Archive for July, 2009
One Web Site: $18,000,000
A company called Smartronix will get $18,000,000 to redesign Recovery.gov, the federal Web site intended to track where federal Recovery Act spending goes.
The government purchased technology for a similar site (with a somewhat smaller scope), USASpending.gov, from the non-profit group OMB Watch for only $600,000. A private company already provides information on Recovery Act spending to the public for free.
I wrote here enthusiastically about the plans of the Sunlight Foundation to go after this contract, saying “[T]he contract award will now be subject to public scrutiny. Value-for-dollar to the taxpayer will be easily discernible, and that will raise the political risks of awarding the contract based on cronyism or go-with-whatchya-knowism. Transparency in all things.”
Sunlight did not ultimately bid. Instead, it took some lessons about the government contracting business. The transparency I wrote about materialized, though, and we can take a lesson, too: The federal government will pay $18,000,000 for one freaking Web site.
Strike a Blow for Freedom: Don’t Buy GM
Time and again my colleagues and I have warned that the government’s takeover of GM would divorce business decisions from economics and wed them to politics ‘til death do they part. But I won’t gloat. Better to be right and satisfied that government is reasonably restrained than right and house hunting in Galt’s Gulch.
We’ve already seen the president insist on the firing of a CEO, design and negotiate a bankruptcy plan devoid of much economic merit, impose preferences about which models to produce, and assure the diabolical, undeserving management of the UAW that GM won’t import small cars from its foreign plants to make space for its U.S.-produced budget-busting green vessels.
Now Congress is attempting to legislate its way into the boardroom. Last month, GM/Obama announced plans to terminate 1,300 dealerships, as part of a larger effort to reduce costs and, ultimately, turn a “profit.” (The term “profit” is, shall we say, imprecise in this case given the amount of production subsidization, fuel taxation, and tax code inducements that will be necessary to sustain GM for the foreseeable future). But many in Congress don’t like the idea. As reported in the Detroit Free Press:
By a unanimous vote, a U.S. House committee has approved a measure that would restore 2,100 dealers either cut or scheduled to be closed by General Motors Corp. and Chrysler Group LLC.
…The bill would turn back the clock to before the companies filed for bankruptcy, restoring the 789 dealers cut by Chrysler and 1,300 dealers GM chose to wind down.
…Executives from GM and Chrysler have both told Congress that cutting dealers was essential to their survival outside of bankruptcy, saving each company billions of dollars a year and strengthen their remaining sales force.
“This legislation, if passed, would put our long-term viability at risk,” said GM spokesman Greg Martin.
I suppose you can’t really blame Congress for trying to impose its wishes on GM. After all, the Constitution is silent on the matter of which branch of government furnishes the CEO of nationalized companies.
Jeff Flake vs. the Spending Robots
Rep. Jeff Flake of Arizona is one of the very few fiscal policy heroes in Congress. Last night, he was doing what he does best — offering amendments to cut funding from a wasteful appropriations bill moving through the House.
Flake tried to strike spending earmarks slipped into the bill by both Republicans and Democrats. Watching the action on C-SPAN, I was struck by what a bunch of robots the big spenders defending the bill were. They said things like “this project is very important,” “it will help people,” and “it has a rate of return of 30-to-1 for every tax dollar spent.”
Flake pointed out the simple logical flaws in the spenders’ arguments. If an earmarked project is so important, why doesn’t it get funding through the normal competitive process? If a project has such a high return, wouldn’t private investors swoop in to earn the big profits? The “high return” claim is a commonly used gambit by big-spending politicians. Economist Martin Sullivan calls it the “liberal Laffer curve.”
Anyway, the spending robots listened politely to Flake, then they focused back in on their staff-prepared bullet points and continued with their self-interested drivel about how the nation’s fate rested on federal aid for the Elvis museum back in their hometown, or whatever their particular project was.
Flake presented some interesting statistics on the earmarks in the agriculture appropriations bill being considered last night. As shown in the chart below, two-thirds of the earmarks go to a small, exclusive club within the House of those on the appropriations committee, committee chairs, and party leadership. He characterized the appropriations process as a “spoils system,” which is evocative of government corruption of the past, such as Tammany Hall.
But unlike the original Tammany Hall, today’s spoils system is not party-based. Instead, it’s run by an elite and bipartisan group of spending robots within Congress, who pose as representatives of the people when they travel outside the beltway. As Flake implied, it’s odd that the great majority of members and their constituents, who get the short end of the stick from the spoils system, don’t revolt.
TSA Search Overturned
A federal judge just threw out three fake passports discovered by a Transportation Security Agency (TSA) screener, holding that the search exceeded the TSA’s aviation security mission. (H/T Bruce Schneier)
This is long overdue; the TSA has moved beyond its original mandate and is now conducting searches for “contraband.” The search for anything that seems suspicious can quickly turn into an inquisition at the security checkpoint. Campaign for Liberty staffer Steven Bierfeldt experienced this at the St. Louis airport, and is now suing to prevent future searches beyond what is necessary for aviation security.
The invasive searches don’t add much to airline security anyway. Just as GAO investigators consistently defeat security at federal buildings, TSA screeners often fail to find fake explosives on security test teams.
As Bruce Schneier points out in his excellent book, Beyond Fear: Thinking Sensibly About Security in an Uncertain World, the two effective changes in airline security since September 11, 2001 have been (1) hardening of cockpit doors; and (2) airline passengers will resist because they know that their hijackers are playing for keeps.
Schneier spoke at Cato’s two-day conference on counterterrorism in January. Video at the link.
Debate over Duncan’s Record in Chicago
At The Quick and the Ed, Chad Aldeman disputes my assertion that Duncan’s impact on Chicago public school achievement was near zero. To make his case, Aldeman cites the fact that scores rose during Duncan’s tenure on 3 out of the 4 available NAEP tests. While true, this evidence actually supports my assertion rather than either Aldeman’s or Duncan’s.
Chicago’s gains on the NAEP tests ranged from 0.3 to 7.2 points on the 500 point scale, averaging out to a 1% increase in scale scores. I think 1% is pretty darn close to zero, and that’s what I said.
What’s more, as I wrote yesterday, the minuscule 1% improvement in Chicago NAEP scores was statistically identical to the improvement made by students in large central cities all over the country during the same period, so “The Duncan Effect” — his value-added over other large city superintendents — was precisely zero.
If there are other relevant data that I’m unaware of that paint a different picture, I’ll be happy to look at them. But the NAEP results flatly contradict Duncan’s own claims — routinely repeated in the media – that students made dramatic academic gains under his leadership.
Parties in Power Like National ID Systems
In a recent post, I noted how Department of Homeland Security secretary Janet Napolitano was “taking the national ID tar baby in a loving embrace.” Now the administration seems to be similarly embracing the E-Verify government background check system.
Starting September 8th, it will go forward with a Bush administration plan to require federal contractors to check their employees against federal databases. The E-Verify program is riddled with problems, and it will send many American workers and legal immigrants into Kafkaesque ordeals when they find they aren’t approved by the federal government to earn a living. Ultimately, “internal enforcement” of immigration law, which is what E-Verify is about, requires a biometric national identity system.
Wasn’t a Democratic administration going to be the antidote to the aggressive security-statism of the Bush administration? Well, no. Once in power, either political party will see merit in national ID systems. After all, a national ID gives the government direct regulatory control over individuals – and that’s a sweet sound to the powerful, regardless of political affiliation. This is why it was so interesting to see the left begin to embrace a national ID as it anticipated an Obama victory in November.
Parties in power like national ID systems.
STEM Sky Not Falling?
Education policy is far too rarely driven by facts or logic — they’re just too inconvenient, mucking up both uber-hyped “crises” and warm-and-fuzzy myths.
Recently, the big scare has been that the United States is on its way to a desperate shortage of scientists and engineers, a message that has, of course, been heartily embraced by politicians determined to push more kids into science, technology, engineering, and mathematics (STEM) fields.
Well, it seems that once again the crisis du jour has been well overstated. USA Today has a great new story demonstrating that we actually have more than enough scientists and engineers. (Not that this hasn’t been pointed out before.) Most telling is the content in the article’s sidebar, which includes some real crisis-deflating stuff:
Detailed findings issued last year by the federally funded RAND National Defense Research Institute found “no evidence of a current shortage” of science and engineering workers. It said National Science Foundation predictions of shortages so far have proved “inaccurate.”
RAND. . . recommended a permanent commitment to monitoring the USA’s science and technology performance, but said the slow growth of U.S.-born technical workers “will change when the earnings and attractiveness of S&E (science and engineering) careers improve.”
So we actually have plenty of scientists and engineers, and the market appears to be working just as it should? I hope someone tells our leaders! Otherwise, they’ll almost certainly push even more kids into jobs that, it turns out, will probably only exist in the land of imaginary crises.
Three Cheers to Swiss Government for Resisting U.S. Fiscal Imperialism
Switzerland has better tax policy than America and a far stronger human-rights policy regarding personal privacy. This makes the IRS unhappy, since the tax police would like to find out if some Americans have overseas bank accounts.
In an odious display of fiscal imperialism, the Department of Justice is demanding that one of the Swiss banks divulge any information about American clients – even though this would mean imposing America’s bad law on a foreign institution operating on foreign soil.
Thankfully, the Swiss government has stepped in to ensure that the bank cannot be extorted.
Switzerland said it would seize UBS AG data to prevent the U.S. Justice Department from pursuing a U.S. court order seeking the identities of 52,000 American account holders in a crackdown on tax evaders. The assertion came in court papers yesterday in federal court in Miami, where the Justice Department sued UBS on Feb. 19, a day after the bank avoided U.S. prosecution for helping wealthy Americans evade taxes. The U.S. effort to enforce a summons seeking the names would force UBS to violate Swiss laws barring disclosure of such data, the filing said.
The Swiss government “will use its legal authority to ensure that the bank cannot be pressured to transmit the information illegally, including if necessary by issuing an order taking effective control of the data at UBS that is the subject of the summons,” according to the filing.
…“It is hoped that it will be unnecessary for the Government of Switzerland to take the extraordinary action of issuing an order to seize the information at issue, but such an action should be expected if the IRS continues to pressure UBS to violate Swiss law,” according to the filing.
CBS News Reports on the Risks of Obama’s Health Care Plan
CBS News reports that if you choose Obama’s government-run health plan, you may be able to keep your doctor, but your doctor might not want to keep you.
CBS sat down with Cato health care expert Michael C. Cannon to discuss why doctors might be reluctant to accept patients who are insured under the government plan.
Socialist Surtax for Health Care
In their desperate bid to find half a trillion dollars or so to fund a health care expansion, Democrats have no shortage of bad ideas. Indeed, their new idea is even worse than last month’s dastardly plan to hike taxes on beer and wine.
The Democrat’s new idea is to slap a special “surtax” on high earners. A surtax is simply a flat additional charge based on adjusted gross income. The model for the new scheme seems to be a four percent surtax proposed by House tax writer Charlie Rangel in 2007.
Elsewhere I’ve explained why tax hikes on high earners is poor economic policy. But politically, what’s striking is how far American economic policy is moving to the left of policies in other major nations.
The chart shows that the current top U.S. personal income tax rate (including the average state rate) is 42 percent, which is the same as the average in the 30 nations of the Organization for Economic Cooperation and Development (OECD).
President Obama already plans to increase the top federal rate from 35 percent to 40 percent at the end of 2010. That would push the combined federal-state rate to 47 percent, substantially above the average of other major industrial nations. Imposing a 4-percent surtax on top would push the top rate to 51 percent, which would be higher than many nations that were traditionally more socialist than America, including France (46%), Germany (48%), and Italy (45%).
Obama and the Democrats chafe at being labeled “socialists”, and it’s true that Republicans are just as socialist when it comes to spending policies. But tax rates higher than France? Tax rates over 50%? Come on Democrats, you’ve got to be kidding!
This “Cyberwar” Is a Cybersnooze
The AP and other sources have been reporting on a “cyberattack” affecting South Korea and U.S. government Web sites, including the White House, Secret Service and Treasury Department.
Allegedly mounted by North Korea, this attack puts various “cyber” threats in perspective. Most Americans will probably not know about it, and the ones who do will learn of it by reading about it. Only a tiny percentage of people will notice the absence of the Web sites attacked. (An update to the story linked above notes that several agencies and entities “blunted” the attacks, as well-run Web sites will do.)
This is the face of “cyberwar,” which has little strategic value and little capacity to do real damage. This episode also underscores the fact that “cyberterrorism” cannot exist – because this kind of attack isn’t terrifying.
As I said in my recent testimony before the House Science Committee, it is important to secure web sites, data, and networks against all threats, but this can be done and is being done methodically and successfully – if imperfectly – by the distributed owners and controllers of all our nation’s “cyber” assets. Hyping threats like “cyberwar” and “cyberterror” is not helpful.
Tax Marijuana to Pay for Teachers?
On my way into work this morning, I heard a report on the radio about a proposal in California to tax marijuana in order to alleviate the state’s budget meltdown. With the money the state could raise, said one supporter, California “could hire 20,000 teachers.”
Now, I have nothing insightful to say about the likely revenue or anything along those lines that would come from taxation of wacky tabacky – it’s not my issue. I can tell you, though, that the addiction that has largely brought California to its knees, ironically, is the very one that the would-be weed taxer in the story held up as a terrific target for resulting funds: state education spending, especially on teachers.
For starters, by law at least 40 percent of California’s budget must be spent on education, and considering that most education spending goes to employee salaries, by default that makes teachers one of the biggest drains on state coffers. But that’s just by default – as the quote above suggests, teachers themselves seem to have a powerful grip on the state and the minds of its people.
One bunch of teachers that almost literally has a kung-fu grip on the minds – or is it the throats? – of Californians is the California Teachers Association, a 340,000-member behemoth of a teacher union, which really says something when you consider that teachers unions are themselves the behemoths of labor unions. Little gets done affecting education without the CTA’s approval.
Then there is class-size reduction. Despite dubious evidence of the value of class-size reduction, in the mid-1990s – when the state felt flush with cash – California undertook a massive effort to bring K-3 class sizes down from an average of 29 students, to an average of 20. The undertaking required a leap from 62,226 K-3 teachers in the 1995-96 school year to 91,902 in 1998-99. According to the 2002 “capstone” report from the CSR Research Consortium, it was an expensive effort that produced at best minor improvements. Despite costing a billion dollars or more each year of implementation, researchers could find “only limited evidence linking [test score] gains to CSR.”
To be fair to the beleaguered Golden State, it’s not the only place where politicians, and often the public, seem to be constantly jonesing for more teachers and education spending. As I have laid out before, nationwide we have gone from 22.3 pupils per teacher in 1970 to 15.7 in 2005, and real per-pupil expenditures have more than doubled. Meanwhile, academic outcomes have been pretty much flat.
What explains this slavish addiction? It’s hard to say for sure, but it seems to come down to this: people feel that education is important; that the more teachers we have, the better; and that you can never spend too much on the children. But it clearly isn’t that simple. Government failure is very, very real – especially with a government monopoly as monstrous as public schooling – and sooner or later you have to pay the price for constantly doing the same crippling thing just to make yourself feel good.
Cato on Facebook
Cato on Twitter
Cato on Google+
Cato on YouTube
