Monday, July 13, 2009

The Media and the First Amendment - The Washington Post scandal is really about double standards

The Media and the First Amendment. By BERT GALL and STEVE SIMPSON
The Washington Post scandal is really about double standards.
WSJ, Jul 13, 2009

Our nation's capital is abuzz over the Washington Post's recent indiscretion. The newspaper planned to host a now-canceled salon at the home of Katharine Weymouth, the Post's publisher. For $25,000, lobbyists and corporate executives would be granted exclusive access to members of the Obama administration, Congress, and Post journalists.

Pundits have condemned the Post for acting as an influence peddler. But other news publications routinely host similar events. This shouldn't come as a shock. Media corporations have always had the privilege of influencing politics without the restrictions -- like campaign finance laws -- that other corporations face.

So while this episode has been treated as a scandal of journalistic ethics, it is really about double standards. When other business corporations attempt to influence politics -- by running political ads during elections -- editorial boards rush to condemn the corporations for "buying" elections or "unduly" influencing candidates. We should be concerned, the boards say, because those corporations have too much influence over the political debate. The public needs strict campaign finance laws to protect it from that influence.

The New York Times recently featured an editorial about the Supreme Court's current major campaign finance case, Citizens United v. Federal Election Commission (2009). The editorial counseled the high court against overturning precedent, referring to Austin v. Michigan Chamber of Commerce (1990). That case allows the government to prevent corporations from spending money on electoral advocacy. According to the Times, eliminating the government's power to ban corporate political speech "would be a disaster for democracy."

But if excessive influence is a reason to censor the speech of every other kind of corporation, then it is also a reason to censor the speech of media corporations. After all, the media spend millions of dollars each year on news stories about candidates and editorials endorsing them. This press is worth a lot. For example, the Washington Post's endorsement of Creigh Deeds is widely credited as the biggest factor in his rise from obscurity to victory in Virginia's Democratic gubernatorial primary this year.

So where are the editorials calling for limits on the amounts of "money" -- in the form of coverage and editorials -- media companies devote to candidates?

Of course, you'll hear no such thing from the nation's newspapers and media outlets. Media companies are exempt from campaign finance laws. Many in the press think that the First Amendment entitles them to special protections that don't apply to anyone else.

This is wrong. The Supreme Court has repeatedly made clear that the media's right to free speech is no greater than anyone else's. And in Austin and other campaign finance cases, the Supreme Court noted that the media's exemption from campaign finance laws was discretionary, not mandatory.

In short, the press's favored status is only as strong as Congress says it is, at least under current First Amendment jurisprudence. If, in the wake of the Post scandal, the public begins to believe that media companies are as corrupt as the press claims other corporations are, Congress's view on the matter could change. Alternatively, Congress may come up with some other reason to start limiting the freedom of the press. Congress is currently considering a bill that would throw struggling newspapers an economic lifeline by allowing them to operate as nonprofits -- thereby making their advertising and subscription revenue tax-exempt. The catch? Newspapers that take the deal would no longer be able to endorse political candidates.

This precarious position -- free speech at Congress's discretion -- is not exactly a recipe for a strong and independent press. It's tempting to think that media companies that have called for limits on everyone else's speech will ultimately get what they deserve when Congress gets around to censoring theirs. But that would be a mistake.

The press remains one of the most important bulwarks against tyranny. The solution is to protect free speech on principle, regardless of the identity of the speaker. Banning a corporation from spending its own money for political advocacy is censorship, plain and simple. The sooner the press understands this, the safer its rights -- and ours -- will be.

Messrs. Gall and Simpson are senior attorneys at the Institute for Justice.

Federal President's comments on Moscow about the Cold War

Obama Rewrites the Cold War. By LIZ CHENEY
The President has a duty to stand up to the lies of our enemies.
WSJ, Jul 13, 2009

There are two different versions of the story of the end of the Cold War: the Russian version, and the truth. President Barack Obama endorsed the Russian version in Moscow last week.

Speaking to a group of students, our president explained it this way: "The American and Soviet armies were still massed in Europe, trained and ready to fight. The ideological trenches of the last century were roughly in place. Competition in everything from astrophysics to athletics was treated as a zero-sum game. If one person won, then the other person had to lose. And then within a few short years, the world as it was ceased to be. Make no mistake: This change did not come from any one nation. The Cold War reached a conclusion because of the actions of many nations over many years, and because the people of Russia and Eastern Europe stood up and decided that its end would be peaceful."

The truth, of course, is that the Soviets ran a brutal, authoritarian regime. The KGB killed their opponents or dragged them off to the Gulag. There was no free press, no freedom of speech, no freedom of worship, no freedom of any kind. The basis of the Cold War was not "competition in astrophysics and athletics." It was a global battle between tyranny and freedom. The Soviet "sphere of influence" was delineated by walls and barbed wire and tanks and secret police to prevent people from escaping. America was an unmatched force for good in the world during the Cold War. The Soviets were not. The Cold War ended not because the Soviets decided it should but because they were no match for the forces of freedom and the commitment of free nations to defend liberty and defeat Communism.

It is irresponsible for an American president to go to Moscow and tell a room full of young Russians less than the truth about how the Cold War ended. One wonders whether this was just an attempt to push "reset" -- or maybe to curry favor. Perhaps, most concerning of all, Mr. Obama believes what he said.

Mr. Obama's method for pushing reset around the world is becoming clearer with each foreign trip. He proclaims moral equivalence between the U.S. and our adversaries, he readily accepts a false historical narrative, and he refuses to stand up against anti-American lies.

The approach was evident in his speech in Moscow and in his speech in Cairo last month. In Cairo, he asserted there was some sort of equivalence between American support for the 1953 coup in Iran and the evil that the Iranian mullahs have done in the world since 1979. On an earlier trip to Mexico City, the president listened to an extended anti-American screed by Nicaraguan President Daniel Ortega and then let the lies stand by responding only with, "I'm grateful that President Ortega did not blame me for the things that occurred when I was 3 months old."

Asked at a NATO meeting in France in April whether he believed in American exceptionalism, the president said, "I believe in American Exceptionalism just as I suspect that the Brits believe in British exceptionalism and the Greeks believe in Greek exceptionalism." In other words, not so much.

The Obama administration does seem to believe in another kind of exceptionalism -- Obama exceptionalism. "We have the best brand on Earth: the Obama brand," one Obama handler has said. What they don't seem to realize is that once you're president, your brand is America, and the American people expect you to defend us against lies, not embrace or ignore them. We also expect you to know your history.

Mr. Obama has become fond of saying, as he did in Russia again last week, that American nuclear disarmament will encourage the North Koreans and the Iranians to give up their nuclear ambitions. Does he really believe that the North Koreans and the Iranians are simply waiting for America to cut funds for missile defense and reduce our strategic nuclear stockpile before they halt their weapons programs?

The White House ought to take a lesson from President Harry Truman. In April, 1950, Truman signed National Security Council report 68 (NSC-68). One of the foundational documents of America's Cold War strategy, NSC-68 explains the danger of disarming America in the hope of appeasing our enemies. "No people in history," it reads, "have preserved their freedom who thought that by not being strong enough to protect themselves they might prove inoffensive to their enemies."

Perhaps Mr. Obama thinks he is making America inoffensive to our enemies. In reality, he is emboldening them and weakening us. America can be disarmed literally -- by cutting our weapons systems and our defensive capabilities -- as Mr. Obama has agreed to do. We can also be disarmed morally by a president who spreads false narratives about our history or who accepts, even if by his silence, our enemies' lies about us.

Ms. Cheney served as deputy assistant secretary of state and principal deputy assistant secretary of state for near eastern affairs from 2002-2004 and 2005-2006.

Congress prepares to kill more jobs - minimum wage

Mandating Unemployment. WSJ Editorial
Congress prepares to kill more jobs.
WSJ, Jul 13, 2009

Here's some economic logic to ponder. The unemployment rate in June for American teenagers was 24%, for black teens it was 38%, and even White House economists are predicting more job losses. So how about raising the cost of that teenage labor?

Sorry to say, but that's precisely what will happen on July 24, when the minimum wage will increase to $7.25 an hour from $6.55. The national wage floor will have increased 41% since the three-step hike was approved by the Democratic Congress in May 2007. Then the economy was humming, with an overall jobless rate of 4.5% and many entry-level jobs paying more than the minimum. That's a hard case to make now, with a 9.5% national jobless rate and thousands of employers facing razor-thin profit margins.

There's been a long and spirited debate among economists about who gets hurt and who benefits when the minimum wage rises. But in a 2006 National Bureau of Economic Research paper, economists David Neumark of the University of California, Irvine, and William Wascher of the Federal Reserve Bank reviewed the voluminous literature over the past 30 years and came to two almost universally acknowledged conclusions.

First, "a sizable majority of the studies give a relatively consistent (though not always statistically significant) indication of negative employment effects." Second, "studies that focus on the least-skilled groups [i.e., teens, and welfare moms] provide relatively overwhelming evidence of stronger disemployment effects."

Proponents argue that millions of workers will benefit from the bigger paychecks. But about two of every three full-time minimum-wage workers get a pay raise anyway within a year on the job. Meanwhile, those who lose their jobs or who never get a job in the first place get a minimum wage of $0.

Mr. Neumark calculates that the 70-cent per-hour minimum wage hike this month would kill "about 300,000 jobs for those between the ages of 16-24." Single working mothers would also be among those most hurt.

Keep in mind the Earned Income Tax Credit already exists to help low-wage workers and has been greatly expanded in recent years. The EITC also spreads the cost of the wage supplement to all Americans, not merely to employers, so it doesn't raise the cost of hiring low-wage workers.

For example, consider a single mom with two kids who earns the current $6.55 minimum at a full-time, year-round job. In 2009 she receives a $5,028 EITC cash payment from Uncle Sam -- or about an extra $2.50 per hour worked. Other federal income supplements, such as the refundable child tax credit, add another $1,900 or so. Thus at a wage of $6.55 an hour, her actual pay becomes $10.02 an hour -- more than a 50% increase from the current minimum. (See nearby table.)

But that single mom can't collect those checks if she doesn't have a job, and the tragedy of a higher minimum wage is that it will prevent thousands of working moms striving to pull their families out of poverty from being hired in the first place.

If Congress were wise and compassionate, it would at least suspend the wage hike for one or two years until the job market recovers. We know this Congress won't do that, but someone has to speak up for the poorest, least skilled Americans.

Don't Shoot the Speculators

Don't Shoot the Speculators. By L. GORDON CROVITZ
They predict prices, not set them.
WSJ, Jul 13, 2009

Speculators don't get much respect. Short sellers last year were blamed for their trades warning about the credit crisis, and commodities traders are now accused of causing higher oil prices. Even when traders are later proven right -- maybe especially when they're proven right -- we blame them for delivering the bad news.

Maybe it's human nature to reject Shakespeare's warning and shoot the messenger. The good news is that a recent proposal aimed at one group of speculators could prove that speculators of all kinds deserve our thanks -- or if that's too much to ask, at least to be left alone to bring valuable information to markets.

The Commodity Futures Trading Commission is considering requiring more disclosure, intended to ferret out what politicians like to call "excessive speculation." Whatever the intention, enough transparency could instead show that oil speculators are heroes, not villains.

Last week, new CFTC head Gary Gensler said the agency might set new limits on oil speculators now that oil prices have doubled this year from a low of $34 a barrel. This was surprising because just last fall, the agency issued an exhaustive study concluding that speculators were not to blame for the runup in oil prices that reached $145 last summer. It's also telling that no one accused traders of harmful speculation when oil prices tumbled from their earlier highs.

The more interesting part of the CFTC proposal is for new transparency to the positions that different kinds of traders take in futures trading. Under current rules, the CFTC sets limits on trading positions based on Commitment of Traders reports, which date back to the 1920s. These put trading in two key categories, based on the type of user, not the positions they have in various contracts. This anachronism has long led to uncertainty about why prices move, a lack of transparency that also feeds the blaming of speculators.

Business users such as airlines and oil companies are considered in the "commercial" category, with hedge funds and other financial traders in the other, more regulated "noncommercial" category. But many commercial users have active trading desks. Likewise, financial firms need to hedge against movements in commodities such as oil because they have trading contracts that leave them as exposed to price risks as the companies that actually use the physical product.

More-detailed reporting on who has which kinds of positions in oil would make the market more understandable. It would show that so-called financial speculators are trying to predict price movements, but also trying to hedge risk. Likewise, commercial traders that take delivery of oil are hedging risks, while also predicting future prices. As oil expert Daniel Yergin points out, more visibility "will give a better sense of how much is the market responding to supply and demand in physical oil and how much is it responding to the supply and demand of money on the part of investors."

It doesn't make sense to shoot either kind of messenger. Markets are collections of information, translated through trading into prices. These prices, unless there is manipulation, are the best estimate of future supply and demand. Such price discovery should not be controversial, though it too often has been.

"Oil market speculation is back in the news," Bob McTeer, a former Dallas Federal Reserve president, wrote on his blog. "I'm afraid I don't have much to contribute since Milton Friedman convinced me long ago that profitable speculation is stabilizing and destabilizing speculation is unprofitable. Speculation is profitable if the speculator buys lower than he sells; it's unprofitable if he sells lower than he buys. Even if they don't make a profit, they are trying."

Or, as the sign in the 19th century saloon put it, "Don't shoot the piano player; he's doing the best he can." Oil industry experts, whether "speculators" or not, do their best to predict price movements. Some focus on uncertainty about Iran. Others point to demand trends from China and India. There's the inherent volatility in this market due to the OPEC cartel having a firm grip on the supply spigot.

Finally, there's the growing role that commodities are again playing as a hedge against inflation and a weak dollar. Increased trading in commodities is a danger-ahead warning about U.S. fiscal and monetary policies. While Washington might like to stifle these particular messengers for the warning they're sending, the rest of us should welcome information about troubles to come.

Congress has succeeded in rattling regulators at the CFTC into doing something about speculators. They have more regulation in mind, but if the CFTC can bring more transparency to oil trading, the result will be excellent even if unintended: We can focus our attention on the real pressures on oil prices instead of wallowing in searches for scapegoats. Better disclosure can reduce the human tendency to blame traders for rising prices when the responsibility lies elsewhere.

O'Grady: Why Honduras Sent Zelaya Away

Why Honduras Sent Zelaya Away. By Mary A O'Grady
WSJ, Jul 13, 2009

"Two incidents earlier this year make the case. The first occurred in January when the country was preparing to name a new 15-seat Supreme Court, as it does every seven years. An independent board made up of members of civil society had nominated 45 candidates. From that list, Congress was to choose the new judges.

Mr. Zelaya had his own nominees in mind, including the wife of a minister, and their names were not on the list. So he set about to pressure the legislature. On the day of the vote he militarized the area around the Congress and press reports say a group of the president's men, including the minister of defense, went to the Congress uninvited to turn up the heat. The head of the legislature had to call security to have the defense minister removed."