Yesterday, we learned that Tesla, an electric-car company, repaid its DOE-guaranteed loan nine years ahead of schedule. Good for Tesla and good for taxpayers. However, this goes to the core of my problem with the DOE loan-guarantee programs. As I have said over and over again, while the demise of Solyndra and Fisker Automotive and the loss of millions of dollar on taxpayers’ money is frustrating, the real problem with these loan programs is that the most of the money goes to companies that could have gotten capital on their own.

Tesla, for instance, managed without the help from the federal government for the first nine years of its existence. And who has any doubt that NRG Energy, the energy giant and the biggest recipient of the DOE’s 1705 loan program, could have gotten capital without the help of the government? I don’t. The same is true for the second-biggest recipient of the 1705 loan, Prologis. Ditto Congentrix, which received a $90 million loan guarantee from DOE even though the company is back by Goldman Sachs. You may also remember that, when SolarCity was approved for a DOE loan but was later denied (I suspect because of closer scrutiny over the political connections of DOE-loan recipients in the aftermath of Solyndra), the company then proceeded to get Bank of America to lend the company the money. 

What am I upset about, you ask? So the private sector doesn’t need the government to lend money to these companies, but what is the harm? If the loans are repaid or if the loans are low-risk to taxpayers, you’d think the program is a great idea.

First, I believe that the government shouldn’t be in the business of lending money to private companies or encouraging banks to lend money to companies – whether the money will be repaid or not. That’s absolutely not the role of the federal government. Besides, there is something unseemly when so much in government subsidies goes to produce a car that only a few Americans can afford. (So far, Tesla’s main product ranges in price from $62,400 to $87,400 — including a $7,500 federal tax credit, and depending on the states other tax credits can apply).

But more important, the government meddling in the lending business introduce serious distortions and also destroys the level playing field by creating unfair competition for the companies that are not getting a federal guarantee. First, the companies that benefit from the government guarantee get much better terms than they would get without the government’s help. They get lower interest rates than they would on their own and than their competitors will get, and they get to borrow more money than they would on their own and than their competitors can get. Further, the loan guarantee from the federal government opens the door to many other subsidy sources, from state governments and elsewhere. Finally, the government guarantee attracts private-sector capital that those who don’t get the guarantee won’t have access to. These distortions are important and unfair. Here are some examples of how that works:

Eric Lipton of The New York Times reported in November 2011 that green giant NRG Energy obtained a $1.2 billion guarantee to build its California Valley Solar Ranch “at the exceptionally low rate of about 3.5 percent compared with the 7 percent that executives said they would otherwise have had to pay.” The lower rate saves the company $205 million over the life of the loan, Lipton explained. The company has also received two other packages of federally backed loans totaling $2.6 billion. And the deal gets even sweeter: Section 1705 guarantees 80 percent of a project’s total cost, a much higher portion than private banks usually agree to finance. 

State backing confers subtler advantages as well. In 2010 the Government Accountability Office concluded that federal subsidies signal to investors that a company is relatively safe, a perception that helps attract additional private capital. During a July 18 statement before the House Committee on Oversight and Government Reform, Craig Witsoe, former CEO of Abound Solar, one of the Section 1705 companies that recently went under, explained that his company managed to collect an additional $350 million from private investors after it had secured its government guarantee. Much of that funding could be the product of the security that the federal support implied.

Section 1705 loan guarantees are not the only subsidies available to alternative energy firms. NRG received more than three dozen grants under the 2009 stimulus. NRG is also eligible for money from the Treasury Department’s Section 1603 grant program, which provides up to 30 percent of a project’s cost in cash. Eric Lipton calculated that the company would be eligible for a $430 million cash payment on its $1.2 billion Section 1705 project once the construction of the California Valley Solar Ranch is completed. NRG also could receive additional cash under the Section 1603 for its other two 1705 projects. 

These federal goodies are often duplicated at the state and local levels. Lipton noted that “under a state law passed to encourage the construction of more solar projects, NRG will not have to pay property taxes to San Luis Obispo County on its solar panels, saving it an estimated $14 million a year.” California offers depreciation tax breaks for renewable energy plants, reducing NRG’s corporate income taxes by $110 million. 

What is true for the 1705 loan program is true for all other loan-guarantee programs. In other words, getting a loan guarantee by the federal government gives a considerable advantage to the company receiving the loan over its competition. This is why many companies that could get capital on their own are eager to get their hands on government-subsidized loans. In fact Elon Musk said that much about the loan Tesla received from the government:

Elon Musk had something to clarify. He believes government subsidies are usually bad, except when they are good.

Tesla Motors didn’t need the federal government loan to go public or to survive, said Musk, chairman, product architect and chief executive of the electric-car company.

Musk jumped in to comment on government subsidies even before the topic was raised by Alan Murray, who moderated the opening session of The Wall Street Journal’s ECO:nomics conference in Santa Barbara on Wednesday. Musk said that generally he doesn’t believe government subsidies are good, but in some cases they do help.

In the case of Tesla, the $465 million loan that was awarded to the company by the Department of Energy in January 2010 helped the company stage a successful initial public offering the same month that another company backed by a federal loan, Solyndra, pulled its initial public offering. Musk said Tesla’s IPO would have happened anyway, though “it wouldn’t have been as good.”

In the end, we are all better off that Tesla has reimbursed its loan guarantee, and certainly the company should be commended for it. Tesla, I am told, produces fantastic cars and, as long as consumers are willing to pay for them, it should be fine. However, if people aren’t willing to buy the car, there is no reason for taxpayers to keep the company afloat to sell cars that taxpayers don’t want to buy at the price it is sold for. Ideally, the company will renounce the many tax credits and other subsidies it received for its car and fly on its own. I also hope that, in the future, the federal government will get out of the private-sector lending business and stop subsidizing companies of any sort, whether green-energy ones or oil-and-gas firms.

The Wall Street Journal has an interesting piece on Tesla today.

David Pryce-Jones on the Woolwich attack.

This week Gallup released their annual survey that asks Americans to rate the morality of various social issues. Overall, the news was not particularly good for social conservatives. On a variety of issues relating to sex and marriage, Americans are becoming more social liberal. Since 2001, a significantly smaller percentage of Americans are morally opposed to gay and lesbian relations, divorce, and sex between unmarried individuals. There was even a seven-percentage-point increase in the number of Americans who thought polygamy was morally acceptable.

However, the news was not all bad. Opposition to pornography held relatively constant. The report also indicated that since 2001 a smaller percentage of Americans find physician-assisted suicide morally acceptable. Furthermore, moral opposition to abortion has remained constant since 2001.

Opinion trends on abortion are interesting. Since 2001, Gallup polls have shown that opinions toward the morality of abortion have remained fairly constant. However, the percentage of Americans willing to identify themselves as “pro-life” has increased. Six of the last nine Gallup polls taken since 2009 have shown that Americans are more likely to describe themselves as “pro-life” rather than “pro-choice.” The fact that more Americans are translating their moral unease about abortion to political and legal opposition toward abortion is a positive development – and is a nice testament to the good work of the pro-life movement

— Michael J. New is an assistant professor at the University of Michigan – Dearborn, a fellow at the Witherspoon Institute, and an adjunct scholar at the Charlotte Lozier Institute. Follow him on Twitter @Michael_J_New.

A year ago today, when I met with some of the 80,000 underground Catholics of Wenzhou, China, they were rebounding from serious hardship. Just months before, authorities had detained their bishop, Peter Shao Zhumin, and chancellor, Paul Jiang Sunian. The authorities pressured the two men to register with the Catholic Patriotic Association, submitting to state control. They even took Shao on a mandatory fieldtrip to Sichuan Province, sitting him down with government-appointed bishop of Leshan, whom the Vatican considers illegitimate. But despite government pressure, both the bishop and the chancellor of Wenzhou refused to yield, and they were both eventually released.

As we gathered at the “underground” Qiao Tau Mang Catholic church — a conspicuous five-story structure built beside a government building — the Catholics were celebrating their leaders’ return. But more than that, they were happy because it was the World Day of Prayer for the Church in China, held each May 24.

If the Communist government had its druthers, there would be no religion practiced in Chinese borders. But Maoist efforts to eradicate faith failed, so Beijing instead tightly controls it through a religious bureaucracy. Even so, many Christians choose to worship outside the official system. These underground Christians are subjected to periodic crackdowns and religious persecution.

Because Protestants don’t adhere to rigid hierarchy, they’re more flexible in their response to government control. House churches sprout up, and it’s tough for the government to even keep track of the new pastors.

But the Catholic Church’s top-down, orderly structure often makes it an easy target.

Government control of Catholics continued this year, most notably in Shanghai. Bishop Thaddeus Ma Daqin announced in December that he was leaving the Catholic Patriotic Association, which governs state-sanctioned Church activity. Since then, he’s been placed under house arrest.

As Chinese Catholics gathered today, Ma’s plight reflected their own. The Church in China is divided, as worshippers in the underground and official churches try to cope with government intervention in their worship. The one-child policy, as well as government closure of seminaries, has resulted in a priest shortage. And persecution continues.

The World Day of Prayer for the Church in China is a high point of Catholics’ year because, many told me, it’s the only day they feel connected to the global church.

Do check out Colette Moran’s new posts.

According to Senator Chuck Grassley, the IRS’s tax-exempt division director Lois Lerner refused to resign after she was asked to do so by the agency’s acting commissioner:

“My understanding is the new acting IRS commissioner asked for Ms. Lerner’s resignation, and she refused to resign.  She was then put on administrative leave instead.  From all accounts so far, the IRS acting commissioner was on solid ground to ask for her resignation. . .  The IRS owes it to taxpayers to resolve her situation quickly.  The agency needs to move on to fix the conditions that led to the targeting debacle. She shouldn’t be in limbo indefinitely on the taxpayers’ dime.”

Yesterday, National Review Online reported that Lerner was put on paid administrative leave at the IRS. Earlier in the week, she invoked the Fifth Amendment at a House oversight-committee hearing on the IRS’s targeting of conservative groups, raising questions about her role in the process.

Republicans looking to press President Obama on the trio of scandals that have been consuming Washington — but not overreach on them — got some private advice this week from Frank Luntz, the pollster and linguistic guru who often briefs top Republican lawmakers.

Luntz delivered a presentation to House Republicans at the whip meeting Monday, the gist of which was, according to a GOP aide present, “don’t be an idiot and go on TV calling for impeachment.” Luntz presented polling numbers showing that voters by and large aren’t blaming Obama for the scandals. They are interested, however, and want to know “how did this happen?” and “what are you going to do to ensure it never happens again?”

Luntz, as he often does, displayed words and phrases in a matrix with the worst words at the bottom and the best words at the top. In this case, he urged Republicans to avoid “impeach,” “fire,” and “replace.” The phrase that did best with voters was “I want to make sure this never happens again.”

Athens — Democracy is under siege in its birthplace. In a room of over 50 Greek CEOs and scholars from the American School in Greece, not one raises their hand when asked if they think their democratic government is capable of solving their economic problems. Nor does anyone raise their hand when questioned if they think there is a better system of government that could fix Greece’s economic crisis. More disturbing, a good 70 or 80 percent agreed with the comment “I feel that my freedom is disappearing.” Given news this month that the official unemployment rate hit a new record of 27.2 percent, the yearning for a way out of the labyrinth is palpable.

Spending several days in Greece clearly is not enough time to understand what is happening here, but one can absorb an enormous amount by getting away from the tourist spots even for a few hours. James Q. Wilson would be horrified by the state of the city — every surface within reach is covered by graffiti, many buildings are falling apart, there is a general feeling of decay. At first, I thought the subway was part of an urban art project, so thoroughly were the cars covered. It’s a bit like walking through New York in the 1970s; even nice areas are filled with spraypainted logos and slogans. That is not surprising in a country whose GDP dropped nearly 6.5 percent in 2012 and is expected to shrink another 4.5 percent this year.

Yet, despite real unemployment being closer to 35 percent, as I’m told by businessmen, cab drivers, and others, the cafes are filled, downtown shops that are open seem filled with customers, and people both young and old mill through the streets. Granted, there is a huge number of closed storefronts, but there is a constant bustle, even on weekdays. I ask people how everyone survives, if unemployment is so high. Some say it is the money economy — more people are working than the statistics capture, they’re just doing it under the table and paying no taxes. Others say it is because so many young Greeks live off their parents’ pensions, pay no rent at home, and pay no taxes on the work they do. Still others claim that no one saves any money and so everything just goes right into consumer spending.

All feel that the economic system is near breakdown, but few talk about regaining competitiveness and spurring innovation, or discuss how the country can position itself in the global economy. The young people I talk with have a grim reaction that combines anger with blithe unconcern, almost a feeling that there is nothing they can do, so they may just as well ride above the waves as long as they can. Walking through the overgrown and ignored ruins of Plato’s Academy in a neighborhood near downtown Athens, the contrast between the ancient spirit of critical inquiry and today’s cynicism is jarring.

As for politics, I’m told by more than one person that the current center-right government of Prime Minister Antonis Samaras and his New Democracy Party is “100 percent” better than the Socialists under George Papandreou, son of Greece’s most powerful postwar leader, Andreas Papandreous. Yet, even with the goodwill of many of the business leaders, retirees, and young people I talked with, few believe he has any real chance of creating a sustainable recovery. At best, people were cautiously optimistic that the country was no longer dropping off a precipice, but with the new unemployment news, such hopes are being dashed. Such disaffection is one reason why far-right parties, like New Dawn, a crypto-fascist movement, are gaining alarming levels of support. One sees their black-clad, combat boot-wearing members in subway stations, public squares, and the like.

Yet there is another reason such modern Diogenes abound. As one finance expert puts it to me, “Greece no longer is sovereign; our creditors will make the final decisions about the future of our country.” Indeed, the week I arrive, negotiators from the troika of the European Central Bank, the IMF, and the European Commission were back in Athens, failing to reach a deal to release a further $3.6 billion dollars on top of the nearly $30 billion already loaned since 2010. In return for more international largesse, Athens has promised massive cuts in the civil service, up to an astounding (and hard to believe) 150,000 positions, and other cost-saving measures. Yet the average Greek on the street feels that it is a shadowy, unrepresentative world community that is creating the uncertainty under which they all live. All whom I talk to recognize Greece’s responsibility for its economic mess, but, as an office lady laments, “the world thinks we Greeks are lazy. It’s not true, we work harder than ever before, but our government has failed and is not in control.”

What is left is a sense of limbo — not knowing where the country is going, nor what crisis could next hit, espeically after watching Cyprus implode just a few weeks before. One thing they all hope for, though: good weather for tourist season. The tourists are our only economic hope, I’m told. Not the most sophisticated of recovery plans, but grabbing on to anything just to make it through the storm seems the one thing all Greeks can agree upon.

— Michael Auslin is a scholar at the American Enterprise Institute in Washington.

Having been away last week and part of this one, I’ve been catching up on my favorite blogs, and this now–almost ancient post by Jonathan Chait seems worth a word (with apologies in advance for a long post).

Chait is a sharp and often knowledgeable commentator, I’ve learned a lot from him, but in this case he evinces what strikes me as a significant and common misreading of some important trends.

I’ll freely admit that his post first caught my eye because part of it is a rather bizarre critique of my own work. Chait, for instance, accuses me of arguing that our current fiscal difficulties are a function of a debt crisis even as he quotes me saying the opposite. He argues I support austerity by citing an essay in which I argue against it. He accuses me of urging Republicans away from “half-measures” and compromise because I opposed the particular counterproductive price controls the president has proposed for Medicare — but I’ve often argued in praise of half measures, including on Medicare in particular, just not in favor of worsening a bad situation.

But none of that is your problem. The problem is Chait’s larger argument: that the concerns of those of us who urge policy reforms to avoid a federal fiscal catastrophe have been proven wrong by recent developments — that, as his title puts it, “the facts are in and Paul Ryan is wrong.”

His first point on that front assumes that what Paul Ryan or I or others on the right argue for is a version of European austerity, which it plainly isn’t, and that conservative fiscal worries were based on the particular finding of a particular paper by two Harvard economists that has been shown to have had some data errors. That latter notion is surely among the more curious liberal hallucinations of the past few years.

But Chait’s more serious point is that the burden of health costs, which I at least do take to be central to the fiscal prospects of the federal government, is dramatically abating, and therefore that the projections on which the worriers base their worries are wrong. In fact, he seems to have taken this point to be so powerful and important that he repeated it a few days later in an attack on the Wall Street Journal’s long-running critique of Obamacare.

In describing recent trends in health costs in both posts, Chait repeatedly refers and links to this New York Times article, which discussed some of the trends and their possible causes and implications. The narrative he takes from that story is that conservative worries expressed in the early Obama years were based on assumptions developed at a time when health costs seemed to be soaring, but that we now know that cost inflation has been slowing since 2009, not just because of the recession, and it looks like the slowdown could persist — perhaps in part because of Obamacare.

The core of the problem with this tale is probably the fault of how the Times story itself lays out the matter. It describes the basic recent trends this way:

Between 2009 and 2011, total health spending grew at the lowest annual pace in the last five decades, at just 3.9 percent a year, although rising out-of-pocket costs have hit millions of families. In contrast, between 2000 and 2007, those annual growth figures ranged between 6.2 and 9.7 percent, according to government figures.

Here are the figures from which the Times draws its description — the official HHS figures for year-over-year health cost inflation from 2000 to 2011:

One way to describe this trend is to say, as the Times does, that health inflation ranged from 6.2 percent to 9.7 percent between 2000 and 2007 and was at 3.9 percent from 2009 to 2011. Another is to say that a major slowdown in cost inflation began in 2003 and ended in (or at least appears to have paused since) 2009. It had not reversed as of 2011, and that’s very important. That’s what the discussion about the effects of the recession and various other factors in the Obama years is about. But it’s not about the original cause of the slowdown, which began in dramatic fashion five years before the recession.

That’s part of what makes the role of Obamacare in the Chait narrative so odd. If we have to attribute the deceleration of cost growth to a federal law, the most plausible candidate given this data would seem to be the Medicare Modernization Act of 2003, which enabled a vast expansion of catastrophic-coverage insurance with health savings accounts and created a premium-support system to provide prescription drugs in Medicare. And indeed, the Times story suggests that greater consumer cost-sharing has played a part, and the Congressional Budget Office, in explaining its recent downward re-estimate of near-term Medicare costs, noted that “the largest downward revision in the current baseline is for spending for Medicare’s Part D (prescription drugs).” As a former Bush White House health staffer, I’d love to make that argument, but I’m sure the story is not nearly so simple or convenient. But the case for Obamacare playing a role in slowing cost growth is far, far harder to justify. Was it already working its magic on expectations a decade ago? Did it bring the slowdown to an end? Prevent a reversal? Isn’t none of the above the most likely answer given the data we have, not to mention the fact that the law doesn’t really take effect until next year?

It should be noted, too, that the slowing trend of the Bush years is part of a longer-term slowdown that has been going on, with a few significant reversals, since the impossibly large annual growth figures of the early 1980s. Here’s annual growth in national health expenditures since 1980, from HHS:

It’s not particularly clear to me what Chait’s kind of analysis wants to make of this pattern, especially as it relates to the federal budget, which is the point he’s trying to argue. After all, the nature of federal health spending (and the relation between annual growth and overall scope) means that while this has been going on with annual health-spending growth, the pattern of federal health spending in relation to the economy has looked like this:

I’m not actually suggesting that juxtaposing these two charts makes any point in particular. I’m just suggesting that it means Chait’s use of the former data to make a point about the latter doesn’t really make sense. The very high rates of growth in the early period of the first chart means that you’re growing a much larger pie in the latter period of that chart, which means that in order to make the growth of health costs sustainable you need a dramatic efficiency improvement in health financing combined with stronger economic growth. That’s roughly what conservatives are arguing for, and we think that if you don’t have that then the federal government will be in very serious fiscal trouble. Nothing about the facts of the past few years suggests otherwise, and nothing about Obamacare suggests it can achieve these goals — quite the contrary.

Chait’s argument seems to imply that the sorts of CBO projections we worry about were made in the midst of a cost explosion and assumed it would go on forever. But they were made in the midst of a dramatic slowdown in health inflation and made what seem to have been quite sensible assumptions about the trajectory of health spending. The Obama administration has made rosier but not fundamentally different assumptions. HHS expects annual health-spending inflation to average 6.1 percent over the next decade; it has averaged 5.9 percent over the last decade. I think their projection is on the low side, particularly because it vastly understates Medicare spending (the latest projection report deadpans its expectation of a gargantuan “scheduled 30.9-percent physician payment rate reduction mandated under the Sustainable Growth Rate Formula” which obviously has no chance of happening) and because it understates the inflationary effects of Obamacare. But whether I’m right or the administration is, or CBO, or the scholars cited in the Times, Chait’s story doesn’t hold up — especially as a case for doing nothing about health-entitlement costs.

And that, in the end, is what his argument is all about. He wants to suggest that conservative arguments for fundamental health-care and entitlement reform are based on the notion that costs are now exploding and that if they aren’t then those arguments fall apart. But no one argues the peak of the crisis is already here. The point is that it’s coming, and we ought to do what we can in advance. Chait doesn’t even really try to argue against that point. Like the liberal fiscal deniers more generally, he says we shouldn’t think about any of this now and implies that maybe we should sometime later when a huge crisis is right upon us, though it’s far from clear what kind of action he would find acceptable even then. This is one irony of our entitlement debate: the two sides disagree less than you might think, they’re just talking about different things. The Left, in essence, says we don’t need to do anything right now so we need not worry, while the Right says we’re eventually going to have to do something so we might as well figure out what. The difference between them is about whether it makes sense to prepare for the future.

The aging of our society, combined with the character of Obamacare, offer some strong reasons to expect that health-spending growth will begin to rise again in the near term and in any case that (because of the demographic facts especially) in the decade after this one we will confront an immense and unprecedented entitlement funding challenge. Medicare, in particular, requires fundamental reform to be made sustainable. And the most recent relative slowdown of costs in that program suggests a path for such reform. The prescription drug program most responsible for CBO’s mildly improving outlook on Medicare spending is a premium support plan of exactly the sort that the House Republican budget proposes for the larger program. And the economic logic behind it is of exactly the sort that is behind some of the key conservative alternatives to Obamacare.

Those reforms could help constrain both national health spending and federal health spending, and they would be very good for growth, without shirking the government’s obligation to the needy and the elderly. That’s the difficult combination we need, and every passing year of denial and distortion makes it more difficult to achieve such reforms without major disruptions in the lives of vulnerable people.

Maybe the growth of health costs will start slowing again. Maybe Obamacare will not significantly increase it. Maybe Medicare will somehow be fine. Maybe. The facts are not in, but the prospects don’t look good.

Lorenzo the Magnificent is on tomorrow, as he is every Saturday, with the best and brightest to launch your Memorial Day weekend via his world-class syndicated radio show — heard coast-to-coast from 10 a.m. to 1 p.m. Eastern via your local station or on the Web (go here and click on “Listen Live,” and catch the show’s archives here). Joining the apostle of free-market capitalism will be Representatives Peter Roskam and Kevin Brady, NR’s own Robert Costa, James Pethokoukis, Tom Curran, Jim Paulsen, Michael Cuggino, David Malpass, Steve Moore, and John McIntyre. What a lineup! And they’ll be contemplating big topics only, such as: the lack of truth-telling at the IRS hearings, who really quarterbacked tea-party targets, if a special counsel is needed, whether Obama is incapable of managing the White House and executive branch, what Ben Bernanke really said, whether Apple CEO Tim Cook was completely right on tax reform, and a look at the stock market’s shaky week.

Listen! And don’t forget those who have made the ultimate sacrifice to defend our freedoms!

There are still some staterooms to be had on the National Review 2013 Norwegian Fjords Cruise. August 1 to 8 — what a week will be awaiting you! Get complete information at www.nrcruise.com.

​An elementary school in Nova Scotia has decided to cancel Mother’s Day and Father’s Day celebrations out of sensitivity for non-traditional families.

United Press International reports that Astral Drive Elementary School will instead only recognize a more inclusive holiday: International Day of Families, a U.N.-established festival that’s meant to recognize single-parent and same-sex family homes, too. The school had celebrated all three starting two years ago.

But this year, students weren’t allowed to make cards specifically for Mother’s Day, said one parent, and were instead asked to write the names of people who have supported them. The province’s education minister explained that schools are free to choose how to recognize holidays and which ones to celebrate.

Apparently, the European Union didn’t have enough on its, ahem, plate, so it decided to further regulate what you can pour on yours. As anyone who has ever been to a restaurant surely knows, restaurants very often provide complimentary bread and olive oil to dip it in. More often than not, the oil is poured from a bottle onto a little dish; sometimes the bottle is refillable, sometimes not. The EU, in its infinite wisdom, decreed that olive oil may only be poured from pre-sealed, non-refillable bottles that had to be thrown out once they were empty. The Brussels bureaucrats aimed to protect customers against the scourge of mislabeled olive oil or bottles that didn’t provide sufficient place-of-origin and nutritional information. 

Europeans were rightly outraged. David Cameron pouted, “This is exactly the sort of thing that Europe shouldn’t even be discussing.” Not exactly John Galt, but we’ll take it. 

Thanfully, the EU has now rescinded the proposal, and Europeans are once again free to consume all the watered-down olive oil their stomachs can stand. 

Shortly after the president’s speech yesterday, a friend of mine who is an expert on counterterrorism e-mailed me the following: “That speech was pretty much every constitutional-law class he ever taught. A moral argument with himself.”

I couldn’t have said it better. The speech raises more questions than it answers. Herewith, some observations:

al-Qaeda
The speech asserts that, because al-Qaeda’s centralized planning capability has been degraded, the threat of a large scale, 9/11-style attack on the United States has been reduced. That ignores the fact that, after American troops leave Afghanistan in 2014, al-Qaeda in the region will likely reconstitute itself, at least in the southern provinces of the country. If the president has a plan to prevent that, he has yet to tell anyone what it is. It also assumes that the networks that al-Qaeda and its associates have established in North Africa and the Arabian Peninsula will be unable or unwilling to plan or assist in a high-casualty attack on the United States. But why not? In his speech, the president said that these groups are concentrating on local targets. That may be true now, but how will we make sure it doesn’t change in the future?

On this point, there is an underlying reality which the president should have addressed. During the first 150 years of the Republic, the oceans protected the American homeland from sudden, devastating attacks. In the information age, that strategic reality has changed; today, rogue states or sub-national movements can launch cyber, biological, or even nuclear attacks directly against the United States, even with limited resources. To this point, the Obama administration has been vocal but not effective on the cyber danger, and it hasn’t begun to deal with the other threats. Nothing in the president’s speech changed that.

The AUMF
The president explained that, because the terrorist conflict is winding down, he wants the Authorization for the Use of Military Force (AUMF), essentially a declaration of war against al-Qaeda and associated forces, to be changed so that the United States is not on a perpetual “war footing.” He should probably have mentioned that to Michael Sheehan, his assistant secretary of defense for special operations and low-intensity conflict. Just one week ago, Sheehan testified before Congress that “[the administration is] comfortable with the AUMF as it is currently structured. Right now . . . it serves its purpose. In my judgment, this is going to go on for quite a while, yes, beyond the second term of the president. . . . I think it’s at least 10 to 20 years.”

Drones
The strongest part of the speech was the president’s defense of deploying drones against terrorist targets.  But the context was the president’s evident but vague discomfort with how drones are being used. According to President Obama, he will only use drones when there is a “continuing and imminent” threat to the American people, and only when there is a “near certainty” that civilians will not be killed. Does this mean that if there is a “continuing and imminent” threat to the American homeland that a drone attack could stop, but more than a near certainty that foreign civilians would be killed if drones were used, the president would not act?

Is this a change from our past policy? How are we to know whether a change has now occurred, since the administration has never said what our past policy is? Why did the United States recently put a new drone base in Niger if the president is planning to limit their use? And how does  the spread of terrorist networks to the Arabian Peninsula, North Africa, Syria, Libya, and other areas suggest less need for drones? If drones are as effective as the president has claimed, and if there are now more targets spread over a broader geographic area, doesn’t that mean we should use drones even more?

Guantanamo
Four years ago, the president signed an order to close the detention facility at Guantanamo. Then, over time, he made a de facto reversal and kept the facility open. Now he says that he wants to close it again, but the only concrete policy he offered as an alternative was transferring some of the detainees to Yemen. 

The president’s angst over Gitmo comes from his concern about the very real conflict between America’s belief in due process and the fact that giving due-process rights to terrorists is both impractical and, from a security standpoint, unwise. But how will the conflict be resolved by sending the terrorists to Yemen? The Bush administration already tried that option and, according to the Director of National Intelligence, almost 30 percent of former detainees returned to militant activities after they were released. The truth is that Yemen doesn’t have the money, inclination, or capability to monitor detainees adequately. Al-Qaeda in the Arabian Peninsula, which the president correctly notes is active and dangerous, is located in Yemen and was founded by former Gitmo detainees (and a Yemeni jihadist who escaped from prison there). And if the concern is for fairness and due process, does anyone believe that the government of Yemen will protect the rights of detainees who are transferred there?

The Elephant In The Room
Finally, the president failed completely to mention the elephant in the room: the fact that our government is busy reducing the capabilities of American armed forces. Over the last four years, the president (and Congress) have cut almost $1.5 trillion from baseline defense budgets, to the point where the United States is now scheduled to spend $100 billion less on defense, in nominal dollars, in 2020 than it spent in 2010. Former secretary of defense Leon Panetta described the last round of cuts (the sequester) as “devastating,” and indeed they are. According to the Joint Chiefs of Staff, the Army has curtailed training for 80 percent of its forces; half of Marine combat units will be below minimal acceptable levels of readiness by the end of the year; two-thirds of the Navy will soon be less than fully mission-capable; and the Air Force has ceased operations for a third of its fighter and bomber force.

Four years ago, the president gave another speech at the National Defense University.  In that speech, he promised that:

This nation will maintain our military dominance. We will have the strongest armed forces in the history of the world. And we will do whatever it takes to sustain our technological advantage, and to invest in the capabilities that we need to protect our interests, and to defeat and deter any conventional enemy.

Whatever else can be said about America’s national-security policy, the government is certainly not now doing “whatever it takes . . . to invest in the capabilities that we need to protect our interests, and to defeat and deter any conventional enemy.” If that doesn’t change, it won’t matter how the president chooses drone targets or what happens at Gitmo. Policy means nothing without the power to back it up.

— Jim Talent served on the Senate Armed Services Committee and is currently a distinguished fellow at the Heritage Foundation and co-chair of the American Freedom and Enterprise Foundation.

Reeling from a sexual-harassment scandal that forced one assemblyman to resign and has raised questions about the conduct of their speaker, the New York state assembly is turning its attention to a pressing issue: borders for bowling shoes.

A bill sponsored by state senator Patrick Gallivan (R., 59th) and assemblyman Robin Schimminger (D., 140th) would require bowling-alley owners to post signs “warning keglers not to wear bowling shoes outside, lest they become wet and increase the likelihood that a bowler could slip and fall when they come inside.”

Bowling-alley owners claim that, since the state outlawed smoking in bowling alleys, bowlers have taken to ducking outside for smoke breaks during games, without taking their shoes off. When it’s raining or snowing, the shoes become slippery, bowlers fall on the lanes, and owners get sued.

If it seems like common sense to recognize that you might slip on wet shoes, well, that’s because it is. Except in Albany, apparently.

Proving that a little more than a year is a long time in politics, Republicans who may have an eye on 2016 have begun to descend on Iowa, where 16 months ago Republican voters ventured from their homes to take part in the first party caucus of the 2012 presidential election. At the time, Wisconsin governor Scott Walker was struggling for his political life in a battle against public-sector labor unions, but since then he has emerged as an A-list presidential candidate for 2016.

Walker was in Des Moines on Thursday night speaking to a dinner held by the Polk County Republican party, fueling speculation that the Wisconsin governor is aiming for higher office in 2016. Walker, who faces reelection to his current position in 2014, has been giving speeches around the country, with three out-of-state stops this week alone. At $75 per plate, the dinner in Iowa sold out, with over 800 in attendance.

Cindy Shields, from nearby Johnston, said before Walker’s speech that she has a “very favorable” opinion of the Wisconsin governor, praising his willingness to take on the public unions. “He stood up for what he thought was right to make their state better,” said Shields’s husband, Dan.

Prior to Walker’s talk, Norm Pawlewski of the Iowa Faith and Freedom Coalition said that he knew “virtually nothing” about him besides the union controversy, but he saw Walker as ”a guy that won’t fade when the going gets tough.” Pawlewski wanted to know more about Walker’s stands on issues such as immigration, abortion, and gay marriage but found him to be ”obviously a viable candidate” for president, adding that he’s “articulate, he looks good, and speaks well.”

During his 40-minute speech, Walker mostly steered clear of social issues, although he thanked Iowans for praying for him during his recall election in 2012. Walker emphasized his Iowa upbringing, noting that he had lived in the state from 1970 to 1977 when his father was a pastor in Plainfield.

While the crowd dined on chicken, Walker used his experiences in Wisconsin to paint a larger vision, saying he had “some thoughts, not just for Iowa and Wisconsin, but where we as Republicans and, in turn, where we as a country should go moving forward.”

Flanked by two large video screens, Walker emphasized three main points that he says will better the Republican party. First, he said, the party needs to provide optimism. Merely attacking your opponent isn’t enough, he pointed out, arguing that conservatives need to put forward positive plans for voters to consider.

Walker also made the case that Republicans need to be more relevant, which means “going to places that we as Republicans don’t typically go.” He noted that he was elected three times as Milwaukee County executive and that he won every one of the majority-Hispanic wards in the city of Milwaukee.  He called the idea that the GOP can’t reach out to women, young voters, or ethnic minorities “nonsense.”

Walker concluded his speech by urging Republicans to be more courageous, pointing to many of the reforms he has implemented in Wisconsin with regard to unions, food stamps, and health care. “I call it moving people from government dependence to true independence,” Walker said of his reforms.  He defended his recent plan to require citizens on food stamps to be enrolled in a job-training program, saying, “I’m not making it harder to get assistance, I’m making it easier to get a job.” His opponents, he said, “measure success by measuring the number of people who are dependent on government. We should measure success by how many people are not.”

Undoubtedly, Walker’s Iowa speech will be one of many that Republicans in Polk County will hear in the next two years. “We have a pretty good screening process here,” said a smiling Pawlewski. “We get their number before the caucuses.”

In a fundraising e-mail sent Friday, Democratic National Committee spokesman Brad Woodhouse accused Republicans of “making up so-called ’scandals’ out of thin air,” and asked supporters to “tell President Obama you’ve got his back.”

Woodhouse wrote:

Getting in President Obama’s way has been the top priority for Republicans in Congress since day one. But now they’ve gone too far. 

They’ve been caught red-handed making up so-called ’scandals’ out of thin air to stir up false rumors of vast ‘cover-ups happening in the White House.

Did they find a single shred of evidence to back up their outrageous claims? No.

Recent polling suggests the American people are taking the “so-called” scandals — Benghazi, IRS targeting, and Eric Holder’s war on journalists – a bit more seriously.

Via Zeke Miller.

Need to launch a satellite? You’re in luck.

NASA has put one of two launchpads at the Kennedy Space Center in Cape Canaveral up for lease. Since the shutdown of the space-shuttle program, NASA has been shrinking its operation. According to Reuters, “NASA’s Florida spaceport has demolished or transferred to commercial users more than 150 shuttle facilities, reducing its footprint by 1 million square feet (93,000 square meters).” A heads-up if you’re interested: NASA would prefer at least a five-year contract.

No word yet on when the ad will be up on Craigslist.

The New York Times lead staff editorial, May 24, 2013:

President Obama’s speech on Thursday was the most important statement on counterterrorism policy since the 2001 attacks, a momentous turning point in post-9/11 America. For the first time, a president stated clearly and unequivocally that the state of perpetual warfare that began nearly 12 years ago is unsustainable for a democracy and must come to an end in the not-too-distant future

There have been times when we wished we could hear the right words from Mr. Obama on issues like these, and times we heard the words but wondered about his commitment. This was not either of those moments.

Before gushing, the New York Times presumably had researched other “momentous turning points” in American history. To cite a few:

May 24, 1775: Washington declares the war of independence “is unsustainable for a democracy and must come to an end in the not-too-distant future.”

May 24, 1862: Lincoln declares the war “is unsustainable for a democracy and must come to an end in the not-too-distant future.”

May 24, 1942: Roosevelt declares the war “is unsustainable for a democracy and must come to an end in the not-too-distant future.”

Planet Earth calling: The New York Times applauds America’s long and illustrious tradition of ending wars unilaterally by quitting. Hello? Is anyone home down there?

On Wednesday, I posted a short piece about the Obama administration’s mass-scale audit of adoptive families — 69 percent of returns claiming the refundable adoption tax credit were audited in 2012. In the ensuing discussion (I was grateful that it was linked and discussed in multiple places), IRS-apologist commenters came up with a common justification: The IRS was just trying to stop all that adoption fraud.

For example, here are two commenters from Rod Dreher’s blog at The American Conservative (and I’m not picking on Rod’s commenters; he actually has one of the better comment boards in the conservative blogosphere):

It’s not harassing them for their good deeds. Its a byproduct of all the people who try to lie about adoptions to lower their taxes.

A child tax deduction is a very very good thing, but this is a necessary result because people will always try to take advantage of these benefits.

And . . .

Off of Stuart’s first paragraph, is it possible this high rate of requests for additional info, and audits, is an unfortunate necessity in light of rampant tax crime on the part of people claiming the adoption tax credit?

I have no info on the matter, but it’s necessary to know the answer before indulging in outrage, even thought outrage is the funnest drug evah.

So what are the facts? Fortunately, the rate of tax adjustments and fraud discovered in the initial audit wave — as helpfully outlined in this 2011 GAO report (the year I got audited) — is available for all those with decent googling skills. Here’s the rate of fraud:

Further, IRS officials also told us that they had not found any fraudulent adoption tax credit claims, and there had been no referrals of adoption tax credit claims to its Criminal Investigation unit.

So the rate of fraud was zero. How about the rate of tax adjustments (in which the IRS finds the audited owes a different amount of tax than they paid) compared to average taxpayer audits?

As of August 2011, 68 percent of the nearly 100,000 returns on which taxpayers claimed the adoption credit were sent to correspondence audit. However, of the approximately 35,000 returns on which audits have been completed as of August, IRS only assessed additional tax about 17 percent of the time. The equivalent rate for all correspondence audits in 2010 was 86 percent.

Keep in mind, these numbers are from 2011. The IRS then followed up its massive, fruitless audits of extraordinarily law-abiding citizens — many of whom have just exhausted their entire life savings and gone into debt to adopt (sometimes even borrowing against the tax credit that was then long-delayed) — with another set of massive, fruitless audits the next year. This is bureaucratic nonsense at best and sheer malice at worst.

While I do think bureaucratic inertia and stupidity are the best explanations for IRS actions, I’m definitely willing to consider malice as a possibility. Let’s not forget that we’re in the midst of a mini-wave of leftist revulsion against (in particular) the evangelical adoption movement. Here’s a recent example of sheer anti-Christian bigotry from Salon:

When you think of adoption, what’s the first thing that comes to your mind? Maybe it’s the vague, rosy notion of a happy ending — of rescue, salvation or (more likely) some do-gooding Hollywood mouthpiece like Angelina Jolie adding kids of various ethnicities to her big, colorful brood.

What probably doesn’t automatically come to mind is coercion, racism and a conservative Christian agenda that extends beyond mere abortion prevention. . . .

[Kathryn] Joyce details how the adoption industry has become overly enmeshed with the Christian right — how evangelical, pro-adoption church leaders have, in recent years, been creepily urging followers to adopt en masse, often internationally and from war-ravaged countries.

Yes, wanting to provide homes, parents, and a lifetime of love to desperately poor, orphaned children is — what’s the word for it? — “creepy.” And what’s the word to describe parents of multi-ethnic families? Ahh yes, “racist.” I’ve got a word to describe this kind of commentary: vile.

Is this far-left ideology playing a role in IRS thinking? Eighteen months ago, I would have thought such an idea to be paranoid. But that was before I knew the IRS was targeting conservative groups, before I knew they asked pro-life groups even about their prayers, and before it illegally provided confidential documents to liberal publications.  

All trust is gone, and it turns out I was foolish to trust in the first place.

Every single investment idea . . . every desire to understand what is going to make this go up or go down is going to be overwhelmed by the most beautiful experience . . . which a man will never share, about a mode of connection between that mother and that baby. And I’ve just seen it happen over and over.

These are the supposedly shocking, condescending, sexists remarks he made during an off-the-record session at the University of Virginia’s McIntire School of Commerce.

Paul Tudor Jones, the hedge fund billionaire, told an audience of University of Virginia students, alumni and others that it is difficult for mothers to be successful traders because connecting with a child is a focus “killer.” As long as women continue having children, he said, the industry is likely to be dominated by men.

“As soon as that baby’s lips touched that girl’s bosom, forget it,” Jones said, motioning to his chest during an April symposium. He was talking about two women who worked with him at a stock brokerage in the late 1970s — two women who married, had children and, according to his account, no longer had the laser focus needed for the intense world of macro trading.

If you listen to the video, Jones also talks about how a man who is going through a divorce – particularly if there are children involved – does not make for the most focused broker.

His point seems to be that there is more to life than trading. It’s not insulting; it’s refreshingly realitistic. It does honor to women.

Jones said in a statement to The Post on Thursday that his “off the cuff remarks” were made “with regard to global macro traders,” who work in a small, intense field in which “emotional highs and lows are obstacles to success.” Jones has four children with his wife, Sonia Jones.

“As I’ve told my three daughters, all of whom I’ve at one time encouraged to go into macro trading, any man or woman can do anything to which they set their heart and mind,” Jones said in the statement. “I believe that great success is possible in any field — from music to mathematics to macro trading.”

Men and women are wonderfully different. And society loses something when it views babies as a lifestyle choice rather than the core of life and civilization.

That Fox News poll from my security-first post this morning reminded of the vague and thoeretical nature of much of the advocacy for the Schumer-Rubio amnesty bill. The poll’s 66 percent support for amnesty is touted by supporters of S. 744 as proof of public backing for the bill. But the question describes an imaginary bill that requires payment of back taxes and the mastery of English, elements which do not exist in S. 744. And, in an example of how advocates compound the falsehood, Ralph Reed’s tweet crowing about the poll said people expressed their support for a measure that said “illegals must pay fines, back taxes, learn English, get job, & go to back of line,” when neither fines nor jobs nor a line are ever mentioned in the question.

Likewise, the letter from conservative and libertarian economists organized by Douglas Holtz-Eakin’s outfit was promoted by amnesty-pushers as further evidence that Republicans should vote for S. 744. But the letter merely supports a “broad-based immigration reform bill that includes a U.S. visa system more attuned to economic policy objectives,” and not the actually existing piece of legislation. Maybe that’s because, as Conn Carroll points out, S. 744 is not a free-market measure: It enacts statutory wage controls, down to the penny, for various occupations; it establishes a State Committee for Planning Bureau of Immigration and Labor Market Research, whose bureaucrats would divine future labor demand and set targets; and it would, in combination with Obamacare, place a large effective tax on the hiring of Americans when compared with immigrants. (This last part is not unknown in immigration; a summer work program for foreigners, for instance, exempts employers from paying Social Security, Medicare, or federal unemployment-insurance taxes, making those young people far more attractive hires than Americans.)

Now, you could say that the Schumer-Rubio bill is a large package and not all supporters will like all its parts. Two responses come to mind. First, that’s yet another reason Congress should never pass “comprehensive” bills about anything. But second, if you’re supporting a package deal that includes things you don’t especially like, you’re implicitly saying that the parts you do like are more important to you than the parts you don’t. So, the “conservative economists” could well have said “S. 744 contains elements reminiscent of Soviet central planning, but we’re willing to support further growth in state direction of the economy in exchange for further weakening of the borders.” It would have been awkward to put it that way, but that’s what they’d be saying by specifically backing S. 744. Instead, they support a vague generality like “immigration reform” and then advocates misrepresent what that actually means.

In contrast, the StopGangof8.com open letter, signed by Rich Lowry, John O’Sullivan, Mark Levin, and scores of others, is quite specific in opposing S. 744.

Quin Hillyer, a senior editor at The American Spectator, a fellow at the Center for Individual Freedom, and a contributor to and great friend of National Review, is running for Congress in Alabama. 

From his announcement:

I am a constitutional conservative—and an “opportunity society” conservative as well, hearkening back to the Reagan-Kemp era of prosperity and liberty. Free men and women, with free minds, in a free market, produce abundance and a vibrant society. . . .

I am a movement conservative, with a Madisonian love of our constitutional system. And I love my adopted home of southern Alabama, which is developing into one of the greatest areas of growth in the country.

There will be much more to say in the coming weeks, and major endorsements to announce. But now I must set aside my cyber-pen for The American Spectator, which has hosted me for seven years. I am honored to have been a part of this publication, which has enlightened and entertained the world of American letters for nearly half a century—and my thanks go to Bob and Wlady and to the whole team that does such a good job here. I also thank the readers for making this not just a magazine, but a conversation.

This is going to be a great adventure.

Hillyer is running for the seat to be vacated by Representative Jo Bonner, who announced yesterday that he will be leaving Congress in August to become a vice chancellor for government affairs at the University of Alabama, where his sister is president. The governor of Alabama has the power to schedule when the special election to fill his seat will occur. Bonner’s district, Alabama’s first, is deep red, and split 62 percent to 37 for Mitt Romney in 2012.

The Obama administration is facing so many potential scandals that senator Rand Paul thinks they might be harder to keep track of than a calamitous barnyard.

“We have sort of Old MacDonald’s farm of scandals: Here a scandal, there a scandal, everywhere a scandal. We’re not sure which scandal to even talk about,” Paul said on Fox News last night.

He suspected that President Obama’s counterterrorism speech yesterday was part of a “misdirection campaign” to take the focus off of the scandals. “I don’t think this will work, because he’s putting off, really, the ultimate reckoning” of when President Obama will have to address the scandals, Paul explained.

The Kentucky senator continued to express his dissatisfaction with the president’s drone policy as well, saying the president didn’t “really come clean with” what changes he plans to make.

A Fox News poll this week illuminates the core issue in the current immigration debate. On the one hand, 66 percent of registered voters chose the following option over sending all illegals back or enrolling them in a temporary worker program:

Allow illegal immigrants to remain in the country and eventually qualify for U.S. citizenship, but only if they meet certain requirements like paying back taxes, learning English, and passing a background check.

Putting aside the fact that the Schumer-Rubio bill requires neither payment of back taxes nor learning English, this result is borne out by many other polls; given how long our political class has allowed this problem to fester, there does indeed seem to be a broad public willingness — or resignation, maybe — to grant amnesty to long-established, non-dope-dealer illegal aliens. The Norquist-Pelosi side of the debate makes much of such findings.

But what the Chuck Schumer Republicans don’t point out is results like this one from the same poll: When asked “Do you favor or oppose requiring completion of new border security measures first — before making other changes to immigration policies?”, 73 percent want security first, with 20 percent opposed. Not only is this share larger than the majority willing to accept amnesty, it’s been growing over the course of the debate in Congress. And this support for security first is overwhelming among all demographic categories: Democrat or Republican, men and women, young and old, white and non-white, rich or poor, college or no college.

The Democrats on the Judiciary Committee, and their Republican fellow-travelers, made clear over the past couple of weeks that they stand with the 20 percent of the public that wants amnesty first and against the 73 percent who want security first. They made this point repeatedly, voting down amendment after amendment that would have required security first, like one that would have required DHS certification of effective control of the border for six months before processing amnesty applications (Grassley 4), or the use of biometric entry-exit tracking of foreign visitors at all ports of entry before amnesty (Sessions 4), or a vote by the House that the goals set out in the border and fencing plans have been achieved before granting amnesty (Lee 4).

“There are a lot of issues that will shape the future of immigration reform,” as Byron York writes, “but security first vs. legalization first is the most fundamental one.” How can anyone calling himself a conservative join with Reid and Obama, Schumer and Pelosi in pushing legalization first?

On a slow news month, the Washington Post manages a profile of Jay Carney’s love a Dayton, Ohio, band.

On the walls of Jay Carney’s office: a photo of the Berlin Wall being dismantled. Snaps of his kids. His employer, President Obama, gracing the cover of his former employer, Time magazine. A tier of clocks labeled London, Baghdad, Beijing. 

And below that, a framed copy of “Bee Thousand,” Carney’s favorite album by his favorite band, Guided by Voices. Those black scribbles? Lead singer Robert Pollard’s autograph. 

 “It’s pretty awesome,” Carney says, sounding half-proud, half-exhausted. 

It’s Wednesday afternoon in the West Wing and the White House press secretary has been trundling through some of the most punishing days of his career. Benghazi and the IRS have kept Carney scrambling, and he hasn’t had much time to listen to “English Little League,” the latest album from the Ohio indie-rock band he has affectionately name-dropped in more than one news briefing.

Its lead singer “dodges the media in ways that Carney probably wishes he could. The 55-year-old frontman hasn’t given an interview since 2011, but evidence of his beer-soaked brilliance springs eternal.”

More from the piece: 

Carney, who has fronted “terrible, terrible” garage bands since his adolescence, says he always has been drawn to the idea of regular dudes making extraordinary rock-and-roll. But above all, Guided by Voices songs simply make him happy.

I have nothing against color pieces – especially ones that remind people of the humanity of names in the news and give a little attention to non-household names and talent. Perhaps, given some of his recent press conferences, the interview request was an act of mercy on the part of the Post. But it would be much easier to read if we had the sense the Washington Post was working overtime on, say, the IRS scandal.

Via Tim Graham.

Former Nixon speechwriter Ben Stein sees a lot of similarities between that administration and the current one in their handling of scandals, though had a couple caveats.

“Look, I’ve been down this road before,” Stein told Bill O’Reilly last night. “This is just the Nixon playbook again, minus all the foreign-policy achievements.” Later in the interview, he added, “this is this thing happening again, only with no shame.”

Stein also said it was “ridiculous” that President Obama was unaware of the IRS’s targeting of conservative groups, especially since members of his senior staff knew.

“I find it strange that, with as much success as you’ve had in these Oscar caliber movies, you returned to The Hangover.”

This is an awkward — crass in parts — interview with Bradley Cooper about The Hangover III. The interviewer does have a point: What’s a movie good for? Is there art there? 

In seventy lugubrious paragraphs, President Obama today asked America whether as commander-in-chief he should bomb terrorists. He concluded that sometimes he should, and sometimes he shouldn’t. He couldn’t quite make up his mind. Therefore, he would appoint a panel to advise him.

Mr. Obama has already authorized more than 200 such drone bombings. His staff has bragged that before ordering a bombing, he personally reviews who lives and who dies. Imagine if Prime Minister Churchill or President Truman had appeared on television to announce an advisory panel before bombing our enemy. We would be appalled. The president appeared before us not as our leader, but as our Hamlet.

The president explained that we are not at war as we were on 9/11. In one paragraph, he said,“we must define our effort not as a boundless global war on terror.” A few paragraphs later, he said, ”al-Qaeda and its affiliates try to gain a foothold in some of the most distant and unforgiving places on Earth.”

English translation: The war on Islamic terrorists is not boundless, but it does encircle the globe. Welcome to New Age geography.

Mr. Obama then criticized the Guantanamo prison for terrorists. “We compromised our basic values,” he said, “by detaining individuals in a way that ran counter to the rule of law.” His remedy? He was sending 62 of the 86 prisoners back to Yemen. Those killers would then be someone else’s problem. Let’s hope Yemen does not copy the president’s example and let them loose to kill more Americans. That result would conflict with “our basic values.”

The rationale for the speech was obvious: Forget Benghazi, the IRS, and wiretaps of journalists. Instead, let’s talk about drones, Guantanamo, and the irresolvable burdens of the commander-in-chief. Having not told the whole truth about the death of our ambassador to Libya, the IRS targeting of U.S. citizens, and the FBI targeting of journalists, the president wanted to change the subject and divert attention.

The speech was cynical and sly.

— Bing West is a former assistant secretary of defense and Marine grunt. 

After Congress called in Apple to testify about its offshore subsidiaries and why it paid only $6 billion in corporate income taxes last year, the Times published this interesting story, clearing up one misconception about how companies defer the payment of taxes on their earnings:

Multinationals based in the United States now hold more than $1.6 trillion in cash classified as “permanently invested overseas.” These funds will face the 35 percent federal corporate tax only if it is returned to the country.

In the convoluted world of corporate tax accounting however, simple concepts like “overseas” and “returned to the country” are not as simple as they appear.

Apple’s $102 billion in offshore profits is actually managed by one of its wholly owned subsidiaries in Reno, Nev., according to the Senate report on the company’s tax avoidance. The money is tracked by Apple company bookkeepers in Austin, Tex. What’s more, the funds are held in bank accounts in New York.

Because the $102 billion is technically assigned to two Irish subsidiaries, however, the United States tax code considers the money to be under foreign control, and Apple is legally entitled to avoid paying taxes on it.

That is, the fact that corporations both earn a lot of cash with honest-to-goodness overseas operations, as well as the more creative operations like Apple’s in Ireland, and then decide not to “repatriate” it because they don’t want to pay the ruinous U.S. corporate tax rate doesn’t mean the cash is literally overseas. Now, this isn’t actually that important — although it does mean the cash sitting here is producing some compensation and creating jobs for money managers and custodial banks — except that it has some real political significance. The concept of billions of dollars in U.S. companies’ cash sitting overseas is a powerful idea for people to relate to — and to be bothered by. Even more appealing, then, is the idea that Congress tried in 2004, and which some Republican primary candidates floated in 2012: a temporary tax holiday for repatriated earnings, which would impose a much lower rate of corporate tax on U.S. companies’ cash overseas (an effective rate of 5.25 percent in 2004’s unfortunately named Homeland Investment Act, which worked by providing a huge tax credit for dividends paid from foreign subsidiaries). This makes sense to a lot of people: There’s all this money sitting overseas, cut off from the market where it could be invested to create American jobs. Why not let all that money come home, taking a smaller slice of it than usual, in order to generate some revenue and drive investment here?

Well, that isn’t how it really works. An NBER study of the results of the 2004 measure found that “repatriations did not lead to an increase in domestic investment, employment or R&D,” because, they conclude, “the domestic operations of U.S. multinationals were not financially constrained and that these firms were reasonably well-governed.” That is, if companies with huge “offshore” reserves saw profitable investment opportunities or R&D projects at home, they will do them, regardless of whether they can cheaply tap the cash of their overseas subsidiaries or not. Multinational corporations aren’t like a kid with a piggy bank; as the NBER paper explains, they usually don’t encounter serious financial constraints, period, and if they have a lot of cash somewhere, that’s about as good as having it anywhere, because they can issue equity or borrow against it.

What actually happened with the money during the repatriation holiday? Corporations brought nearly $300 billion of their earnings home — and, in effect, gave it all to stockholders (despite regulations saying they were specifically supposed to invest it in domestic operations). The paper found that “repatriations did not alleviate any financial constraints” and “firms that valued the tax holiday the most and took greatest advantage of it did not increase domestic investment or employment, instead returning virtually all of the cash they repatriated to shareholders.” Now, as the authors explain, that’s still a good thing for the U.S. economy, since it does mean more cash in American investors’ pockets (it’s also appealing to firms that need to pay dividends, such as Apple, which supports another holiday — they’re taking on debt to pay a huge 2013 dividend, instead). But it’s not what the act was intended to do — get the firms to bring funds back to America to drive economic activity themselves — and amounts to a huge giveaway to the shareholders, who were rewarded with corporate earnings that are more lightly taxed than they should be, a distortion. 

Thus the problem: There’s an intuitive appeal to this idea that corporations have so much cash sitting overseas that they’re not spending here, so people like the idea of bringing it home — but it actually doesn’t much matter whether the cash is there or here, so there isn’t a compelling policy case for succumbing to corporate pressure for allowing them to return it while paying almost no tax on it. Perhaps if more people realized that money was held in banks in New York and being managed by financiers in Nevada, they’d understand a little better the weak economic case for creating a special break to bring those earnings home.

As NR’s editors write today, the right solution is a permanent one, moving to a lower corporate tax rate and a territorial tax regime (where firms owe taxes only on income earned here). Counterintuitively, this good policy is actually just a permanent version of the above, poor policy. But the above policy basically only allows corporations to return their earnings here without paying onerous taxes; it does nothing to affect American corporations competitiveness against foreign firms, or the incentives regarding whether it’s more profitable after-taxes to operate here or abroad – in fact, it’s almost a disincentive to invest in the U.S.’s high-tax environment, if you suspect that you’ll just be able to return your earnings, lightly taxed abroad, to the U.S. almost tax-free during some future repatriation holiday.