Archive for June, 2015

The Export-Import Corporate Welfare Bank is Closed

Tuesday, June 30th, 2015

Originally published at Rare

The Export-Import Bank is a New Deal relic of corporate welfare that’s managed to earn the support of Congress for over 80 years.

That ended today, when organized pressure from free-market critics forced the expiration of the bank’s charter for the first time. While the government-funded bank accounts for a relatively small portion of the budget, defeating it represents a victory for those who oppose the nefarious relationship between big government and big business.

As Tim Carney, one of the bank’s most prominent critics, explained:

Ex-Im subsidizes U.S. exports through a few different financial products that all have one thing in common: they put the U.S. taxpayer on the hook if a foreign customer fails or refuses to pay back a loan. In Fiscal Year 2013, Ex-Im extended $27.3 billion in financing.

Ex-Im’s biggest product is the long-term loan guarantee. Over the past three fiscal years, such guarantees made up $52.6 billion of the agency’s $95.9 billion in financing. A fairly typical guarantee is the one that the Ex-Im’s board of directors approved on August 22, 2014: Virgin Australian International Airlines was buying a new batch of Boeing jets and Canadian TD Bank was providing the financing, in the form of a 20-year loan to the Aussie airline.

This looks like a regular market transaction until the Ex-Im Bank steps in to guarantee the loan, meaning that if Virgin Australian fails to pay back the Canadian lender, U.S. taxpayers cover the bank’s loss.

This is why Carney refers to support of Ex-Im as a “crony capitalist litmus test.” It has earned the support of Congress for so long precisely because the status quo has been so corporatist, often under the guise of support for free markets or American jobs. The tea party wave of 2010 brought to power a new class of Republicans who oppose cronyism, and ever since Ex-Im has found itself in their crosshairs.

Even Congressman Jeb Hensarling, Chairman of the House Financial Services Committee, opposes Ex-Im. According to him, “If you’re a politically connected bank or company that benefits from Ex-Im, no doubt you would like it to continue. After all, it’s a sweetheart deal for you. Taxpayers shoulder the risk and you get the reward.

Ex-Im expiration, while a win for free market advocates, may be short-lived unless opponents of cronyism take action. The Associated Press reports that Senate Majority Leader Mitch McConnell thinks Ex-Im proponents have the votes to renew the bank’s charter and will attempt to attach its reauthorization to a highway bill. Unsurprisingly, Ex-Im apologists are yet again avoiding a clean vote on a bill specific to the bank, given its controversial nature.

The last time Ex-Im was set to expire, proponents tied its temporary reauthorization to legislation that thwarted a government shutdown. This short-term extension was tacked on in haste in September 2014 over the objections of a strong coalition of groups that were lobbying for a clean vote on Ex-Im’s renewal.

Ex-Im advocates like to push the narrative that without it, American jobs will suffer. The U.S. Chamber of Commerce claims:

Ex-Im Bank is a small federal agency that enables U.S. companies, including small and medium-sized businesses, to sell their products in global markets. As American companies compete and win in these international markets, they increase exports, create U.S. jobs and grow the American economy.

But as critics of the bank argue, the cronyism and corruption have become far too rampant. Four bank officials were recently charged with providing illegal kickbacks, and one with accepting bribes. There have been nearly 800 incidences of fraud with open cases still pending, almost 50 criminal judgments, and 74 transactions frozen by the Inspector General due to wrongdoing, all between 2007 and 2014. Furthermore, since 2010, Ex-Im beneficiaries who were found to be defrauding taxpayers are serving a total of 66 years in prison. Does this sound like a benign agency committed to middle-class American jobs?

The Ex-Im issue will heat up even further when members of Congress return from the July 4 recess. In preparation, the free-market advocacy organization Americans For Prosperity, one of the groups leading the charge against the bank, is encouraging opponents of reauthorization to pressure Congress into voting against any attempts at resurrecting the crony bank.

If Ex-Im does manage to rise from the grave, expect opponents to double down on killing it once and for all.

Can Libertarians Separate Government and Marriage?

Monday, June 29th, 2015

Originally published at EveryJoe

In the wake of the Supreme Court ruling in Obergefell v. Hodges that same sex marriage is now legal nationwide, prominent liberty advocates offered a variety of reactions. Senator Rand Paul, who is known as the most libertarian Republican presidential candidate, believes the government should respect contracts between consenting adults, but stop defining marriage. Although Paul trends libertarian compared to his colleagues, he leans more toward conservatism than other pro-liberty individuals on the broader ideological spectrum. His reaction to the marriage ruling reflects that nuance.

As Paul explained at TIME:

While I disagree with Supreme Court’s redefinition of marriage, I believe that all Americans have the right to contract.

The Constitution is silent on the question of marriage because marriage has always been a local issue. Our founding fathers went to the local courthouse to be married, not to Washington …

Marriage, though a contract, is also more than just a simple contract.

I acknowledge the right to contract in all economic and personal spheres, but that doesn’t mean there isn’t a danger that a government that involves itself in every nook and cranny of our lives won’t now enforce definitions that conflict with sincerely felt religious convictions of others.”

Senator Paul’s position mirrors a sentiment that can now be seen in action in states such as Alabama, Mississippi, Louisiana, and Texas. As David Simpson, a libertarian-leaning State Representative from Longview, Texas has stated:

In light of the Supreme Court’s actions, I believe that the best way to protect marriage is to divorce marriage from government. I am asking the governor to recall the legislature so that legislation may be immediately considered to remove state and local officials from the process of issuing marriage licenses. In its place, the process of issuing a certificate of marriage will be performed by any willing clergy member consistent with their conscience and in respect for our culture and our heritage. For those who do not wish to have a religious ceremony, any authorized notary may approve a certificate.

Congressman Justin Amash, another prominent libertarian-leaning Republican, took a similar approach to both Paul and Simpson ideologically. However, Amash deferred more to the court’s ruling from an equal protection standpoint than did Senator Paul.

From Amash’s official Facebook page:

What makes marriage traditional is not its adherence to a universal definition but rather that it is defined by personal faith, not by government. For thousands of years, marriage flourished without a universal definition and without government intervention. Then came licensing of marriage. In recent decades, we’ve seen state legislatures and ballot initiatives define marriage, putting government improperly at the helm of this sacred institution.

Those who care about liberty should not be satisfied with the current situation. Government intervention in marriage presents new threats to religious freedom and provides no advantages, for gay or straight couples, over unlicensed (i.e., traditional) marriage. But we shouldn’t blame the Supreme Court for where things stand.

To the extent that Americans across the political spectrum view government marriage as authoritative and unlicensed marriage as quaint, our laws must treat marriage—and the corresponding legal benefits that attach—as they would any other government institution. So, while today’s Supreme Court opinion rests upon the false premise that government licensure is necessary to validate the intimate relationships of consenting adults, I applaud the important principle enshrined in this opinion: that government may not violate the equal rights of individuals in any area in which it asserts authority.

David Boaz, Executive Vice President of the libertarian think-tank Cato Institute, defended the Obergefell logic more forcefully than many of his fellow ideological travelers. Said Boaz:

Here and now, or more specifically last week, when many states were discriminating against gay people in marriage, did you think that was OK, at least until marriage is — some day, maybe — fully privatized? And if so, back in 1965, when the government was discriminating against interracial couples in marriage, did you think THAT was OK? Do you think the Court should have refused to strike down laws against interracial marriage, and we should have waited until government got out of marriage entirely? And if you’re a libertarian and believe that government shouldn’t run the schools, what would you say if government ran schools only for white Christian kids? Should libertarians oppose that policy, or just insist on full privatization of schools with no intermediate remedies?

Other libertarians were less moved by the 14th amendment equal protection argument, expressing concern that the centralization of power necessary to justify the Supreme Court’s ruling is a threat to liberty, despite an agreeable outcome. Channeling sentiments similar to Rand Paul’s, Independent Institute’s Research Fellow Melancton Smith, penned a reaction entitled “Libertarians Should Be Cautious in Celebrating Obergefell.” In it, he makes several specific points.

Smith contends that issues such as marriage, child custody, and divorce have always been dealt with on a local and state level. He argues that because there is no federal power delegated to deal with them in the Constitution that the Supreme Court’s ruling threatens self-government. He also believes that when judges – who are unelected – expand the plain meaning of the Constitution, even if we agree with their opinions, we risk centralizing power to a dangerous extent and exposing ourselves to tyranny we would oppose in the future. Smith finally concludes by agreeing with Chief Justice Roberts that gay marriage likely would have been instituted in this country through democratic means, and posits that allowing the Supreme Court to take on the role of legislator will ultimately spell doom for various libertarian policy measures.

Generally, libertarians span the left-right spectrum in terms of personal social views, and opinions on the matter of gay marriage reflect this. One can be a devout social conservative or an extreme “libertine,” and still believe that the government has very little or no right to regulate the personal behavior of consenting adults who aren’t harming others.

Ultimately, most libertarians tend to agree that in a perfect world, two adults would not have to ask government for permission to be married. Many see it as a strictly religious institution, or one that can be dealt with on a civil level without hijacking the term marriage. The point that Rand Paul and other privatization advocates make, is that there’s no reason benefits such as spousal rights surrounding inheritance, visitation, custody, etc. could not be worked out through mutually agreed upon contracts, absent one overarching federal definition of marriage.

Paul and others argue that since marriage itself does not need to be recognized by government for the appropriate social and legal benefits it ought to confer to exist, it could revert to being a matter dealt with by religious institutions. This would allow both gay and straight couples equal civil rights under the law, while protecting the sanctity of marriage and religious liberty. As states continue adjusting to nationwide marriage equality, it will be interesting to see to what extent the libertarian argument of marriage privatization takes hold legislatively. Today, the question remains as to whether this vision can become a policy reality.

SCOTUS Rewrites ObamaCare: The Sequel

Thursday, June 25th, 2015

Originally published at Rare

In a strikingly political decision, the Supreme Court ruled in favor of providing federal subsidies to states that did not set up their own Obamacare exchanges—despite the law explicitly calling for the opposite.

King v. Burwell emerged because thirty-six states either chose not to set up their own Affordable Care Act “marketplaces” or failed to properly maintain them and resorted to use of a federal exchange. As a result, the question of whether consumers in states without their own exchanges qualified for federal subsidies became a point of contention that eventually landed at the Supreme Court.

As Justice Antonin Scalia explained in his Burwell dissent:

“This case requires us to decide whether someone who buys insurance on an Exchange established by the Secretary gets tax credits. You would think the answer would be obvious—so obvious there would hardly be a need for the Supreme Court to hear a case about it. In order to receive any money under §36B, an individual must enroll in an insurance plan through an “Exchange established by the State.” The Secretary of Health and Human Services is not a State. So an Exchange established by the Secretary is not an Exchange established by the State—which means people who buy health insurance through such an Exchange get no money under §36B.”

Scalia’s point is central to understanding the backwardness of this ruling. Obamacare was written with the language Scalia described for a very specific reason. The goal was to coerce states into creating their own exchanges by tying access to federal subsidies to the creation of state-specific Obamacare “marketplaces.”

Recall Jonathan Gruber, the MIT economist and architect of Obamacare, who became a household name when it was revealed that he mocked the “stupidity of the American voter” for believing Obamacare wouldn’t ban their insurance plans or increase costs. He also stated in January 2012: “I think what’s important to remember politically about this, is if you’re a state and you don’t set up an Exchange, that means your citizens don’t get their tax credits.

This directly contradicts the Supreme Court’s claim that Obamacare was just “sloppily written” and congressional intent was to provide federal subsidies in all 50 states. These coercive measures were baked into Obamacare, and the Supreme Court has now rewritten the statute for a second time.

Using federal law to coerce the states in this manner has become a time-tested American tradition. Take the drinking age as an example. States technically do not have to follow the guidelines set forth in the 1984 National Minimum Drinking Age Act. However, if they allow individuals under 21 to purchase alcohol, they lose a portion of their federal highway funding.

Notice that every state has since conformed to this federal standard. Also note that the Supreme Court ruled in South Dakota v. Dole that the National Minimum Drinking Age Act was in fact constitutional because, according to the Court, the level of coercion was just-so as to not violate the 10th and 21st amendments.

In her dissent, Justice O’Connor opined: “In my view, establishment of a minimum drinking age of 21 is not sufficiently related to interstate highway construction to justify so conditioning funds appropriated for that purpose.” The majority disagreed.

Today, there remain similar federal incentives built into funding for education, health care (most notably Medicaid), infrastructure, and countless other policy areas, all of which tie the hands of states and cajole them into a preferred federal model.

Given the long-standing effectiveness of this coercive federalization, our central planners were sure that no state would pass up the opportunity for “free” money when it came to Obamacare. Thus, they penned the section on exchanges accordingly, per Gruber, expecting state governments to line up at the trough as usual. Obamacare passed without much thought given to the state exchange issue, and was signed into law in March of 2010.

Then the tea party wave happened. Remember the contentious town hall meetings where constituents confronted their members of Congress over the absurdities of Obamacare? Recall when Democrats lost 60 seats in the House during the 2010 elections due in large part to dissatisfaction with the law?

This led to direct grassroots pressure on state legislatures and governors to refuse a state-based Obamacare exchange. Ultimately, 26 chose to forego the creation of their own exchanges outright. Others chose state-federal partnerships, and some eventually failed in their attempts at creating a state-based system.

Given the fact that the majority of states ultimately lacked their own exchanges, the executive branch decided to take matters into its own hands—as it has upwards of 30 times with Obamacare, congressional intent be damned. Federal subsidies were granted to those who qualified, despite the plain letter of the law. This gave birth to several lower court cases and what eventually became King v. Burwell.

Justice Scalia’s scathing dissent makes several good points about how shamelessly the Supreme Court has rewritten and protected Obamacare. As he artfully stated:

The Court’s decision reflects the philosophy that judges should endure whatever interpretive distortions it takes in order to correct a supposed flaw in the statutory machinery. That philosophy ignores the American people’s decision to give Congress “[a]ll legislative Powers” enumerated in the Constitution. Art. I, §1. They made Congress, not this Court, responsible for both making laws and mending them. This Court holds only the judicial power—the power to pronounce the law as Congress has enacted it. We lack the prerogative to repair laws that do not work out in practice, just as the people lack the ability to throw us out of office if they dislike the solutions we concoct. We must always remember, therefore, that “[o]ur task is to apply the text, not to improve upon it.”

Ultimately, Burwell leaves us with the messy Obamacare status quo, as written more by the executive and judicial branches rather than the actual lawmaking one, and will likely lead to further centralization of struggling state exchanges at taxpayer expense. Six million and counting have had the insurance plans they were promised they could keep banned, prices have skyrocketed (hence the need for the cost-hiding subsidies in question), and people have Obamacare health insurance cards without health care.

So much for affordability and access.

A Formidable New Super PAC is Working to Elect Rand Paul

Monday, June 22nd, 2015

Originally published at Rare

Super PACs are playing an increasingly important role in the electoral landscape. While maximum contributions to a campaign are limited to $2,700 per individual, Super PACs are not restricted by donation limits. This makes them valuable entities, even though they cannot coordinate directly with campaigns.

Thus far, two Super PACs have been created with the goal of electing Senator Rand Paul president. The first is America’s Liberty PAC. The second newer entrant is a grassroots-focused outfit called Concerned American Voters (CAV), which recently made national news.

Concerned American Voters PAC is bringing a formidable staff to the table. The Wall Street Journal recently announced that Matt Kibbe, executive director of the influential activist group FreedomWorks, will be a senior advisor at CAV. The group’s president is Young Americans For Liberty’s Jeff Frazee.

In an interview provided exclusively to Rare, Kibbe explained that CAV’s goal is to capitalize on a new era in politics, which he believes requires an expert use of grassroots mobilization and a targeted social media strategy. He cited the Tea Party wave of 2010 as a model, in which conservative candidates were outspent by their establishment opponents but still prevailed.

“CAV will utilize decentralized strategies, much like I did at FreedomWorks, and Jeff Frazee is doing Young Americans For Liberty,” Kibbe said. “We must organize on the ground and get out the vote, particularly in early primary states where Dr. Paul will inevitably be outdone by establishment candidates on the airwaves.”

CAV already has 40 full-time field staffers in Iowa. The PAC’s on-the-ground efforts reflect the activist mentality that helped Paul’s supporters out-organize Trey Grayson, the Republican establishment’s pick in the Kentucky Senate primary five years ago.

Kibbe explained to Rare that continuing to enhance that grassroots model matters. He also noted that Barack Obama’s successful campaign against Hillary Clinton in the 2008 Democratic primary invested in just this type of organizing.

CAV president Jeff Frazee explained this strategy further.

“Reaching voters early, often, and at their door is the most effective way to win Iowa,” Frazee said. “Obama defeated Hillary in 2008 with a statewide door-to-door program. He was a community organizer, while Hillary was producing TV ads in California.”

“If Rand is to win, we’re not going to outspend Jeb Bush and the Washington machine. But we can out-organize them,” he added.

Frazee also gave Rare a look at CAV’s digital operation, which draws from top Silicon Valley talent.

On our team, we have a top 20 Salesforce engineer in the world, a CEO of a major online advertising company, and a CEO of an experienced and sophisticated political technology company,” he said.

Kibbe said that Rand Paul is a “once in a lifetime candidate whose communications skills, goals, and an ability to beat Hillary Clinton make him the GOP candidate who should win the primary.”

“Polls show he’s the best positioned in states like Pennsylvania and Ohio to beat her in a general election. Republicans have an opportunity to defeat Clinton, but it’s going to require early organization by groups focused on electing Rand Paul rather than the typical establishment options,” he said.

For more information on Concerned American Voters, check out their website at ConcernedAmericanVoters.com.

Former NSA Director Pleasantly Surprised By Lack of Reforms

Thursday, June 18th, 2015

Originally published at Rare

In the two years since former NSA contractor Edward Snowden revealed large amounts of classified data, surprisingly little has been done to eliminate the surveillance abuses he shed light on.

Many civil liberties advocates have expressed dismay at how few reforms have been put in place. Leading reformers in Congress have stressed how minutely the recently passed USA Freedom Act tweaks surveillance practices relative to the breadth of the problem.

As a letter written by 33 Republican and 27 Democratic congressmen to their Senate colleagues states:

On May 13, 2015, the USA FREEDOM Act of 2015 (H.R. 2048) passed the House of Representatives by a vote of 338 to 88. We, the undersigned representatives, opposed the measure because its reforms do not adequately or appropriately reform surveillance practices or address privacy concerns. Many of our colleagues felt similarly, supporting the bill only out of concern the Senate would be unwilling to engage in more comprehensive reform…

Congress has had ample time for debate. We must not kick the can down the road with a short-term reauthorization. Nor will we acquiesce to any effort to weaken this legislation. Indeed, there is strong support for real reform in this chamber, and we hope you will work with us to improve the legislation, such as by incorporating the reforms contained in the original USA FREEDOM Act of 2013, which was cosponsored by a bipartisan group of 152 representatives in the House, and the reforms embodied in the Massie-Lofgren amendment, which was overwhelmingly adopted by the House last year.

Despite these efforts, the USA Freedom Act ultimately passed the Senate in early June, and was signed into law by President Obama. Leading civil liberties advocate Senator Rand Paul voted against the legislation because it was his belief that this watered-down version of a once-good bill only created the illusion of reform.

Surveillance state supporters are also astonished by the relative lack of action, but unlike reform advocates, they’re pleasantly surprised. As Michael Hayden, former NSA director, said at a recent Wall Street Journal CFO Network meeting, he’s shocked that in the wake of the Snowden revelations, outcry for serious change hasn’t been more pronounced:

Said Hayden:

If somebody would come up to me and say “Look, Hayden, here’s the thing: This Snowden thing is going to be a nightmare for you guys for about two years. And when we get all done with it, what you’re going to be required to do is that little 215 program about American telephony metadata — and by the way, you can still have access to it, but you got to go to the court and get access to it from the companies, rather than keep it to yourself” — I go: “And this is it after two years? Cool!”

Hayden also admitted he has no evidence that Snowden is a Russian spy, a charge that many have levied. As Hayden said: “I’ve got my suspicions … (But) I’ve got no evidence.”

Snowden recently defended himself against this accusation during a Reddit “Ask Me Anything” session, in which he said:

When you look at in aggregate, what sense does that make? If I were a Russian spy, why go to Hong Kong? It would have been an unacceptable risk. And further – why give any information to journalists at all, for that matter, much less so much and of such importance? Any intelligence value it would have to the Russians would be immediately compromised.

If I were a spy for the Russians, why the hell was I trapped in any airport for a month? I would have gotten a parade and a medal instead. The reality is I spent so long in that damn airport because I wouldn’t play ball and nobody knew what to do with me. I refused to cooperate with Russian intelligence in any way.

All in all, the government has been quite slow to implement change at the NSA. This has the potential to anger a majority of voters, who, according to a recent poll commissioned by the American Civil Liberties Union, oppose the current NSA spying regime, regardless of political affiliation.

Whether the issue will make or break candidates in the 2016 presidential election is still an open question. Data does indicate that only 34 percent of Americans favor keeping the Patriot Act in its current form.

So far, Rand Paul is the only candidate on the Republican side who has expressed clear views in line with Americans on surveillance reform. How strongly Democrats will run on this issue, especially in contradiction to President Obama, remains to be seen.