Senate GOP Caucus Caving On Earmarks?

The British newspaper The Guardian reports that the watered-down version of ethics reform will apparently get Republican backing after all in the Senate. Despite removing requirements for certification by chamber parliamentarians for earmark compliance, the elimination of searchability, and the restriction of the definition of personal benefit to an impossibility for enforcement, the Minority Leader and the Republican Whip both indicated that they would press the caucus to pass the bill:

Sen. Tom Coburn, R-Okla., said he will fight the bill because it “guts key earmark reforms.” He noted that, unlike a previously adopted version, it would allow the majority party’s leaders – not the Senate parliamentarian- to rule on whether earmark disclosure requirements have been met in bills reaching the Senate floor.
Dissident senators would not be able to challenge the ruling, but they could try to strike an unreported earmark by offering an amendment.
Senate Minority Whip Trent Lott, R-Miss., said some Republicans think a nonpartisan “third party or parliamentarian” should rule on such disclosure matters, but he stopped short of saying he would oppose the bill. …
Senate Minority Leader Mitch McConnell, R-Ky., declined to say whether he would support the bill. He noted that an objection from Republican Sen. Jim DeMint of South Carolina – who shares some of Coburn’s concerns – prevented House and Senate negotiators from working on a final draft in conference.
“As a result of that, none of our people were involved in the final product,” McConnell told reporters Tuesday. “But in a sense, we made it difficult on ourselves because one of our members prevented us from going to conference.”

So with the biggest Republican porker in the Senate answering search warrants from both the FBI and the IRS today, the GOP chooses today to shrug off the dilution of key earmark reforms? What’s left on earmarks is almost useless, and earmarks have been at the heart of almost every major public corruption case over the last few Congresses.
That’s not to say that the bill doesn’t have other good points. It puts more pressure for disclosure of “bundling” contributions from lobbyists to political campaigns, for example, and it does require the reporting of earmarks 48 hours before a vote. However, it doesn’t require that for conference reports, and it fails to provide the easy accountability that the previous version did — the version that Democrats used to congratulate themselves on their new direction on ethics in January.
Mitch McConnell has done an especially good job as Minority Leader so far in this session. He must believe that opposing the bill in its current form would allow the Democrats to paint the GOP as opposed to reform. We need to demonstrate that we need real earmark reform, not another coat of varnish on the existing system — and that fighting for real reform will win the confidence of voters in the long run.

But They’re Low In Tar!

Smokers have spent the last few years exiled to the outdoors in order to service their addiction during working hours. A new study in Australia might give them some company — laser printers and copiers:

The office printer causes frustration when it isn’t working but it may be posing as much danger to staff as smoking a cigarette when it is, scientists in Australia said.
An investigation into 62 laser printers revealed that 17 of them — almost 30 per cent — released high amounts of minute toner particles into the air.
Professor Lidia Morawska from the Queensland University of Technology, who led the research, said: “Ultra-fine particles are of most concern because they can penetrate deep into the lungs where they can pose a significant health threat. …
The study, conducted in a large open-plan office in central Brisbane, showed that particles increased five-fold during working hours.
Emissions were worst when new cartridges were used, and when graphics and images which required larger quantities of toner were being printed.

The American Chemical Society’s journal, Environmental Science and Technology, will publish the study later this week. It will reportedly include a list of popular printer brands with an index of emissions for each model. It will allow employers to select the lowest-emission choices for the work environment, as well as launch a million lawsuits around the world.
How did the researchers stumble on this gold mine for the legal profession? They actually wanted to test ventilation systems in offices to see how well they kept outdoor pollutants from nearby roads. When they began testing office environments, they didn’t find disturbing levels of outdoor pollutants, but were surprised to see the printer particle levels reach levels “far higher” than anything from outside.
The researchers said that workers who spent months and years exposed to these high particulate levels could be at high risk for pulmonary diseases. Determination of the potential for Laserjet Lung will have to be conducted in further studies. However, don’t be terribly surprised to see commercials soon that ask, “Have you worked near a laser printer for more than a few months? You may be owed compensation! Dial 800-SUE-HAPI for more information!”

Why Democrats Are Different

The Wall Street Journal reports on what the Democrats have on their agenda before Congress takes its August vacation this year — and it’s not how they can reduce expenses. Instead, the Democrats have a raft of new and increased taxes for the American public, a few of which threatens to return us to the marginal rates of the Carter administration:

With a new Democratic majority, the agenda on Capitol Hill has shifted abruptly this year, and no more so than on taxes. For a decade the focus in Congress was which taxes to cut. Now everywhere you look someone running the Congress, or running for President, is proposing to raise taxes on some industry or group of Americans. …
It’s all the more remarkable given that federal tax revenues as a share of GDP are currently above their modern historical level. The latest budget estimate is that fiscal 2007 revenues will reach 18.8% of GDP, compared to the 40-year historical average of 18.3%. Tax revenues this year are rising by nearly 8%, following increases of 11.8% in 2006 and 14.6% in 2005. The budget deficit is down to 1.5% of GDP, and falling. But apparently Democrats still think Americans are undertaxed.

It’s quite a list, too. On CQ Radio today, Phil Kerpen deconstructed the capital-gains tax increase for hedge funds and private equity from 15% to 35%, the top marginal rate for personal income tax. Like most other capital gains, this income has already been taxed through the partnerships. However, despite the populist rhetoric coming from the Democrats on this topic, the primary investors that this tax will affect will be the limited partners who will wind up with smaller returns as the general partners absorb more of the revenue to cover the increased taxes. Those limited partners are in large part pension funds for teachers, police, and firefighters, as well as other unions and public employees.
But that’s not where the Democrats stop with new taxes. As the WSJ points out, that’s merely where it starts:

  • The Senate will increase tobacco taxes, almost doubling the taxes on a pack of cigarettes and potentially adding as much as $10 to the cost of a cigar
  • Higher withholding taxes on subsidiaries of foreign companies
  • Raise overall capital-gains tax rates from 15% to 28%, a level not seen in a decade
  • New taxes on oil leases in the Gulf of Mexico
  • A “tax surcharge” of 4.3% for income over $500,000, effectively creating a new top marginal rate of 39.3% — a level last seen in the Carter administration
  • Elections have consequences, and the last one has large consequences for the American economy. Taxing foreign companies at a higher rate will have the effect of discouraging the expansion of foreign investment here in the US. For American workers, that means more outsourcing of jobs and a higher trade imbalance. How does that make America more competitive?
    The higher taxation of oil leases seems especially backward at this moment. We’re hearing nothing but “energy independence” from the Democratic presidential candidates. How do they think we’ll accomplish that — by discouraging domestic production? Now the workers who lose jobs when foreign companies pull out of the US can pay higher gas prices, too.
    So far, the Democratic Congress has delivered on its promise to return to the economic policies of a previous Democratic administration. They just didn’t mention that they meant the Carter administration.

    CQ Radio: Private Equity And Public Health

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    Today on CQ Radio (2 pm CT), we’ll have two great guests on two important policy issues. First, Phil Kerpen from Americans for Prosperity will join us to discuss the new tax increase floated by the Democrats. Kerpen will explain why this proposal will damage the American economy — and how targeted tax cuts could generate the revenue that Congress seeks. In the second part of the hour, Dr. Scott Atlas joins us to discuss his participation on Rudy Giuliani’s health-care policy team. Rudy’s efforts on this are in the news today, as he pushes for private enterprise solutions rather than socialized medicine.
    Call 646-652-4889 to join the conversation!
    Did you know that you can listen to CQ Radio through your TiVo service? Click here for the instructions. Also, you can subscribe to CQ Radio through iTunes now by clicking this link:
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    Why Not Increase Revenue Through Growth Rather Than Punishment?

    Phil Kerpen criticized the tax-first impulse of the current Congress, as demonstrated by the recent notion of increasing tax penalties on equity partnerships. In yesterday’s Wall Street Journal, he makes the case that Congress itself has caused much of the problem it seeks to correct through the Sarbanes-Oxley regulation — and uses the AMT to remind people what happens when Congress uses taxes to moderate the market:

    Not content to merely spend the record influx of cash coming into the federal treasury, some members of Congress are pushing to hike the capital-gains tax on so-called “carried interest” — the share of partnership profits, typically 20%, that hedge-fund and private-equity investment managers have not sold to their outside investors. This would be nothing more than a punitive tax on those the congressmen perceive to be making too much money.
    This is the same kind of thinking that led Congress in 1969 to enact the Alternative Minimum Tax. An effort to “soak the rich,” the AMT was supposed to fall on the 155 households that, because their income was mostly dividends from municipal bonds, paid no federal income taxes. But, because lawmakers conveniently forgot to index the AMT for inflation, it now hits an increasingly large portion of upper middle income folks, especially those in “Blue States” such as New York, New Jersey and California, who write off large state and local income taxes on their federal tax returns. …
    Under current law, individual partners in an investment partnership such as a hedge fund or private equity fund are taxed based on what the underlying partnership income is; if the income comes from a capital gain, it is taxed at the capital gains rate. Ordinary income is taxed at ordinary income tax rates. This tax treatment is consistent with the rationale for a lower capital gains tax rate — to alleviate the double taxation of corporate-source income and to encourage risk taking, entrepreneurship and capital formation.
    The legislation Congress is considering ends those protections, saying in effect that it doesn’t matter if the income is a clear-cut capital gain, such as proceeds from the sale of corporate stock. What matters is who receives the income, in this case politically unpopular rich guys.
    All investors should be on notice that if the capital gains tax is considered a loophole for investment partnerships, it can’t be long before the capital gains tax is raised for everyone else. Some leading Democrats, including Oregon Sen. Ron Wyden and presidential candidate John Edwards, are already calling to do just that.

    Well, some might say, so what? Why treat one kind of income differently than another? Isn’t that unfair, and doesn’t it just amount to a dodge to allow rich people to pay less than their share?
    Not all income is equal in terms of its benefit to the economy. Investment carries risks that need to be rewarded in a “progressive” tax scheme. Otherwise, capital would increasingly get locked up in corporations with a steady and predictable return, rather than in the new ventures that create jobs and growth for the economy. If a system doesn’t recognize the value of the risk, fewer investors will spend their money on new ventures — and the economy will lose its engine for growth.
    Now, in this case, advocates of the tax hike point out that they would only be bringing the equity-partnership tax to the same level as the corporate capital-gains tax, which is now at 35%. Kerpen answers that by advocating a drop in that rate to the same level as the existing equity-partnership rate. If Congress wants to make up for the loss of revenue that will occur when they restrict or eliminate the AMT, then they should open up more risk-reward in the current tax system to create more growth. That would allow investors to take more risks and to get rewarded for it.
    Kerpen notes that two-thirds of all voters are now investors. Congress should give them a break and allow them to reap the rewards of investment and keep America competitive.
    UPDATE: Phil Kerpen is also the head of Americans for Prosperity, and he wrote at length about the proper strategy for capital-gains tax policy. He includes this chart to show the effect of capital-gains tax cuts and tax increases over a three-year period:

    Are They Looking For Frozen Pork?

    The FBI and the IRS raided the newly-renovated home of Senator Ted Stevens in Alaska, looking for evidence of political corruption in an investigation that has already corralled his son and one of his closest political backers. Bill Allen, the CEO of oil-services firm VECO, got convicted of bribing state legislators earlier this year, and now the FBI and IRS want to see what Allen may have given the Republican Senator in exchange for millions of contracts in earmarks:

    Agents from the FBI and the Internal Revenue Service raided the Alaska home of Sen. Ted Stevens (R) yesterday as part of a broad federal investigation of political corruption in the state that has also swept up his son and one of his closest financial backers, officials said.
    Stevens, the longest-serving Republican senator in history, is under scrutiny from the Justice Department for his ties to an Alaska energy services company, Veco, whose chief executive pleaded guilty in early May to a bribery scheme involving state lawmakers.
    Contractors have told a federal grand jury that in 2000, Veco executives oversaw a lavish remodeling of Stevens’s house in Girdwood, an exclusive ski resort area 40 miles from Anchorage, according to statements by the contractors. …
    (AP) Stevens, 83, is under a federal investigation for his connections to Bill Allen, founder of VECO Corp., an Alaska-based oil field services and engineering company that has reaped tens of millions of dollars in federal contracts.

    These are the wages of pork. Allowing earmarks gives lawmakers far too easy a path to reward constituents who reward the lawmakers. It’s bad enough when they buy political contributions through earmarks to protect their incumbencies, but we’ve seen Duke Cunningham and William Jefferson shake down special interests for their own personal enrichment.
    Stevens has not yet been charged with a crime, and judgment should be held until we at least see an indictment. Given that Stevens has been one of the more ridiculous figures in Washington in protecting his pork, though, he brings these character questions on himself. Hysterical defenses of $200 million projects to benefit a few dozen residents of an island practically begs people to question who gets the money and how that benefits Stevens.
    We should keep a close eye on this investigation and the companion probe into Stevens’ Alaskan colleague in the House, Don Young. Both have connections to VECO, and both have insisted that earmarks are their own money to do with what they see fit. Until we end that facility by which our elected representatives can raid the taxpayers’ treasury to bestow favors and line their own pockets, we will continue to see embarrassing corruption probes into the activities of members of both parties. This, unfortunately, is where partisanship ends in Washington. (via Michelle Malkin)

    Lieberman On Offense On Iran, Iraq

    The Hill interviewed Senator Joe Lieberman about his unique position in the upper chamber, and how he sees the debate on Iraq and Iran. Lieberman castigated his former colleagues in the Democratic caucus as excessively partisan and unwilling to meet the threats posed by America’s enemies:

    Lieberman, the Democrats’ 2000 vice presidential nominee, insists he is not actively considering joining the Republican Party. But he is keeping that possibility wide open as his disenchantment grows with Democratic leaders. The main sticking points are their attempts to end the war in Iraq and their hesitation to take a harder line against Iran.
    “I think either [Democrats] are, in my opinion, respectfully, naïve in thinking we can somehow defeat this enemy with talk, or they’re simply hesitant to use American power, including military power,” Lieberman said in a wide-ranging interview with The Hill.
    “There is a very strong group within the party that I think doesn’t take the threat of Islamist terrorism seriously enough.” …
    As Lieberman sees it, however, the Democratic Party has slipped away from its “most important and successful times” of the middle of last century, where it was tough on Communism and progressive on domestic policy.

    Lieberman may see himself as the last of the Scoop Jackson Democrats. He would probably find more company with the Blue Dog Democrats in the House, but for now he has to settle for the company of Republicans. He has increased his attacks on Democratic insistence on retreat and appeasement, almost defying them to cast him out of the caucus and potentially unsettle the leadership composition of the Senate.
    They have started to do so, in small measures. While Lieberman opposes the caucus on Iraq and Iran, he works with the Democrats on domestic policy, and he serves as chair of the Homeland Security and Governmental Affairs committee. When Harry Reid celebrated a legislative victory on a new Homeland Security bill, Lieberman didn’t get an invite to the press conference, which mystified Lieberman, given his efforts for that win.
    Lieberman knows he could lose that chair if the Democrats expand their majority in the 2008 election, a good possibility given the imbalance in Republican seats at risk. He has already endorsed one Republican for re-election in defiance of Chuck Schumer’s DSCC, Susan Collins. He will likely endorse the Republican candidate for President, since none of the Democrats in this cycle’s crop of contenders will demonstrate any kind of strength or tenacity on Iraq or Iran. Nevertheless, he won’t switch parties; he wants to remain an independent.
    I think that’s wise. As such, Lieberman has the most potential to assist in keeping the Senate from declaring a surrender on the Beltway beachhead. We can expect Lieberman to get even more vocal when Petraeus reports in September, especially if the surge keeps producing more success.

    Unclear On The Concept

    A sixteen-year-old boy got arrested on “soft drug” charges in Germany, and got remanded to a children’s home for observation and care. He kept testing positive for marijuana even though he couldn’t leave the home. They checked his pockets and found a packet of pot — a care package from his mother:

    A mother regularly sent her 16-year son packets of cannabis into the children’s home where he had been placed in care, German police said.
    “She apparently didn’t want her son to feel bad,” Detlev Kaldinski, spokesman for the police in Rotenburg, central Germany, told SPIEGEL ONLINE.
    The 39-year-old single mother now faces a charge of breaching German drug laws. Her son had been committed to the home for abuse of soft drugs.

    She had sent her son pot five times since his entry to the home. Apparently, Mummy didn’t want to see her son suffer, so she decided to send the hair of the dog as a comfort while he was supposed to be rehabbing. It appears that German authorities may have discovered the real problem at the boy’s home.
    Still, we know how the boy got the pot, but how did he get away with lighting up? Pot has a distinctive aroma, one which notoriously lingers. The police and the community may wonder what the facility management is doing at the children’s home — and what else may be happening behind their backs.

    High Noon For The AG

    Do not forsake me, oh my darlin’ …
    The Senate Judiciary Committee has reached an agreement with the White House to produce a letter to “clarify” the testimony of Alberto Gonzales on his midnight meeting at the hospital with John Ashcroft. The letter must arrive by noon today, and the committee will release it immediately to the news media. At that point, they will determine whether to recommend an investigation into perjury charges against the Attorney General (via Memeorandum):

    The Senate Judiciary Committee’s ranking Republican, Arlen Specter (Pa.), emerged from a crucial Monday briefing and gave the Bush administration 18 hours to resolve the controversy over apparent contradictions in Attorney General Alberto Gonzales’s congressional testimony.
    Gonzales took issue last week with former Deputy Attorney General James Comey’s description of internal dissent in 2004 over the legal authority for the National Security Agency’s (NSA) warrantless eavesdropping program. Frustrated Democrats called for a special prosecutor to investigate Gonzales for perjury, noting that several officials have publicly echoed Comey’s account. Those calls prompted Specter to request a classified briefing to clear up the dispute.
    Specter aides released a statement late Monday that suggested a bombshell to come on Tuesday afternoon.
    “Given the difficulty of discussing classified matters in public, I think it is preferable to have a letter addressing that question [of Gonzales’ veracity] from the administration … by noon tomorrow, which will be made available to the news media,” Specter wrote in the statement. “The administration has committed to producing such a letter.”

    Whatever the letter says, the perjury issue will likely die off, as even Ruth Marcus notes in her Washington Post column today. No fan of the AG, Marcus argues that Gonzales didn’t commit perjury, and that the Senate would be foolish to argue otherwise:

    As the Times put it, “If the dispute chiefly involved data mining, rather than eavesdropping, Mr. Gonzales’ defenders may maintain that his narrowly crafted answers, while legalistic, were technically correct.”
    Congress deserves better than technically correct linguistic parsing. So the bipartisan fury at Gonzales is understandable. Lawmakers are in full Howard Beale mode, mad as hell at Gonzales and not wanting to take it anymore.
    But perjury is a crime that demands parsing: To be convicted, the person must have “willfully” stated a “material matter which he does not believe to be true.”
    The Supreme Court could have been writing about Gonzales when it ruled that “the perjury statute is not to be loosely construed, nor the statute invoked simply because a wily witness succeeds in derailing the questioner — so long as the witness speaks the literal truth” — even if the answers “were not guileless but were shrewdly calculated to evade.”

    In other words, the Senate Judiciary Committee did a lousy job of asking the right questions. In fact, Gonzales tried to tell them that during the interrogation, which I watched as it happened. The committee members should have easily read Gonzales’ desire to go into private session to clarify his answers at that moment, but they either were too caught up in themselves to notice or deliberately ignored it. He obviously wanted to give them a more complete answer but could not do so in open testimony, due to the nature of the counterterrorism activity.
    Marcus is right in another respect, which is that Congress has taken this badgering too far. These programs over which they have attempted to trip Gonzales are not new, and Congress has been aware of them for almost six years. Regardless of whether the data-mining efforts qualify as a separate program or not, the entire effort has been overseen by Congressional delegations since 2001, and kept in check by them and the DoJ since. If the Senate thinks that it has moved outside of the legal boundaries established in 2001 and adjusted at the insistence of Congress and the DoJ in 2004, then ask about that — but quit playing games and exposing confidential national-security efforts just to harangue Gonzales out of office.
    I say this as no fan of the AG, as CQ readers know. My friends at Power Line have an excellent post up about why they feel the need to defend Gonzales. They see him as strong on the war (agreed) and able to stand up to the Democrats in Congress. I disagree, both on his ability and the requirement of the latter. His appearances before Congress have been disasters in which he has argued that he has little knowledge of what his aides do at his own department, even to the extent of firing high-profile presidential appointments without any guidance from him.
    The AG, in a perfect world, should be fairly independent and minimize the politicization of the Justice Department in order to maintain confidence in the fairness of prosecutions and the implementation of policy. It’s when this office seems excessively partisan that we get the plague of independent prosecutors that run roughshod over justice. This administration is not the first to have a politicized DoJ, but it’s not something we should encourage.
    Gonzales should have resigned months ago, but the Senate has now made that almost impossible with their hysterics over a perjury that never happened. We’ll see which side backs down at High Noon today. Unfortunately, we’re woefully short of Gary Coopers these days.

    Ellison: Progress Is Being Made

    When Michael O’Hanlon and Kenneth Pollack of the Brookings Institution wrote in yesterday’s New York Times that Congress should give General David Petraeus more time in Iraq to expand on the progress he has already made since the beginning of the surge, critics reacted by painting them as stooges of the Bush administration. What will they do when Democratic Representatives Keith Ellison and Jerry McInerney talk about the progress Petraeus is making? McInerney even spoke of adjusting his demand for a withdrawal deadline:

    Ellison said that local leaders in Ramadi told him of how they partnered with U.S. and Iraqi military officials to virtually rid al-Qaeda from the city. Although the lawmakers had to travel in flak vests and helmets, “we did see people walking around the streets of Ramadi, going back and forth to the market.”
    There have been fewer anti-U.S. sermons as the violence has been reduced, Ellison said, and religious leaders meet regularly with U.S. military officials.
    “The success in Ramadi is not just because of bombs and bullets, but because the U.S. and Iraqi military and the Iraqi police are partnering with the tribal leadership and the religious leadership,” he said. “So they’re not trying to just bomb people into submission. What they’re doing is respecting the people, giving the people some control over their own lives.” …
    McNerney, the California congressman, also said he saw signs of progress in Ramadi and was impressed by Petraeus, who argued in favor of giving President Bush’s troop surge strategy time to work.
    McNerney said he still favors a timeline to get troops out of Iraq — something House leaders may bring to the floor again this week as part of a defense spending bill — but is open to crafting it in a way more favorable to generals’ wishes.

    This demonstrates the dilemma for Democrats as the surge presses forward over the next few months. Even war critics now acknowledge that progress has been made by Petraeus and that the new war strategy has created hope for Iraqis — and that the alternative will be a catastrophe. Ellison spoke about how he “cared” for the Iraqis as well as the troops, and having said that, he will find it hard to care for them by watching them disappear in the rear-view mirror.
    The return of normality for the Iraqis that he met in Ramadi came through the offices of the American military, and a precipitate withdrawal would end it, probably immediately. The reduction of anti-American rhetoric from the mosques comes not because we left those parts of Iraq, but because we stayed and drove out the terrorists. The nation-building of our alliances with tribal leaders, and our adherence to their customs, comes from having made mistakes and learned tough lessons in the first years of the war — and applying those lessons properly and to good effect now.
    Democrats seemed in a big hurry to pass retreat demands ahead of the September reporting deadline, and now we can see why. As Petraeus makes more progress and pacifies more of the nation, the Democrats will see themselves marginalized by all the shrieking that took place before. By the end of September, Petraeus will have extensive improvements to report, and the national attention on his successes will paint the Democrats as a party of surrender in a region we cannot afford to lose.