ScaifeNet because we can't let Soros have all the fun...

In July 2010 Congress passed the U.S. Manufacturing Enhancement Act, otherwise known as the miscellaneous tariff bill (MTB), which unilaterally suspends duties on hundreds of imported goods of special interest to U.S. manufacturing companies. In a new paper, Cato scholar Daniel Griswold suggests that the bill offers a blueprint for future trade policy. "The next Congress," says Griswold, "should act decisively to expand the scope of the existing MTB process, and then build on that success to spread the benefits of trade liberalization even more broadly."

• "The Miscellaneous Tariff Bill: A Blueprint for Future Trade Expansion," by Daniel Griswold

As part of a larger package of "stimulus measures" announced by the administration this week, President Obama has unveiled a new nationwide infrastructure overhaul plan. On Wednesday, Obama also announced two new tax credits, a $100 billion permanent extension of the business tax credit for research and development, and a new $200 billion tax cut giving businesses an incentive to buy new equipment in the short term. Comments Cato scholar Daniel J. Mitchell, "All of these proposals suffer from the same flaw in that they assume growth is sluggish because government is not big enough and not intervening enough."

• "Obama's New Stimulus Schemes: Same Song, Umpteenth Verse," by Daniel J. Mitchell
• "Why Not Private Infrastructure?," by Tad DeHaven

Criminal defense systems are in a state of perpetual crisis, routinely described as "scandalous." Public defender offices around the country face crushing caseloads that necessarily compromise the quality of the legal representation they provide. In a new paper, Professors Stephen J. Schulhofer and David Friedman examine the broken criminal defense system and propose free market solutions to better serve indigent defendants.

• "Reforming Indigent Defense: How Free Market Principles Can Help to Fix a Broken System," by Stephen J. Schulhofer and David Friedman

President Obama addressed the American people on the evolving role for the U.S. military in Iraq. Obama discussed what the U.S. military draw down in Iraq means for national security efforts and the fight against terrorism. Observes Cato scholar Christopher Preble, "Some people are advising the president to leave a permanent U.S. military presence in Iraq, essentially arguing that the United States is the rightful guarantor of Iraqi sovereignty, and that the Iraqis simply can't be trusted with security matters. The president has wisely turned aside such recommendations in the past, and should do so again."

• "The Iraq Mission Shifts to the Iraqis," by Christopher Preble
• "War in Iraq Not Over," by Christopher Preble
• "Iraq Is Defenseless," by Ted Galen Carpenter

President Obama on Tuesday addressed the American people on the evolving role for the U.S. military in Iraq. Obama discussed what the U.S. military draw down in Iraq means for national security efforts and the fight against terrorism. Observes Cato scholar Christopher Preble, "Some people are advising the president to leave a permanent U.S. military presence in Iraq, essentially arguing that the United States is the rightful guarantor of Iraqi sovereignty, and that the Iraqis simply can't be trusted with security matters. The president has wisely turned aside such recommendations in the past, and should do so again."

• "War in Iraq Not Over," by Christopher Preble
• "Concerning the End of 'Combat Operations' in Iraq," by Christopher Preble
• "Iraq Is Defenseless," by Ted Galen Carpenter

The financial crisis, which began in the U.S. subprime mortgage market in 2007 and spread in 2008 to the global economy, raises a fundamental question: What is the role of government in creating financial harmony? The articles in the latest issue of Cato Journal shed light on the causes of the crisis, the proper balance between government and the market in bringing about financial stability, and the reforms needed to ensure that the too-big-to-fail problem does not destroy financial harmony in the future.

• Issue Summary by Editor James A. Dorn
• Fall 2010 Issue of Cato Journal
• Spring/Summer 2010 Issue of Cato Journal

The Commerce Department recently revised its estimate for U.S. GDP growth in the second quarter from a 2.4 percent annual rate to 1.6 percent. The Washington Post puts the blame squarely on the trade deficit. But Cato scholar Daniel Griswold argues, "The fatal flaw of the story line is that it assumes that rising imports slow economic growth. That view neglects the supply-side role of imports. More than half of what we import consists of goods consumed by producers. Those imports help us produce more, not less."

• "Is the Trade Gap to Blame for Slowing GDP Growth?," by Daniel Griswold
• "Media Feeds America's Skepticism about Trade," by Daniel Ikenson

Federal Reserve Chairman Ben Bernanke on Friday indicated that while economic growth was "less vigorous" than expected, the Fed would likely not take additional action unless "the outlook were to deteriorate significantly." The Washington Post had reported that Bernanke was "under rising pressure to offer solutions" to the floundering economic recovery. Cato scholar and former vice president at the Federal Reserve Bank of Dallas Gerald P. O'Driscoll argues, "The Fed has done the heavy lifting and responded more than adequately to liquidity issues. Now there is little further it can do that is beneficial."

• "The Fed Can't Solve Our Economic Woes," by Gerald P. O'Driscoll
• "How Mortgage Market Should Be Fixed," by Mark A. Calabria
• Cato Journal: Restoring Financial Stability (Part 1 | Part 2)

The White House on Tuesday unveiled another "analysis" that purportedly demonstrates the stimulus's success in "transforming" the economy. Vice President Joe Biden, who presented the report, stated that the "government plants the seed and the private sector makes it grow." Argues Cato scholar Tad DeHaven, "Because the government possesses no 'seeds' that it didn't first confiscate from the private sector, what the vice president is advocating is the redistribution of capital according to the dictates of the Beltway. This mindset exemplifies the arrogance of the political class, which at its core believes that free individuals are incapable of making the 'right' decision without the guiding hand of the state."

• "Biden's Fatal Conceit, by Tad DeHaven
• "The Stimulus: The Government Job Creation Myth, by Tad DeHaven

The transfer of sensitive nuclear materials and technology have been going on for the past 60 years or so, but there has been no systematic research on the subject. The fundamental question is: Why do states provide sensitive nuclear assistance to nonnuclear-weapon states, essentially contributing to the international spread of nuclear weapons? In a new Nuclear Proliferation Update, Matthew Kroenig tackles this question, and examines the implications for the Iranian nuclear issue.

• August 2010 Issue of Nuclear Proliferation Update
• Subscribe to Nuclear Proliferation Update

General Motors has announced it will take its stock public as a move toward repaying its bailout package. About time, writes Daniel Ikenson: "A GM initial public offering is the right move, and cannot happen soon enough. Let's get the government out of the car business now. But successfully reprivatizing GM should not be seen as a sign that the intervention itself was successful. …[T]here is the real prospect that that the IPO won't raise anywhere near the amount of cash to make taxpayers whole, which could generate a lot of bad press before the election."

• "GM IPO ASAP, SVP" Cato@Liberty, Daniel Ikenson
• "What Was the Point of Bailing Out GM?" Los Angeles Times, Daniel Ikenson
• "Automakers That Can't Compete Deserve to Despair," Los Angeles Times, Daniel Ikenson

The Obama Administration's Conference on the Future of Housing Finance convened last week. Cato scholars say the key is simple: fix Fannie Mae and Freddie Mac, the giant mortgage-holders at the center of the housing market tempest. Writes Mark A. Calabria, who attended the summit: "The era of politicians winking and nodding about the 'private' status of Fannie Mae and Freddie Mac should be no more. Any subsidies should be on-budget, as well as accurately and fairly estimated."

• "How Mortgage Market Should Be Fixed" by Mark A. Calabria
• "Say Goodbye to Fannie and Freddie" by William Poole
• "Foreclosure Prevention: Is The Home Affordable Modification Program Preserving Homeownership?" Testimony by Mark A. Calabria

The Bureau of Economic Analysis has released its annual data on compensation levels by industry. The data show that the pay advantage enjoyed by federal civilian workers over private-sector workers continues to expand. Cato scholar Chris Edwards has long studied the growing gap, and argues, "It's time to put a stop to this. Federal wages should be frozen for a period of years, at least until the private-sector economy has recovered and average workers start seeing some wage gains of their own."

• "Federal vs. Private Pay: A Response to OPM Director John Berry," by Tad DeHaven
• "Federal Employees Continue to Prosper," by Tad DeHaven
• "Federal Government Is a Lucrative 'Industry'," by Tad DeHaven
• "Federal workers earning double their private counterparts," by Dennis Cauchon, USA Today
• DownsizingGovernment.org

A major battle appears to be looming over whether or not the 2001 and 2003 tax cuts should be allowed to expire. Some, like Treasury Secretary Timothy Geithner, have suggested that they should be extended, but only for the middle class. Cato scholar Daniel J. Mitchell disagrees, and argues, "[T]he Obama Administration's approach is to look at tax policy only through the prism of class warfare. ...But for those of us who care about prosperity more than politics, what really matters is that the economy is soon going to be hit with higher tax rates on productive behavior."

• "Soaking the Rich," by Daniel J. Mitchell
• "How Big Were the Bush Tax Cuts?," by Chris Edwards
• More Cato Research on Tax Policy

Welfare and immigration is a combustible topic. In many ways, the issue is less fiscal than emotional. Americans treat the concept of newcomers arriving in America and immediately receiving government handouts as akin to an in-law moving into their basement and refusing to look for a job. In the latest Immigration Reform Bulletin, Cato scholar Stuart Anderson says there is little evidence that immigrants come to America to go on welfare, rather than to work, flee persecution or join family members in the United States.

• "Evidence Shows Immigrants Come to Work, Not to Collect Welfare," by Stuart Anderson
• Subscribe to the Immigration Reform Bulletin

The Senate has confirmed Solicitor General Elena Kagan to the Supreme Court by a vote of 63-37. Cato scholar Ilya Shapiro comments, "Elena Kagan's confirmation represents a victory for big government and a view of the Constitution as a document whose meaning changes with the times. Based on what we learned the last few months, it is clear that Kagan holds an expansive view of federal power. She will rarely be a friend of liberty on the Court."

• "Kagan's Confirmation Could Be High-Water Mark for Big Government," by Ilya Shapiro
• "Elena's Nanny State," by Michael D. Tanner
• Cato@Liberty Blog Posts on Kagan and the Hearings

A federal judge has ruled Proposition 8, California's ban on same-sex marriage, unconstitutional on both due process and equal protection grounds. Cato's chairman Robert A. Levy, also co-chair of the advisory board to the American Foundation for Equal Rights (which sponsored the suit) had this to say: "The principle of equality before the law transcends the left-right divide that so often defines issues in this country. Today, people from across that divide came together to fight a law that cut to the very core of our nation's character. This Judge and this Court bravely confronted wrongful discrimination and came down on the right side – defending and enforcing equal protection, as demanded by the Constitution."

• "California's Gay Marriage Ban Lacks a Rational Basis," by Ilya Shapiro
• "Reagan-Appointed Judge Strikes Down Gay Marriage Ban," by David Boaz
• "Marriage Equality for All Couples," by Robert A. Levy and John D. Podesta

Manuel Ayau, a leading figure in the international movement to promote liberty, and founder and president emeritus of Francisco Marroquin University in Guatemala, passed away Wednesday. Cato scholar Ian Vasquez remarks on his impact: "Muso [as he was known to his friends] was a living embodiment of the classical liberal spirit. ...He leaves an enormous legacy because he successfully combined clear thinking, entrepreneurship, intellectual curiosity, and a belief in the potential of free individuals to create what has become the center of classical liberal thinking in Latin America."

• "The Spirit and Influence of Manuel Ayau (1925-2010)," by Ian Vasquez

Due to wavering Republican support, Sen. John Kerry, chairman of the Senate Foreign Relations Committee, on Tuesday announced that he will delay a vote on the New Strategic Arms Reduction Treaty (New START) until after the summer recess. A recent edition of Cato's Nuclear Proliferation Update argues that while the New START "kicks many difficult decisions down the road," ultimately it "is a significant improvement over the 2002 Moscow Treaty that it replaces."

• "President Obama's Nuclear Weapons Strategy: Reviewing the New START Treaty and Nuclear Posture Review," May 2010 Nuclear Proliferation Update
• Subscribe to the Nuclear Proliferation Update

The U.S. and South Korea last week concluded four days of military exercises in the Sea of Japan, marking the latest in a series of confrontations in the region. And while North Korea has indicated interest in returning to six-party talks on its nuclear program, hope for a diplomatic resolution might be fading. In a recent article, Cato scholar Ted Galen Carpenter argues that it's time to consider options for Plan B: "It is not a prudent strategy simply to hope that the six-party talks will produce an enforceable, effective solution."

• "Plan B for Dealing with North Korea," by Ted Galen Carpenter
• "The U.S.-South Korea Alliance: Outdated, Unnecessary, and Dangerous," by Doug Bandow