic on the prospects for an economic recovery nonetheless warns of an end of Democratic Capitalism and the beginning of an era of “corporate capitalism.” Whether you think these new financial and economic policies are socialism, fascism, “corporate capitalism” or “state capitalism,” it still boils down to a giant increase in state control.

In Case You Missed It from the Minnesota Free Market Institute

Craig Westover

EPA Ruling: Carbon Dioxide A Threat To Human Health

John LaPlante State House Call

King Banaian SCSU Scholars

Notable Quotes

No man’s life, liberty, or property is safe while the legislature is in session. –Mark Twain (1866)Talk is cheap…except when Congress does it. –AnonymousThe government is like a baby’s alimentary canal, with a happy appetite at one end and no responsibility at the other. –Ronald Reagan

Support Us!

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Web Site

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Quick Links

Tax Cut Rally 2009 (May 2)

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Weekly Update April 10, 2009

April 10th, 2009 by Adam Axvig

The Minnesota Free Market Institute Weekly Update
Friday, April 10, 2009

Media Alert!

Tune into Fox Business network at 5:20PM CST, today, Friday April 10 to see Minnesota Free
Market Institute President Pat Anderson discuss the Minnesota Tea Party
movement with anchor Charles Payne.

In This Issue

Record Crowds Expected for Next Wednesday’s Tea Party at the MN Capitol

Legislation Could Help or Hinder Charter Public Schools

Must Reads

Seats Still Available for the Spring Policy Luncheon with Lawrence McQuillan on April 14

Record Crowds Expected for Next Wednesday’s Tea Party at the MN Capitol

Over 500 cities across the nation are hosting Tax Day Tea
Parties next week. Here in Minnesota, we have 13 scheduled events
including the Saint Paul Tea Party being held at the state capitol Wednesday
evening. Needless to say, response has been overwhelming.

The folks involved in this movement are not your typical political
activists. They are a diverse crowd, representing all political
parties, but united in their belief that the federal government is heading down
the wrong track with its bailouts, stimulus packages, huge federal deficits and
spending levels and numerous proposed tax increases.
There is a deep concern that America has strayed far from
its roots and constitutional powers and is headed into decline.

We hope all our members take the time next week to attend their local Tea
Party. Please make your voices heard before it’s too late.
For more information, go to the Minnesota Tea Party site. Patricia Anderson is President of the Minnesota Free Market Institute.

Legislation Could Help or Hinder Charter Public Schools

Minnesota was the first state to use charter schools as a way of
bringing innovation to public education. While nine states have no
legal provisions for charter schools, Minnesota has the strongest
charter laws in the nation, according to the Center for Education
Reform, a pro-charter group based in Washington, D.C. And if legislators act carefully, Minnesota could have an even
better policy environment for charter schools at the end of the session.

Charter public schools not only have their own governing boards, but
they also have sponsoring organizations (sometimes called authorizers)
that are responsible for ensuring they meet the academic, fiscal and
governance terms of their charter. Minnesota leads the nation in
charter schools, in part, because it allows multiple types of
organizations (colleges, nonprofits, the department of education, etc.)
to serve as sponsors. In some states, by contrast, charter schools must
be legally and financially part of school districts. By embedding
charters within districts, those states weaken the power of charter
schools to serve as laboratories of innovation.

A key question about charter schools is “Who oversees the
overseers?” And what happens when some sponsors are not up to the job?

Read more John LaPlante is a Policy Fellow at the Minnesota Free Market Institute

Must Reads

Chris Ayres. Chill winds take heat off global warming Times Online We’ve known all along that global warming skepticism wasn’t just reserved to a few nutters and mad scientists but it’s nice to see a major member of the mainstream media acknowledge it too, with the skepticism expressed publicly by Nobel prize winning scientist Physicist Freeman Dyson.

Richard W. Rahn. Heads I Win, Tails You Lose. Washington Times.

The capital gains tax counts inflation as a gain that can be taxed.

Resenting the Rich. The Economist Debates

Following on the theme of last week’s issue’s lead editorial the Economist magazine sponsors an online debate between Chris Edwards of the Cato Institute and Thomas Piketty of the Paris School of Economics on whether the Rich should pay higher taxes.

In Case You Missed it from The Minnesota Free Market Institute

Craig Westover

Rep. Matt Dean on Bonding for State Buildings

John LaPlante State House Call

Change the Tax Code to Fix Healthcare

Waiting for Healthcare Savings

King Banaian SCSU Scholars

Broken windows, Cajun style

It’s not temporary

Regulation as anger management?

Exchanging values

Forthcoming

Almost the worst since

Crowding, Ricardian, and forecast accuracy

Seats Still Available for the Spring Policy Luncheon with Lawrence McQuillan on April 14

Join
us on April 14 at the Minneapolis Hilton for “The Sizzle of Economic
Freedom” with Lawrence J. McQuillan Ph.D., of the Pacific Research
Institute. Tuesday, April 14, 12:00 PM at the Hilton Minneapolis. Cost is $35. Please
send checks to the Minnesota Free Market Institute, P.O. Box 120449,
St. Paul, MN 55112. You may RSVP by calling Sara
Linert at 651-294-3593 x207; email saral@mnfreemarketinstitute.org

Notable Quotes

Government is the great fiction, through which everybody endeavors to live
at the expense of everybody else.
–Frederic Bastiat, French Economist
(1801-1850) Government’s view of the economy could be summed up in a few short phrases: If
it moves, tax it. If it keeps moving, regulate it. And if it stops moving,
subsidize it. –Ronald Reagan (1986)

I don’t make jokes. I just watch the government and report the facts. –Will
Rogers

Support Us!

The Minnesota Free Market Institute accepts Paypal.

Now More than ever, your contributions are needed to help us defend Conservative Principles and Free Markets!

Facebook users can also contribute to our Cause.

MN Free Market Institute on the Web

Web Site

Twitter

Facebook

Youtube Channel

Quick Links

MN Tea Party (April 15)
Tax Cut Rally 2009 (May 2)

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May 1st, 2009 Weekly Update

May 1st, 2008 by Adam Axvig

The Minnesota Free Market Institute Weekly Update
Friday, May 1, 2009

In This Issue

Tax Cut Rally is this Saturday May 2nd!

Tax Those People!

Ought Implies Can

Must Reads

In Case You Missed it from the Minnesota Free Market Institute

Budget Hawks 3: The Final Showdown is May 14

Tax Cut Rally is this Saturday May 2nd!

If you were one of the working stiffs who had to miss the Tea Party last month, you have a second chance to show up and make your voice heard at the Annual Tax Cut Rally this Saturday. The Rally is from 11am-4pm on the capitol grounds. There will be plenty to see and do, from an impressive line up of speakers, to a book fair and there will be many information booths to learn about the issues. If you couldn’t make the Tea Party, you also missed an opportunity to sign the Tea Party Petition. We will have the petition at the Minnesota Free Market Institute booth so stop by and add your name to the list! Also, don’t forget to bring a canned food contribution for metro area food shelves, sponsored by Hope for the City. Pat Anderson is President of the Minnesota Free Market Institute

Tax Those People!

In 2005, the U.S. Supreme Court ruled, in case of Kelo v. New London, that the U.S. Constitution is no bar to cities seizing property from one private landowner and giving it to another. Following that decision, a number of states changed their laws to restrict the powers of eminent domain. Minnesota was one of those states, though it allowed existing projects to proceed. One of those was the Cedar Grove project in the south metro suburb of Eagan.

In the words of mayor Mike Maguire, who recently wrote an op-ed on the subject,

“The area went into a steady decline over two decades. Restaurants became engine repair shops, a gas station became a truck rental facility, a grocery store became a paintball range and the old mall housed fewer and fewer shops.”

My first thought upon reading this was “what’s wrong with engine repair shops?” In recent years, some members of the city council have complained that the city’s northern section has “too many” trucking companies and not enough “quality” development.

City government has invested seven years in an effort to redo the area. It used its power of eminent domain to forcibly acquire properties in the area. Together with a commercial developer and community activists, it developed grand plans. In other words, it substituted the political process for the free market.

During these seven years, the city has incurred carrying costs for the project, which it had hoped would someday pay off. But now, thanks to the tanking of the economy, those plans are had to be altered, once again.

April 3, 2009 Weekly Update

April 3rd, 2000 by Margaret Martin

Minnesota Free Market Institute Weekly Update

http://www.mnfreemarketinstitute.org

Friday, April 3, 2009

The Minnesota Free Market Institute accepts paypal. To donate go here.

Now more than ever, your contributions are needed to help us defend Conservative principles and Free Markets!

The Minnesota Free Market Institute is now a cause on Facebook! Contribute here.

1. The New Minnesota Free Market Institute Website has been Launched!

2. Craig Westover on the Bob Davis Show on April 15

3. Self-Sufficiency, Poverty; Markets, Prosperity

4. Must Reads

5. Tea Party and Tax Rally

6. Lawrence McQuillan Luncheon on April 14

1. The New Minnesota Free Market Institute Website has been Launched!

As you may have noticed, the Minnesota Free Market Institute has just completed a major website overhaul. A month in the making, the website has many features that will be familiar to you, and many that are completely new. I will go through a handful of these new features:

In the left side column, there is a link to “Be It Resolved…” This section will contain month-long debates on policy issues. The discussion will be well moderated and more respectful than your average blog-comment battles. We are hoping to get a wide variety of individuals and viewpoints involved.
We have a front-page “recommended reading” column with a mixture of publications and books relevant to the Institute’s mission. The column will represent news and commentaries.
We also have dedicated another column for videos and events specific to the Minnesota Free Market Institute. Check back often to stay current on the latest MNFMI events and videos.
On the topic of videos, the Minnesota Free Market Institute was just approved for non-profit status on you tube. This allows for greater channel customization and more importantly, longer videos. Visithttp://www.youtube.com/mnfmi and take a look around. Video recommendations are always welcome atinfo@mnfreemarketinstitute.org

More to come, but the new website is definitely worth a look. Spend a couple minutes exploring and check back often, we will be continually adding new content and features.

Adam Axvig is the new Web Master of the Minnesota Free Market Institute

2. Craig Westover on the Bob Davis Show on April 15

Minnesota Free Market Institute Senior Policy Fellow Craig Westover will be on the Bob Davis Show on AM 1500 on Wednesday, April 15, in the 10 o’clock hour to talk about his Pioneer Press column, Jobs for Jobs sake? That’s Fuzzy Math.

3. Self-Sufficiency, Poverty; Markets, Prosperity

During my recent trip to the North Shore, I talked with some people who had spent a few days making skis at the North House Folk School. You might call the school, which is based in the artists colony of Grand Marais, a pre-market institution.

I heard the teacher give a talk to a small group of journalists. While he told some amusing stories, he also struck me as anti-business, anti-profit, and anti-market. He believes in both personal and micro-community self-sufficiency. I think he said that he lives in a hut that he constructed by hand. Good for him, I guess.

Most people, however, don’t want to live like that. I certainly don’t. If my housing were limited to my own skills in building design and construction, you’d find my frozen body inside a ramshackle collection of two-by-four lumbers that was covered in a layer of indoor-outdoor carpeting. I’m quite happy to not be self-sufficient in building, heating, and powering my housing.

Self-sufficiency is a big deal in some economic development circles. But it’s simply another name for shunning the economic principles of “division of labor” and “comparative advantage,” which have led mankind out of poverty.

When you’re in a rural, remote area such as the North Shore, it’s easy to take for granted the market-driven changes that improve our lives—even as we enjoy them. My friends can take great pride in the fact that they turned wood into skis with nothing but hand tools. Not everyone can do that.

But yesterday’s wooden skis are inferior to the high-tech, engineered products we can buy today from mega-corporations. They’re more likely to handle hard-packed snow and icy conditions, for example.

So if pursuing individual or community self-sufficiency doesn’t always lead to poverty, it can bring us a limited variety of goods and stagnation of product design.

What we today call capitalism, with its use of comparative advantage, specialization, profit-seeking corporations, overseas manufacturing, business plans and dull corporate meetings, focus groups, accountants and revenue projections, provides us what we expect today: A variety of goods; an evolution of product design; improvements in product quality over time; and reasonable costs.

So this snowboarder says … Down with self-sufficiency. Long live capitalism and free markets.

John LaPlante is a Policy Fellow at the Minnesota Free Market Institute

4. Must Reads

John H. Cochrane. Health Status Insurance’ Provides Real Alternative To Universal Care. Cato. This proposal answers the question about what to do with the sickest patients, people who are currently badly served by the current employer based health insurance system. Cochrane argues that we don’t have to have universal, government provided healthcare in order to get them the care they need.

Arthur Laffer. Spend It in Vegas or Die Paying Taxes. Wall Street Journal. Laffer points out how the death tax doesn’t “spread wealth around,” to benefit the poor. It just creates perverse incentives to blow all your cash before you die or pay big fees to accountants and lawyers to create tax shelters for your wealth.

The Rich Under Attack. The Economist. This week’s leader in the Economist is unsparing in criticism for the financial sector but also warns of the dangers of economic populism: “The rich are an easy target. But when you try to bash them, you usually end up punching yourself in the nose.”

In Case you missed it from the Minnesota Free Market Institute

Craig Westover

King Banaian (SCSU Scholars)

John LaPlante

Who Owns Your Healthcare? St. Paul Legal Ledger

Margaret Martin

Government Mandate Creates Dirty Dishes and a Black Market for Detergent

5. Tea Party and Tax Rally

The Tax Day Tea Party rally will be held April 15th between 5 pm and 8 pm at the Minnesota State Capitol as part of the Nationwide Tea Party movement. A large number of events all around the country are planned to coincide with tax day, April 15. The Minnesota plans are being posted on the website http://teapartymn.com/. The Minnesota Free Market Institute is participating in this event and is helping to coordinate it. You can download a flyer here.

May 2, is the annual “2009 Tax Cut Rally and Conservative Issues Fair.” This year the Rally is being held on the first Saturday in May, also at the Capitol, and the event now has an associated “Issues Fair” to enable Conservatives around the state to learn about legislation and public policy debates and to get together with other conservatives and groups to learn about their efforts. The web site for the Tax Cut rally is http://www.taxcutrally.com/

6. 2009 Spring Policy Luncheon with Lawrence McQuillan Luncheon on April 14

Join us on April 14 at the Minneapolis Hilton for “The Sizzle of Economic Freedom” with Lawrence J. McQuillan Ph.D., of the Pacific Research Institute. Tuesday, April 14, 12:00 PM at the Hilton Minneapolis. (See the top item for a discussion of his ebook). Cost is $35. Please send checks to the Minnesota Free Market Institute, P.O. Box 120449, St. Paul, MN 55112. RSVP by April 10. You may RSVP by calling Sara Linert at 651-294-3593 x207; email at saral@mnfreemarketinstitute.org or on facebook.

An economics professor at Texas Tech said he had never failed a single student before but had, once, failed an entire class. That class had insisted that socialism worked and that no one would be poor and no one would be rich, a great equalizer. The professor then said ok, we will have an experiment in this class on socialism.

All grades would be averaged and everyone would receive the same grade so no one would fail and no one would receive an A. After the first test the grades were averaged and everyone got a B. The students who studied hard were upset and the students who studied little were happy.

But, as the second test rolled around, the students who studied little had studied even less and the ones who studied hard decided they wanted a free ride too; so they studied little.. The second test average was a D! No one was happy.

When the 3rd test rolled around the average was an F.

The scores never increased as bickering, blame, name calling all resulted in hard feelings and no one would study for the benefit of anyone else. All failed, to their great surprise, and the professor told them that socialism would also ultimately fail because when the reward is great, the effort to succeed is great; but when government takes all the reward away; no one will try or want to succeed.

Could not be any simpler than that…

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The Minnesota Free Market Institute conducts research and advocates for policy that limits government involvement in individual affairs and promotes competition and consumer choice. By analyzing the actions of the past and applying the enduring lessons of the free market, the Minnesota Free Market Institute creates policy options for the future. To donate click here.

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Friday, March 27, 2009 Weekly Update

March 27th, 2000 by Margaret Martin

Minnesota Free Market Institute Weekly Update

http://www.mnfreemarketinstitute.org

Friday, March 27, 2009

The Minnesota Free Market Institute accepts paypal. To donate go here.

Now more than ever, your contributions are needed to help us defend Conservative principles and Free Markets!

The Minnesota Free Market Institute is now a cause on Facebook! Contribute here.

1. Upcoming Events: The Tea Party and The Tax Rally

2. The Constitutionality (or not) of the Treasury Department’s bailout plan

3. Lessons in Economics from the North Shore

4. Must Reads

5. Budget Hawks event at Trocaderos on April 2nd

6. Lawrence McQuillan Luncheon on April 14

1. Upcoming Events: The Tea Party and The Tax Rally

The Tax Day Tea Party rally will be held April 15th between 5 pm and 8 pm at the Minnesota State Capitol as part of the Nationwide Tea Party movement. The movement took shape after CNBC’s Rick Santelli gave a stirring speech in front of cameras during his usual report from the Chicago Mercantile Exchange. He called for “a Chicago tea party” recalling the Boston Tea Party, where protesters threw tea into Boston Harbor to protest a new tax on tea to the British government. Since Santelli’s “rant of the year,” a grassroots movement has sprung up to organize protests in favor of free markets and against government intervention and excessive taxes. Other groups and well known conservative leaders like Newt Gingrich and Michelle Malkin have thrown their support behind the movement. Blogs and social networking sites like Twitter and Facebook are abuzz with people making plans to attend events in different cities. A large number of events all around the country are planned to coincide with tax day, April 15. The Minnesota plans are being posted on the website http://teapartymn.com/. The Minnesota Free Market Institute is participating in this event and is helping to coordinate it. You can download a flyer here.

On May 2, we will also be at the annual “2009 Tax Rally and Conservative Issues Fair” which has traditionally been held on a Saturday near Tax Day at the Capitol. (If you were with us last year, you you’ll recall it was held on a very cold April 12!) This year the Rally is being held on the first Saturday in May and in keeping with last year, there won’t just be speeches, the event now has an associated “Issues Fair” to enable Conservatives around the state to not only make their voices heard but also to learn about legislation and public policy debates and to get together with other conservatives and groups to learn about their efforts.

The Minnesota Free Market Institute also has two other events in April, on the 2nd, we have our second Budget Hawks event and on the 14th we have our 2009 Spring Policy Luncheon with Lawrence McQuillan (See the bottom of the update for details).

Pat Anderson is President of the Minnesota Free Market Institute

2. The Constitutionality (or not) of the Treasury Department’s bailout plan

It’s interesting when critics of Rep. Michele Bachman suddenly discover Article I, section 8 of the U.S. Constitution. Even more interesting is when Treasury Secretary Timothy Geithner and Federal Reserve chairman Ben Bernanke incoherently make oblique references to Article I “Enumerated Powers” clause in defense of the massive extension of federal power that is the TARP and EESA programs.

Bachman’s challenge to each man — “What in the Constitution could you point to, to give authority to the Treasury’s extraordinary actions that have been taken?” — made in Tuesday’s hearing before the House Financial Services Committee has been criticized as if she were asking the two men sitting behind a table if they were wearing pants. In this land of the free and home of the brave, some find it “inappropriate” to point out the emperor has no clothes.

When Geithner responds to Bachmann’s question with the constitutional justification, “Oh well, the Congress legislated in the Emergency Economic Stabilization Act a range of very important new authorities,” he is, as post-hearing analysis of Bachmann critics claim, essentially citing congressional authority enumerated in Article I, section 8 of the U.S. Constitution. How ironic.

Article I, section 8 is tagged the “Enumerated Powers” clause. Article I, section 8 is the clause conservatives and constitutional scholars point to as evidence that the Constitution limits the power of government to those actions specifically listed therein. To use the Enumerated Powers clause to justify a range of “important new authorities” for the Treasury Department is ludicrous on its face, not to mention it’s the wrong section of the Constitution to be looking at.

Article I, section 1 of the Constitution — the first clause after the Preamble — states, “All legislative Powers … shall be vested in a Congress” — not a Treasury Department or a Federal Reserve System. The words “all” and “shall” are significant. In a legal sense, those words preclude Congress selectively discriminating among legislative powers, retaining some for itself and delegating others to the executive branch. But as Geithner makes clear creating new authorities for the Treasury Department is precisely what the TARP and EESA legislation does.

The constitutionality issue has to do with the Congressional authority to delegate legislative power, and Geithner and Bernanke’s defense that their actions are constitutional because they were granted by Congress are as valid as a claim to keep stolen property received from a thief.

As have many bastardizions of Constitution, the demise of the legislative exclusivity of Congress was spawned in the New Deal Era when the Supreme Court created the notion that Congress could constitutionally delegate powers if it legislated “an intelligible principle” that defined the extent of legislative authority delegated. Since that action, not a single statutory program has been invalidated for lack of a “intelligible principle,” which demonstrates the dangers and consequences of misinterpreting the Constitution as a “living document”.

The “intelligible principle” given to the Treasury Department under TARP was “to purchase … troubled assets for the purpose of providing stability to and preventing disruption in the economy and the financial system” — a pretty vague “intelligible principle” that even so has been pretty much ignored by the Treasury Department as TARP money has so far been allocated for anything but purchasing troubled assets. The EESA “intelligible principle” is even more dubious: Asset purchases can be made “on such terms and conditions determined by the Secretary.”

By any criteria of rational judgment, even considering the thread of Supreme Court cases that have steadily eroded the exclusive legislative authority of Congress, the bundle of bailout legislation is a questionable constitutional delegation of legislative authority. Bachmann pressing that point was prudent, not audacious; the incoherent responses and misapplication of the Constitution by Geithner and Bernanke would be audacious were they not so pathetic.

Craig Westover is a Senior Policy Fellow at the Minnesota Free Market Institute

3. Lessons in Economics from the North Shore

Can you learn a lesson in economics by going on vacation? I did.

On March 18 through 22, I spent some time at a convention on the North Shore, held for people who write about skiing, snowboarding and winter generally to talk about their work, swap stories, and ski and snowboard at Lutsen Mountains.

Over the next few weeks I’ll be offering up some observations I gleaned about economics and public policy from the conference.

Today, the hat.

Though winter is on its way out, I’m still wearing a knit cap I received in the conference goodie bag.

This beanie hat works just fine. It keeps my head warm, it (almost) fits, and it looks good.

The hat is produced by Wintergreen Northernwear

, of Ely, Minnesota. And that latter fact, I guess, is
supposed to make me feel good.

After all, the company web site says “We take great pride in being one of the largest private employers in a small remote town where jobs are scarce but garment-making talents and pride in workmanship are in
abundance. We’re one of the last full-line outdoor clothing makers in the U.S.”

That may explain why the beanie on my head sells for $40.00, while REI sells what appears to be a comparable one for $30.00, and Amazon.com sells it for $20.00. This cheaper model is, in the words of REI,
“imported,” which probably means that it was made in Bangladesh or the Dominican Republic, or some other country where wages are a fraction of those in Ely.

Is this bad? Some people say yes. But does it make any sense for Americans to try to outhustle people working on third-world wages? Buying Ely-made clothing may make you feel an authentic patriot, a supporter of the Iron Range, someone who strikes a blow for “community” and against the global economy and impersonal
corporations.

But it also means that you’ve given up the opportunity to buy a hat AND spend the $10 or $20 on another business. We might say that you’ve paid a locality premium for a single product.

I suppose that’s fine. People pay for more than the utilitarian value of products all the time. (With baseball season coming up, think of those Minnesota Twins jerseys you’ll start seeing around the office.)

But it’s not without costs, which I’ll discuss next week.

John LaPlante is a Policy Fellow at the Minnesota Free Market Institute

4. Must Reads

Jake DiSantis. Dear AIG, I Quit! New York Times Op Ed. This resignation letter from an AIG executive vice president explains why the proposed 90% tax on AIG employee bonuses was more hype than sound fiscal policy and establishes a very bad precedent if the financial sector is to regain its footing. It was the talk of watercoolers all over America this week. See King Banaian’s commentary “Someone…” below.

Mary Anastasia O’Grady. Now Is No Time to Give Up on Markets Wall Street Journal. O’Grady interviews Nobel Prize winning economist Gary Becker.

66% say Obama Likely to raise taxes on those earning less than $250,000 a year. Rassmussen Reports.

Citizens against Government Waste takes a whack at Congressman Barney Frank (D-MA) by making him their “porker of the month” for March. CAGW cites Frank’s hypocrisy over making sure that OneUnited Bank in Boston ( for which the Boston Herald had documented waste and excessive executive perks) got it’s TARP funding without scrutiny while pointing a finger at AIG executive bonuses. Even worse is Rep. Frank’s involvement in creating the financial crisis in the first place as Chairman of the House Financial services committee he oversaw waste fraud and abuse at Fannie Mae and Freddie Mac.

A few weeks ago we featured the Heartland Institute’s recent international conference on climate change, Global Warming: Was it ever really a crisis? More than 75 papers and keynote addresses were presented by some of the worlds leading climatologists, economists, policy makers, and opinion leaders. The proceedings and panels are available on-line as pdfs and there is audio and video available. Be sure to check it out for the latest research on this important issue.

In Case you missed it from the Minnesota Free Market Institute

King Banaian (SCSU Scholars)

5. Budget Hawks Event at Trocaderos on April 2

400 People showed up for our last Budget Hawks event at Trocaderos in Minneapolis earlier this month. Join us for our next event on Thursday, April 2 from 5-8 PM at Trocaderos. See the flyer here for details on free parking and for more information about the event. Although it’s not required, you can RSVP on facebook here.

6. 2009 Spring Policy Luncheon with Lawrence McQuillan Luncheon on April 14

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The Minnesota Free Market Institute conducts research and advocates for policy that limits government involvement in individual affairs and promotes competition and consumer choice. By analyzing the actions of the past and applying the enduring lessons of the free market, the Minnesota Free Market Institute creates policy options for the future. To donate click here.

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