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The Lighthouse is the weekly email newsletter of the Independent Institute.
Subscribe now, or browse Back Issues.

Volume 13, Issue 41: October 11, 2011

  1. Don’t Cut Charitable Deductions
  2. Can Big Government Be Rolled Back?
  3. Manufacturing Terrorism
  4. Obama’s Dangerous Precedent
  5. New Blog Posts


Please join with us to celebrate The Independent Institute’s 25th Anniversary Dinner: A Gala for Liberty, November 15th, at the Ritz-Carlton in San Francisco. Honorees Lech Walesa, Mario Vargas Llosa, and Robert Higgs will be presented with the Alexis de Tocqueville Award as champions of individual liberty, entrepreneurship, personal responsibility, civic virtue, and the rule of law.


1) Don’t Cut Charitable Deductions

President Barack Obama proposes to help pay for his jobs plan by reducing the itemized tax deductions of taxpayers who earn $200,000 or more each year, including deductions for charitable contributions. If enacted, this measure would reduce the funds donated to charity—perhaps significantly. Households that reported annual incomes of $200,000 or more account for 54.9 percent of the charitable deductions claimed on federal income tax returns for 2009, according to Independent Institute Research Fellow Craig Eyermann. Moreover, charitable giving by wealthy individuals has been a vital source of funding for medical research on uncommon diseases that receive no government dollars.

“It isn’t the tax deduction that motivates such individuals to give,” Eyermann writes in the Sacramento Bee. “But the tax deduction enables many Americans to give more than they might be able to give otherwise.”

Eyermann cites the example of Spinal Muscular Atrophy Foundation, an organization founded by a Goldman Sachs executive whose daughter was diagnosed with spinal muscular atrophy, a debilitating and as yet untreatable disease that has stricken an estimated 25,000 individuals in the United States. Unfortunately, non-profits that rely on private donations could take a huge hit if federal tax deductions for charitable giving were reduced. Even a mere 5 percent reduction in charitable donations would amount to a cut of almost one billion dollars. “That’s a huge price to pay for short-lived ‘stimulus’jobs,” Eyermann concludes.

Don’t Be Charitable about Jobs Bill, by Craig Eyermann (The Sacramento Bee, 10/5/11)

What does federal spending cost you? Find out at MyGovCost.org.

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2) Can Big Government Be Rolled Back?

The U.S. government is involved in the American economy on a scale that few would have predicted a century ago. In 1900, Uncle Sam spent about 3 percent of national income, and state and local governments spent about 6 percent. Today, federal spending amounts to about 30 percent of national income—roughly double what state and local governments spend combined. Must advocates of limited government resign themselves to the Leviathan state?

The answer, according to J. R. Clark and Dwight R. Lee, is a resounding no. The task of reversing the growth of government is formidable—even herculean—but it is in principle doable. In fact, some of the mechanisms that served to increase the size and scope of government over the past century could also serve to reverse the trend toward Big Government, the two economists explain in their article for the fall 2011 issue of The Independent Review, “Shrinking Leviathan: Can the Interaction Between Interests and Ideology Slice Both Ways?”

As advocates of Big Government became more numerous, their goals became more attainable, and this spurred them to invest more resources in their cause, which in turn made their movement more popular. But that kind of bandwagon behavior—what Clark and Lee call an “ideological network effect” —can also work in the opposite direction: if more people grow disenchanted with Big Government, the perceived value of working to reduce it will rise, making retrenchment more popular and more likely. Moreover, voter behavior would reinforce such a trend. Because voters know that a single vote doesn’t decide an election, they vote largely according to their ideology, rather than according to whether they might gain or lose a perceived government perk. These two phenomena—ideological network effects and the indecisiveness of voting—could enable an initially minor ideological trend that favors shrinking government to become a major political force that defeats the supporters of Big Government. That outcome could happen more quickly than one might expect, but only if the foes of Big Government work hard to achieve their goal.

Shrinking Leviathan: Can the Interaction Between Interests and Ideology Slice Both Ways?, by J. R. Clark and Dwight R. Lee (The Independent Review, Fall 2011)

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3) Manufacturing Terrorism

The U.S. government has both hyped the threat of terrorism and helped create it, according to Ivan Eland, senior fellow at the Independent Institute and director of its Center on Peace & Liberty. It was not for reasons of national security that the White House authorized the assassination of Anwar al-Awlaki, Eland argues in his latest op-ed. Although the American citizen preached jihad against the United States, he was what one expert called a “dime-a-dozen cleric.” His assassination was an act of political theater, meant to show that President Obama was “tough on terrorism.”

Another recent case of “anti-terrorist” showmanship is even more transparent. Last month authorities charged Rezwan Ferdaus of Ashland, Massachusetts, with intent to attack the Pentagon and the U.S. Capitol. Mr. Ferdaus planned to carry out his attack with a remote-controlled aircraft armed with explosives. The source of the foiled terrorist’s operational funds and equipment? The Federal Bureau of Investigation. Although she was careful not to call it entrapment, U.S. attorney Carmen Ortiz admitted, “The public was never in danger from the explosive devices.”

“This is not an isolated case,” Eland writes. “In similar cases, the FBI has provided the means to carry out the terrorist attacks but then arrested the alleged plotter. Such entrapment provides opportunities for people to do what they otherwise would not or could not do.... Such government hyping of the terrorist threat, or actual creation of it, to justify greater federal coercive action makes one wonder whether to fear more the low probability of a successful terrorist attack or the massive, expensive, and intrusive government efforts to combat it.”

The Government’s Illusory Terrorist Threat, by Ivan Eland (10/5/11)

Recarving Rushmore: Ranking the Presidents on Peace, Prosperity, and Liberty, by Ivan Eland

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4) Obama’s Dangerous Precedent

The assassination of Anwar al-Awlaki is monumental, hence the focus given to it in The Lighthouse. In his latest piece for the Huffington Post, Independent Institute Research Editor Anthony Gregory argues that the Awlaki assassination sets a dangerous precedent that jeopardizes Americans’constitutionally protected rights. It is, to use a word that has been invoked far too often on other occasions, unprecedented.

The U.S. Constitution, Gregory notes, guarantees legal due process to suspected traitors. Indeed, it “requires that ‘no person...be deprived of life, liberty, or property, without due process of law,’” Gregory writes.

Though unprecedented, the assassination was not a total break from the past; arguably, it takes the policies of President George W. Bush just one step further. Unfortunately, the push for change” that swept Obama into the Oval Office seems devoid of consistency. “If Bush’s detentions without trial were objectionable to liberals, and Obama’s domestic ambitions offend conservatives, why should this not be a universal outrage?” Gregory writes. “What greater tyranny could there be than a president’s power to order a citizen executed without consulting Congress or the courts? This action has indeed crossed a line, descending further toward the very lawlessness the United States claims to stand against.”

Obama, the Ground-Breaking President?, by Anthony Gregory (The Huffington Post, 10/7/11)

“The Tissue of Structure”: Habeas Corpus and the Great Writ’s Paradox of Power and Liberty, by Anthony Gregory (The Independent Review, Summer 2011)

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5) New Blog Posts

New Blog Posts

From The Beacon:


From MyGovCost News & Blog:

Steve Jobs: Engine of Market Process
Emily Skarbek (10/6/11)

Greece Circling the Drain
Craig Eyermann (10/4/11)

The Independent Institute’s Spanish-language blog has surpassed 3 million page views! You can find it here.

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