Dou­ble stan­dard: Gov­ern­ment ly­ing okay

The Washington Times Weekly - - Commentary -

From the found­ing of the Amer­i­can repub­lic, mem­bers of the po­lit­i­cal class have been caught ly­ing about sex and, no doubt, sex scan­dals will con­tinue, men (and women) be­ing who they are. There of­ten are de­mands that those in­volved re­sign — and some­times they do be­cause they are shamed or pushed. Most of­ten, the real dam­age caused by lies about sex ex­tend no fur­ther than to those di­rectly in­volved, to their fam­i­lies and, at times, to their co-work­ers and col­leagues.

Far more dam­ag­ing are the fi­nan­cial, pol­icy and leg­isla­tive whop­pers told by mem­bers of the ad­min­is­tra­tion and Congress that ad­versely af­fect al­most ev­ery Amer­i­can. Cor­po­rate ex­ec­u­tives and direc­tors are of­ten forced to re­sign af­ter mak­ing un­true state­ments about the busi­nesses they over­see and are some­times sub­ject to both civil and crim­i­nal penal­ties, in­clud­ing jail. Many pub­lic of­fi­cials who en­gage in far more dam­ag­ing un­truths are rarely forced to re­sign, let alone face civil and crim­i­nal penal­ties. Is it not time the dou­ble stan­dard ended?

One un­truth told by many mem­bers of the Obama ad­min- is­tra­tion, in­clud­ing the pres­i­dent, was that the monies pro­jected from Oba­macare/Medi­care sav­ings would be do­ing two dif­fer­ent and con­tra­dic­tory things at the same time: shoring up the Medi­care trust fund to pro­tect its sol­vency and pay­ing for Oba­macare’s ex­ten­sion of health care for 30 mil­lion unin­sured. Health and Hu­man Ser­vices Sec­re­tary Kath­leen Se­be­lius fi­nally was forced to ad­mit be­fore a con­gres­sional hear­ing a cou­ple of months ago that the ad­min­is­tra­tion had in­deed dou­ble­counted the same money. If the ad­min­is­tra­tion had been truth­ful about what it was do­ing be­fore the vote on the health care bill — in­clud­ing the facts that it con­tained new taxes and would force many peo­ple to change their providers — it is un­likely that it would have passed, given the nar­row­ness of the vote.

When cor­po­rate of­fi­cials are caught dou­ble-count­ing, it is rightly con­sid­ered fi­nan­cial fraud. What Mrs. Se­be­lius, other mem­bers of the ad­min­is­tra­tion and their con­gres­sional al­lies did was far more fraud­u­lent and dam­ag­ing than any­thing Bernard Madoff, the En­ron crowd or Rep. An­thony D. Weiner did. Of course, Wash­ing­ton be­ing Wash­ing­ton, Mrs. Se­be­lius can sleep well know­ing that her Cabi­net col­league At­tor­ney Gen­eral Eric H. Holder Jr. will never go af­ter her.

The In­ter­nal Rev­enue Ser­vice (IRS) has long been a do­main of the un­truth­ful. Those who have sav­ings ac­counts know all too well that they have been re­ceiv­ing painfully lit­tle in the way of in­ter­est be­cause of Fed poli­cies. Most peo­ple are re­ceiv­ing in­ter­est pay­ments that are less than the rate of in­fla­tion; hence, they have a loss of cap­i­tal. Nev­er­the­less, the IRS in­sists that peo­ple pay in­come tax on this imag­i­nary in­come. The 16th Amend­ment to the Con­sti­tu­tion gave the fed­eral gov­ern­ment the right to im­pose an in­come tax, but not a wealth tax. If those with a sav­ings ac­count re­ceive in­ter­est at less than the rate of in­fla­tion and pay the gov­ern­ment tax only with the phony in­come out of the ac­count, they even­tu­ally will find the ac­count is al­most worth­less. Yet the IRS com­mis­sioner and his staff con­tinue to de­mand that tax­pay­ers pay tax on solely in­fla­tion­ary gains on both in­ter­est-bear­ing ac­counts and cap­i­tal gains, call­ing it “in­come” when, by ev­ery eco­nomic and com­mon us­age of the term, it clearly is not. It is a big lie, which par­tic­u­larly hurts the el­derly on fixed in­comes and un­der­mines the nation’s cap­i­tal stock. Even if IRS Com­mis­sioner Dou­glas H. Shul­man claims he is just fol­low­ing prece­dent, that is no ex­cuse for con­tin­u­ing an ob­vi­ous wrong. (The prece­dent was es­tab­lished be­fore in­fla­tion was per­sis­tent and thus is ir­rel­e­vant.)

For­tu­nately, there are prin­ci­pled and eth­i­cal peo­ple in gov­ern­ment who are brave enough to call out those who are not. We had an ex­am­ple last week. Nancy Nord, a truth-teller, wrote a letter to the Wall Street Jour­nal re­ply­ing to an ar­ti­cle by ad­min­is­tra­tion reg­u­la­tory czar Cass Sun­stein. Ms. Nord wrote: “I read with in­ter­est Cass Sun­stein’s as­ser­tion that the fed­eral agen­cies are work­ing to elim­i­nate ex­ces­sively bur­den­some reg­u­la­tions. As a com­mis­sioner at the U.S. Con­sumer Prod­uct Safety Com­mis­sion (CPSC), I can at­test that no such ac­tiv­ity has been hap­pen­ing in this agency. We cer­tainly have not combed through our reg­u­la­tions to elim­i­nate those that are ‘out of date, un­nec­es­sary or ex­ces­sively bur­den­some,’ as he sug­gests is be­ing done across the gov­ern­ment. In­stead, we are reg­u­lat­ing at an un­prece­dented pace and have pretty much aban­doned any ef- forts to weigh so­ci­etal ben­e­fits from reg­u­la­tions with the costs im­posed on the pub­lic.”

For­mer Demo­cratic Party Chair­man Tim Kaine said last week that ly­ing is “un­ac­cept­able” and that Mr. Weiner should re­sign. If ly­ing about sex is un­ac­cept­able, shouldn’t it also be un­ac­cept­able to lie about gov­ern­ment fi­nan­cial state­ments, what is ac­tu­ally per­mit­ted by the Con­sti­tu­tion and what one is re­ally do­ing in gov­ern­ment? Congress should let it be known that it will not fund agen­cies whose se­nior of­fi­cials lie about im­por­tant mat­ters un­til they are re­moved from of­fice.

Some things clearly are lies — mis­rep­re­sent­ing facts on fi­nan­cial state­ments, at­tempt­ing to re­de­fine words to avoid com­ply­ing with the Con­sti­tu­tion and com­monly un­der­stood eth­i­cal stan­dards, and mak­ing false claims about what one is do­ing. The rules that the Se­cu­ri­ties and Ex­change Com­mis­sion im­poses on busi­ness ex­ec­u­tives should be im­posed equally on of­fi­cials in gov­ern­ment, where the stakes are much higher.

Richard W. Rahn is a se­nior fel­low at the Cato In­sti­tute and chair­man of the In­sti­tute for Global Eco­nomic Growth.

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