Free Market Fundamentalist is Moving

Free Market Fundamentalist is moving.

I'm integrating this blog with the Atlantic Sentinel, a transatlantic news, analysis and commentary website that is set on expanding its opinion section.

You will be able to read Free Market Fundamentalist at this location from now on. (There'll be a shorter URL, probably marketfundamentalist.atlanticsentinel.com, available soon.)

The Atlantic Sentinel is on the look out for other voices as well: liberal, libertarian and conservative. For all of the website's opinion articles, follow this link. You'll recognize the Free Market Fundamentalist posts from the Atlas imagery.

Democratic Hypocrisy on Deficit Reduction

As Republicans will vote to repeal ObamaCare in the House of Representatives this week, Democrats are condemning the measure as fiscally irresponsible. Repealing their health care reform bill, liberals say, would add some $230 billion to the federal deficit over the next decade.

The numbers come from the Congressional Budget Office and while some Republicans dispute them, I don't really care. For a decent and concise summary, I recommend this blog post though.

What matters are two things:

1) During Speaker Nancy Pelosi's tenure (2006-2010), Democrats have almost doubled the national debt, running trillion dollar deficits each year. Now they're worried about deficit spending? I doubt it.

2) The notion that Republicans should favor any measure that reduces the deficit and oppose any measure that increases it is nonsense. Republicans have reinvented themselves as fiscal conservatives but fiscal conservatism is not an end in itself. It stems from principle: the principle that government should be limited and people free.

Even if repealing ObamaCare increases the deficit, Republicans should favor it because the law infringes on individual liberties and expands the role of government in an industry that is already far too heavily regulated.

Federal Deficit in First Quarter of Fiscal Year 2011: $371 Billion

From the Congressional Budget Office's Director's Blog:

The federal budget deficit was $371 billion in the first quarter of fiscal year 2011, CBO estimates in its latest Monthly Budget Review, $18 billion less than the shortfall in the same period of fiscal year 2010. Revenues were 9 percent higher than they were a year ago, whereas outlays were only 3 percent higher. [...]

Revenues through December totaled about $531 billion [...] CBO estimates that spending for the first quarter of fiscal year 2011 totaled $902 billion, up $26 billion from outlays in the same period last year. [...]

Compared with spending in the same period last year, defense spending was 7 percent higher, and net interest on the public debt rose by 10 percent, reflecting the substantial growth in debt in the past year. Outlays for major entitlement programs grew at varying rates during the first quarter of fiscal year 2011. Spending for Medicaid increased by 13 percent. Spending for Social Security and Medicare grew more slowly—by 4 percent and by less than one percent, respectively, adjusted for timing shifts. Expenditures for unemployment benefits decreased by 15 percent because of a decline in the number of claims and because average benefits were lower than they had been a year before.

America’s Looming Entitlement Disaster

After billions in stimulus spending and bailing out banks and automakers, America's public finances are in dire straits. Last year, the federal deficit reached almost $1.5 trillion while the debt has grown to $14 trillion, equaling the total annual economic output of the United States. Americans may need to brace for austerity but plans to rein in spending are few and controversial.

Republicans have pledged austerity in the new Congress. Several incoming Tea Party conservatives have promised to cut spending by up to $100 billion but this would not solve the country's budget woes for the long term. Entitlements, which account for approximately a third of federal spending and will likely swallow up half of the budget by the end of this decade, have to be abolished or reformed in order to restore fiscal balance. But neither party likes to take away benefits from low income families and seniors.

That is not to say that lawmakers don't recognize the problems. According to Republican Congressman Phil Gingrey of Georgia, thirty-eight states across the country are already taking funds from other programs, including education, to continue to pay for Medicaid. On the Fox Business Channel last month, he lambasted the Democrats' health care reform bill which prohibits states from making any changes to Medicaid for the next three years. "In 2014," he added, "every state has to cover individuals up to a 138 percent of the federal poverty level." Currently only Americans with incomes below the poverty line are eligible for health care benefits.

Another congressman who has warned against runaway entitlement spending for many months is Wisconsinite Paul Ryan. He expressed concern in February of last year about Americans being "more worried about their material support from goverment than they are about their own liberties." Many lawmakers in Washington believe that it is their job not merely to equalize opportunity, but to equalize the outcomes of peoples' lives, he said. "The more we ask government to do for us," Ryan warned, "the more government can take from us."

Ryan has designed deep spending cuts and entitlement reform, including a privatization of Social Security for those who are under the age of 55. Medicare would be similarly dismantaled if Ryan had his way. Current recipients and those enrolling over the next ten years could continue to enjoy today's program whereas in 2021, the system should become voucher based for new recipients.

On NBC's Meet the Press last November former Federal Reserve chairman Alan Greenspan expressed support for Ryan's plans, noting that with government borrowing over a third of what it spends, to find spending cuts, lawmakers have to look for "not individual, piecemeal cuts or taxes," but reconsider whole programs instead.

As incoming chairman of the House budget committee, Ryan will be at the helm of trimming federal expenditures for the next two years. Democrats, who maintain a majority in the Senate, have already announced that they will "protect" public pensions against reform efforts however.

When the chairmen of the president's debt commission released their recommendations last November, then Speaker Nancy Pelosi professed that entitlement reform "must do what is right for our seniors, who are counting on the bedrock promises of Social Security and Medicare." The president himself has pledged to preserve Social Security "forever". He denounced privatization as "an ill conceived idea that would add trillions of dollars to our budget deficit while tying [people's] benefits to the whims of Wall Street traders and the ups and downs of the stock market."

Raising the retirement age by one month every two years after it reaches 67 under current law would achieve nearly $4 trillion in deficit reduction through 2020, according to the debt commission. The pension age would reach 68 around 2050 and 69 by 2075. But even under those circumstances, Social Security remains a "Ponzi scheme," said Texas Governor Rick Perry in an interview with Newsweek. He advised congressmen who aren't willing to cut spending to "just go home."

With Democrats adamantly opposed to entitlement reform and Republicans similarly hostile toward the notion of cutting defense spending, there wouldn't seem to be much reason to assume that Washington will be able to avert the looming entitlement crisis.

Originally published at the Atlantic Sentinel, January 7, 2011.

Nanny State At Work in San Francisco

The city of San Francisco is banning toys from McDonald's happy meals. It's so preposterous that really the only thing to do is make fun of it. Which The Daily Show does best. Watch.

British and German Liberals Losing Appeal

The governing coalitions in Germany and the United Kingdom are under pressure as their junior partners have failed to deliver on key election promises. Both liberal parties are currently trailing in the polls as voters flee the center.

Chancellor Angela Merkel's own christian democrats lost seats in the upper house of parliament last May in the wake of the Greek bailout effort. German voters have been skeptical of having to come to Europe's rescue time and again and many are longing for a return of the Deutsche Mark.

The junior Free Democratic Party (FDP) has bore the grunt of voter dissatisfaction however. A liberal free market party, the FDP pledged to lower tax rates ahead of federal elections last year. The liberals won nearly 15 percent of the vote in 2009. Forced to cut public spending, they have been unable to deliver on their promise. In recent polls, the party receives but 5 percent of votes, not enough to make the election threshold.

According to the socialist opposition in Germany, the government's austerity measures as socially imbalanced and some 80 percent of Germans agree. Two thirds of voters are in favor of raising the top income tax rate instead, something both the chancellor and the FDP are opposed to. Conservatives and business leaders are increasingly weary of the coalition meanwhile, predicting its demise as early as this summer.

In Britain the Liberal Democrats, in coalition with the Conservatives since May of last year, have similarly lost part of their appeal, particularly among students and young urban professionals. If elections were held today, the party would receive but 11 percent of votes; half of what they won last year.

As in Germany, the government's fiscal policies are unpopular with voters on the left. The Liberal Democrats agreed to a raise in the value added tax from 17.5 to 20 percent and supported an education reform measure which they said to oppose ahead of the elections.

In other parts of Europe, liberal parties have performed well. Small government conservatives and proponents of the free market were on the rise in Central Europe last year while in the Netherlands and Scandinavia, broad alliances of liberals, conservatives and populists remain firmly in power.

A new right is emerging across Europe, spearheaded in some countries, as in the Czech Republic, the Netherlands and Sweden, by traditional liberals and in others, including Germany and the United Kingdom, by conservatives who have moved to the center. Like Swedish Prime Minister John Fredrik Reinfeldt, David Cameron is far from an outspoken antagonist of Britain's welfare state. The political rights favors spending cuts and smaller government but does not believe in abolishing welfare provisions altogether.

The British and German liberals could be part of that new right except their base is divided. Leftists have been disillusioned by their support for spending cuts while moderate voters are drawn to the right where they find conservatives who share their concerns about immigration and crime. There doesn't seem to be much room for social liberalism in the middle anymore.

Originally published at the Atlantic Sentinel, January 6, 2011.

The Era of Speaker John Boehner Begins

Two months after November's congressional elections, a Republican majority took power in the House of Representatives today. Wednesday afternoon John Boehner of Ohio became Speaker of the House. His priorities: to repeal the Democrats' health reform bill and slash federal spending.

For several months Republicans have promised to rein in spending. With a deficit exceeding $1 trillion, or more than a third of expenditures, the opposition can't be reasonable and compromise, especially when fiscally conservative Tea Party newcomers demand deep spending cuts.

Republican leaders know that the Tea Party insurrection launched against government overreach in the private sector, including health care, last year was not exclusively aimed at Democrats. Conservatives also blame Republicans who, during the Bush Administration, allowed a huge expansion in the size of government and a vast increase in public spending to occur. Federal spending nearly doubled between 2000 and 2008 in fact.

Even if neither party cheered last month's compromise on tax cuts, the business lobby praised Republicans for extending current tax codes at the cost of extending unemployment insurance at the same time. But Tea Party groups have been critical. In a Politico op-ed the founders of Tea Party Patriots urged incoming legislators to challenge their party's leadership if need be and stand on principle. "They have a mandate from the people to step up and lead," they wrote.

Will they lead by principle? Or will they go along with Speaker-elect John Boehner, like so many sheep to the slaughter?

Republicans have pledged austerity in the new Congress. Two critical votes in the months ahead will test that promise.

In February, Congress is scheduled to enact a huge spending bill to keep the government running. Many incoming legislators have promised to cut discretionary domestic spending by up to $100 billion. Even if such a spending cut would reduce the deficit only minimally, the Democratic majority in the Senate may not accept it. John Boehner wants to avoid a government shutdown similar to the one that tarnished the 1994 Republican majority but he will be hard pressed to maintain discipline among his members when Congress has to raise the federal debt ceiling in the spring. The current debt ceiling, enacted last February, is $14.3 trillion. The president's budget for this fiscal year will topple the national debt of $13.9 trillion, necessitating the vote.

Letting the nation default on its debt could trigger another global financial meltdown but some Tea Party conservatives have already announced that they will vote against the measure to protest runaway federal spending.

On health care reform, there is no division among Republican ranks. The House is set to vote on repealing ObamaCare next week---an effort that is almost certain to die either in the Senate, where the Democrats are still in the majority, or by presidential veto.

If Republicans fail in their repeal effort, they might try to undercut the Federal Government's ability to enforce the least popular part of the law---the individual mandate which forces people to buy health insurance. By withholding funds for the IRS and health department in the House Appropriations Committee, which has to approve all federal spending, Republicans could delay the bill's implementation in order to repeal it in 2012 when they expect to take back the Senate.

The first order of business in the new House of Representatives tomorrow will be a reading aloud of the Constitution. Some House Democrats have ridiculed a related rule that Speaker Boehner will enforce, requiring members to cite the specific constitutional authority for any bill they introduce. "It's an air kiss they're blowing to the Tea Party," according to Barney Frank, outgoing chairman of the House Financial Services Committee.

Boehner has also announced to slash the sizes of House committees, meaning that each member will have a narrower focus for oversight and legislation. And he has promised to keep track of and publicize the names of members who show up to do their legislative work and those who don't.

Originally published at the Atlantic Sentinel, January 5, 2011.

California Court Rules Texts Can Be Searched Without Warrant

From the AP wire:

The California Supreme Court ruled Monday that police do not need a warrant to search a cell phone carried by someone under arrest.

The state court ruled 5-2 that US Supreme Court precedent affirms that police can search items found on defendants when they are arrested.

"Items," yes, to make sure they aren't carrying weapons or have illegal substances on them. Reading a person's text messages is no different from reading a person's mail. Policemen shouldn't be able to do that arbitrarily.

Nationalizing Airports Because Of a Bit of Snow?

Well, not a bit of snow actually. Some tens of thousands of travelers were stranded at the London airports because of the poor weather conditions there. No wonder that Britain's leftist newspaper The Guardian favors renationalization then.

According to The Guardian's Neil Clark even before last weeks terrible delays, Britain's privatized airports, "with their shortage of public seating, their lack of reasonably priced food and drink outlets, and their depressing, unfriendly atmosphere, were an international disgrace." I never noticed Heathrow had a lack of "public" seats but I do wonder just what constitute "reasonable" food and drink prices according to Mr Clark? Also, could he point to a single government building that has an uplifting, "friendly" atmosphere to it? And is that really what travelers were upset about when they spent the night at the airport?

Airports' "spectacular failure to adequately deal with recent snowfalls has," according to Clark "surely exposed to all but the most fanatical free marketeers, the enormous price we pay for having our infrastructure in private ownership." He reminiscences about the 1960s when state owned terminals had to provide "lots of seating" for the public whereas according to the "commercial attitude" of private airlines today, "every square inch must be turned over to retail space." Isn't that despicable?

Unlike its state owned predecessor, the privately owned BAA is seemingly guided by just one concern: maximising profits for its Spanish owned parent company, Ferrovial.

Clark seems startled to find that a private company cares to turn a profit. Indeed, it's ridiculous, he writes, "to have profit hungry multinational companies running things that really are best left to the public sector." If that includes airports, what doesn't it, I wonder?

Public seating aside and disregarding the moral implications of public versus private ownership, there is no doubt that privately owned services always do better than their public counterparts. As Clark so disgustingly points out, private companies care about maximizing profits. That means that they have to offer better products and better service than their competitors else their customers will turn elsewhere. Indeed, people are quite willing to drive an extra mile for an airport that serves cheaper airlines and flights. They aren't usually so willing to pay extra for comfortable seating though---which is probably why many people fly economy while very few buy a first or business class ticket.

Public ownership by contrast has no competitors. Consequently, it has no reason to innovate, no reason to improve its service, for the people have nowhere else to go. The only reason government has to ensure that its nationalized companies do well is some altruist benevolence maybe or the fear of being voted out of office. History tells us that the profit motive is a far more solid incentive.

Fallacies of Net Neutrality

"As there is no real problem with the Internet, it's not surprising that some of our top minds have been working diligently on a solution."

David Harsanyi wrote that at Reason this May and argued against the proposition of mandating "neutrality" on the Web in the same article.

The problem, according to proponents of "net neutrality", is that large companies, Google and Microsoft for instance, would soon be able to afford faster delivery of their content at the disadvantage of smaller companies and startups. That is unfair, says the Federal Communications Commission (FCC) and it is considering regulation that would ensure equal access for all Internet companies.

As Harsanyi puts it, that "makes as much sense as mandating that tricycle riders have the same rights and privileges as cars and trucks on our roads---highway neutrality."

The FCC promises it doesn't have any intention of controlling Internet content, only of making access fair. But empowered with the ability to regulate the flow of online traffic, it offers a semantic, not substantive, excuse for a power grab.

Peter Suderman, also with Reason, has similarly been arguing against net neutrality. He sees no reason to worry. "If anything, it seems like consumers would benefit from larger web providers being able to offer nifty, advanced services that a smaller competitor might not be able to afford."

He isn't convinced that the theoretical tiny competitor's inability to pay for speedier service is a concern serious enough to warrant regulatory meddling. "Think of how FedEx and UPS operate," he suggests. "Some customers pay to have their packages delivered to their destinations faster, yet no one thinks of this as harmful to those who choose regular speed delivery. Why should it be any different with ISPs [Internet service providers], which are essentially delivery networks for data rather than physical goods?"

Startups always face long odds against entrenched competitors, which is why the majority of new businesses fail relatively quickly. But the best startups compete through genuine innovation, not by taking advantage of government enforced business model barriers.

Milton Friedman was right, Thomas Friedman is not

Good stuff from Foreign Policy's "Shadow Government" blog. William Tobey writes:

In a column again lamenting the benighted state of the United States, Thomas Friedman criticizes China's treatment of Nobel laureate Liu Xiaobo. Liu is a political prisoner serving an 11-year sentence for subverting state power. Of course, just a bit more than a year ago, Friedman was comparing the U.S. government with China's -- unfavorably!

On Sept. 8, 2009 he wrote, "[I]t is hard not to draw the following conclusion: There is only one thing worse than one-party autocracy, and that is one party democracy, which is what we have in America today. One party autocracy certainly has its drawbacks. But when it is led by a reasonably enlightened group of people, as China is today, it can also have great advantages."

Friedman went on to note approvingly Beijing's ability to command orderly entry into the clean technology industry, versus the United States' reliance on chaotic markets.

Of course, Milton Friedman understood, but Thomas Friedman apparently does not, that over the long haul, capitalism and freedom work together, and that they are not separable from each other. The Beijing government's powers to throw a human rights activist in jail and to command massive economic projects are of a piece. They are antithetical to representative democracy and rule of law.

It is understandable that in these tough times people will question how well our system is working, but some perspective is necessary. The past 100 years of U.S. economic performance are unmatched in human history. The engine of the U.S. economy powered enormous improvements in the health, welfare, and living standards of hundreds of millions of people. The political and economic freedoms guaranteed by our system of government made such prosperity, innovation, and achievement possible.

Twenty-five years ago, the passing intellectual fancy was the United States' decline relative to another rising Asian power, Japan, because of Tokyo's ability to plan economic growth and manage private sector investment. Such predictions look silly today.

Warren Buffett, who has the true perspective of a long term investor, has observed, "In the 20th Century, the United States endured two world wars and other traumatic and expensive military conflicts; the Depression; a dozen or so recessions and financial panics; oil shocks; a flu epidemic; and the resignation of a disgraced president. Yet the Dow rose from 66 to 11,497."

As we consider what is next for the United States, rather than turning to the coercive power of centralized planning, as Thomas Friedman seems to consider, we should affirm our confidence in the values that have brought us so far -- capitalism and freedom -- as Milton Friedman knew. Nobody ever made money for long by selling America or American values short.

Don't Ask, Don't Tell Repealed

It's old news but I'd like to mention here the Republican and Independent Senators who voted to repeal the decade old ban that prohibits gay servicemen and -women from openly serving in the military.

Scott Brown of Massachusetts, John Ensign of Nevada, Mark Kirk of Illinois, Joe Lieberman of Connecticut, Lisa Murkowski of Alaska, Olympia Snowe of Maine and George Voinovich of Ohio.

They stood up against what was a bigoted and wrong policy even if the majority of their fellow GOP legislators opposed repeal.

Jim Bunning of Kentucky, Judd Gregg of New Hampshireand Orrin Hatch of Utah didn't cast a vote.

Microsoft's Failure and the Success of the Market

Ten years ago, Microsoft was on top of the world. Newspapers predicted it would rule the world and governments from Europe to the United States launched antitrust investigations, set on breaking up the company that seemed well underway to establishing a permanent monopoly.

In just a few short years, Microsoft is on the decline. Competitors who once complained of its "Death Star" might are doing better in new areas of information technology. What happened? The Huffington Post explains:

In short, changing appetites of the marketplace, technological evolution and questionable decision-making inside Microsoft itself have combined to accomplish what antitrust regulators never did: rolling back the company's dominance and opening the terrain for newer, nimbler entrants.

Imagine that. The free market at work.

Republicans Blame Government for Financial Crisis

From The Huffington Post:

The four Republicans appointed to the commission investigating the root causes of the financial crisis plan to bypass the bipartisan panel and release their own report Wednesday, according to people familiar with the commission's work.

The Republicans, led by the commission's vice chairman, former congressman and chair of the House Ways and Means Committee Bill Thomas, will likely focus their report on the explosive growth of subprime mortgages and the heavy role played by the federal government in pushing mortgage giants Fannie Mae and Freddie Mac to purchase and insure them. They'll also likely focus on the Community Reinvestment Act, a 1977 law that encourages banks to lend to underserved communities, these people said.

The Republicans' report is expected to conclude that government policy helped inflate the housing bubble and that prices weren't expected to crash because the government pushed homeownership so aggressively. They say that the report will note that once the bubble burst, a financial panic followed because firms weren't adequately prepared.

Besides Thomas, the Republicans on the panel include Peter Wallison, a fellow at the American Enterprise Institute, Keith Hennessey, former head of the National Economic Council under George W. Bush and as a fellow at the Hoover Institution, and Douglas Holtz-Eakin, former chief of the Congressional Budget Office and now with American Action Forum, a policy institute in Washington.

Why Republicans Can't Just Be Reasonable

Riding on a powerful wave of resentment with the Obama Administration's interventionist policies, the Republicans performed exceptionally well in last month's midterm elections. They picked up scores of House and Senate seats, several governorships and many state legislatures turned red.

After two years of obstructionism, the left, including the White House, has urged the opposition to become a more "responsible" stakeholder. As they will have a majority in the House of Representatives next year, Republicans should work with Democrats, the president said on election night, not "spend the next two years refighting the political battles of the last two." The challenges that the country faces, he added, do not "lend themselves to simple solutions or bumper sticker slogans. Nor are the answers found in any one particular philosophy or ideology." He shouldn't expect Republicans to share that view.

Republican leaders know that the Tea Party insurrection launched against government overreach in the private sector, including health care, last year was not exclusively aimed at Democrats. Conservatives also blame Republicans who, especially during the Bush Administration, allowed a huge expansion in the size of government and a vast increase in public spending as a consequence. Federal spending nearly doubled between 2000 and 2008 in fact.

Under the Obama Administration the spending spree has continued with hundreds of billions in stimulus and an overhaul of health insurance that is projected to explode Medicaid costs. The Federal Governments has already to borrow more than a third of what it spends and that deficit will only grow in the years to come. But bumper sticker slogans and ideological divide are precisely what will prevent meaningful reform.

Ahead of November's congressional elections, Republican leaders pledged to rein in spending, somehow but they have so far refrained from championing concrete austerity measures. They know that even if the self proclaimed fiscal conservatives of the Tea Party oppose bigger government they like a lot of what government does for them.

Overwhelmingly tea partiers, like all Americans, want to keep Medicare and Social Security for the elderly and oftentimes Medicaid for low income families as well. Cuts in defense spending moreover are anathema to all wings of the Republican Party yet along with entitlements, these are the Federal Government's single largest expenditures.

Without entitlement reform and reductions in defense spending, it is nigh impossible to bring down the deficit and balance the budget, except through raising taxes---something else Republicans won't do.

Republicans' unwillingness to see tax rates go up was most dramatically exposed this month when they blocked all pending legislation in Congress before an extension of Bush era tax cuts would be enacted. They had a good case to make, arguing that during a time of recession, the government should provide certainty and stability before anything else. Democrats were suddenly concerned about the deficit on the other hand, pointing out that if they let the Bush tax cuts on the wealthiest of Americans expire, it would produce several hundreds of billions in revenue.

A compromise negotiated with the White House ultimately saw Republicans agreeing to an extension of unemployment benefits in return for the tax cuts---another multibillion dollar expense, at least for the next thirteen months. The fundamental unwillingness to compromise on core principle remains however.

Democrats and the White House may claim to be open to compromise but when it comes to spending cuts, they are far from pragmatic. When the chairmen of the president's debt commission proposed to reform Social Security this month in order to ensure the system's affordability for several more decades, including a gradual raise in the retirement age, dozens of Democratic lawmakers immediately lined up to "stand firmly against" pension cuts. The president himself has pledged to preserve Social Security "forever" while Speaker Nancy Pelosi promised to "do what is right for our seniors, who are counting on the bedrock promises of Social Security and Medicare."

The president's health insurance reform was conspicuously absent from the commission's recommendations moreover and in all likelihood, Democrats will oppose any attempt to repeal the law or stall its implementation.

If Democrats remain averse to entitlement reform, Republicans cannot agree to tax hikes. Revenues may have dropped as a natural result of the recession but Republicans are right to point out that Washington has a spending problem before anything else.

Democrats have raised public spending as high as 25 percent of GDP, a level not seen since World War II. As a result of health care and financial reform, government interference in the private sector has grown substantially; a role that is only set to expand if the administration manages to advance its energy agenda. Restoring balance to the budget is not just a political cause for Republicans; it is economically imperative.

Originally published at the Atlantic Sentinel, December 14, 2010.

Court Rules Health Mandate Unconstitutional

In what is another major setback for the administration's health care reform agenda, a federal judge in Virginia ruled part of the ObamaCare legislation unconstitutional today, noting that a mandate to buy health insurance exceeds the boundaries of Congress' power.

The state's Republican attorney general filed suit against the health reform law this summer along with prosecutors across the country who contested the mandate's constitutionality. The White House has maintained that the mandate is constitutional under the Commerce Clause which allows the Federal Government to regulate interstate trade. District Judge Henry Hudson has now struck down that view.

Federal courts in Michigan and Virginia previously ruled differently, opining that the mandate was constitutional. In his ruling Monday, Hudson stopped short of blocking health care reform's implementation until a higher court acts. "The final word will undoubtedly reside with a higher court," he wrote. Opponents of the law as well as the Justice Department expect the Supreme Court to ultimately make a ruling on the issue.

Health care reform's assault on individual rights may be argued to exceed the mandate however. Not only would all Americans be forced to buy insurance; health insurance companies could not deny coverage to anyone. The law is further meant to drive down permissible doctors' fees, affecting the rights of health providers.

The White House on Monday tried to downplay the significance of the Virginia ruling, point out that the full health care reform bill does not take effect until 2014. The administration expects all challenges to the law will have worked their way through the legal system by then.

Originally published at the Atlantic Sentinel, December 13, 2010.

Defending the Right to Smoke

Watch the video then click here to sign the petition.

Federal Judge Strikes Down ObamaCare

From the AP wire:

RICHMOND, Va. – A federal judge in Virginia has declared the Obama administration's health care reform law unconstitutional.

US District Judge Henry Hudson is the first judge to rule against the law, which has been upheld by two others in Virginia and Michigan.

Virginia Attorney General Ken Cuccinelli filed the lawsuit challenging the law's requirement that citizens buy health insurance or pay a penalty starting in 2014.

He argues the federal government doesn't have the constitutional authority to impose the requirement.

Other lawsuits are pending, including one filed by 20 states in a Florida court. Virginia is not part of that lawsuit.

The US Justice Department and opponents of the health care law agree that the US Supreme Court will have the final word.

The Story of Business: When Costs Compete With Passion

Restoring Balance to the United States Budget

After billions in stimulus spending and bailing out banks and automakers, America’s public finances are in a dismal state. This year, the federal deficit alone is set to near $1.5 trillion while the national debt reach a staggering $13.7 trillion last month. Americans may need to brace for austerity but plans to rein in spending are few and controversial.

Ahead of November's midterm elections for Congress, Republicans pledged to rein in spending, somehow but they volunteered few specifics. A deal struck with the administration this week, which sees an extension of tax cuts combined with continued unemployment benefit spending into next year, offers little hope for future bipartisan agreement. Similarly, both parties' response to the only concrete plans for deficit reduction drawn up so far have been virtually opposite on all major items.

The National Commission on Fiscal Responsibility and Reform which was formed by President Barack Obama in January, proposed deep budget cuts last month, including a freeze in government salaries, reductions in subsidies and an end to congressional earmarks. The largest expenditures of government---entitlements as Medicaid, Medicare and Social Security which together account for more than $1.4 trillion in federal spending---were not exempt from the commission's recommendations although proposed reforms fell short of actually balancing the books on these programs. ObamaCare, which will only increase health care spending, was not mentioned in the commission's report.

Raising the retirement age and asking doctors if not insurers to share in the burden of mounting health care costs, as the commission prescribed, will not make the entitlements affordable unless their scope is reduced or taxes are raised. Democrats are adamantly opposed to entitlement reform however and the president has explicitly pledged to preserve Social Security "forever." Republicans will block any proposed tax hike, leaving the country with a huge deficit that equals approximately a third of total spending.

If Democrats and Republicans cannot manage to shrink the deficit there is another way---freeze federal spending altogether. Even if revenues collapsed to barely 15 percent of national income as a result of the recession, the Congressional Budget Office estimates that tax revenues will grow by an average of 7.3 percent annually over the next decade. Without an increase in government spending, the budget will balance itself by 2016. Even if spending is allowed to keep pace with inflation and grow at 2 percent a year, the budget balances in 2020.

By that year even the president's fiscal commission is still several hundreds of billions short of balance. But as the national debt continues to mount, so do interest payments which this year amounted to more than $160 billion---an 18 percent increase compared to 2009.

A freeze in federal spending---which, as the economy recovers and begins to grow again, effectively amounts to a reduction in the size of government---should not be anathema to any politician. Democrats have raised spending as high as 25 percent of GDP, a level not seen since World War II. The debt it incurs is unsustainable while such a raised involvement of government in the private sphere is economically unsound.

Originally published at the Atlantic Sentinel, December 9, 2010.