Archive for February, 2009
Napolitano: Scrap REAL ID
She didn’t put it so bluntly, but DHS secretary Janet Napolitano appears ready to scrap the failed national ID program in the REAL ID Act. This is good news.
Is it great news? Not really. Nothing I’m aware of in her public comments reflects awareness of the thoroughgoing weakness of identity-based security or its prohibitive privacy and dollar costs. And she’s looking for an alternative national ID.
“‘Enhanced driver’s licenses give confidence that the person holding the card is the person who is supposed to be holding the card, and it’s less elaborate than Real ID,” the Washington Times quotes her saying. Less elaborate? Yes. Reliably secure? Not really. A full-fledged national ID? Eventually.
The point is to get away from national ID systems entirely. It’s not an achievement to produce a national ID that’s less bad than the one that went before. But it is progress.
HUD the Dud
Last week I blogged on President Obama’s “stimulus” rally prop Henrietta Hughes — a.k.a. “the face of the economic crisis.” Ms. Hughes and her son, who were homeless, asked our messianic president to help them since they’ve been stuck on a two-year waiting list at the Fort Myers, Fl., public housing authority. Using the government’s own numbers, I was able to determine that Fort Myers and surrounding Lee County received almost $70 million in U.S. Housing & Urban Development (HUD) money in the past three years. Some $41 million — or $600 per man, woman, and child in Fort Myers — went to the city’s public housing authority alone.
I concluded that HUD’s inspector general should investigate what the housing authority is doing with all that taxpayer change. And if a story coming out of Las Vegas about its public housing authority is any indicator, there’s a good chance a lack of federal funding wasn’t the problem in Fort Myers. According to the Las Vegas Sun,
The North Las Vegas Housing Authority failed to spend up to $2 million on federal housing programs even as thousands of people were on lists awaiting that help, a recent audit has found… The total amount won’t be known until the city audit and a federal investigation are finished, but so far auditors have determined that at least $800,000 was misused, [North Las Vegas City Manager Gregory] Rose said. Still unclear is how the money was spent, who is responsible, and whether any crimes were committed, he added.
I keep hearing the Obama administration say the “stimulus” bill, which will be funding a plethora of notorious HUD programs, will come with transparency and accountability. The odds of accountability at HUD are somewhere around the odds of me taking off and flying after running really, really fast down the street.
In other HUD news this week:
- A city in Ohio plans on using HUD Community Development Block Grant (CDBG) funds to purchase ball field back stops.
- Tulsa’s city council wants to know more about the $1.5 million in CDBG money the city inappropriately used to pay for employee salaries. The city was to pay it back, but “In December, the city announced that HUD would allow the city to reapply for the $1.5 million to fund two projects it has deemed meet the required use of the funds.”
- In New Jersey, “The [Franklin] township’s former housing coordinator and her plumber husband have been indicted on a variety of charges — including official misconduct, forgery and witness tampering — in connection with what authorities are calling a conspiracy to misappropriate more than $100,000 in federal housing rehabilitation funds.”
- And in West Virginia, the Wheeling city council “voted 6-0 to spend $42,000 in CDBG money to install an outdoor modular floor at the Pulaski Playground tennis courts in South Wheeling.”
Unintentionally Funny Quote of the Week
“The president hasn’t done as good a job of preparing the nation for the tradeoffs necessary to reconcile the hope agenda with the fear agenda.”
–William Galston, Brookings Institution
For more on Obama as “a bundle of contradictions,” see here.
Is Sports like Wall Street?
Washington Post sportswriter Sally Jenkins often has sensible things to say. And in today’s paper she makes some interesting points about hyper-competitiveness in sports and finance. But I think she was led astray by investor, college athlete, and Clinton Treasury appointee Roger Altman:
There is a strong natural connection between Wall Street and sports because “both are quite binary worlds, somebody wins and somebody loses,” according to Altman, who was a varsity lacrosse player at Georgetown.
That’s just wrong. In sports it’s true: somebody wins and somebody loses. If the Yankees beat the Red Sox, that’s a binary outcome with a winner and a loser. It’s what economists call a zero-sum game. If Michael Phelps wins the gold, then everybody else doesn’t.
But in the market both parties to a transaction expect to gain. I get a meal, the restaurant owner gets my money. I get a salary, Cato gets my production. As Murray Rothbard wrote in the Concise Encyclopedia of Economics:
The mercantilists argued that in any trade, one party can benefit only at the expense of the other—that in every transaction there is a winner and a loser, an “exploiter” and an “exploited.” We can immediately see the fallacy in this still-popular viewpoint: the willingness and even eagerness to trade means that both parties benefit. In modern game-theory jargon, trade is a win-win situation, a “positive-sum” rather than a “zero-sum” or “negative-sum” game.
No doubt businessmen do like to “win” — sometimes they say “money is a way of keeping score.” They like to make the deal and block their competitors. Sometimes their testosterone may even impel them to make deals that aren’t economically rational, and the market has a way of punishing such decisions. But the people who make the deals — both parties, all parties — all expect to benefit. And usually they’re right. We’ve all bought things that we wish we hadn’t, or made investments that didn’t pan out. Most of the time, though, both parties to a transaction are pleased to make it and remain pleased after the fact. And the process of repeated positive-sum transactions creates economic growth and development.
Sports is different. The game may be fun, for both competitors and spectators. But in the end, as Altman correctly says, in sports “somebody wins and somebody loses.”
The “Stimulus” Package’s Depressing Health Care Provisions
I’ve got a commentary over at NPR about how the health care provisions in the “stimulus” package are bad investments. Here’s a taste:
We desperately need research on the effectiveness of medical treatments, and the law includes $1 billion for that. Yet experience suggests the benefits of taxpayer-funded research may be zero…
[T]he law’s $33 billion for electronic medical records also fails the cost-benefit test. The CBO estimates it would be cheaper just to do the second MRI…
The law includes $115 billion in health insurance subsidies. Economists have no clue whether that passes the cost-benefit test either…
The law will finance expanded COBRA benefits with a $65 billion hidden tax on other workers’ health insurance premiums. That hidden tax will actually reduce wages and job creation…
The good folks at NPR encourage you to post comments.
(FYI, Cato will host a forum on comparative-effectiveness research on Tuesday, March 3.)
The Ant and the Grasshopper
President Obama’s proposal to tax the thrifty to bail out those who contracted for more house than they could afford — and hearing people on the radio say “I scrimped and saved to buy a house I could afford, and now I’m going to pay for people who overextended themselves?” — somehow got me to thinking of the old fable about the ant and the grasshopper:
In a field one summer’s day a Grasshopper was hopping about, chirping and singing to its heart’s content. An Ant passed by, bearing along with great toil an ear of corn he was taking to the nest.
“Why not come and chat with me,” said the Grasshopper, “instead of toiling and moiling in that way?”
“I am helping to lay up food for the winter,” said the Ant, “and recommend you to do the same.”
“Why bother about winter?” said the Grasshopper; “we have got plenty of food at present.”
But the Ant went on its way and continued its toil. When the winter came the Grasshopper had no food, and found itself dying of hunger, while it saw the ants distributing every day corn and grain from the stores they had collected in the summer. Then the Grasshopper knew:
IT IS BEST TO PREPARE FOR THE DAYS OF NECESSITY.
Unless, of course, you can count on a government bailout.
Charles Murray on Myths of Education
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Masters of the Universe – On the Dole
In one of the most “you’ve got to be kidding me!” stories that I’ve come across in a while, The New York Times reports that New York City wants to spend $45 million to retrain laid-off Wall Street financiers. This is so incredibly offensive that I don’t know where to begin. But I’ll give it a try nonetheless.
First, just because they are laid-off does not mean that they are poor. Won’t a lot of this taxmoney be going to, well, rich people who don’t really need it? Second, even if they now find themselves with nothing, why should the taxpayers come to the rescue? If they didn’t manage to sock away anything for a rainy day, then tough. Third, exactly what is New York going to retrain these masters of the universe to do? This ought to be well worth watching. Fourth, if they’re smart enough and savvy enough to be the master of the universe, they are smart enough and savvy enough to get back on their own two feet without the hard earned cash pinched from some cabbie somewhere.
It’s as if The New York Times has become The Onion.
The Increasing Burden of Government Employees on Taxpayers
Dennis Cauchon of USA Today and Stephane Fitch of Forbes recently penned articles on the excessive nature of state and local government employee benefits and the threat taxpayers face as a result.
First, Cauchon reports that “State and local governments have set aside virtually no money to pay $1 trillion or more in medical benefits for retired civil servants…With bills coming due as Baby Boomers start to retire, states, cities, school districts and other governments may be forced to raise taxes, cut benefits or both — a task made especially difficult in an economic downturn.”
I would add that the task of cutting benefits for government employees is especially difficult because state and local politicians are generally beholden to the government employee unions. Even those policymakers not predisposed to carry water for the unions are hesitant to ruffle the feathers of a sizable voting block, not to mention a vocal one that still has a lot of regular citizens conned into believing government employees are underpaid, selfless, public “servants.” Trust me, I’ve witnessed this game first hand.
Cauchon also spotlights the big picture problem: “These medical costs are part of a larger burden taxpayers face in providing health care for an aging population. The federal government has a $1.2 trillion unfunded obligation to pay medical costs for retired federal workers and military personnel. Medicare and Social Security push the nation’s unfunded promises above $50 trillion.” He also notes that the same private sector employees who pay for these benefits via taxes are not so lucky: “Unlike private companies, most governments subsidize health insurance for retired employees.”
For more Cato work on unfunded medical benefits for state and local government employees, see here and here.
Second, Fitch reports on the outrageous pension benefits state and local government employees are receiving. This piece should be read in its entirety (warning: don’t read it standing up), but I’ll list a few tidbits here:
Omnibus Spending Bill in the Works – Unseen
GOP leaders are calling on the House majority to give them and the American people a look at the omnibus spending bill in the works. It’s likely to see votes in the next week or two. The bill will spend somewhere in the range of a half-trillion dollars on the operation of the government for the rest of the fiscal year.
“New” NCLB Findings
You probably don’t need to read it unless you really want the details, but the Thomas B. Fordham Institute just released a report finding that academic standards vary widely from state to state under the No Child Left Behind Act, creating an “accountability illusion.” I say you probably needn’t peruse the paper not because it doesn’t have solid data or a decent analysis – Fordham has put out a lot of fine studies on the state of state standards – but because it doesn’t really tell us anything new. We’ve known for years that NCLB is essentially a big lie.
Unfortunately, the findings aren’t the only slightly stale bit in this report. The recommendations are also warmed over, and they’re just as logic-defying as they’ve always been. From the press release for the paper:
In their foreword to the study, Finn and Petrilli wrote that the solution to this dilemma is not to scrap NCLB or to federalize tests and standards. Instead, they argue, the Obama Administration and Congress should create incentives for states to voluntarily sign on to rigorous, comprehensive common standards and tests. Washington should then publish the results for every school in the land but allow states to decide what to do with schools that don’t meet those common expectations. This would ensure greater transparency and reinforce state responsibility. “Best of all,” they note, “it would end the gamesmanship that has characterized the federal-state relationship for the past seven years.”
“Finn and Petrilli” are Fordham President Chester Finn and Vice President Michael Petrilli, and I’ve been over this nationalizing-without-federalizing approach with them before.
First off, when “the Obama Administration and Congress…create incentives,” that is federalizing tests and standards. One need look no further than the last forty-plus years of federal involvement in education, or in almost everything else for that matter, to see clearly that Washington has constantly used monetary “incentives” – change your laws or you don’t get your taxpayers’ dollars back! – to control countless things over which it has no constitutional authority. Whether it’s withholding highway funds to alter drinking ages, or threatening to keep money from states that don’t sign on to NCLB, “incentives” have equaled “control.”
And who would decide whether standards and tests were “rigorous” or “comprehensive” in Finn and Petrilli’s scheme? If federal ducats are the adoption bait, it would almost certainly be the feds. But it doesn’t really matter: As I’ve written many times before, all the standards-setting evidence we have screams that standards set by government, whether states or the same feds who brought us NCLB, will almost certainly be low. Indeed, as I reminded readers just a few days ago, Fordham itself has only been able to point to three out of fifty states with laudable standards. In light of that pitiful batting average, why would we ever think that nationalized standards-making is a promising solution? When we consider how standards are made in a government-run system, we definitely wouldn’t: Special interests employed by the system, ranging from teachers, to principals, to state bureaucrats, have the most motivation and clout to influence political control over the system, and it’s in their greatest interest to have low standards that are easy to hit. Hence, the dismal state-level performance.
At this point, frankly, it’s pretty darn clear that NCLB is a failure. It should also be obvious that further centralizing political control would just be dumping more water into the already submerged ship. Unfortunately, the latter seems to keep escaping the notice of far too many people.
Fighting for Economic Liberty
While assaults on economic liberty from the Bush-Obama administration continue in Washington, the Institute for Justice is taking on another fight for the right to earn a living, this time in Boston. Erroll Tyler wants to use state-of-the-art amphibious vehicles to pick up and drop off passengers in Kendall Square in Cambridge and tour historical sites along a fixed route in Boston and Cambridge. But the city won’t issue him a sightseeing license, ostensibly because of a moratorium on such licenses instituted because of the disruptive Big Dig project — which finally ended six years ago. Ironically, one of the sights Tyler would like to show to visitors is the USS Constitution.
The Institute for Justice has come to his aid, with a lawsuit in federal court and this video, featuring Cato senior fellow Randy Barnett, author of Restoring the Lost Constitution:
The Boston Globe asks, “What does it say about the climate for small businesses in Boston and Cambridge that a guy with a promising business plan needs to turn to out-of-state libertarians to protect his interests in federal court?”
One might also ask what it says about the liberals and conservatives in Massachusetts. Don’t they want to help entrepreneurs?
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