Category: Spending

One brilliant governing strategy

The Wall Street Journal’s editors know how to frame a debate. That frame is made of lies, of course, but so be it. If it sells the party line, all is fair.

If ever there was a market test of economic policy, the last three years have been it. The stock market has recovered from its implosion in Bill Clinton’s last year in office, unemployment is down to 4.7%, and growth has averaged 3.9% in the three years since those tax cuts passed–well above the post-World War II average and more than twice the growth rate in Euroland.

It’s not enough to say the tech bubble collapsed, it was clearly Bill Clinton’s fault. Our greater economic growth than Europe has nothing to do with a complex combination of factors, but rests solely on one set of tax cuts. The partisan defense only appears because it’s so self-evident, I guess. More interesting, though, is this:

Yes, gas prices are high and interest rates are rising, which helps to explain the anxiety felt by some of the public. But these headwinds are all the more reason to be impressed by the economy’s ability to push ahead nonetheless. We’d have thought that the Democrats who are now voting to let taxes increase would be thrilled to know that things turned out better than they had feared. Americans are better off despite Democratic predictions that, as Minority Leader Nancy Pelosi put it back in 2003, tax cuts would “damage long-term economic growth.”

When long-term is now defined as three years, it’s little wonder that current Republican economic “policy” is so great. Reap all the benefits of lower taxes and greater spending, with no worries that the looming (super-duper, extra-double long term?) devastation will come up and bite the savior President Bush. The hero always rides off into the sunset, but perhaps this is where we should remember what the horse leaves behind for the saved as the hero claims the glory.

Tax cuts are great, and I’m generally for them. I like the money I earn and would love to keep it. However, Congress and the President have lost all sense of how to run a budget. I’d rather feel the rough impact of this current profligate spending in the next few years, than to feel the decimation from bankruptcy. Maybe that’s just a dash of realism in knowing that “starve the beast’ is a joke, or maybe it’s just naked cynicism. No matter. The bill is coming due at some point.

I know the political strategy is to leave the Democrat to take the blame for increased taxes (which they’ll happily do because they won’t control spending, either). But it tells me a lot to know no politician seems to care that we’re all the ones who will get screwed eventually. Consider the lesson learned. No political point is too small to score.

Solving the gas crisis, one giveaway at a time

Congress is putting our money where its mouth is:

Scientists, inventors and entrepreneurs will be able to vie for a grand prize of $10 million, and smaller prizes reaching millions of dollars, under House-passed legislation to encourage research into hydrogen as an alternative fuel.

Legislation creating the “H-Prize,” modeled after the privately funded Ansari X Prize that resulted last year in the first privately developed manned rocket to reach space twice, passed the House Wednesday on a 416-6 vote. A companion bill is to be introduced in the Senate this week.

Yay? From a budgetary impact, the prize is only $10 million. When the government spends almost $3 trillion, who will miss it? (That’s not a sufficient reason, of course, as there are many “no one will miss it” appropriations.) But here’s a question: what if hydrogen isn’t the eventual best solution to switching from oil? In that scenario, either this incentive pushes entrepreneurs and scientists into sub-optimal research, or the prize is ignored or awarded to the best of the worst ideas to solving the energy crisis. At least Congress did something. No doubt subsidies for hydrogen access (supplies, stations) will follow.

Naturally, many grandiose statements must flow from the hallowed halls of Congress, since no politician wants to avoid credit for the inevitable success.

“This is an opportunity for a triple play,” said bill sponsor Rep. Bob Inglis, R-S.C., citing benefits to national security from reduced dependence on foreign oil, cleaner air from burning pollution-free hydrogen and new jobs. “If we can reinvent the car, imagine the jobs we can create.”

I am imagining them. And so are the entrepreneurs most likely to take the investment risk necessary to create a viable alternative to the gas engine. And so are the automotive unions who will lobby Congress to protect their jobs when the technology changes on them. A rational person understands that economic and technological growth is not a zero-sum game, but he also understands that it’s not an infinity-sum game.

“Perhaps the greatest role that the H-Prize may serve is in spurring the imagination of our most valuable resource, our youth,” said co-sponsor Rep. Dan Lipinski, D-Ill.

Really, I have nothing insightful to say on that, other than score one for Rep. Lipinski for finding a creative way to insert “for the children” into the discussion. I should’ve anticipated it, but I’m not sure I would’ve come up with that. Granted, my view is tainted by my brother, who will enter college in the fall, and his desire to be an engineer. Amazingly, that desire grew without the influence of a $10 million prize from the federal government. I’m sure he’ll study harder because of this, so it’s worth it.

Maybe Texas will buy me a patio

In a particularly egregious display of current Senate form, Mississippi’s senators proved exactly why the rush to rebuild the Gulf Coast after Hurricane Katrina should have included a little more planning and a lot more oversight (since federal dollars were involved). Consider:

Mississippi’s two U.S. senators included $700 million in an emergency war spending bill to relocate a Gulf Coast rail line that has already been rebuilt after Hurricane Katrina at a cost of at least $250 million.

Republican Sens. Trent Lott and Thad Cochran, who have the backing of their state’s economic development agencies and tourism industry, say the CSX freight line must be moved to save it from the next hurricane and to protect Mississippi’s growing coastal population from rail accidents. But critics of the measure call it a gift to coastal developers and the casino industry that would be paid for with money carved out of tight Katrina relief funds and piggybacked onto funding for the wars in Iraq and Afghanistan.

If it needs to be moved now, it needed to be moved then. Why spend a quarter of a billion dollars to fix a rail line that any fool could see would face the exact same risk after repair that caused it to need repair? I think the question answers itself, considering this is the United States Senate, with solid fiscal conservatives in charge of doling out the political favors.

The $700 million in the emergency spending bill is just short of the price CSX set for selling its right of way, buying into the Norfolk Southern line, making capacity improvements on the main line and bolstering a short line railway to bypassed areas. The high price was inevitable, Appropriations Committee aides said. CSX just spent as much as $300 million in insurance payouts and its own money to rebuild the track that Lott and Cochran now want to destroy.
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Susan Irby, Lott’s communications director, said safety is the senator’s biggest concern. But she added: “Senator Lott makes no apologies for trying to develop one of the poorest states in the country.”

Of course not. He’s a modern Republican. Want to take bets that this will play out exactly like Sen. Stevens’ defunded, but not really, “bridge to nowhere”? Senators Lott and Cochran are going to get their money, and we’re all going to pay for it with even more money to buy off another senator with another pet project. Is it November yet?

Progressive Tax Day propaganda

The editors at The Washington Post certainly know how to frame skew a discussion in their favor. Today, they’re trying to make a case against the Senate essentially ignoring one of its rules to get tax cuts extended. That would be a fine argument, and worth pointing out if only to further build the case of Congressional hypocrisy. But that’s not the setup the editors use. Consider:

MUCH TO THE chagrin of the White House and the GOP leadership, lawmakers didn’t get a new round of tax cuts done in time for tax day today. But when Congress comes back from its recess, it’s expected to take up a deal to extend President Bush’s capital gains and dividend tax cuts. To make their budget-busting tax policy appear less costly than it is, the lawmakers are resorting to a gimmick that is even more egregious than their usual tactics.

If they want to use the size of the deficit as the justification for their position, they should anticipate, and understand how poorly it reflects on them, the simple counter-argument that reducing spending is just as effective at deficit reduction. It’s certainly more appropriate. Instead we get terms like “budget-busting”. What’s more budget-busting, bringing in too few dollars or sending out too many dollars? One thing is easier to control than the other. I know which one it is. It’s a shame the Post’s editors don’t, or at least won’t acknowledge it since it doesn’t fit a liberal vision of American government.

Via: To The People

They were for the Constitution before they were against it

Two interesting tidbits from this story about proposed spending cuts increases cuts before Congress. First, Sen. Arlen Specter impersonating Rep. Tom Delay:

“We’re beyond cutting the fat and beyond the bone. We’re down to the marrow,” said Sen. Arlen Specter (R-Pa.), who plans to introduce an amendment today to raise spending on health care, education and worker safety by billions of dollars above the president’s request for next year.

I suppose a cheesy smile for the mug shot camera is next up on Sen. Specter’s busy agenda? Here’s a hint: check the Constitution and you’ll find the general guidelines for where Congress should be spending federal dollars. There may be a few unwritten implications since the founders couldn’t possibly have foreseen how significantly the world would change in the first few centuries of the Republic. However, I’m fairly certain they knew about areas such as education. Somehow that oversight probably wasn’t implied. Resume cost-cutting there.

Next, this engaging theory:

Reps. Daniel E. Lungren (R-Calif.) and Jane Harman (D-Calif.) plan to unveil legislation today that would raise spending on port security by $801 million a year. That bill nearly equals a bipartisan Senate legislation that would raise annual port security spending by $835 million. Both bills are scheduled for quick action in the House and Senate homeland security committees in the coming weeks.

Proponents of the measures say the government has avoided such spending for too long under the guise of fiscal restraint. Three times since the Sept. 11, 2001, terrorist attacks, the House has voted against Democratic efforts to raise spending on port security. But in the wake of a Dubai company’s effort to take over management responsibilities at six major U.S. ports, such opposition appears to be collapsing.

“There simply is no cheap way to be better prepared,” Lieberman said yesterday.

There isn’t a direct connection between port security and spending reductions, but I’m sure a reasonable person could indirectly link over-spending on non-federal issues (and pork barrel madness) with a reduced availability to fund legitimate federal needs like national security. Granted, I don’t have the wisdom of a congressman, so it’s just a thought. I’m just saying that “no cheap way” doesn’t mean we should just throw money around because it makes us feel better. For instance, on health care and education. Maybe if we spent only on legitimate funding needs, we’d stop worrying about cheap and stop focusing on effective.

Are we building Ewok Village 2000 2006?

I’m still amazed at how oblivious to logic some politicians can be. Throw in fiscal recklessness and it’s a plan for future disaster. Consider:

President Bush, in his first visit to New Orleans since two reports criticized the government’s response to Hurricane Katrina, today urged Congress to approve a $4.2 billion initiative to help Louisiana residents who lost their homes in the Aug. 29 storm.
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“We’ve all been working together to figure out how to come up with a housing plan that will restore the confidence of the people in this important part of our country,” Bush said. “In order to make sure that housing plan meets its goals, Congress should make sure that the $4.2 billion I requested goes to the state of Louisiana.”

It’s important to ask whether it’s justified to “restore the confidence of the people” in Louisiana through transfer payments from the rest of the country. I don’t choose to live in an area that sees hurricane activity every year, yet I’m expected to pay my share so that families in Louisiana can live happily on the Gulf Coast, without the financial risk equal to their clear exposure. Under his scenario, President Bush should know that any confidence increase in the Gulf region is zero-sum for the United States.

Need further proof why? Behold:

Speaking in front of a broken levee in New Orleans’ hardest-hit Lower Ninth Ward, Bush spoke of a plan that would make as much as $150,000 available to each homeowner.

Since we’re stuck bailing out an irresponsible system, isn’t it reasonable to expect that we’ll rebuild the region’s defenses before we fund other rebuilding? Hurricane season isn’t that far off.

Can we claim national identity theft?

This is mostly a formality, since Congress never fails to authorize such requests from Treasury, but it’s worth noting that the request appeared. Again. Consider:

Treasury Secretary John Snow notified Congress on Monday that the administration has now taken “all prudent and legal actions,” including tapping certain government retirement funds, to keep from hitting the $8.2 trillion national debt limit.

In a letter to Congress, Snow urged lawmakers to pass a new debt ceiling immediately to avoid the nation’s first-ever default on its obligations.

We’re spending ourselves into oblivion. Nothing new to see here, folks. This is what happens when Congress spends and the president encourages it. Of special importance, though, is the amusing manner in which the Treasury is plugging the hole until Congress intervenes. We can’t default, so it’s better to use raid the Civil Service Retirement and Disability Fund and the Government Securities Investment Fund of the Federal Employees Retirement System. They’ll get paid back, and all that, but it reveals a lot about the sanctity of trust funds managed by the government, no?

Two quotes from the story merit attention:

“Simply raising the limit on George W. Bush’s credit card and crossing our fingers won’t solve anything,” [Charles] Rangel, D-N.Y., said in a statement. “Any long-term debt limit increase must be accompanied by a serious effort to bring our budget back to the balance we achieved under the Clinton administration.”

The credit card may be signed by President Bush, but the purchases are made by Congress. Glass houses, Rep. Rangel. Glass houses.

On a side note, I’m sure this need for fiscal sanity is one example of why President Bush wants the line item veto.

“I know that you share the president’s and my commitment to maintaining the full faith and credit of the U.S. government,” Snow said in his letter to leaders in the House and Senate.

AAAAAAAAAAAAAAHAHAHAHAHAHAHAHAHA.

Saving souls over the infected body

President Bush’s faith-based initiative developed foreseeable political baggage surrounding the allocation of $15 billion to fight HIV/AIDS. Mostly the baggage revolves around the distribution of condoms and the focus, or lack of focus, on abstinence and fidelity. I don’t want to go too in-depth on this because any thinking person could come up with the standard storyline for each side in the argument.

Personally, I don’t care for the religious angle coming from the federal government. That’s realistic more than anything. Just like any other arena where the independent, objective-minded interests of the government become quickly skewed to whatever dominant social theme prevails, this was bound to erupt into chaos. The goal is fighting AIDS and the spread of HIV. That shouldn’t be political, but a faith-based initiative means it will be so. It’s an inefficient waste of resources. That’s the outcome in which government specializes, of course.

Instead of worrying about whether we’re on message for what Jesus would want (hello, First Amendment), we should be practical. People are still dying, HIV is still spreading, and ignorance still permeates policy. Better to understand that human nature will not suddenly change, across cultures, in numbers sufficient to justify the “moral” solution. Essentially, at-risk people will continue to have sex, regardless of education, because that’s what humans do. As for the larger goals (incorrectly) promoted by faith-based initiatives, people will come to religion or they won’t; neither outcome is any government’s business. If government must pursue an international prevention policy, at taxpayer expense, it must approach the task with an aim for the proper results. No religious or moral qualifiers are appropriate.

Unlike this:

For prevention, Bush embraces the “ABC” strategy: abstinence before marriage, being faithful to one partner, and condoms targeted for high-risk activity. The Republican-led Congress mandated that one-third of prevention money be reserved for abstinence and fidelity.
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The letters followed a briefing last year by Focus on the Family, run by Christian commentator and Bush ally James Dobson. The group’s sexual health analyst, Linda Klepacki, said even some religious groups emphasize condoms over abstinence.

“We have to be careful that the president’s original intent is being followed where A and B are the emphasized areas of the ABC methodology,” she said.

Focus on the Family would not be my first choice for medical advice on how to stop HIV/AIDS. No matter. Like everyone, I’m forced to pay for it. I only wish this next quote applied to government, in a much broader scope than a funding decision in one individual program:

“The notion that because people have always received aid money that they’ll get money needs to end,” Deputy U.S. global AIDS coordinator Mark Dybul said in an interview with The Associated Press. “The only way to have sustainable programs is to have programs that are wholly owned in terms of management personnel at the local level.”

If only, indeed…

An endorsement for poor leadership and government intrusion?

Skimming the news this morning, I came across this editorial. It’s about health care reform and an apparent coming push from President Bush in his State of the Union address. There are several angles to this, all of which the writer approaches. The whole piece is so discombobulated that I can only offer a few bits and try to make a little sense out of them, which is something I think the writer forgot. Consider this opening paragraph:

This time last year, President Bush was preaching Social Security reform; that got nowhere. This time six months ago, his team was thinking tax reform; it soon got cold feet. Now the new theme is health reform. “This is a big priority for the president,” Al Hubbard, the White House national economic adviser, told me Friday. “The system has got to be reformed.”

If that’s the path President Bush is going to pursue, there’s a lesson in how leaders (leadership in character, not title) behave. Flip-flopping around to every new issue, hoping to make a mark, only to abandon it when it becomes apparent that it might be challenging is not the mark of a good leader. A leader sets his course and then moves in the direction of its achievement. That clearly can’t be said of Social Security and tax reform, so I fail to see how health care will be different. But let’s continue:

Some look at the U.S. health mess and see a failure of the market, but the authors [R. Glenn Hubbard of Columbia University and John F. Cogan and Daniel P. Kessler of the Hoover Institution] insist that government clumsiness prevents the market from working. Modest tort reform would free doctors from practicing expensive defensive medicine. Tougher antitrust policies would prevent price-raising alliances among hospitals. Pruning mandates on health insurers — which often reflect lobbying by doctors’ groups — might free insurers to cover only the most cost-effective procedures.
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Enter the authors’ really big idea — the one on which the White House is likely to build a story about its grand health-reform vision. To make the health market work, the trick is to create and then empower consumers. You create them by making individuals pay more out of pocket. And you empower them by forcing hospitals and doctors to publish information on quality and price.

As I read this I thought this plan might be a start. My experience backs up much of what they’re saying in some form. Essentially, I read this as a way to make the free market work. Wherever an obstacle exists, figure out a way to remove it. Mostly, I see the government’s role as removing governmental obstacles to free market success. Beyond that, a solution that involves individuals in making choices relavent to them is the most logical. One specific example I’ve offered in the past is breaking the paternalistic link between employer and health care. Mr. Hubbard seems to propose that with an imaginary scenario.

The idea appeals to Al Hubbard, a bluff, no-nonsense business type with a genial, uncomplicated style. Hubbard invited me to imagine a world in which companies paid for their staffs’ groceries: Employees would load up with more food than they needed; supermarkets would seize the chance to mark up groceries; pretty soon, they wouldn’t even bother posting their prices. So it is today with medicine. You don’t know the cost of your hospital visit until a few days later, when the bill arrives.

Too extreme an example? Possibly. Too far-fetched? I don’t think so. The writer goes on to explain a supposed weakness in this. I’m simplifying, but he posits that the system is too complex, whether for consumer intelligence or consumer knowledge for decision-making. Throw in a dose of “people won’t take care of themselves” if they have to pay for it, and the proposed outcome starts to take shape. The market works, but only if people are smart, which leads to this conclusion:

Beyond the imperative of restraining prices, the biggest challenges in health care are to get insurance to everyone and to create incentives for preventive treatment — even though prevention may pay off 30 years later, by which time the patient will have gone through multiple switches in health plans. The most plausible subsidizer of universal insurance is government, and the only entity with a stake in lifelong wellness is the government. Is the administration ready to see that?

Somehow we’ve gotten to a situation where waste, inefficiency, and bureaucratic largess resulted in a health care crisis in need of urgent reform. The logical conclusion is to hand that over to the government to eliminate those problems? Are we talking about the same government? The United States government? I would not have come to that conclusion, although I fear the Bush administration will. (See: prescription drug benefit) Right, great idea.