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The top federal capital gains tax rate is increasing this year. A new bulletin from Cato scholar Chris Edwards describes why policymakers should keep capital gains taxes low. If the U.S. capital gains tax rate rises next year as scheduled, these higher rates will harm investment, entrepreneurship, and growth, and will raise little, if any, added federal revenue. “Advantages of Low Capital Gains Tax Rates,” by Chris Edwards “Six Reasons to Keep Capital Gains Tax Rates Low,” by Chris Edwards [...]
Source: CATO HEADLINES
With new laws legalizing marijuana use on the books in Colorado and Washington, everyone is waiting to see how the Justice Department will react. Meanwhile, House legislation has been introduced to get the feds to back off states that pass legalization measures. A new Cato study and a forum featuring the former DEA chief examine where marijuana laws are headed nationwide. “On the Limits of Federal Supremacy: When States Relax (or Abandon) Marijuana Bans,” by Robert A. Mikos “Amendment 64 Becomes Law in Colorado,” by Tim Lynch “The Law and Politics of Marijuana Legalization,” Cato Event [...]
Source: CATO HEADLINES
The deal raises tax rates on entrepreneurs, investors, small business owners, and other “rich” taxpayers, and postpones the sequester budget cuts. Cato scholar Daniel J. Mitchell comments, “This deal is not good for the economy. It doesn’t do anything to cap the burden of government spending. It doesn’t reform entitlement programs. …This is sort of like a late Christmas present, but we must have been naughty all year long and taxpayers are getting lumps of coal.” “Grading the Fiscal Cliff Deal: Terrible, but Could Be Worse,” by Daniel J. Mitchell “The Spending Cliff,” by Michael D. Tanner “A CEO’s Advice to Congress,” by John A. Allison “On to the Next Manufactured Fiscal Crisis,” by Tad DeHaven [...]
Source: CATO HEADLINES
The Cato Institute would like to wish you a happy and safe holiday season. Amidst your celebrating, please take a moment to remember the traditional American principles of limited government, individual liberty, free markets and peace. “Holiday Book Recommendations,” from Cato Scholars and Staff “Things to Be Thankful For,” by David Boaz Make a Year-End Gift to Cato [...]
Source: CATO HEADLINES
As the one hundredth birthday of the Federal Reserve System approaches, it seems appropriate to once again take stock of our monetary system. In the latest issue of Cato Policy Report, economists George Selgin, William D. Lastrapes, and Lawrence H. White survey the relevant research and conclude that the Federal Reserve System has not lived up to its original promise. Also in this issue, new president John A. Allison shares his thoughts on joining the Cato Institute. November/December 2012 Issue of Cato Policy Report [...]
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Until the last quarter of a millennium, mankind depended on living nature for all its food and clothing, most of its energy, and much of its material and medicines. Then mankind began to develop technologies to augment or displace living nature’s uncertain bounty. In a new study, author Indur Goklany shows how fossil fuels not only saved humanity from nature’s whims, but nature from humanity’s demands. “Humanity Unbound: How Fossil Fuels Saved Humanity from Nature and Nature from Humanity,” by Indur Goklany [...]
Source: CATO HEADLINES
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In recent days, several senior Republicans have allowed that they would be willing to compromise on a pledge they made to oppose tax increases. At least one of those lawmakers, Senator Lindsey Graham, has said that he would negotiate on “revenue generation” because he is unwilling to let sequester budget cuts “destroy the United States military.” But Cato scholars have long argued that the proposed cuts in military spending would allow the United States to maintain a substantial margin of military superiority, and would in fact pay dividends for the U.S. economy over the long run. “Budget Hawks or Military Hawks?,” Cato Video with Grover Norquist “The Bottom Line on Sequestration,” by Christopher Preble “The Pentagon Will Survive the Fiscal Cliff,” by Justin Logan [...]
Source: CATO HEADLINES
The United States faces two economic challenges: slow growth and an ever-increasing ratio of debt to GDP. Many policymakers believe they face a dilemma because the policy solutions to the two problems are opposite – lower taxes and/or Keynesian stimulus spending to spur growth only exacerbates the long-run fiscal imbalance. But in a new paper, Cato scholar Jeffrey A. Miron says that policymakers are wrong to see this as a dilemma. Argues Miron, “The United States has a simple path to a brighter economic future: slash expenditures and keep tax rates low.” “Should U.S. Fiscal Policy Address Slow Growth or the Debt? A Nondilemma,” by Jeffrey A. Miron [...]
Source: CATO HEADLINES
In his compelling new book, Ted Galen Carpenter details the growing horror overtaking Mexico and explains how the current U.S.-backed strategies for trying to stem Mexico’s drug violence have been a disaster. The only effective strategy, says Carpenter, is to defund the Mexican drug cartels by abandoning the failed drug prohibition policy, thereby eliminating the lucrative black-market premium and greatly reducing the financial resources of the drug cartels. [...]
Source: CATO HEADLINES

Jeffrey A. Singer There is an opioid crisis in the United States, and Arizona lawmakers are considering proposals to address this growing problem. Policymakers looking to address the problem head-on should focus on reducing harm and death and leave doctors to care for their patients in pain. There are two good measures that can be enacted on the state level that are “low hanging fruit.” Naloxone has been in use since 1971 as an antidote for opioid overdoses. First responders across the nation have used the drug to reverse at least 26,500 overdoses between 1996 and 2014. Unfortunately, despite the fact that naloxone is not a controlled substance and has been used by laymen with minimal training, it is still classified as a prescription drug by the Food and Drug Administration. All 50 states and the District of Columbia have devised work-arounds so that either pharmacists can prescribe naloxone or they and other designated personnel are given a “standing order” by a state’s chief medical officer to dispense the drug. What lawmakers should not do is add insult to injury by imposing a one-size-fits-all limit on the amount of opioids prescribed to people in pain. But studies have shown that, due to the stigma attached to opioid use, and because some states prohibit dispensing naloxone to friends or relatives of opioid users, the drug [...]
Mon, Jan 22, 2018
Source: OP-EDS
Jeffrey Miron Libertarians believe in smaller government. How much smaller? Roughly back to its size and scope in the 90s — that is, the 1790s. So one might naturally assume that libertarians would cheer federal government shutdowns. These do not stop all federal government activities, but they at least suspend some parts temporarily. And no doubt many libertarians do find government shutdowns appealing. But I think that view is a mistake. Perhaps shutdowns serve the libertarian view in a small way by illustrating that government is not as essential as past and present gloom-and-doom commentary suggests. After all, the United States has experienced 18 shutdowns, of varying size, since 1976, and in each case, the world kept spinning on its axis. Shutdowns distract from the serious conversations that need to be had about fiscal reform and the size of government. They have no meaningful effect on how much the government spends, however. To begin with, shutdowns are (presumably) temporary. The average length of previous government shutdowns was seven days. And if history is a guide, then most of the suspended expenditures for salaries, benefits, and the like will be paid retroactively. If you think a shutdown helps keep the budget in check, you’re wrong. Shutdowns also have zero effect on entitlements like Social Security, Medicare, Medicaid, and Obamacare, which continue automatically unless Congress explicitly amends them. [...]
Sun, Jan 21, 2018
Source: OP-EDS
Ted Galen Carpenter The most basic feature that the United States should expect from an ally is consistent, reliable behavior that benefits U.S. policy objectives. Ideally, since America regards itself as a champion of democracy and freedom, an ally should embody those values as well, but Washington has never been a stickler for that standard. Indeed, the United States has a sordid history of collaboration with undemocratic, even odious, regimes when U.S. leaders believed that the relationship was important to America’s security or economic interests. President Donald Trump’s fawning over Saudi Arabia is clear evidence that such a cynical attitude remains intact. Given Washington’s record, it is not especially surprising that both the Obama and Trump administrations have maintained close ties with Turkey, even as President Recep Tayyip Erdogan has systematically dismantled his country’s secular, democratic institutions. It might be embarrassing for American officials to accept that a fellow member of NATO, an alliance of professed democratic nations, now is a de facto dictatorship that routinely imprisons political opponents and independent journalists. Erdogan’s domestic outrages, however, do not seem sufficient to alienate American policymakers. As long as Turkey’s foreign policy did not undermine Washington’s goals, U.S. leaders were content to look the other way about such misdeeds. But Ankara’s international conduct now threatens to eliminate the most fundamental basis for considering Turkey a [...]
Sat, Jan 20, 2018
Source: OP-EDS
Ryan Bourne President Trump will attend the World Economic Forum in Davos next week. On the face of it, the annual jolly for worldwide business and political elites at a ski resort in Switzerland looks an unwelcoming environment for the President. “Davos Man” is seen by many as the manifestation of the globalist agenda Trump denounces. The biggest acclaim at last year’s jaunt, after all, went to President Xi of China, as he outlined a robust defense of free trade days after Trump’s inauguration extolled protectionism. But there’s an argument to be made that on other issues, Trump’s likely opinions will provide the shake-up the Forum needs. Rich people blowing company cash in an expensive resort to bloviate their political views and contemplate the musings of “very important people” is in itself not particularly interesting. But when politicians, businessmen, lobbyists, commentators and regulators get together committing to “improving the state of the world,” there are reasons to be concerned. The first is that by design elites and vested interests dominate the conversation. As an example, last year the forum contained business voices denouncing Brexit, with major banks and other established international companies lamenting potential impacts on supply chains and their commercial activities. Totally unrepresented were British consumers, who pay higher prices for external goods because of EU-level tariffs, and small businesses and yet-to-exist enterprises, which disproportionately [...]
Fri, Jan 19, 2018
Source: OP-EDS
Ryan Bourne Even before Donald Trump had signed his tax reform into law, his opponents had company-level stories at the ready. Pfizer, Coca-Cola and Cisco Systems had said they intended to use any immediate gains from rate cuts to increase dividends and buy their own shares. Instead of increasing wages as promised, Democrat critics were certain this showed wealthy shareholders were the beneficiaries of major cuts to corporate taxes. So who can blame Republicans for drawing on contrary evidence after the signed Bill slashed the headline rate from 35pc to 21pc? The apparent good news just kept on coming for the president. Wells Fargo increased their company minimum wage to $15 an hour and pledged to donate $400m to charity, citing the tax Bill’s effects. AT&T said they would give a $1,000 bonus to more than 200,000 US employees. Others, such as Fifth Third Bancorp, pledged to both give bonuses and increase basic pay. Yet despite the despair on the Democrat side or the backslapping by Republicans, attaching too much weight to either set of company announcements would be erroneous. The success or otherwise of the corporate tax change cannot and should not be judged by company bonus or share buyback decisions. The acid test of the reforms, which cuts rates and allows immediate expensing on equipment, is whether it increases corporate [...]
Fri, Jan 19, 2018
Source: OP-EDS
Doug Bandow South and North Korea currently are enjoying a limited détente. But their seeming embrace, with plans for a unified Olympics team, is a symbolic act unlikely on its own to reshape U.S. policy. South Korean President Moon Jae-in planned to resume the so-called Sunshine Policy, which uses cash and aid to leaven engagement with the North, until Pyongyang’s aggressive rhetoric and accelerated weapons testing forced him to change course. Now Kim Jong-un’s call for dialogue has resurrected his original plans. President Trump’s cascade of threats encouraged Kim to engage Moon and help pull the South away from the Trump administration, citing U.S. “hostility.” The result has been to reinforce Seoul’s already firm opposition to U.S. military action, which the South fears could trigger a Second Korean War. At the end of the day: Contact between the U.S. and North Korea is essential to a permanent solution. Unfortunately, the Trump administration remains intransigent, pressing the DPRK to concede the main issue at stake before talks can be held — a nonstarter — and leaving the threat of war looming. Doug Bandow is a senior fellow at the Cato Institute and the author of “Tripwire: Korea and U.S. Foreign Policy in a Changed World.” [...]
Fri, Jan 19, 2018
Source: OP-EDS
Doug Bandow The United States is effectively bankrupt, but that doesn’t matter to the GOP. Once evangelists of fiscal responsibility and scourges of deficit spending, Republicans today glory in spilling red ink. The national debt is now $20.6 trillion, greater than the annual GDP of about $19.5 trillion. Alas, with Republicans at the helm, deficits are set to continue racing upwards, apparently without end. This flood of red ink will increase. Last year the Congressional Budget Office figured the U.S. was going to again run trillion dollar deficits around 2022. An extra $10 trillion would be added to the deficit over the following decade. But under Republican fiscal “stewardship,” analysts now believe the deficit could hit a trillion dollars next year. Why? Congress relaxed the sequester, eliminating its modest pressure for fiscal responsibility, and approved disaster relief, without making any corresponding spending cuts. Legislators also inflated military outlays, even though much of the Pentagon budget constitutes defense welfare, subsidies for prosperous and populous allies. These poseurs of fiscal responsibility are about to drive up debt to its highest levels since World War II. Even after the most optimistic accounting for the impact of increased economic growth, the tax bill will still add $500 billion to $1 trillion to the deficit over the coming decade. (In fact, those estimates probably understate the final cost since Congress is likely [...]
Fri, Jan 19, 2018
Source: OP-EDS
Ryan Bourne Fears are mounting that the current Congressional funding impasse will lead to a government shutdown by Friday. So far three continuing resolutions to fund the government have been passed during fiscal year 2018. Now, the impending deadline is the focus of horse-trading and negotiation, with many in Congress pushing for yet higher spending. President Donald Trump’s original budget last May proposed higher defense spending financed by discretionary spending cuts elsewhere of $54 billion. House Republicans followed up with a more modest proposal with cuts of $5 billion. Now though, there is talk that the two parties might eventually agree to spending increases totaling over $200 billion over the next two years, busting existing caps. At the moment details cannot be agreed upon, and Democrats are trying to attach other issues to any spending bill, driving talk of a shutdown. But eventually a compromise will no doubt be reached. The truth is any such agreement that does not cut spending would be another example of Congress kicking the U.S.’ debt problem can down the road. The Congressional Budget Office has already projected that the federal deficit (spending beyond revenues) will be $563 billion this year, or 2.8 percent of GDP. The Joint Committee on Taxation believes tax cuts will add another $103.5 billion to that. But the real problem is not the [...]
Thu, Jan 18, 2018
Source: OP-EDS
John Glaser An increasing number of observers argue that President Trump is orchestrating fundamental changes to US grand strategy, dismantling the US-led international order and relinquishing America’s overseas commitments. It’s not true. Joe Scarborough recently lamented “America’s dangerous retreat from the world,” drawing a parallel to the isolationism of the inter-war period. “Under the banner of ‘America First,’ ” reports Evan Osnos in The New Yorker, “President Trump is reducing US commitments abroad.” Misplaced as it is, this criticism isn’t cut from whole cloth. Last year the Trump administration abruptly withdrew from the Trans-Pacific Partnership trade deal and the Paris Climate Accord, and has also approved cuts in funding for foreign aid and the United Nations. Trump himself has contributed to the view of America’s retreat from the world with his erratic tweets and his campaign statements decrying “globalism.” Though White House officials are quick to deny accusations of retreat, they do claim they’re being more selective. National Security Adviser H.R. McMaster says the Trump approach differs from the “consensus view . . . that engagement overseas is an unmitigated good, regardless of the circumstances.” Instead, “there are problems that are maybe both intractable and of marginal interest to the American people, that do not justify investments of blood and treasure.” That’s eminently reasonable. But it doesn’t accurately describe Trump’s foreign policy, which hasn’t backed away from any theater in which the US [...]
Thu, Jan 18, 2018
Source: OP-EDS
Jay Schweikert Imagine you were on trial for your life, but your lawyer insisted on telling the jury you were guilty. That’s what happened to Robert McCoy after he was charged with a triple homicide in Bossier City, La. When the Supreme Court hears oral arguments in McCoy v. Louisiana on Wednesday, it will decide whether McCoy deserves a new trial. But it will also have a chance to vindicate the sanctity of the criminal jury trial itself. Criminal defense is deeply personal. The assistance of counsel is invaluable, but it is defendants, not their lawyers, who get to make fundamental decisions about their cases. The Supreme Court summed this up in 1975 when it held that the Constitution “does not provide merely that a defense shall be made for the accused; it grants to the accused personally the right to make his defense.” With that in mind, the events of McCoy’s case were shocking. Despite the circumstantial evidence against him, McCoy maintained innocence and demanded a jury trial, in which the state would have to prove guilt beyond a reasonable doubt. But McCoy’s lawyer thought a better strategy would be to admit guilt to the jury and hope for leniency. McCoy adamantly opposed this idea, but his attorney pursued it anyway. There’s no easy solution to the problem of coercive plea bargaining, [...]
Tue, Jan 16, 2018
Source: OP-EDS

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