Feed aggregator

IT boss ‘blown away’ that IRS backup tapes in Lerner case erased, watchdog says

Fox News (Politics) - Thu, 07/02/2015 - 15:39
The chief technology officer at the IRS was "blown away" after learning backup tapes that likely contained messages to and from controversial ex-official Lois Lerner were destroyed, according to an internal government watchdog report.

US drone strike kills Islamic State leader

Fox News (Politics) - Thu, 07/02/2015 - 14:58
The Pentagon says a coalition airstrike in Syria has killed a senior Islamic State leader, who has been responsible for moving fighters and weapons from Libya to Syria.

Washington's Role in Puerto Rico's Mess

Cato Recent Op Eds - Thu, 07/02/2015 - 14:51

Nicole Kaeding

Puerto Rico’s governor announced this week that the small island territory would be unable to repay its $70 billion in outstanding debt. The commonwealth is in its tenth year of a depression and is losing its tax base as thousands of residents relocate to the mainland for better economic opportunities.

The Puerto Rican government, which has spent wildly, is principally at fault for the crisis. But Washington, D.C. deserves a large portion of the blame for Puerto Rico’s mess.

Flawed policies from Washington have aided Puerto Rico’s descent into fiscal insolvency in a number of ways. Washington inflated the island’s transportation costs, destroyed the island’s labor market with an abnormally-high minimum wage and lavish entitlement programs, and pushed flawed tax policy that created an economic bubble.

Islands have higher-than-normal transportation costs due to their remote locations, but a pre-New Deal era law drives up the cost even more for Puerto Rico. The Jones Act decrees that goods being shipped between U.S. ports must be on U.S. chartered ships with a U.S. crew. That means goods coming from the mainland can’t come on the most cost-competitive vessel. They must go with one of four U.S. shippers operating that route. The limited competition increases costs. Puerto Rico’s shipping costs are twice those of its island neighbors, making items more expensive to purchase on the island. It also limits Puerto Rico’s ability to export its products to the mainland.

“Bad policies from Washington have made the pain much worse.”

The federal minimum wage of $7.25 an hour applies on the island. The minimum wage’s effects are well-known, but it has disproportionate influence in Puerto Rico.

The island’s median income is only 40 percent of the mainland. Twenty-eight percent of Puerto Rico residents earn $8.50 an hour or less, compared to 3 percent on the mainland. So the minimum wage greater impact in Puerto Rico. It would be like if the mainland had a $19 an hour minimum wage.

The high minimum wage raises the cost of employment and prices many employers out of the market, causing unemployment to rise and thus tax revenue to dry up.  The minimum wage is a partly why the island’s unemployment rate is almost three times that of the mainland.

The minimum wage is coupled with lavish entitlement benefits. A household of three in Puerto Rico can earn $1,700 a month in benefits from Medicaid, food stamps, utility subsidies, and aid for dependent children, compared to $1,150 a month in take-home benefits from the minimum wage. Individuals are better off not working, and many chose that option. Only 40 percent of Puerto Rico residents are employed or looking for work, compared to 63 percent on the mainland.

Finally, Washington fueled the Puerto Rico bubble with inconsistent tax policy. Per Congress, Puerto Rican municipal bonds are exempt from federal taxation—like other states—but they are also exempt from state and local taxes too. Triple tax exempt bonds are a great investment. That attracted buyers to the bond market, allowing Puerto Rico to issue billions and billions in debt cheaply, and postpone spending restraint.

In 1976 Congress allowed U.S. corporations with subsidiaries in U.S. territories, including Puerto Rico, to avoid federal taxation on dividend payments to the parent company. In essence, U.S. firms could relocate large portions of their business to Puerto Rico to avoid federal taxation. As expected, many firms took advantage and the island’s economy grew rapidly, but nothing lasts forever. In the mid-1990’s, Congress and President Clinton phased out this provision over a ten year period. Firms closed up shop on the island and moved. Puerto Rico’s 10 year depression began in 2006, the first year after tax preference ended.

Puerto Rico’s inability to limit spending, reform its protectionist labor laws, and institute broad pro-growth tax reform all contribute to its precarious debt situation. But it isn’t alone. Bad policies from Washington have made the pain much worse.

Nicole Kaeding is a budget analyst for the Cato Institute.

Perry: Republicans are ones offering hope for black families

Fox News (Politics) - Thu, 07/02/2015 - 14:45
Republican presidential candidate Rick Perry on Thursday urged his party to fight for the African-American vote and said black families should hold Democrats accountable for what he called decades of unsuccessful anti-poverty programs.

Federalism Rots Away Under King v. Burwell

TownHall Latest columns - Thu, 07/02/2015 - 13:35
The fallout from the latest Obamacare ruling, King v. Burwell, has carried on with all the typical stagecraft one would expect. 2015-07-01T16:00:00-04:00 2015-07-02T18:35:01Z Kathleen Hunker

Democrat Jim Webb joins 2016 White House race

Fox News (Politics) - Thu, 07/02/2015 - 13:03
Former Virginia Sen. Jim Webb is jumping into the race for president, becoming the latest Democrat to try for a primary upset over frontrunner Hillary Clinton.

Kurds intent on carving new state out of Iraq after ISIS fight ‘whether the US likes it or not’

Fox News (Politics) - Thu, 07/02/2015 - 12:45
Kurdish fighters and leaders are intent on carving an independent state out of Northern Iraq after they wrest back vital territory from the Islamic State "whether the U.S. likes it or not," according to American and international security forces on the ground.

Making Sense

TownHall Latest columns - Thu, 07/02/2015 - 12:35
You can tell it's presidential election season. Once again, politicians and the mainstream media are being stupid and irresponsible. 2015-07-02T11:00:00-04:00 2015-07-02T17:35:02Z Michael Reagan

So Much for the Constitution – Is America Now a Rudderless Ship?

TownHall Latest columns - Thu, 07/02/2015 - 12:35
In 1819, Jefferson spoke out against judicial activism, saying: "The Constitution is a mere thing of wax in the hands of the judiciary, which they may twist and shape into any form they please." 2015-07-01T15:45:00-04:00 2015-07-02T17:35:02Z Jerry Newcombe

Walker enters race in best spot to beat Jeb

Fox News (Politics) - Thu, 07/02/2015 - 12:29
While there are others who might pull off an upset, at this point Scott Walker is the top underdog.

Sanders raises $15 million since launching presidential bid

Fox News (Politics) - Thu, 07/02/2015 - 12:04
Vermont Sen. Bernie Sanders' presidential campaign says it has raised $15 million since launching his bid in late April.

Sanders raises $15 million after launching presidential bid

Fox News (Politics) - Thu, 07/02/2015 - 11:55
Vermont Sen. Bernie Sanders' presidential campaign says it has raised $15 million since launching his bid in late April.

Pataki calls on GOP candidates to denounce Trump comments; The Donald fires back

Fox News (Politics) - Thu, 07/02/2015 - 11:43
Former New York Gov. George Pataki has launched a broadside against Donald Trump over his controversial remarks on Mexican immigrants, sending an open letter this week to every other Republican presidential candidate urging them to "denounce his comments today."

Walker filing paperwork for 2016 bid

Fox News (Politics) - Thu, 07/02/2015 - 09:47
Wisconsin Gov. Scott Walker, a preacher's son who withstood a recall election spawned by his fight with public employee unions, is joining the crowded Republican presidential race, aides said.

In Greece's Tribulation, Shades of the 1930s

TownHall Latest columns - Thu, 07/02/2015 - 09:35
How little things change -- and how a lot does. It may all depend on leaders -- their quality, their vision, their temperament. The scenes in Greece would be familiar to any American caught in the low ebb of the Depression, like the panicky lines of depositors trying to get what's left of their money out of shuttered banks. It could be the United States in March of 1933 complete with a bank holiday in effect, and all wondering what happens next. 2015-07-01T13:57:00-04:00 2015-07-02T14:35:01Z Paul Greenberg

EXCLUSIVE: County Clerk Resigns Instead of Issuing Gay Marriage Licenses

TownHall Latest columns - Thu, 07/02/2015 - 09:35
In the coming days, Christians will be forced to abandon their jobs in public service. Those who remain will be targeted with lawsuits and investigations from activists. 2015-07-01T12:48:00-04:00 2015-07-02T14:35:01Z Todd Starnes

Gulf states reach $18.7B settlement with BP over oil spill

Fox News (Politics) - Thu, 07/02/2015 - 08:19
Officials in four Gulf Coast states on Thursday announced a $19 billion settlement with BP to resolve claims in connection with the devastating 2010 oil spill, ending years of litigation.

The Other Danger of a 'Grexit'

Cato Recent Op Eds - Thu, 07/02/2015 - 07:55

Emma Ashford

Greece’s economic turmoil will come to a head this Sunday when Greeks vote in a referendum on whether to accept EU bailout funds. The expectation that Greece will leave the eurozone and default on its IMF loans has led to a run on Greek banks, the imposition of capital controls and volatile financial markets.

But while these financial woes are roiling Greece and destabilizing Europe’s economic order, the security implications of a potential “Grexit” could be at least as ominous as the financial ones.

First, it is almost certain that a Greek exit from the eurozone would push the country closer to Russia, a scenario that would deepen divisions within NATO. Greek ties with Russia have been improving since the victory of the left-wing Syriza party in January’s elections, and Greek leaders have made no secret of the fact that they consider Moscow a possible alternative source of funding if their European negotiations fail.

“A closer Greece-Russia relationship could have long-term security implications for the European Union and for NATO.”

Syriza’s traditionally strong relations with Russia have been strengthened through a series of recent visits between Moscow and Athens. During his visit last month at the St. Petersburg International Economic Forum, for example, Greek Prime Minister Alexis Tsipras spoke of the Greek and Russian relationship, hinting that Greece was “ready to go to new seas to reach new safe ports.”

Russian officials deny that they have offered financial aid to Greece, yet the Russian energy minister just recently announced a $2.77 billion pipeline project in Greece, and Moscow followed this with an informal invitation to Greece to join the BRICs’ New Development Bank.

It is true that the initial impact of a Grexit would simply be to provide Russia with a wonderful propaganda coup, allowing anchors on Russian state TV to highlight further evidence of the decline of the European Union and of Western civilization more broadly. Yet a closer Greece-Russia relationship could also have bigger long-term security implications for the European Union and for NATO.

Though the European Union’s Ukraine-related sanctions on Russia were renewed without objection on June 22, that extension is only good through January. Greek leaders have strongly objected to sanctions on Russia in the past. If it exits the eurozone, but remains a member of the European Union, Greece would have little to lose in choosing to veto any future extension of the sanctions on Russia.

And even if Greece exits the European Union entirely, it will remain a member of NATO. Greece was a Cold War battleground and an important player in the struggle against communism. Yet today, a Greek government with strong ties to Russia would not only perpetuate the Russian narrative that NATO is weak and divided but could easily exert veto power over NATO operations or any NATO response to potential Russian aggression in the Balkans or Eastern Europe.

Greece also has a strategically important location in the southeast of Europe and on the Aegean Sea. Closer ties between Greece and Russia raise the possibility that Athens might permit Russian ships the friendly use of Greek ports. This would be a major strategic concern for NATO, allowing Russia to expand its military influence not only in Crimea and the Black Sea, but to obtain a stronger foothold in the Mediterranean. The Greek-friendly Cypriot government, though not itself a NATO member, already permits such use.

It’s even possible that a Grexit and closer Athens-Moscow ties could lead Greece to withdraw entirely from NATO, moving instead toward closer security cooperation with Russia.

There is precedent: Greece has previously withdrawn from NATO, from 1974 to 1980. While relatively unlikely, a new Greek withdrawal from NATO would result in the loss of strategically placed bases, placing an increasing burden on Turkey to support NATO’s southern security needs.

To be sure, despite implied promises, it is unlikely that Russia could entirely bail out Greece in the event of their exit from the euro. After all, Russia is suffering substantial economic problems as a result of low oil prices combined with American and European sanctions and might itself face balance of payment problems in the next few years.

But given Russian President Vladimir Putin’s demonstrated willingness to accept domestic economic pain to further foreign policy objectives, a Grexit would almost certainly be followed by favorable financing deals and Russian support for major infrastructure projects, such as the recently agreed Turkish Stream pipeline, as well as increased cultural and political ties between Athens and Moscow.

All this means that if Greeks reject the terms of the euro bailout this Sunday, United States and European leaders will have to worry not only about the financial fallout, but also the unsettling security implications of an EU and NATO member state slipping into Moscow’s orbit.

Emma Ashford is a visiting fellow with the Cato Institute.

US employers add 223,000 jobs in June, jobless rate falls to 5.3 percent

Fox News (Politics) - Thu, 07/02/2015 - 07:43
U.S. employers added a solid 223,000 jobs in June, and the unemployment rate fell to 5.3 percent, a seven-year low. The numbers reflect a job market moving close to full health and raise expectations that the Federal Reserve will start raising interest rates as early as September.

A Time For Resolve, Not Sunshine Patriotism

TownHall Latest columns - Thu, 07/02/2015 - 07:35
Many conservative Americans look at their country now and no longer recognize it. 2015-07-01T11:11:00-04:00 2015-07-02T12:35:02Z Edward White

Syndicate

Syndicate content
Syndicate content