What is the greatest obstacle confronting the new congressional Republican majority in enacting good policy? It may not be President Obama, because there is an even more formidable force in Washington that crushes good policy: the Permanent Bureaucracy. The permanent bureaucracy is made up of federal employees, government contractors and their employees, congressional staff and the special-interest lobbying community (including law and accounting firms). It also includes the media establishment, which depends on leaks and information from those in government for stories in exchange for protective coverage. Hardworking taxpayers never cease being ripped off by wasteful and fraudulent government spending and regulation. Unlike what happens in the private sector, people in government rarely go to jail or are even fired for financial misconduct. The government requires financial and senior officers of companies to sign off on the accuracy of their financial statements in order to protect stockholders. Company officers are subject to civil and criminal penalties, including jail time for misstatements, and their names are released to the press. There is no reason for taxpayers to be any less protected than stockholders from financial negligence or fraud.  Here's how to do it.

How many hurricanes do you think will hit the East Coast of the United States in 2015? Will the Arctic ice sheet disappear next year? How fast will the U.S. economy grow? What will the level of the Dow Jones stock index be at the end of 2015? Which team will win the World Series? Go back and look at past predictions made by the experts, and then look at what really happened. Climate alarmists 15 or so years ago were forecasting catastrophic events by this time. Al Gore and his alarmist crowd told us that by now we would be having more and stronger tornadoes and hurricanes. And indeed, many tornado and hurricane records have been broken -- not because there were more, but because there have been fewer. Florida has now gone a record nine straight seasons without a significant hurricane. Government economists have no better track record at predicting what will happen to the US economy next year than climate alarmists.  Maybe worse and here's why.

Why do very successful nations often adopt policies that lead to their undoing? After a revolution or major reform, some countries allow a high degree of economic freedom, establish the rule of law, protect private property rights and establish low tax rates with strict limits on government spending and regulation. The economy takes off, the citizens become far richer and then the government mucks it up, usually by attempting to redistribute income and expand state control. Is Chile, which has been one of the bright spots in the world economy, falling into this pattern under socialist President Michelle Bachelet? For the past three decades, Chile has outperformed the other South American countries and now has the highest per-capita income in South America, averaging approximately $22,000 per year on a purchasing power parity basis. The World Bank lists Chile as a "developed economy," and it was the first Latin American country to become a member of the Organization for Economic Cooperation and Development. The average Chilean has a per capita income about three times higher than in 1983. And now the Chilean people seem poised to let Ms. Bachelet throw it all away.

Would you make an effort to find additional ways to reduce your tax burden if your tax rate was suddenly raised 50 percent? The higher one's income, the more incentive a person has to find ways to minimize his tax burden -- which is why very high tax rates on the rich always fail to produce the projected revenue. Republican congressional leaders have pledged to undertake tax and spending reform. To do so, they need accurate projections of the impact on tax revenues, job creation and economic growth resulting from their possible alternative reforms. This requires realistic models of what is likely to happen, so they need to find the best possible experts to manage the Joint Committee on Taxation and the Congressional Budget Office. These are two key questions I would pose to the candidates for these positions:

Whom do you work for? Such a simple question should not require a government agency to give an answer. However, the Obama administration, in its never-ending quest for power over individuals and businesses, has decided that it -- rather than you or your employer -- should determine whom you work for. Last Thursday (11/20), the Senate held a hearing for President Obama's nominee for the National Labor Relations Board, Lauren McFerran, after the administration abruptly withdrew the nomination of the tainted Sharon Block for the same post. The National Labor Relations Board has the responsibility to be an unbiased referee in disputes between labor unions and management and to make sure that U.S. labor regulations are followed. As union membership has fallen from more than a third of the labor force in the 1950s to a 97-year low of 6.7 percent of the private labor force this year, the NLRB is not as relevant as it was in decades past. However, like most government bureaucracies, the people at the board are looking for ways to expand their mission -- and their budget and power. The Obama administration, rather than seeking out people who would be impartial to serve on the board, has selected people with strong ties to unions.  There is no doubt whatever that Lauren McFerran is one of them.

The only surprising thing about Obamacare architect Jonathan Gruber's revelations that the legislation was based on a series of lies and voter stupidity was that Mr. Gruber was so stupid to think no one would see the videos of him saying so. The good news is that, perhaps, many more Americans will wake up to the fact that Obamacare is not the only hoax they have been subjected to, and will be much more skeptical about policy experts' snake oil. Most of these schemes increase the power and money flowing to the political class and their "experts," while robbing the pocketbooks and liberties of the people. The great economist F.A. Hayek (1899-1992) argued there was a limit to what any one person or even groups of people could know, which was one reason socialist planning always failed. His 1974 Nobel Prize lecture ended with the following sentence:

Russian President Vladimir Putin's clear goal is to re-establish as much of the Russian Empire (1721-1917) as he can. At its greatest extent, the Russian Empire included the territories of the old Soviet Union, most of Eastern Europe, Finland and Alaska (up to 1866). Mr. Putin knows the next U.S. president is unlikely to be as indecisive and reluctant to act as President Obama. He also faces falling demand for Russian oil and gas and unexpected price declines, which may cause him to run through Russia's considerable financial reserves. Accordingly, the pressure is on Mr. Putin to act quickly. The Russian economy is now little more than a petro-state, relying on oil and gas, which account for 68 percent of its total exports, and more than half of its government revenue. Much of Russia's manufacturing base evaporated after the end of the Soviet Union. The ruble has fallen more than 30 percent against the dollar since the beginning of this year. As a result, inflation is accelerating (more than 8 percent at the moment) as imports become more and more expensive. Thus Mr. Putin is both dangerous and vulnerable.  He must be contained.  Let's see how.

What is the maximum income-tax rate that anyone should be expected to pay? Some questions are never settled, in part because people often ignore the theoretical and empirical evidence, and history that can help answer the question. The question of what an optimum income-tax rate would look like is one of those questions. Rather than attempt to answer it, political demagogues merely shout: "It is only fair that the rich pay more." Back in 1971, a Scottish economist by the name of James A. Mirrlees wrote a groundbreaking paper, in which he attempted to answer the question of what an optimum income-tax regime would look like if one desired to reduce inequalities while at the same time not discouraging work and economic growth. Up to the time of Dr. Mirrlees' work, no one had been able to figure out the optimum trade-off between equality and efficiency. Dr. Mirrlees was awarded the Nobel Prize in economics in 1996 for his work, and was knighted in 1998.  Here is what he won his Nobel and knighthood for.

If you pay people not to work, what do you think they will do? In a new staff paper published by the New York Federal Reserve Bank titled "Unemployment Benefits and Unemployment in the Great Recession," the researchers found "that most of the persistent increase in unemployment during the Great Recession can be accounted for by the unprecedented extension of unemployment-benefit eligibility." The irony here is that President Obama and the congressional Democrats kept voting to extend the unemployment benefits, which had the effect of keeping unemployment far higher for a much longer time than if they had not done so. As the Fed researchers explained: "Our results lead us to expect that the stimulative effect of higher spending by the unemployed is largely offset by the dramatic negative effect on employment." The artificially induced higher unemployment caused economic growth and total output to be significantly lower. The high unemployment and slow growth are major issues in the upcoming election -- all working against the interest of the Democrats, who voted for this destructive policy. Some Democrats voted for the extended unemployment benefits in the name of compassion for the unemployed without thinking through the consequences -- particularly to themselves.

When the government "fines" you for not buying health insurance, is it, in fact, a fine, a tax or government extortion? The biggest U.S. banks have been "fined" something in the neighborhood of $125 billion (yes, billion) over the past five years, without anyone in the banks or the banks themselves charged or convicted of criminal wrongdoing. How can that be? Countless individuals have had their property (automobiles, cash and bank accounts) seized by state, local and federal law enforcement officials, including the IRS, without being convicted of wrongdoing. How can that be? The distinction between a tax, a fine and government extortion is not trivial, particularly when fines are running into the tens of billions or even hundreds of billions of dollars of revenue for the government. The  basic and clear provisions of the Constitution's Article I and the 4th and 5th Amendments are violated on a daily basis by all too many ignorant or corrupt law enforcement officials, and upheld all too often by judges who think their own opinions trump the Constitution.  How can we put an end to this?

Blueberries are healthier than bread, so why don't people eat more blueberries and less bread? Perhaps it's because blueberries cost roughly 15 times more than bread (depending on the time of year) for the same number of calories. Blueberries are a labor-intensive crop and are costly to harvest (as are many healthy fruits and nuts), unlike wheat and corn. There are those who want to increase the minimum wage, and there are those who want to further restrict the use of foreign, seasonal farmworkers. Both fail to think clearly about the consequences of such actions. Let's do some clear thinking for them.

Yes, the world is a mess -- but there is a long-run solution. Most countries, including those with the biggest economies, are plagued with slow growth and rising, unsustainable debt burdens. The slow growth is in large part a result of excessively large government sectors -- with taxes, regulations and spending far beyond the optimal. And the rise in debt increases the pressure for more taxes, which slows growth even further and thus fuels the demand for even more government spending to take care of the growing numbers of those "left behind" (because of the lack of growth). This is an economic death spiral. Citizens in many countries, including the United States, feel they have lost control of their own governments -- because they have. They no longer think they are masters of their destinies. Large centralized government, by its nature, becomes uncaring at best, and brutal and oppressive at worst. The movement for secession in Scotland was a cry to regain control. There are secession moments all through Europe, as well as the rest of the world. A few examples:

Hong Kong.  Why is Hong Kong succeeding while New York City is receding? They are both world-class cities with about the same per-capita income and great natural harbors. New York is about 15 percent larger in population, while Hong Kong is about one-third larger in area (but unbuildable because of the steep terrain). Both have large immigrant populations who are seeking better lives. Last week, I explained how much of Hong Kong's success was a result of it having the freest economy in the world, with low levels of government spending, low tax rates, a minimum of government regulation and the rule of law. There is more. Hong Kong, like Singapore, South Korea, Chile and Switzerland are aspirational societies, rather than societies consumed with envy, like France. Work, saving and investment are not punished in aspirational societies, and there tend to be less social conflict and a higher level of civility. (It was U.S. venture capitalist Terry Anker who first used the term "aspirational society" to describe Hong Kong during our meetings in this glorious city this past week. It is a more inclusive term than "opportunity society" that Newt Gingrich and Jack Kemp frequently used to describe their vision for the United States.) The United States used to be an aspirational society, but has increasingly become an envious society.

Do you think people in government are more or less honest than those in the private sector? A major function of most regulatory agencies is to keep those in the private sector honest and from abusing power. Yet we know that those in government often abuse the power that has been entrusted to them. The American Founders were well aware of the problem. As Thomas Jefferson warned: "The two enemies of the people are criminals and government, so let us tie the second down with the chains of the Constitution so the second will not become the legalized version of the first." As the size of government has grown, and particularly the bureaucratic state, the chains of the Constitution have been loosened, and predictably the abuse of power has also grown -- the Internal Revenue Service (IRS) being Exhibit A. Exhibit B is the ways bureaucrats and politicians enrich themselves and their cronies with insider trading -- a criminal offense for anyone outside of government but not within.

Geneva. Switzerland is not perfect, but as countries go, it is hard to find one that is much better. The more people know about Switzerland, the higher regard they tend to have for it. By almost any measure of human accomplishment, and particularly in creating a most successful country governance model, the Swiss are clearly No. 1 in the world. Switzerland is a small, landlocked nation without much in the way of natural resources. It has managed to stay out of wars for two centuries and developed a long-term multilingual and multireligious democracy without strife. There is a rule of law with competent and unbiased judges and strong protections for private property. Switzerland also ranks higher than average among the OECD countries (the 35 most-developed economies in the world) in levels of education and student test scores, and has lower levels of air and water pollution. Civil liberties are strongly protected, including freedom of speech, religion, press, assembly and even the right to own guns. It does not get much better than this.

Jersey, Channel Islands.  Americans know of the state of New Jersey, but few know that it was named after the island of Jersey, which is located in the English Channel about 14 miles off the coast of France. This small island, about two-thirds the size of Washington, D.C. with only 100,000 people, is today home to one of the world's largest financial centers. Jersey has a higher per-capita income than America, and roughly twice the per-capita income of Britain and France. The globe is dotted with relatively small, prosperous places that have become rich without the benefit of natural resources. What have they -- Jersey and the island next door, Guernsey, along with Bermuda, Cayman, Singapore, Hong Kong, and even larger places like Switzerland --  done right, leaving many of their larger and more richly endowed neighbors plodding along in their economic dust?

Do you want the Obama administration sharing all of your financial information with the Russian, Chinese and Saudi Arabian governments? You may be thinking, not even President Obama would go that far. Not so, read on. This past week, the Organization for Economic Cooperation and Development (OECD) released its full proposal for a global standard for the automatic exchange of financial information. The rationale behind this despicable idea is to more effectively enable governments, such as that of France and the United States, to identify tax evaders. This might sound like a good idea until one realizes that every individual and business will be stripped of all of their financial privacy if this becomes the law of the land - and it is very close to being just that. Under the OECD proposal, all of the information that financial institutions now report to the U.S. government to try to ensure income-tax compliance, including your account balances, interest, dividends, proceeds from the sale of financial assets - would be shared with foreign governments. The United States and other governments will, of course, claim that your sensitive financial information will remain confidential - and that you can trust the governments. It is bad enough when American officials leak or misuse sensitive financial information about U.S. citizens and businesses, but just think what is going to happen when all of those corrupt officials in foreign governments get ahold of it.

The Obama administration is arguably the most corrupt administration in U.S. history. Corruption destroys civil society and economic growth by undermining the rule of law and protection of private property. Corruption takes many forms, from the simple payment to a government official for a favor, to the failure of government employees to do what they are paid to do, to gross abuse of power. Eric Holder's  "Justice" Department is involved in a $100 billion shakedown racket against the big banks. It has been able to greatly expand its budget outside the legislative process by obtaining financial "settlements" from the private sector, through threats, intimidation and asset forfeiture. This is corruption on a massive scale. The real question should be: Why is Mr. Holder not in jail? If regulatory agency officials are not doing what they are legally required to do, why are they not in jail? Those in government who waste or misspend funds for which they have a fiduciary responsibility are stealing from their employer - the American taxpayer. Why are they not in jail?

Did you know that the portion of the federal budget that Congress actually votes on (the discretionary budget) has been falling for years? The so-called "entitlements," such as Social Security, Medicare, Medicaid, food stamps and Obamacare, take a larger and larger portion of the total federal budget each year. Former U.S. Treasury economist Eugene Steuerle, now at the Urban Institute, has created a Fiscal Democracy Index, which measures "the extent to which past and future projected revenues are already claimed by the permanent programs that are now in place." In 1965, these programs claimed about 35 percent of the federal budget; now they claim about 85 percent of the budget, and they will soon claim more than 100 percent of total tax revenue. Mr. Steuerle is now out with a new book, "Dead Men Ruling," which explains how we got into the budget mess and the consequences of it. He writes:

Do you know why the U.S. economy shrank almost 3 percent in the first quarter of this year? When the news of the dreadful gross domestic product (GDP) number came out last week, many were surprised, but none were more surprised than the folks in the Obama administration. Many of their supporters had been saying this was the year of a real economic recovery. The quick reaction was to blame the bad GDP numbers on the cold weather.  It is rather ironic that the president blames the bad economy on the cold weather, while at the same time he is running around the country saying we have to spend many more tax dollars to prevent warmer weather a hundred years from now. But get ready for much worse economic weather.  Today, July 1, the administration implements perhaps the most stupid and destructive piece of tax regulation ever devised - the Foreign Account Tax Compliance Act (FATCA). This one regulation by itself may well cause another drop in GDP during the third quarter of this year.  The Disaster of FATCA has begun.

The gullible give in to the government's global-warming myth {youtube}tiO68V45bjY{/youtube} "Wasting Resources on a potential threat ignores problems at hand." Much of the media treat those who are skeptics about man-made global warming with the pejorative term "global-warming deniers," as if they were Holocaust deniers. Yet many of those in the media who watched presidential spokesperson Jay Carney engage in what can only politely be called "reality denial" day after day were-all-too silent about his obvious misstatements. Reality deniers get away with many of their fibs because...

You may have noticed gasoline prices are rising. If the Middle East situation gets much worse, gasoline prices will rise even more. The good news is that we are likely to avoid long gas lines as we had in the late 1970s under President Carter, because fracking and other new technologies have lessened our dependence on foreign oil and gas. The bad news is that a major rise in oil prices could easily tilt Europe and other places back into a recession, which could kill the little growth the United States is now experiencing. The tragedy is all of this was unnecessary, but brought about by the Obama administration, letting short-term political considerations and ideology override good economics and global security.

Would you have traded five terrorists for Sgt. Bowe Bergdahl? The decision may have been wrong or right, but what is striking is that President Obama seems to have made this decision, and all too many others, in an ad hoc way, rather than using decision theory. Decision theory is an orderly way of thinking and choosing among alternatives when there is a number of variables for which the probabilities of each may or may not be known to the decision-maker. It's the opposite of Mr. Obama's thought process. Politicians and criminals both have a tendency to underestimate the probability of getting caught in bad acts. Is it because few studied decision theory or because there is a certain recklessness in the nature of those who follow such pursuits? Obviously it's the latter in Mr. Obama's case, who suffers from what is known as The Fatal Conceit.

Without fracking of oil and gas deposits, there would have been no economic growth in the U.S. over the past five years. Yet the oil and gas industry has been a favorite whipping boy of the environmental zealots both inside and outside of the administration. Without those brilliant entrepreneurs and engineers in the private sector who developed the new techniques to unlock massive amounts of oil and gas at reasonable cost, it is unlikely that President Obama would have been re-elected - for it is they who have kept his economy afloat. Mr. Obama owes his renewed presidency to the very people he gives his back of the hand to.  Is there no end to the irony of this president?

If you were a political leader who wanted to control the population, but wanted to do it without using brute force, how would you do it? The answer: control how individuals and businesses spend their money by controlling their bank and other financial accounts. The Obama administration has set up a program to do just that, called "Operation Choke Point." If the government can prevent you from spending your money on legal products and information services it does not like, it soon has control over much of your life. You might be thinking this could not happen in America, but it is. Increasingly, businesses and individuals engaged in legal activities are having their banking relationships severed because people within the Obama administration and some politicians do not like the particular activity. The Justice Dept.'s "Operation Choke Point" should be renamed Operation Choke Freedom, for that does seem to be its very purpose.

What is the Republican Party's vision for America? You may have a hard time answering other than "not President Obama and his policies." Most Republicans plan to run their fall campaigns focusing on the Obama scandals -- admittedly a target-rich area -- with scandals involving Obamacare, Benghazi, the Internal Revenue Service and Veterans Affairs. All of this is not a vision of the future, though. It is hard to build a consensus -- but smart, strong-minded individuals in the past have been able to articulate a vision that attracted not only the public but other politicians. Ronald Reagan accomplished this, and he was fortunate to have a visionary economic evangelist by his side who helped shape much of the Reagan program and became its principal salesman. The GOP needs this man's vision and passion to end the Malaise of Obama.

Most wars result from at least one side overestimating its chances of success and one or more of the sides not having a clear "endgame." Russian President Vladimir Putin has a clear goal, which can be discerned from his own statements and actions, and from discussions with those who know him well. It is to leave as his legacy the re-establishment of the Russian Empire. The Russian Empire existed from 1721, when Peter the Great proclaimed it, until its collapse in 1917. At its high point in 1866, the Russian Empire included all of modern-day Russia plus Alaska, Finland, the Baltic nations, much of present-day Poland, parts of other Eastern European countries, the Central Asia "Stans," part of Mongolia, and the shores of the Caspian Sea. Mr. Putin, a master of strategy and timing, sees that he has a 2-year window of opportunity to grab or control much of the former Russian Empire. He correctly sees President Obama as weak and indecisive, and hence unwilling to stand in his way -- giving him a window before Americans likely elect a stronger president. And he must start in Ukraine.  Here is why.

Have you noticed that many political candidates, when running for office, claim they are going to make government less corrupt, irrational, incompetent and burdensome? Yet after they are elected, it only gets more so. Politicians like to speak in broad, general terms rather than lay out specific things that they can and will do. If voters demand more specifics, though, they will get them. The following are four specific measures that most members of Congress should be able to support because, once explained, the benefits are obvious. *Let's start by asking:  Do you think you should be able rely on Internal Revenue Service guidance when preparing your taxes? This would seem to be a no-brainer - an obvious "yes."  However...

When do you think the Associated Press reported this? "The Arctic Ocean is warming up, icebergs are growing scarcer, and in some places the seals are finding the water too hot. Reports from fishermen, seal hunters, and explorers all point to a radical change in climate conditions and hitherto unheard-of temperatures in the Arctic zone. Exploration expeditions report that scarcely any ice has been met as far north as 81 degrees 29 minutes. Within a few years it is predicted that due to the ice melt the sea will rise and make most coastal cities uninhabitable." The Washington Post published this AP report on Nov. 2, 1922. You may have noticed that the predicted disaster 92 years ago did not happen, nor have other predicted catastrophes from the global-warming crowd.  Yet the warmists' apocalyptic predictions continue unabated.  Why?

Do you think the Internal Revenue Service and other government agencies should have the right to seize your assets, including your bank accounts, when you have not been convicted of wrongdoing? The fact is, the IRS and other government agencies do this all the time, and often without even a formal accusation of wrongdoing. Thus, in criminal cases, the government has to convince a judge and jury beyond a reasonable doubt that a crime has been committed. Under civil asset-forfeiture laws, no such proof is required -- and, as a result, many innocent people have had their property taken by agents of the federal government. Anyone who is awake knows that the IRS has been politicized -- and thus critics of the administration live in fear that their property will be taken for the mere act of speaking out against the government.  There is only one solution.

Athens, Greece.  How far can a modern economy sink? The Greek economy is entering its fifth year of decline. Nominal gross domestic product is about 28 percent lower than it was four years ago. The official unemployment rate is 27.5 percent (as though the decimal point matters, given the poor quality of the data). The unemployment rate for young people is about 60 percent. Nonperforming loans continue to rise. The privatization program continues to fail, in part because of an absence of bidders. In a paper posted earlier this month, leading Greek economist Yanis Varoufakis of the University of Athens and the University of Texas at Austin argues Greece is "a failed social economy." The following are several of his examples:

To whom would you be willing to trust with all of your financial and tax information: 1) close family members; or 2) the U.S. government and foreign governments, including Russia? For the last several decades, global liberty-haters have dreamt that all financial privacy would be eliminated. They have sought out a variety of excuses to act as Peeping Toms peering into your bank accounts. In the 1980s, their big push was to enact "anti-money laundering" legislation, with the claim that it would make catching drug dealers and other assorted criminals easier. The United States passed its first anti-money laundering law in 1986 -- despite the fact that no one could objectively define "money laundering", because it is not an action but an "intent" to act unlawfully. As a result of all the global anti-money laundering regulations, total compliance costs for financial institutions are now in the hundreds of billions of dollars. Basic banking and other financial services have been reduced and even eliminated for tens of millions of people around the world. Have all of these regulatory costs done any good?

The Russian economy is highly dependent on oil and gas exports, and reducing Russian oil and gas exports would be the most direct way to cause pain to the Russian leadership. However, Europe is heavily dependent on Russian gas and oil, particularly gas. The countries in the EU did not need to be in this position, because the EU has plenty of gas reserves that could be economically tapped using hydraulic fracturing, or fracking. Because of the environmental lobby, though, the EU has allowed itself to become dependent on foreign energy sources -- particularly Russian. Perhaps Peter Foster said it best in Canada's Financial Post on March 8: "Europe's alternative-energy policy is in a shambles. The EU would be even more vulnerable but for a typically unanticipated example of free-market ingenuity: hydraulic fracturing and the boom in oil shale gas. But guess what: Greens are everywhere resolutely opposed to fracking, and nowhere more than in Europe. [L]ike their peace march colleagues half a century ago, they are ultimately dupes for an authoritarian agenda."

If a politician or government official takes a direct monetary bribe for granting a favor or sweetheart contract, do you think he should be sent to prison? Such an illegal activity is despicable, but it is usually far less costly to society than the legal forms of corruption, which undermine the integrity and respect for government that is necessary for a civil and prosperous society. Most legal corruption is all about increasing power for those in government. This past Friday (2/28), the following amendment offered by Sen. Ted Cruz, Texas Republican, was defeated in the Senate Judiciary Committee.  It was to prevent "Intentional discrimination by employee of the Internal Revenue Service." It is hard to imagine anyone interested in good government being against such an amendment, because it is clearly designed to help prevent those in the IRS from abusing their power -- which many have done. Yet 10 senators, all Democrats, voted against it. They were: