Archive for November, 2008
For the Good of Barack Obama, Mr. Rangel Should Step Aside
Or am I reading too much into the Washington Post editorial, “Step Aside, Mr. Rangel,” when it says:
At a time when President-elect Barack Obama is holding frequent news conferences to reassure the markets and the American people that he is ready to lead the nation to economic recovery, the last thing he will need is a chairman of Ways and Means caught up in a swirl of serious allegations.
The cult of the presidency, indeed.
Are We Keeping Gates’ Defense Budget?
Barack Obama’s apparent decision to retain Robert Gates as Secretary of Defense is popular in the Beltway. One thing pundits admire is Gates’ talk about sacrificing expensive weapons systems designed for peer competitors to pay for the counterinsurgency campaigns that we are fighting. What Gates’ fans don’t point out is he has done little more than talk. Under his watch, the Pentagon recently drafted a fiscal year 2010 defense budget that requests a $60 billion increase over FY 2009 spending, not including war costs. That is a departure from prior Pentagon plans that envisioned defense spending leveling off next year. The 2010 budget proposal comes with a new five-year plan that would boost spending by $450 billion. The increase would avoid the kind of painful choices that Gates has discussed.
This request sets up a dilemma for the Obama administration. There are indications that the Democratic leadership on the Hill wants to contain defense spending to help pay for the proliferating bailouts. But the Pentagon’s plan is, by most accounts, an attempt to box Obama in — even a decision to hold spending at last year’s level could be called a cut, and open the President up to attack from the right. The services and Bush administration, including Gates, would like to fix defense spending at over four percent of GDP, even if the wars wind down and GDP resumes its normal growth. This budget serves that purpose, which is devoid of strategic rationale.
Ideally, Obama would force massive cuts on the Pentagon. Its budget is already far too big. At a minimum, if only to demonstrate that he won’t be bullied by the bureaucracy, Obama should tell the Pentagon to rewrite its proposed budget without the increase. If Obama is keeping Gates’ spending ideas along with Gates, it is one more indication that Obama’s defense policy is likely to be a kindlier, gentler version of Bush’s, a more competent imperialism.
Larry Summers on Employer Mandates
President-elect Barack Obama has named former Treasury Secretary Larry Summers to head his National Economic Council. Obama also wants to require employers to offer health insurance to their workers.
It is therefore instructive to recall what the head of Obama’s National Economic Council has written about employer mandates:
Economists have generally devoted little attention to mandated benefits- regarding them as simply disguised tax and expenditure measures. Uwe Reinhardt’s reaction is probably typical: “[Just because] the fiscal flows triggered by mandate would not flow directly through the public budgets does not detract from the measure’s status of a bona fide tax.”
Suppose, for example, that there is a binding minimum wage. In this case, wages cannot fall to offset employers’ cost of providing a mandated benefit, so it is likely to create unemployment….
Mandated benefit programs can work against the interests of those who most require the benefit being offered…
If policymakers fail to recognize the costs of mandated benefits because they do not appear in the government budget, then mandated benefit programs could lead to excessive spending on social programs. There is no sense in which benefits become ‘free’ just because the government mandates that employers offer them to workers…
It can plausibly be argued that mandated benefits fuel the growth of government.
Bailouts May Scare U.S. Economy to Death
A Pew Research poll conducted more than a week ago found that 57 percent of Americans are terrified by Bailout Mania 2008. That was several days, and many billions of dollars, before Bloomberg reported that U.S. taxpayers are now on the hook for $7.7 trillion in bailout bucks — half of the nation’s entire GDP for the past year. At this point, not even Carl Sagan could get a handle on the numbers we’re talking about.
What do people do when they’re scared about the state of the economy? They stop spending. With each new government “investment” announced by our new overlord Hank Paulson, Americans are going to clutch ever more fiercely at their wallets. They will eat out even less than they’ve been doing. They will rediscover the true spirit of Christmas and give each other hugs instead of Blue-Ray disc players. They will forgo that new coat or pair of winter boots. And they will bring the U.S. economy to a halt.
Even if all these bailouts could save the economy, other things being equal, other things are NOT equal. The bailouts themselves have an effect on consumer psychology, which has an effect on consumer spending. The Fed had better hire a shrink, quick, to let them know that they are on the brink of scaring the U.S. economy to death.
Google Flu Trends and Privacy
The recent privacy dust-up about Google’s Flu Trends service is interesting – and confounding.
Flu Trends is one of many cool things that can be done with data. By tracking searches that suggest the existence of flu symptoms, Google can identify influenza outbreaks about two weeks faster than the Centers for Disease Control, as illustrated by this video graph.
Searches reveal our interests, and this service highlights that fact. So the good folks at Patient Privacy Rights and the Electronic Privacy Information Center wrote a letter to Google asking for more information about the privacy consequences of Google Flu Trends. This kind of inquiry and exposure is important to the successful operation of markets because it helps educate both the public and businesses about the privacy consequences of services like Google.
The letter is a little confounding, though. It asks, “Would you agree to publish the technique that Google has adopted to protect the privacy of search queries for Google Flu Trends?”
It’s an inartfully drawn question. Search queries don’t have privacy – they’re inanimate character strings. What the letter intends, I think, is to ask how the privacy of Google users is protected in developing the data for Google Flu Trends. Still, the request is a bit incoherent.
Google said in response to the letter:
Flu Trends uses aggregated data from hundreds of millions of searches over time. Flu Trends uses aggregations of search query data which contain no information that can identify users personally. We also never reveal how many users are searching for particular queries. The only information released publicly or to the CDC is what is seen on the Flu Trends website now: estimates of the percentages of people with influenza-like illnesses.
It’s essentially a given that drawing aggregated data from hundreds of millions of searches produces data that is not identifiable. The data relevant for display by Google Flu Trends is not identifiable. Google Flu Trends doesn’t affect the privacy of Google users. It’s using Google at all that affects their privacy.
There’s value in exploring these issues though, and here’s where I think there is pay dirt in the PPR/EPIC letter:
[T]he question is how to ensure that Google Flu Trends and similar techniques will only produce aggregate data and will not open the door to user-specific investigations, which could be compelled, even over Google’s objection, by court order or Presidential authority.
The rule of law has fallen this far: Advocates must cite the privacy threat from unconstrained, unilateral “Presidential authority.” The letter is also right to point out that courts can strip away Google’s control of the information it collects about its users.
This is a problem with use of all Google services, and a problem with the use of all Internet services. The heart of the problem lies not with the current leader in search, or any other Internet innovator. The problem lies with our unconstrained government.
Yes, Google is playing a dangerous game with the data it collects from us. It has nonchalantly beaten the CDC at its own game, and one can’t predict how the agency will respond. CDC may seek to deputize Google as its public health agent. As the PPR/EPIC letter points out, it may drive Google to reveal more precise – and identifiable – information about health-related searches.
Any agency could do this to any Internet service provider while our law about privacy/search and seizure is in such a shambles.
Again, I think advocacy of this type is a valuable part of market processes because of its educational value, but if I had written the letter, I would have written it to the head of the Centers for Disease Control asking for a pledge that the agency will not use any informal or extra-judicial means to collect personally identifiable health information.
What Exactly Does “Cost Neutral” Mean?
I won’t pretend to be the least bit able to keep track of who is getting bailed out how and at what price anymore. When we were talking about a nice, simple, $700-billion bailout of some type to someone, sure, that was easy to follow. But there’s practically a new proposal involving hundreds-of-billions of dollars every day now, and at this point it just seems that Hank Paulson is throwing out dollar signs like a random number generator set between $100 billion and $800 billion. Forget about any average taxpayer being able to figure it all out, especially how much he is ultimately going to be on the hook for.
One would hope that just a small piece of the action — in my area, student loans — would be easier to follow. It isn’t. Since May the U.S. Department of Education has been erecting financial Rube Goldberg devices of all sorts to ensure that no potential student goes without money for college. You can catch up on all the goings-on here, but one thing in particular concerns me: Who, ultimately, is going to pay for all this? Unfortunately, like the overall bailout (or bailouts? or rescues? or giveaways? whatever…) federal officials give vague promises not to hurt taxpayers, but how that miracle will be accomplished basically comes down to “trust us.” Witness the Education Department’s description of all that the feds will do to keep loan dough flowing. It promises that “these programs will be cost neutral and in the best interest of the taxpayer,” but how, exactly, will that cost neutrality be achieved? For those minor details, we’ll all just have to stay tuned:
To assure cost neutrality, different parameters may be placed on the terms for these programs. The Federal Register notice will include the final prices, terms, and conditions, as well as the Department’s methodology for determining cost neutrality.
Pardon me and my aching head if I don’t find this either helpful or reassuring. For some reason I just don’t trust these people.
Pointless, Political, and Pork-filled
Greg Mankiw speculates on the best alliterative description of the stimulus package:
Instead of fiscal stimulus that is temporary, targeted, and timely, John Taylor suggests that it be permanent, pervasive, and predictable.
What the Obama administration is aiming for, it seems, is helpful, hopeful, and humongous.
Critics fear it might end up pointless, political, and pork-filled.
—–
Update: A reader emails me that Larry Summers now calls for stimulus that is speedy, substantial, and sustained.
Other readers think it will be:
big, bloated, and borrowed.
immodest, immoral, and imbecilic.
clumsy, corrupt, and counterproductive.
expansive, extensive, and expensive.
weighty, worrisome, and wayward.
politicized, pandered, and pathetic.
socialized, silly, and sorry.
random, record-setting, and ridiculed.
ultimate utilitarian utopianism.
absolutely abjectly apocalyptic.
The Constant Bailer II
The superintendent of the financially inept Miami-Dade Schools wants a federal bailout, and it’s hard to blame him for desiring a piece of Washington’s ever-bigger Ineptitude Rewards Programs. But, as I wrote a couple of months ago – and a professor echoes in the article about the Supt’s request — public schools are, essentially, constantly being bailed out. They live off of government money, which come to think of it, might be why they seem constantly to be in trouble. Something about government control just always seems to end badly.
I’ll Tell You What’s Tedious
Jonah Goldberg finds “conservative complaints about Barack Obama’s public-schools hypocrisy…all a bit tedious.” Well, aside from my not having actually seen many conservatives complaining about Obama choosing a private school for his kids while telling the rest of us to support public schools, I find arguments like Goldberg’s main one tedious. Very tedious. Like, we-should-just-keep-trying-to-force-excellence-out-of-socialism tedious.
Here’s the meat of Goldberg’s contribution to education reform:
The real issue is why the public schools are unacceptable to pretty much anyone, liberal or conservative, who has other options.
His culprit, talk about tedious:
Teachers unions, arguably the single worst mainstream institution in our country today.
Now, I’m sure not going to tell you the teachers unions aren’t a pain. They are. But they are not our root education problem in any way, shape or form. The root problem is that we have a system in which no one has a choice — that’s right, boring ol’ “choice” — about financing a government education monopoly, and there is little competition, innovation, or anything else decent as a result.
Oh, and why does Goldberg think the unions have so much power, anyway? Surely he knows that private-sector unions have been disintegrating for decades while their public-sector cousins keep going strong. That’s because no one can choose not to fund the public sector – unless, that is, they enjoy time behind bars – while industries that are disciplined by consumer choice simply can’t afford efficiency-crushing unions.
So let’s get one thing straight. School choice — especially universal school choice — is not some boring cop-out that dull folks reflexively whimper about because they’ve got nothing better to say. No, it is the essential ingredient to getting an education system that actually works, and no amount of pooh-poohing it for the sake of excitement, giggles, seeming cool, or whatever, can change that.
Is Hillary Clinton Unconstitutional?
So Hillary Clinton is “on track” to be the nation’s top diplomat, huh? Well, setting aside the wisdom of that decision — forget ideology; does she have both foreign policy expertise and a good working relationship with the President-elect? — it appears that there may be genuine constitutional problems with her expected nomination. To wit, Article I, section 6, clause 2 reads:
No Senator or Representative shall, during the Time for which he was elected, be appointed to any civil Office under the Authority of the United States, which shall have been created, or the Emoluments whereof shall have been encreased [sic] during such time…
That is, under this “Emoluments Clause,” members of Congress are expressly forbidden to take any appointed position within the government which was created or whose pay has been increased during their current term in office. Now, a January 2008 executive order, promulgated in accordance with a statute from the 1990s that addressed cost of living adjustments for certain federal officials, raised the Secretary of State’s salary, thus constitutionally prohibiting any then-serving senator who remains in office from taking charge of Foggy Bottom. (Sen. Clinton’s current term began in January 2007 and expires in January 2013.)
Not surprisingly, this is not the first time such a conflict has arisen in executive appointments and nominations and, equally not surprisingly, Congress has on several occasions legislated around it: To enable one of its own to assume executive office, Congress simply decreases the pay of that office to the pre-raise level for the full tenure of that specific appointee.
Although this legerdemain has been around since at least the Taft Administration — and was most recently used when President Clinton picked Sen. Lloyd Bentsen to be his Treasury Secretary – the move is called the “Saxbe Fix” after Sen. William Saxbe, whom President Nixon nominated for Attorney General.
The Saxbe Fix is not uncontroversial. UCLA law professor Eugene Volokh, for example, cites Steptoe and Johnson partner John O’Connor’s objection that the Saxbe Fix is inadequate for circumventing the Emoluments Clause. To O’Connor’s thinking, while simply lowering the salary — resulting in no “net” increase — does prevent the nominee from directly benefiting from a vote he or she cast, it would not substantively address the Framers’ intent to limit the size and scope of the federal government. That is, if, contrary to the Emoluments Clause’s terms, Congress can restore its Members’ eligibility for appointment by reducing the office’s salary, the Emoluments Clause ceases to serve its function as providing a constitutional disincentive for regular increases in the salaries of federal offices.
One could also argue that in this specific case, Congress did not act to increase anybody’s salary; it was that long-ago Congress that even gave that option to the president — and only in the form of an aross-the-board COLA, not some shady or opportunistic self-dealing. But, of course, if we are to follow the text of the Constitution, there is no exception for offices “the Emoluments whereof shall have been encreased” by a non-shady COLA granted via statutorily-enabled executive order.
Whether anyone could challenge Hillary Clinton’s appointment in the courts is another matter. Perhaps someone denied a passport, or who has had some other adverse action done to them by a Clinton-led State Department, would have standing to sue. In any event, in this time of constitutionally questionable bailouts, it cannot hurt to be vigilant even about the most obscure text from our nation’s governing document.
Much more on this issue can be found in Eugene’s fascinating post here.
There’s No Change Here
He’s still months away from officially becoming president, but on education Barack Obama is already indicating that his brand of change is much more about high-flying rhetoric than sober reality. Whether it’s choosing a private school for his kids, or promising to expend billions to “modernize” public schools, so far Mr. Obama is turning out to be just as politicized as everyone else in Washington.
Start with Obama’s choice of the Sidwell Friends School for his kids, which was sneakily announced around 5:00 pm on Friday — perfect timing to ensure the decision got as little press as possible (not that the press was going to be tough, anyway). There is nothing wrong with the president-elect selecting the best possible school for his kids — indeed, doing so is his obligation as a parent — but as documented by Andrew Coulson, the hypocrisy is glaring for those who choose to see it.
“We need to focus on fixing and improving our public schools; not throwing our hands up and walking away from them,” Mr. Obama declared to the American Federation of Teachers this summer. But, of course, by “we” he meant “you,” just like all those folks in Congress mean when they send their kids to private institutions while opposing school choice and singing the praises of saintly public schools.
But perhaps even more aggravating than President-elect Obama’s eschewing public schools for his daughters — again, it is his responsibility to get them the best education he can — is his proposal to include presumptive billions (I’ve not yet seen an itemized breakdown of proposed spending) on public-school construction as part of his ever-growing economic stimulus plan.
As I testified to Congress earlier this year, heap all the federal cash you want on school construction, you’re neither going to fix most of the true problems nor get any kind of value for taxpayers. Indeed, in 1999 the National Center for Education Statistics estimated that it would take about $127 billion to get all U.S. public school facilities into good shape. According to School Planning and Management magazine, however, since 2000 school districts have completed projects totaling more than $166 billion. So why is our schooling infrastructure still crumbling? Because many districts build absurd School-Mahals featuring extravagances ranging from television studios to planetariums, while others are so bogged down in red tape they can’t get anything done.
Of course, as is far too often the case, it probably doesn’t really matter to Obama or others in Washington that money on school construction is almost sure to be wasted. The primary motivation behind Obama’s proposal isn’t educational, but political, with any project backed with federal money almost certain to carry union prevailing-wage requirements — a nice little hors d’oeuvres before the card check main course — and the appearance of caring and “doing something” is most important, anyway.
For a “change” administration still months away from official existence, this does not bode well at all.
Scrap E-Verify
The 111th Congress and the new Obama administration should scrap “E-Verify.” The federal government’s inchoate immigration background check system is the culmination of 20 years’ failure to create a tolerable “internal enforcement” program for U.S. immigration law. Rather than building on past failure, the new Congress and president should pull the plug on E-Verify and reform immigration law so that it aligns with the nation’s economic need for labor.
More here.
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