Congress is apparently not going to fix the odd dynamics of the estate tax, with awkward implications:

Starting Jan. 1, the estate tax — which can erase nearly half of a wealthy person’s estate — goes away for a year. For families facing end-of-life decisions in the immediate future, the change is making one of life’s most trying episodes only more complex.

“I have two clients on life support, and the families are struggling with whether to continue heroic measures for a few more days,” says Joshua Rubenstein, a lawyer with Katten Muchin Rosenman LLP in New York. “Do they want to live for the rest of their lives having made serious medical decisions based on estate-tax law?”

The greater challenge will toward the end of 2010 if Congress has still failed to act:

Under current laws in effect until the end of this year, the size of the exemption is $3.5 million per individual or up to $7 million per couple. The tax is slated to disappear entirely on Jan 1. …

The estate tax is scheduled to return in 2011 at a 55% rate with an exemption of slightly more than $1 million.

Thus, next December, heirs will face a strong incentive to pull the cord on ederly relatives.

The right policy is to make repeal permanent.  The estate tax punishes saving relative to spending and serves mainly to prop up the incomes of estate tax lawyers and accountants.

As Shinnecock Indians returned to their reservation on Long Island after World War II, elders warned that their tribe’s long struggle for survival was once again threatened.

Decent jobs were scarce and many Shinnecock veterans were leaving, draining the reservation of needed hands. …

Now this small tribe on the eastern end of Long Island is on the verge of sketching a new, perhaps more prosperous chapter. The Obama administration’s recent announcement that the Shinnecocks met the criteria for federal recognition finally paves the way for a casino, generating a bounty of jobs and revenue.

The odd fact raised by this story is that the U.S. pays restitution to Indian Tribes by giving them monopoly rights (within a given state or area) to sell casino gambling services.

Here’s a different approach: legalize all gambling.  Then have an honest debate about whether, or how much, the U.S. should pay restitution to Native Americans.

According to M.I.T. economist Jon Gruber, the Senate’s tax on cadillac health plans is good policy because it

would reduce the incentives for employers to provide excessively generous insurance, leading to more cost-conscious use of health care and, ultimately, lower spending.

Gruber is right, and virtually every economist agrees. The ideal reform would combine increased taxation of employer-provided health insurance with offsetting reductions in personal or corporate income taxes.  Both changes would reduce distortions in the tax system and allow government to raise any given amount of tax revenue with a smaller negative impact on the economy.

But that does not mean government should expand spending, on health insurance or anything else. That is a logically separate question.

Libertarians are fond of noting that government projects can have unintended consequences; here’s an example:

The reversal of the Chicago River a century ago, to send the city’s sewage to the Mississippi River instead of into Lake Michigan, was hailed as an engineering marvel. Now Michigan is suing Illinois to potentially re-reverse the river to prevent the movement of voracious, invasive Asian carp into the lake.

Perhaps the right action now is to re-reverse the river, but perhaps that will have its own unintended consequences.  Any thoughts?

Besides, aren’t carp good eating?   My grandmother made wicked-good smoked carp (using carp spear-gunned in Lake Erie by a neighbor at my grandparents’ cottage).  Carp is a delicacy in Europe and Asia.

Think I’m kidding? Check out these carp recipes.

Milton Friedman would not be surprised by this story:

North Korean leader Kim Jong Il moved early this month to wipe out much of the wealth earned in the past decade in his country’s private markets. As part of a surprise currency revaluation, the government sharply restricted the amount of old bills that could be traded for new and made it illegal for citizens to have more than $40 worth of local currency.

It was an unexplained decision — the kind of command that for more than six decades has been obeyed without question in North Korea. But this time … the markets and the people who depend on them pushed back.

Grass-roots anger and a reported riot in an eastern coastal city pressured the government to amend its confiscatory policy. …

The currency episode reveals new constraints on Kim’s power and may signal a fundamental change in the operation of what is often called the world’s most repressive state — a change driven by private markets that now feed and employ half the country’s 23.5 million people, and appear to have grown too big and too important to be crushed, even by a leader who loathes them.

These events do not guarantee that North Korea will soon become a freer state, but they do suggest that economic freedoms help constrain oppressive government, which is precisely the point of Friedman’s famous work.

U.S. promises unlimited financial assistance to Fannie Mae, Freddie Mac

I can think of two possible justifications.

The first is that society wants to promote particular ideas, values, individuals, or the like; think of the 4th of July or President’s Day.  I find this defense problematic: the choice of holidays is a vehicle for thought control.

The second justification asserts that legal holidays solve a co-ordination problem by helping people take vacations at the same time as their friends and relatives.  This view has some merit, but a countervailing effect is that promoting specific vacation days generates crowding at airports, beaches, and so on.

So I do not see a convincing justification for government holidays, especially not those associated with religion.

Yes, I know I am a Scrooge.  My family has been telling me this for years.

While driving last night from Wellesley to Charlottesville, I was stopped for not having a working light over the rear license plate.

My wife said, “It makes sense to have such a rule; otherwise police could not read your license (at night).”

My response was, “Why do the police need to read my license plate (at night or otherwise)?  Why require license plates at all?”

The answer is presumably something like, “It helps police solve crimes.”

But how many?  Is it worth the cost of all those license plates?

Rebuffed this month by skeptical lawmakers when it sought finances to buy a prison in rural Illinois, the Obama administration is struggling to come up with the money to replace the Guantánamo Bay prison.

As a result, officials now believe that they are unlikely to close the prison at Guantánamo Bay, Cuba, and transfer its population of terrorism suspects until 2011 at the earliest — a far slower timeline for achieving one of President Obama’s signature national security policies than they had previously hinted.

So, closure is not going to happen soon.  And the taxpayer will undoubtedly get stuck with a payoff to whatever U.S. locality ends up housing the Guantanamo inmates.   What will this have accomplished?

Nothing. The issue should never have been whether the U.S. closes Guantanamo.  I am not aware of a compelling reason to maintain this base, and I am equally unaware of a compelling reason to close it.

The crucial question has always been, and remains, what legal rules and procedures to employ for individuals designated by the federal government as enemy combatants?

The Bush administration’s view was that the federal government could detain anyone, whether a U.S. citizen or not, whether captured on U.S. soil or not, indefinitely.  And that such detainees had no right to counsel, process, procedure, or anything.

That cannot be the right balance between protecting national security and safeguarding individual rights.   I can imagine a reasonable argument that says, “persons captured under such and such cirmcumstances, who might be a threat to national security, do not have the same rights as a standard criminal suspect.” Perhaps this would mean trials held in secret, or under different rules of evidence, or something.  But anyone detained by the government must have some ability to protest his innocence.

So, I would have cheered Obama had he iniated a serious discussion of the appropriate rules and procedures for dealing with enemy combatants.  Instead, he focussed on the irrelevant question of whether to close Guantanamo.  By so doing he has given and aid and comfort to proponents of the extreme positions that he and his supporters claim to oppose.

The federal government will impose big fines starting this spring on airlines that keep passengers waiting on the tarmac too long without feeding them or letting them off the plane.

Airlines that let a plane sit on the tarmac for more than two hours without giving passengers food or water, or more than three hours without offering them the option of getting off, will face fines of $27,500 a passenger, the secretary of transportation announced on Monday.

Does this rule make sense?  At first blush it might sound reasonable, but let’s think it through.

Without the rule, some planes that have been sitting for three hours leave soon after the three-hour point, while some sit on the tarmac for an extended, additional period.

The planes in the first category arrive at their destinations even later, becuase it takes time to get passengers off and back on the plance, and because the plane ends up at the back of the line for takeoffs.  Worse, some of these flights get cancelled.

So, sometimes the rule benefits passengers, sometimes it makes them worse off.

Does the Department of Transportation have any evidence that the welfare of passengers is higher, on average, under the rule?

No.  It has just pandered to customer annoyance and the press coverage of a few extreme incidents.  It has responded to what is seen (the long delays that occur without the rule) and ignored what is unseen (the canceled flights and delays that will result from the rule).

Bastiat is spinning in his grave.