a service of NPRI

July 28, 2005 
Vol. 1, No. 24


The law
Justice Roberts Will Be Good for the Economy

By Kevin A. Hassett

Financial markets appear to have yawned over the nomination of John G. Roberts Jr. to the U.S. Supreme Court. They shouldn't have.

Roberts may well help tilt the scales in coming legal battles over tort reform that will have dramatic effects on corporate profits and the economy. That is, of course, assuming he is confirmed.

According to the futures market at Tradesports.com, the current odds of Roberts being confirmed are about 89 percent. He may be, but it will not be pretty. If the past is any guide, we are about to witness the political equivalent of a Mike Tyson boxing match. There will certainly be low blows, and there might even be biting.

The process will be so vicious because the stakes are so high. Democrats have in the recent past abandoned all standards of decorum when considering Republican nominees because the Supreme Court has become their primary weapon in the culture wars.

Ever since the landmark decision of Roe v. Wade, which found a constitutional right to abortion, Democrats have made that highly questionable legal decision a litmus test.


Trading Places

CAFTA shows Ds’ now overwhelmingly hostile to global trade

Wall Street Journal editorial

The House pulled out a victory on the Central American Free Trade Agreement last week, though so narrowly that the White House may need to rethink its "bilateral" trade strategy.

Protectionists have all the intensity on these smallish trade deals, while supporters tend to be less passionate than they would be on larger, multilateral agreements such as the ongoing Doha global trade round.

Another negative political note is the declining support among Democrats for open trade. The White House had to deliver 202 House Republicans to pass Cafta, 217-215, because only 15 Democrats bucked their party leadership to vote yes.

Not a single Democrat from California or Oregon voted aye, and only one (Norm Dicks) from Washington--all states that benefit enormously from exports.


Worker rights
An End to the  Gravy Train

Will Unions Stop Wasting Member Dues on Partisan Activities?

By Robert Novak
Chicago Sun-Times

WASHINGTON -- The bolt in Chicago from the AFL-CIO by the Teamsters and Service Employees International Union (SEIU) reflects a long-building reaction to John Sweeney's plans a decade ago when he muscled his way into the labor federation presidency.

He wanted to restore union power through politics. His project was a total failure, and the AFL-CIO is in ruins 50 years after its creation.

The scenario of the breakup was accurately laid out to me by Teamsters sources nearly a year ago. Sweeney would be offered a deal he could not accept. To keep the two big unions in the federation, Sweeney would have had to agree to a six-month tenure as president and a sharp reduction in the share of union dues to the AFL-CIO. The $10 million a year each saved by the Teamsters and the SEIU means money that has gone into Democratic coffers will be used for organizing.

That's why Democratic strategists wring their hands, fearful that the financial drought caused by the events in Chicago will undermine the party in the 2006 midterm elections. But James P. Hoffa of the Teamsters and Andrew Stern of the SEIU have rejected organized labor's political illusion.

They may not know how to cure what ails the nation's unions, but they cannot buy Sweeney's notion that salvation lies in electing Democratic politicians.

When lifetime union bureaucrat Sweeney became president Oct. 25, 1995, in the AFL-CIO's first contested election for president, he threatened civil disobedience and other militant tactics "if necessary," but that was not what he really had in mind. It soon became clear he planned a massive effort for the Democrats and labor to regain control of the whole federal government that had been lost when Republicans won control of Congress.

Sweeney's political illusion was that the conjunction of Democratic control of the Senate, House and presidency would somehow restore labor's health (though that alignment was not therapeutic when it existed during Bill Clinton's first two years as president). In any event, pouring labor money into Democratic coffers proved an absolute failure, climaxed by Republican victories in 2000, 2002 and 2004.


At online stores, sniffing out the crooks a matter of survival

By Mitchell Pacelle
The Wall Street Journal

LYNBROOK, N.Y. -- Six years ago, Neil Kugelman found himself puzzling over the very first customer to arrive at the Web site he had launched to sell jewelry online.

The order: a $496 men's diamond ring. The North Carolina address didn't match the address tied to the credit card. The shipping address was different still. Mr. Kugelman tried to telephone the customer, but the number didn't work. His email bounced back. He was no expert on fraud, but neither was he born yesterday. He spiked the order.

"Our first order -- order No. 1 -- was fraudulent," he marvels.

Since then, as family-controlled Goldspeed.com Inc. grew from a basement start-up to a 10-person operation that fills more than 50,000 orders a year, Mr. Kugelman has taught himself to regard each and every customer as a potential online crook -- and with good reason. He says fraudulent orders have risen to a staggering 30% of the total, up from just 5% when he started.

[continued]  This article will be available to non-subscribers of the Online Journal for up to seven days after it is e-mailed.

WHY BusinessNevada

Government schools
When tried, accountability works—even in public schools

More than two-thirds of schools in the Clark County School District failed the “adequate yearly progress” standards of the federal No Child Left Behind Act for the 2004-05 year, the state education department reported last week.

Last year 141 Clark County public schools were listed as failing; now that number has grown to 205.

Clark County School District—currently fifth-largest in the United States—is legally responsible under state law for educating over 70 percent of Nevada’s public school students.

One bright spot for the district was the Andre Agassi College Preparatory Academy's middle school—the only school in Clark County classified as "exemplary" for exceeding federal standards.

Editorially, the Las Vegas Review-Journal noted that the middle school, as a charter school, is exempt from “the bureaucratic shackles that prevent most every other campus from escaping the status quo.”

Setting the academy apart from other public schools, noted the R-J, “is its atmosphere of accountability. Students must sign contracts pledging good behavior, and parents must promise to involve themselves in their children's education. If those vows are broken, students can be shown the door. If teachers deliver exceptional results, they can earn financial bonuses. If they don't, they won't be back the following school year.”

Only five Nevada public schools were designated in 2005 as exemplary. They were:

  • Agassi College Preparatory,
    Clark Charter

  • Whittell High School,
    Douglas County

  • Battle Mountain High School,
    Lander County

  • Verdi Elementary School,
    Washoe County

  • Lund Elementary School,
    White Pine County

[Quality ranks of Nevada public schools for 2005, from the Nevada State Department of Education]

Tax reform
Ann O'Connell to head effort
to rein in state spending

Respected 20-year legislative veteran will push measure

By Sean Whaley
Las Vegas Review-Journal

CARSON CITY -- Former state Sen. Ann O'Connell, one of Nevada's most conservative lawmakers in her 20 years in the Legislature, will head a group seeking to qualify a ballot measure to place limits on government spending.

"I will come on board as chair of the group," O'Connell said last week. "This is something I'm 100 percent in favor of."


Your economic future
Greenspan’s fictional
‘glut’ of savings

By Frank Shostak
Ludwig von Mises Institute

Following Ben Bernanke, the chairman of the Council of Economic Advisers, in his testimony to the Congress on July 20, 2005, Fed Chairman Alan Greenspan said that it is quite likely that we are currently experiencing a global savings glut. Agreeing with Bernanke, the Fed chairman views this glut as one of the factors behind the so-called interest rate conundrum, i.e., long-term rates have been falling despite the tight interest rate stance of the Fed.

What's Really Behind the Interest Rate 'Conundrum'?

An analysis by
Frank Shostak

This savings glut, according to many commentators, has been instrumental in the very low mortgage interest rates, which have pushed the housing market to new highs. The housing boom in turn has lifted consumers’ wealth and in turn boosted their expenditure and thereby kept the US economy going.

Indeed the International Monetary Fund (IMF) seems to support the Fed chairman’s view. According to the IMF the World is flooded with savings. The IMF has estimated that world savings as a percentage of world GDP stood at 25.4% in 2005, which translates into US$11.8 trillion—nearly the size of the US economy.


AFL-CIO crackup
Behind the scenes,
Nevada unions scurry

By Steven Mihailovich

Nevada union leaders say they are working hard to find a way to keep the local labor movement united in the wake of the split in the AFL-CIO last week in Chicago. The future, say experts, will depend on the operational structure that emerges as locals pick up the pieces.

"This is new territory for everybody," said Richard Hurd, a professor at Cornell University's School of Industrial and Labor Relations. "We haven't had a split of this magnitude since the 1930s. It is not clear whether the locals have the ability to dictate to the national level."


AFL-CIO crackup
Breakaway Unions ‘Among
America’s Most Corrupt’

National Legal and Policy Center

“The biggest problem facing organized labor today,” says Ken Boehm, chairman of the National Legal and Policy Center, “is not a disagreement over strategy. It is declining membership. Workers do not believe union bosses represent their interests. Corruption remains a huge problem in unions like the Teamsters, Laborers, SEIU and UNITE-HERE. Ironically, it is the most corrupt unions that are among the dissidents. It would be inaccurate to call them reformers.”

“The reason for the split may be more mundane than expressed in the media so far,” continued Boehm. “To be sure, there are differences over the future of organized labor, but the real dispute is over who gets the spoils of dues monies. Unions that leave the AFL-CIO don’t have to pay their dues, including millions in back dues.”

Boehm pointed to the corruption problems in the dissident unions:

Teamsters - The Teamsters continue under Justice Department oversight, with no end in sight. Last year, former federal prosecutor Edwin Stier, who had been hired by the Teamsters to clean up the union, resigned. Stier charged that Teamsters President James Hoffa had “backed away” and “inexplicably retreated” from anticorruption efforts. Earlier this year, a top aide to Hoffa by the name of Carlow Scalf, whom Stier had accused of protecting mob interests in the Teamsters, was suspended from the union for allegedly embezzling nearly $70,000, in the form of a fake housing allowance.


Roberts Sees Limited Role
For High Court on Social Issues

By Josh Gerstein
The New York Sun

WASHINGTON - President Bush's nominee to the Supreme Court, Judge John Roberts Jr., argued yesterday in response to a Senate questionnaire that judges should avoid meddling in complex social problems best resolved by the political branches of government.

"Judges must be constantly aware that their role, while important, is limited," Judge Roberts wrote. "They do not have a commission to solve society's problems, as they see them, but simply to decide cases before them according to the rule of law. When the other branches of government exceed their constitutionally mandated limits, the courts can act to confine them to the proper bounds. It is judicial self-restraint, however, that confines judges to their proper constitutional responsibilities."


The Incredibly
Shrinking Tax Base

Increasingly, fewer and fewer pay the taxes

The first lesson of public finance is that good taxes have broad bases and low rates. But since 1980, the base of the federal income tax—the largest single source of federal revenue—has been shrinking dramatically.

According to a new analysis by the Tax Foundation, a record 42.5 million Americans who filed a tax return in 2004 had zero tax liability after credits and deductions. That amounts to more than one-third of the 131 million tax returns filed last year that owed zero federal income tax. And millions more paid next to nothing. Why does this matter?

Tax Foundation president Scott A. Hodge calls the shrinking number of taxpayers bearing the nation’s tax burden a troubling development for any democratic society.

“America is becoming divided between a growing class of people who pay no income tax, and a shrinking class who bear the majority of the burden,” said Hodge, co-author of the new analysis. “That makes tax reform politically difficult, since reform would require drawing these non-payers back into the tax system in order to broaden the tax base.”

Despite the charges of critics that the tax cuts enacted in 2001, 2003 and 2004 favored wealthy Americans, these cuts actually reduced the tax burden of low and middle income taxpayers, and shifted the tax burden onto wealthier taxpayers.

“The number of Americans who paid no income taxes because of deductions and credits in the tax code has varied greatly since 1950,” said Hodge. “But in recent years it has spiked to record levels, and the trend line does not appear to be slowing.”

In addition to the 42.5 million nonpayers, some 15 million individuals and families earned some income last year but not enough to be required to file a tax return.

[The Tax Foundation]

New study: Ds more involved
in voter suppression efforts

American Center for Voting Rights

While Democrats routinely accuse Republicans of voter intimidation and vote suppression, in 2004 it was paid Democrat operatives who were far more involved in those efforts, says the non-partisan American Center for Voting Rights in a newly released study.

Examples cited include:

  • Paid Democrat operatives charged with slashing tires of 25 Republican get-out-the-vote vans in Milwaukee on the morning of Election Day.

  • Misleading telephone calls made by Democrat operatives targeting Republican voters in Ohio with the wrong date for the election and faulty polling place information.

  • Intimidating and deceiving mailings and telephone calls paid for by the DNC threatening Republican volunteers in Florida with legal action.

  • Union-coordinated intimidation and violence campaign targeting Republican campaign offices and volunteers resulting in a broken arm for a GOP volunteer in Florida.

[Study exec summary]    [Report specific to Nevada]

Western land use
Judge bars cattle
from 800,000 acres

Associated Press

BOISE, Idaho -- The U.S. Bureau of Land Management is telling ranchers to remove thousands of head of cattle from nearly a million acres of public land in southern Idaho after a federal judge found the agency addressed environmental impacts from grazing in a "patchwork-quilt manner."

"We are working with ranchers to discuss how to implement the judge's order, which necessitates the removal of the livestock," Cheryle Zwang, Idaho BLM spokeswoman, said Wednesday. "We don't know if it's going to be under appeal, but we are trying to comply with the order."

U.S. District Judge B. Lynn Winmill ruled last week in favor of conservationists who had sued BLM, arguing the agency violated federal regulations when it authorized increased grazing in the Jarbidge Resource Area, an expanse of rangeland southwest of Twin Falls that stretches to the state's southern border with Nevada.


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