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AEI: A Battlefield in the Ex-Im War


Please forgive me for being a company man, but one of the many things I love about working at the American Enterprise Institute — in addition to having lunch with Jonah and Ramesh — is the academic freedom fellows and scholars hold. This results, fortunately, in us disagreeing about important issues, and makes AEI a place of stimulating intellectual debate.

The most recent incarnation of this institutional feature (not a bug) is the war over the Export-Import Bank. If you want to get a good handle on both sides of the argument, look no further than the debate happening within AEI. Much of the best stuff written on either side has come from us, with Stan Veuger dealing the most recent blow just yesterday.

Strain, Goldberg, and Carney versus Veuger, Schmitt, and Donnelly.

Obviously, I am on the side of the angels. But the devil may have his day.

— Michael R. Strain is a resident scholar and economist at the American Enterprise Institute. You can write to him on Twitter at

Geraghty: ‘We Have a Wartime Vice President, and a Peacetime President’



Delaying the Bank Question


Politico, the Daily Signal, and others are reporting that House Republicans are now considering a short-term extension of the Export-Import Bank’s authorization, to put the issue off until after the election. Staunch opponents of extending the bank’s charter, like Jim Jordan and Jeb Henserling, appear to be involved in the talks about such a move. It’s not hard to see why House leaders would want to put this off, but the details matter a lot. The Daily Signal, for instance, notes that:

Rep. Jim Jordan, R-Ohio, confirmed there was talk of a deal that would reauthorize the bank and allow Congress to revisit the issue either after the November elections or early in the next Congress.

Those two options are very, very different. Moving the vote on the Ex-Im bank’s future into a lame duck session would make it much more likely that the leadership could push through a longer-term reauthorization and persuade members that there won’t be serious consequences. Holding that vote early in the next congress, on the other hand, could make it a test of the GOP’s commitment to genuinely take on cronyism and corporate welfare and show the public that they do not share the Democrats’ vision of a corporatist America in which big government and big business (and what’s left of big labor) run the economy together. It would be especially important if Republicans manage to take the Senate, but it would matter a lot either way. 

Obviously, the Ex-Im bank is nowhere near the worst example of corporate welfare and cronyism in federal policy. But it is, as Jeb Henserling (chairman of the committee with jurisdiction over the bank) has said, “a poster child” for both. If Republicans can’t end such an obvious example of taxpayer-funded corporate giveaways, it’s hard to imagine how they could take on bigger and more politically complex instances. And if they can’t even make the case for cutting corporate welfare, how can they make the case for reducing federal spending in other areas? 

It would be better, of course, if Republicans refused to renew the bank’s charter now, and actually offered voters an argument about the nature of our economy and the dangers of cronyist corporatism. But evidently congressional Republicans have decided they can win November’s elections by stealth; maybe if voters temporarily forget they exist, they’ll just vote against the Democrats. Democrats are basically trying the same strategy (and the Senate under Harry Reid has been run this way for years). One party will do better than the other in November and conclude that the strategy worked. It’s both unseemly and unwise. But if this is how it has to be, then at the very least the opponents of the Ex-Im Bank should try to frame the question of the bank’s future in a way that will help them move the party in the right direction in the next Congress. 

That means insisting that the vote happen next year and not in a lame-duck session. It also means insisting that it not be tied to the expiration of a continuing resolution, the debt ceiling, or any other fiscal deadline. They should agree to a short-term delay on the condition that they will get a freestanding up-or-down vote in the first year of the next congress. And they should use the intervening months to make their case. 

Web Briefing: September 15, 2014

The False Promise . . .


. . . of Medicaid flexibility.

In negotiations with the Centers for Medicare and Medicaid Services (CMS), [Pennsylvania's] governor requested dozens of changes to Medicaid for the expansion group (those earning less than 133 percent of federal poverty, or $15,500). He wanted to tie cost-sharing reductions to employment and job training, for example, and increase co-pays for a non-emergency ER visit from $8 to a whopping $10.

Almost all these requests were denied. In fact, as Josh Archambault and Nic Horton noted at Forbes, “not a single ‘state-unique’ request was approved as included in Corbett’s original application. Of the roughly 24 changes he asked for, only 3 were granted, but in severely watered down forms.”


Obama Appointees Vacate Major Anti-Obamacare Ruling


President Obama’s appointees to the D.C. Circuit Court will get to re-hear a major Obamacare challenge, after a three-judge panel of the court heard the case and ruled against the administration.

A majority of the judges on the court voted to re-hear the Halbig case, which pertains to whether subsidies can be provided to people who purchase insurance through the federal Obamacare exchanges. Accordingly, a D.C. Circuit panel’s decision that the federal exchange participants are not eligible for subsidies will “be vacated.”

Obama was able to secure a majority of Democratically appointed judges on the court, which is regarded as the most important court in the country next to the Supreme Court, after Senate Majority Leader Harry Reid (D., Nev.) pulled the trigger on the nuclear option in the Senate to prevent Republicans from filibustering Obama’s judicial nominees.

“Reid’s power play over Republican opposition in December led to the seating of three Democratic judges on the federal appeals court circuit that serves the District of Columbia,” CNBC suggested the day after the three-judge panel ruled against Obamacare. “The Obama administration is now banking on a Democratic majority created by those judges to help overturn a stunning ruling that threatens a key leg of the Affordable Care Act.”

Oral arguments are scheduled for December. Lawrence Tribe, Obama’s former law professor at Harvard, said he thinks the case could go against the president if it ever reaches the Supreme Court.

“I don’t have a crystal ball,” Tribe told the Fiscal Times. “But I wouldn’t bet the family farm on this coming out in a way that preserves Obamacare.”


Who Pays the Tax?


In response to my piece today calling for the abolition of the corporate income tax, I’ve received a half-dozen remarks to the effect that “taxes on businesses are nothing more than a pass-through to the consumer,” citing Milton Friedman’s famous observation that corporations aren’t taxpayers but tax-collectors.

But it is not the case that corporate taxes are necessarily passed on to consumers; it’s a bit more complicated than that.

Imagine that we passed a special punitive tax of $1 billion a year on Walmart. Walmart could do all sorts of things in response, but it probably would not raise prices on consumers — because it does not really have the power to. People shop at Walmart mostly because of its low prices, and shoppers would walk away en masse if Walmart tried to pass that new expense on to them. (It’s almost as if consumers have no sense of loyalty or solidarity or social justice, and are driven by narrow, selfish financial considerations.) Consumers have veto power over Walmart’s pricing decisions, as they do for many other businesses. If you’re shopping for a new car, you can configure it online and get prices from a dozen dealers, none of which can, on its own, simply charge you more because it desires to do so.

But customers are not the only party doing business with Walmart. There are the employees, obviously; changing jobs is more difficult than changing where you buy your bananas, so some costs might be passed on to them.

But the more likely target would be the companies behind Walmart’s inventory. Everything on the shelves at Walmart is made by another company, and many of those companies rely on Walmart for a very large share of their sales. About 26 cents of every dollar the J.M. Smucker Company does in sales comes from Walmart. And while Walmart might not be able to charge customers more for a pound of Folger’s coffee, it might very well be able to pay Smucker less for it, or to renegotiate various aspects of its relationship in a way that is more advantageous to itself.  

The tax burden is spread throughout the market as part of a web of extraordinarily complex financial relationships. Measures intended to pick the pockets of the so-called fat cats and giant corporations very often end up picking other unexpected pockets instead. That’s probably good news for the evil people who own Walmart — you know, grandma, schoolteachers — but bad news for smaller businesses or those with less negotiating power. 

Lowry: Obama ‘Divided’ on ISIS Because ‘Afraid’ of Where Going Back to Iraq Will Lead


Recognition, Always Welcome


Go back with me to 2002 for a second. Martin Amis published a book called Koba the Dread. It said that Stalin was bad. Some people in the anti-Communist camp said, “Gee, that’s nice, Martin. Stalin has been dead for half a century. What will you come up with next? That the bubonic plague was harmful, killing a lot of people?” But a better view was this: When a cool, stylish, best-selling novelist joins your side, you say, “Hurray.” Amis’s book was helpful.

I thought of this when reading a Richard Cohen column last week. Cohen wrote,

I used to not believe in evil. When Ronald Reagan called the Soviet Union “the evil empire,” I thought it was a dandy phrase but also a confession of ignorance. The word itself connotes something or someone diabolical — bad for the sake of bad. The Soviet Union was bad, I conceded, but not for no reason. It was bad because it was insecure, occupying the flat, inviting, Eurasian plain, and because it had a different system of government that it dearly wanted to protect. Reagan had it right, though. The Soviet Union was evil.

On one hand, you want to snort and roll your eyes. “Gee, thanks, Dick. You might have done us some good when Reagan was being hammered as a fascist moron who wanted to subject the world to a nuclear holocaust.” On the other hand, you think, “Good.” That’s what I think (mainly). Good.

Buffett and Bread


Charles Krauthammer is known for his expertise on foreign policy, but he can certainly write a rip-roaring column on domestic policy. He did so last week. He discussed the Democrats’ scorn for corporations that move abroad, for better tax deals. These are “corporate deserters,” in Democratic eyes (or at least in Democratic rhetoric). They lack “economic patriotism.”

Krauthammer specifically discusses Warren Buffett, “Obama’s favorite plutocrat.” Buffett is behind the deal sending Burger King to Canada. Writes Krauthammer,

Buffett’s demand that the rich be required to pay more taxes made him a hero to the president. In 2012, Obama repeatedly held up Buffett as a champion of economic justice. What does Obama say today about his 2012 class-war comrade-in-arms — now become, by Obama’s own lights, an economic traitor?

The whole point of my post is to get to this: Charles’s column reminded me of something that caught my eye in May. Buffett is big into wind — wind as a form of alternative energy. He probably knows it’s a crock. But he said, with admirable candor, “We get a tax credit if we build a lot of wind farms. That’s the only reason to build them. They don’t make sense without the tax credit.”

Say this for Buffett: He knows which side his bread is buttered on. And he can indeed be admirably, refreshingly candid.

The ‘One System of Education’


Last week, Mona Charen had a column emphasizing the importance of the teacher: Of all the things that go into a good education, it’s hard to beat an excellent teacher. This reminded me of a favorite statement of mine, which I found while studying the Nobel Peace Prize. It comes from a Dutchman who was the first U.N. high commissioner for refugees. That office won the peace prize for 1954. And, in his lecture, Gerrit Jan van Heuven Goedhart said, “Many years ago, I participated in a discussion on the problem of international education. After many experts had presented their complicated theories, an old headmaster of a certain school got up and quietly said, ‘There is only one system of education — through love and one’s own example.’”

Satire and History


All of our lives, we have read two things (among others): The Nobel Peace Prize to Henry Kissinger was absurd, and Tom Lehrer, the satirist, quit his career because of it. Those two things are repeated in a Telegraph post today.

The 1973 Nobel Peace Prize is indeed an interesting one. The committee in Oslo honored Kissinger and Le Duc Tho. Those are the two who had inked the Paris Peace Agreement in January 1973. The terms of Alfred Nobel’s will say that prize committees are to award work done in the recent year. (That stipulation is often honored in the breach, as we know.) The Norwegian committee was hoping, futilely, that the Paris agreement would bring to an end a war that had lasted for more than a decade. The North Vietnamese co-winner, Le Duc Tho, refused his share of the prize. He is the only recipient of the prize ever to turn it down. The Nobel committee still considers him a recipient.

Allow me to quote from my history of the peace prize:

Everyone says that the 1973 award is the “most unpopular” Nobel award ever, and that is probably true. But the nature of the unpopularity is worth pondering. The critics mainly objected to the half of the prize going to Kissinger, not the half going to Le Duc Tho. They thought it outrageous that the American secretary of state had won the Nobel prize, not so much that the representative of a totalitarian and mass-murdering dictatorship had done so. It is legend that Tom Lehrer, the American musician-satirist, gave up his career after Kissinger won the peace prize. That is not true: He had bowed out before. But he did say that “political satire became obsolete” when Kissinger won.

There is a coda to the ’73 award. The below paragraph refers to Ralph Bunche, the American U.N. diplomat who won the prize in 1950 for negotiating a general armistice between Israel and its Arab attackers:

As the Bunche-mediated armistice was shot to hell, so was the Paris Agreement: North Vietnam conquered the South in April 1975, uniting [the Vietnams] under Communism. Kissinger wrote to [the Nobel committee chairman], returning his gold medal, his diploma, and the money. He said he felt “honor bound” to do this. “I regret, more profoundly than I can ever express, the necessity for this letter. But the anguish and tragedy that have been inflicted upon millions who sought nothing more than the chance to live their own lives leave me no alternative.” The committee would not accept Kissinger’s gesture (or medal, or diploma, or cash): The Nobel Peace Prize is not returnable. The committee explained that events in Vietnam in no way reduced their “appreciation of Mr. Kissinger’s sincere efforts to get a ceasefire agreement put into force in 1973.”

Murdock: Obama ‘at War with Himself — He Doesn’t Really Know What He Believes’


Make sure to check out Deroy’s latest piece, “Pulverize the Islamic State.”

Justice Department to Investigate Ferguson Police for Pattern of Civil-Rights Violations


The U.S. Department of Justice will conduct a civil-rights investigation of the Ferguson, Mo., police department, not looking further into the shooting of Michael Brown, who was killed by a Ferguson police officer earlier this summer, but at the department’s pattern of conduct over the years.

Federal law-enforcement officers have already been in the area for weeks to conduct a civil-rights investigation of the Brown, which would determine whether the federal government will bring civil-rights charges. Former DOJ civil-rights attorney Robert Driscoll has explained on NRO why a civil-rights prosecution in the Brown case is unlikely — it’s quite possible a broad investigation of the Ferguson PD might be the most the Justice Department does in the wake of the Brown shooting.

The Washington Post, which broke the news, explains that the broader probe “will be conducted by the Justice Department’s civil rights division and follow a process similar to that used to investigate complaints of profiling and the use of excessive force in other police departments across the country.”

The investigation will also look at other departments in the county that contains Ferguson, St. Louis County. At least one department, officials said, invited the DOJ to look at its practices.

The federal Department of Justice has pursued more such investigations of local police departments under the Obama administration and Attorney General Eric Holder than it had in prior years, with at least 34 such departments undergoing such investigations right now. The probes cite a 1994 federal law passed in the wake of the beating of Rodney King by the Los Angeles Police Department, which empowers the DOJ to look into departments to see whether they have a pattern of violating citizens’ constitutional rights or rights under federal civil-rights law.

One such investigation concluded in April, with Holder’s Justice Department releasing a critical report about excessive use of force by the Albuquerque, N.M., police department, which led to an agreement about reforms the department would implement.

Several Ferguson cops have been involved in recent lawsuits brought by private citizens about individual civil-rights violations (some regarding incidents at other departments). Those suits make “a variety of allegations, including killing a mentally ill man with a Taser, pistol-whipping a child, choking and hog-tying a child and beating a man who was later charged with destroying city property because his blood spilled on officers’ clothes,” according to the Washington Post, which reported on them recently.

Re: Biden & the Gates of Hell


As Jonah notes, the vice president didn’t quite make sense – theologically or otherwise. But while it’s not quite the leadership the world needs, at least he took note that something gravely evil is happening. 

This is why people (at least in my travels) have long taken a liking to Biden, despite so much: because at least he has what seem to have some appropriate reactions to things now and again. In this particular case, at least you got an immediate sense from him something terrible has happened.

Voices should be raised against this evil.

Elizabeth Scalia has been blogging up a storm for just this reason.

A Christian and a Jew, two American journalists, have now been executed by the Islamic State. The lives of James Foley and now Steven Sotloff (the grandson of Holocaust survivors who in captivity pretended he was sick so that he could fast) cannot be forgotten.

We cannot afford to be distracted (as we have been).

To forget, to look away, is to contribute to a cheapening of life. It is, as has been argued, complicity.

Pope Francis recently called Father Behnam Benoka, a priest from Mosul, who was until recently vice-rector of a seminary there. He is currently ministering in a refugee camp. A journalist, a friend of the priest, handed the pope a letter on the plane ride back from Korea a few weeks ago.

In his letter to the Pope, the priest expressed gratitude for the Pope’s repeated appeals to end the suffering and persecution of Christians and described the tragic situation faced by thousands of Iraqi Christians: “The situation of your sheep is miserable. They die and they are hungry. Your little ones are scared and cannot do it anymore. We, priests, religious, are few and fear not being able to meet the physical and mental needs of your and our children.”

“Your Holiness,” he continued, “I’m afraid of losing your children, especially infants who every day struggle and weaken more. I’m afraid that death will snatch some away. Send us your blessing so that we may have the strength to go on and maybe we can still resist.”

God bless these people.

Keep reading this post . . .

What ISIS Means for Rand Paul


President Rand Paul would “seek congressional authorization to destroy ISIS militarily.” That’s what he told the Associated Press last week, and the remark, coming as it did from a lawmaker notoriously wary of military intervention, has turned heads. Just days earlier, Paul attacked former secretary of state Hillary Clinton as a “war hawk.” 

With the Islamic State kidnapping and beheading Americans, Paul has certainly found an opportune moment to deflect the charge that threatens to derail his nascent presidential campaign: that he is an isolationist. Since he was elected to the Senate in 2010, he has struggled to escape the long shadow his father has cast over his political career; now, he is mitigating the vulnerability.

The younger Paul is openly at odds with his father. In his weekly column, published Saturday, the elder Paul fretted that “if the neocons have their way, the Federal Reserve will ‘print’ more money to finance another massive U.S. intervention in the Middle East” that would cause a “further devaluation of the U.S. dollar.” He concluded that President Obama’s admission that he has yet to settle on a strategy to combat the Islamic State is “a glimmer of hope.”

Richard Burt, one of Rand Paul’s foreign-policy advisers, says that the senator’s call to destroy the Islamic State is not merely a matter of political opportunity, but reflects the senator’s broader views about America’s role in the world. When I spoke with Burt, who served as ambassador to West Germany during Ronald Reagan’s second term, he was working with Paul’s team on an op-ed on the Islamic State threat.

Paul, Burt says, “understands that the United States is a global power and that there are occasions where the United States has to use military force.”

“I think this is all based on an approach to foreign policy that thinks in terms of American interests,” he says. “The thing that makes ISIS a particularly serious challenge is that we do have interests” in the Middle East, Burt says — in a thriving Kurdish minority and a stable, successful Iraqi government that integrates the country’s Sunni minority.

Burt tacitly suggests that what differentiates Paul from the neoconservatives who shaped policy at the top echelons of the Bush is his belief that the use of force should be “selective” and that leaders should think through the consequences of using force and have a strategy for bringing it to an end.

Though less idealistic than George W. Bush was in his call to end tyranny in our time, Paul is embracing the conventional foreign-policy stance of the pre-Bush era.

His latest comments are something of an about-face. In a June interview, he told me that President Obama’s contention that the Islamic State might establish safe havens in Iraq from which it could launch attacks on the United States was “a bit of a stretch” and said of the group, “Their first objective isn’t getting to the United States, their first objective would be getting to Baghdad.”

Asked about those remarks, Burt says, “I don’t think two months ago any of us really had a clear understanding of the momentum this group had.”

‘Life Means Nothing Here. It’s So Cheap and Valueless’


Meanwhile in Nigeria:

NAIROBI, KENYA (RNS) Five months after Boko Haram abducted more than 200 girls in Nigeria’s Borno State, the Islamic extremist group has begun occupying churches in the country’s northeastern region, church officials there said.

The militant group, which church leaders and analysts view as an African variation of the Islamic State, is also beheading men, forcing Christian women to convert to Islam and taking them as wives, officials said.

“Things are getting pretty bad,” said the Rev. John Bakeni, the secretary of the Maiduguri Roman Catholic diocese in northeastern Nigeria. “A good number of our parishes in Pulka and Madagali areas have been overrun in the last few days.”

The militants have turned the church compound and rectory of the St. Denis Parish in Madagali town into their base, the priest said. The militants overran the church center on Aug. 23.

“The priest in charge managed to escape, but they took his car and important church documents,” said Bakeni.

“Many civilians are now on the run,” he added. “Many others are being trapped and killed. Life means nothing here. It’s so cheap and valueless.”

Will: Obama ‘Making Up ISIS Policy Press Conference to Press Conference’


“Much has been made about the president’s reliance on a teleprompter, and today we saw, in all seriousness, one reason why,” says columnist George Will: “He’s not that good when he’s winging it, and it’s very hard to be good when you’re making up a policy as you go along from press conference to press conference.”

“‘Degrade,’ ‘destroy,’ ‘roll back,’ and ‘shrink.’ When you promise, as he’s done, to do a lot and also promise to do a little, you’re going to succeed one way or another,” Will said. Then again, Will is skeptical about what the U.S. can or cares to do about the threat from the Islamic State: “It’s a basic principle of politics: If you will an end, you have to will the means to that end, and I don’t see that we’re ready to do that yet.”

Krauthammer’s Take: ‘The President Doesn’t Even Know His Own Mind’


“We thought a week ago [President Obama] didn’t have a strategy,” says Charles Krauthammer. “Now we know that he doesn’t even have an objective.” That is Dr. K’s takeaway from the president’s morning press conference, at which the president both pledged to defeat the Islamic State and suggested he’d be fine with degrading it to where it was merely “manageable.”

“He doesn’t know if [his objective] is to destroy or containment,” Krauthammer said.

Last week the president blamed the Pentagon for his inaction because “he wanted to blame it on somebody else the way he blames everything on somebody else,” Krauthammer said on Special Report. “So he says I don’t have options from the Pentagon. Obviously he did. The problem is he hasn’t chosen.”

More worrisome than the fact that “the president doesn’t even know his own mind,” though, says Krauthammer, is the revelation that forces in Kurdistan “are not receiving heavy weapons from the United States despite assurances a few weeks ago that we had changed our policy. . . . Because of ridiculous legalisms we have to route this through Baghdad knowing, a) that Baghdad is not going to send it up to Kurdistan, and that, b) Baghdad is likely to lose it, and it’s going to end up in the hands of ISIS.”

Jeb Bush Headed to Chicago for Rauner as Illinois Governor’s Race Might Be Tightening


Republican businessman Bruce Rauner has held a steady lead over incumbent Illinois governor Pat Quinn for most of this campaign season, but now the race seems to be tightening a bit.

A Reboot Illinois/We Ask America poll conducted Tuesday found Rauner up just more than eight points, after leading by 14 points in July. The pollster said the inclusion of Libertarian candidate Chad Grimm in its polling for the first time may account for Rauner’s lessening lead, but the decline may seems to have also coincided increasing attacks on Rauner as a rich and out-of-touch Republican.

Several newspapers have picked up a story indicating that Rauner belongs to a private wine club, possibly Napa Valley Reserve, that costs six figures to join. The Chicago Tribune splashed a 2010 photo of Chicago mayor Rahm Emanuel carrying a bottle from the reserve alongside Rauner, and the Washington Post headlined an article about the situation, “Bruce Rauner spends more on wine than average Illinois households spend on everything.”

While the Chicago Sun-Times got Rauner to admit he is a member of such a club, and he didn’t deny the association, the Post noted it’s unclear if Rauner would be a paying member. Instead, it’s possible he acquired his membership because he was one of the founding investors in a vineyard that was started by the founder of Napa Valley Reserve.

Regardless of what Rauner’s shelling out on wine, incumbent governor Quinn has sought to capitalize on the issue by living on minimum wage for one week. Quinn told the Sun-Times living on the minimum wage has been hard — he had to choose to order water instead of iced tea when dining out this week, for instance. “I had graham crackers — for dinner I guess,” Quinn said. “I’m planning to have macaroni and cheese tonight. I already bought it.”

The Rauner campaign has planned a lunch with former Florida governor Jeb Bush for later this month. While Bush’s appearance will likely lead to more speculation that he could be accumulating chits for a 2016 run, Rauner is probably looking to benefit from Jeb’s reputation as a business-first, reform-minded Republican.

McConnell: ISIS ‘Probably Better Able’ than Al-Qaeda to Launch 9/11-Level Attack


President Obama needs to back up Joe Biden’s pledge that the United States will follow the murderers of American journalists “to the gates of Hell” by outlining to Congress and the American public a strategy to defeat the Islamic State, says Mitch McConnell (R., Ky.). President Obama offered mixed messages earlier in the day, first saying his administration aims to “degrade and destroy” the Islamic State, only to later say it will look to make the threat a “manageable problem.”

“This is not, in my view, a ‘manageable’ situation — they want to kill us,” the Senate minority leader told the Fox Business Network. “We’ve had this experience before on 9/11.”

“These guys are probably better able to carry out such a mission than al-Qaeda was back in 9/11,” McConnell added.


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