Archive for November, 2009
Justice Grants and Federalism
USA Today reports that “the Justice Department gave more than $77 million in stimulus funds this year to 200 police agencies because of their locations rather than economic or crime-fighting needs, department records show.” Why? Because a 1994 congressional provision requires that every state gets a slice of the local law enforcement funding, regardless of need or circumstances.
The Justice Department has a merit-based ranking system, but in some cases it doesn’t matter thanks to Congress making sure that every plate gets some gravy:
In Houston, where increasing assaults nudged up violent crime in 2008, Police Chief Harold Hurtt says the city was “overlooked.” The agency requested money for 260 officers but got nothing despite a Justice Department score of 90.4. That was well above many of the agencies that qualified because they were the only applicants in their state, including Boise, which scored 58.5; Cheyenne, Wyo., 46.8; Honolulu, 81.3; and Omaha, 84.7.
As a Cato essay on fiscal federalism notes, irrational federal granting isn’t new:
A 1940 article in Congressional Quarterly lamented: ‘The grants-in-aid system in the United States has developed in a haphazard fashion. Particular services have been singled out for subsidy at the behest of pressure groups, and little attention has been given to national and state interests as a whole.’ A June 1981 report by the Advisory Commission on Intergovernmental Relations concluded, ‘Regarding national purpose, the record indicates that federal grant-in-aid programs have never reflected any consistent or coherent interpretation of national needs.’
The USA Today says that the National Sheriffs’ Association is upset because “the rule funded just 6.4% of sheriff applicants, compared with 16.7% of police agencies.” The U.S. Conference of Mayors, which represents both winner and loser cities, came up with a brilliant solution: “The way to solve this problem is…to increase the funding.”
The squabbling over the Justice grants illustrates the advantages of the federal government sticking to the limited powers that it was intended to wield. Local taxpayers should fund local law enforcement services. But in a day and age where Congress can play Santa Claus, this simple concept has become completely lost upon federal policymakers.
Monday Links
- Three decades of politics and failed policies at HUD.
- Michael D. Tanner on the Senate Sell-Outs: “At a time of 10.2 percent unemployment, they voted to make it more expensive to hire workers, especially low-wage workers. With the economy struggling, they voted for $485 billion in tax hikes. They voted to raise the payroll tax, limit your flexible spending account, and tax your health insurance plan. This is moderation?”
- The limits of U.S. power in Afghanistan: “Even if more troops were better deployed, the odds of reasonable success in reasonable time at reasonable cost are long.”
- Republican and Democratic senators pushing for subsidizing prayer.
- In Washington next week? Tom Palmer will be here Tuesday, Dec. 1 to discuss his new book, Realizing Freedom. Can’t make it? Watch live online.
- Podcast: “Money, Greed and God“
Pelosi Eyeing Global Tax on Financial Transactions
Imagine if the government got to pick your pocket every time you engaged in a financial transaction? That nightmare scenario is a distinct possibility now that senior Democrats have joined with European politicians and urged that such a tax be applied on a worldwide based. Reuters has the disturbing details:
Any tax imposed on financial transactions would have to take effect internationally to keep Wall Street jobs and related business from moving overseas, U.S. House of Representatives Speaker Nancy Pelosi said on Thursday.
“It would have to be an international rule, not just a U.S. rule,” Pelosi said at a news conference. “We couldn’t do it alone, we’d have to do it as an international initiative.”
Several House Democrats have proposed a Wall Street tax to pay for job-creating legislation they plan to pass in December. The tax, which could raise $150 billion per year, would tap into widespread public outrage at Wall Street in the wake of the financial crisis.
…The No. 4 Democrat in the House, Representative John Larson, said his proposal to impose a 0.25 percent tax on over-the-counter derivatives transactions would apply internationally. “Part of our proposal would include that it would be international,” Larson told Reuters after meeting with other lawmakers about the jobs package. Democratic Representative Peter DeFazio said his separate proposal, which would tax a wider array of trading activity, would cover all U.S. corporations and individuals no matter where their trades took place.
…Britain urged other governments earlier this month to consider a bank tax as a way to fund future bailouts, and France and Germany have also called for a bank tax. The International Monetary Fund is studying the idea.
This issue reveals the value of tax competition — but also its limitations. Pelosi and other collectivists realize that economic activity will migrate to friendlier jurisdictions if if they unilaterally impose this punitive tax. This externally-imposed discipline is why tax competition is a liberalizing force. But competition can be undermined if governments create a cartel, which is exactly what American and European statists would like to see.
Will a False Crisis Revive REAL ID?
I’ve written here before about how the National Governors Association is seeking to peddle state power over driver licensing and identification to the federal government in order to cement its role as a supplicant for states in Washington, D.C.
NGA is currently seeking to drum up a false, end-of-year driver license crisis to convince Congress to pass a new version of REAL ID called PASS ID, moving the national ID project forward.
The letter says that states must be “materially compliant” with the REAL ID Act by the end of the year or their citizens will not be able to use their driver’s licenses as identification to board commercial aircraft. This is technically true, in one sense, but it omits some important information.
The statutory deadline for REAL ID compliance was actually a year and a half ago, May of 2008. No state was in compliance then, and the Department of Homeland Security gave out deadline extensions wholesale—even to states that didn’t ask for them.
If Congress takes no action by the end of the year, the DHS will simply do this again. There is no end-of-year driver license crisis.
And it’s no harm, no foul—nobody who has studied identity-based security believes that the national ID law would cost-effectively protect the country. Ignoring or repealing REAL ID are the best paths forward.
The NGA, of course, believes that states will be better off with its preferred version of REAL ID. Some of the sharpest corners are taken off REAL ID in the new ”PASS ID“ version, but states are kidding themselves if they think PASS ID is good for their bottom lines.
As I wrote before—twice!—PASS ID is likely to cost states as much or more than REAL ID. Its requirements are essentially the same, and its implementation deadline—one of the biggest cost drivers—is tighter in some respects than REAL ID.
Will Congress slip PASS ID into law by the end of the year the way REAL ID was slipped into law four-plus years ago? It’ll be interesting to see…
Colombia Trade Deal Enters Fourth Year of Limbo
Sunday marked the third anniversary of the signing of a free trade agreement between the United States and Colombia. It is an embarrassment to our great nation that this agreement with an important Latin American ally still sits on the shelf three years later, a victim of congressional trade politics.
As my Cato colleague Juan Carlos Hidalgo and I argued in a 2008 Free Trade Bulletin, and as I wrote in a more recent op-ed, the FTA with Colombia is a win-win for Americans. It fully opens the Colombian market and its 44 million pro-American consumers to our exports, while deepening our ties with one of our most dependable allies in the Western Hemisphere.
The AFL-CIO and other opponents of the agreement demand that Colombia further reduce violence against trade unionist before approval can be considered, and the president and Democratic congressional leaders have dutifully agreed. Never mind that the number of trade union members murdered in traditionally violent Colombia has declined dramatically under President Alvaro Uribe. Congress and the administration keep moving the goal posts, much to the frustration of the Colombian government.
Meanwhile, since the agreement was signed, U.S. companies have paid $2.3 billion in unnecessary duties, according to the “Colombia Tariff Ticker” sponsored by the Latin America Trade Coalition. On the foreign policy front, Colombia faces continued threats from the Marxist FARC guerrilla movement and its anti-American neighbor, President Hugo Chavez of Venezuela.
Refusing to enact the trade agreement with Colombia only reinforces suspicions in Latin America that the U.S. government is unreliable.
Chapman on Chicago Pols and Guns
Steve Chapman has another terrific column — this one about gun regulations and the tendency of politicians to exempt themselves from such regulations — for the public good, of course. Here’s an excerpt:
Roland Burris, another Chicagoan, has endorsed a nationwide ban on handguns and, in 1993, organized Chicago’s first Gun Turn-in Day. But the following year, while running unsuccessfully for governor, he admitted he owned a handgun — “for protection,” he explained — and hadn’t seen fit to turn it in along with those other firearms. Lesser mortals apparently can protect themselves with forks and spoons.
The Supreme Court will soon be hearing an important case about Chicago’s firearm regulations and the right to keep and bear arms. Cato just filed an amicus brief (pdf) in that case.
Also, persons interested in this subject should know that Cato associate policy analyst David Kopel has a new book just out.
For additional Cato work, go here.
Should the Government Pay for Christian Science?
Leaders of the Church of Christ, Scientist, are pushing to get a provision into the health care bill that would mandate equal treatment for “spiritual healing,” such as Christian Science prayer treatments. Sens. John Kerry and Orrin Hatch are trying to get it inserted into the Senate bill, according to the Washington Post.
Kerry’s spokeswoman, Whitney Smith, told the Los Angeles Times that insurers would not be forced to cover prayer. Instead, she said, “the amendment would prevent insurers from discriminating against benefits that qualify as spiritual care if the care is recognized by the IRS as a legitimate medical expense. Plans are free to impose standards on spiritual and medical care as long as both are treated equally. It does not mandate that plans provide spiritual care.”
So far the provision has not been included in either the House or the Senate bill, but efforts are continuing. The Post reports that “opponents of spiritual care coverage — a coalition of separation-of-church-and-state advocates, pediatricians and children’s health activists — say such a provision would waste money, endanger lives and, in some cases, amount to government-funded prayer.”
To a lot of us, this sounds ridiculous. Pray if you think it helps. But why should that be the government’s business? And why on earth would we want the government to mandate that insurers cover prayers?
But if you want government health care, then this is the world you have chosen. We’ve already seen pitched battles over whether abortion should be covered by government programs, or government-subsidized programs, or insurance plans that participate in the government “exchange.” The House bill eliminates a tax penalty for same-sex couples who receive health benefits from employers, but so far the Senate bill does not. The House bill provides grants to states for “home visitation” programs in which nurses and social workers counsel pregnant women and new mothers in low-income families, coaching them on “parenting practices” and skills needed to “interact with their child to enhance age-appropriate development” — a program that some American families would surely find Big Brother-ish.
But that’s the reality of government-funded and directed health care. If the government is paying for it, then every inclusion or exclusion — abortion, fertility treatments, prayer, same-sex couples, acupuncture, homeopathy – becomes a matter for political decision. And political decisions become the subject of political activity and lobbying, by groups ranging from Big Pharma to small insurance companies to nurses to Catholic bishops to Christian Scientists. No wonder lobbying is up in our increasingly politicized economy, particularly in the health care arena.
You can’t have government pay for something as personal and intimate as health care, and not find the government poking around in the bedroom, the medicine cabinet, the sickroom, and the chapel.
Would ObamaCare Kill Medical Innovation?
Medical innovation — new discoveries that make medical care better and less expensive — is the most important kind of health care reform.
In this new Cato study, Glen Whitman and Ray Raad show that the United States leads the world in medical innovation — and that President Obama’s health plan would likely reduce such innovation, to the detriment of the entire world.
This Reason.tv video shows how…
Nice work, boys.
(Cross-posted at NRO’s The Corner.)
Air Traffic Control Troubles
A computer glitch in the Federal Aviation Administration’s national air traffic control system caused delays and cancelations last Thursday. A spokesperson for the air traffic control employees union called it a “nightmare.” Sen. Charles Schumer (D-NY) said the nation’s ATC system is “in shambles” and called for more “resources, manpower, and technology” for the FAA.
The FAA is already trying to implement a $35 billion overhaul of the nation’s air traffic control system that would replace old-fashioned radar technology with modern satellite-based GPS navigation. As I blogged last month, the FAA tried to deploy the new computer system at the first of twenty regional facilities, but the system misidentified an airliner and was shut down. This failure wasn’t surprising considering the FAA’s decades of mismanagement.
This week Reason TV released an excellent video on the nation’s air traffic control system, which can be viewed here. The video effectively illustrates broader, more fundamental problems with the way the government operates. For instance, the FAA needs to upgrade is ATC systems, members of Congress spend millions of taxpayer dollars on seldom-used airports in their district.
The video also highlights the fact that our neighbors to the north have already successfully privatized their air traffic control system. As a Cato essay on privatization notes, “The Canadian system has received high marks for sound finances, solid management, and investment in new technologies.”
Reforming the GOP
This morning, Politico Arena asks:
Do you take Glenn Beck’s “new national movement” seriously? Is the GOP establishment letting itinerant celebrities and talk show stars set the party’s agenda?
As Winston Churchill understood, democracy is messy (and, as in his case, sometimes ungrateful). Glenn Beck is no William F. Buckley Jr. But then, “Joe the Plumber” probably never read National Review, which like most other journals of “high opinion” was never self-sustaining. Liberals today, their noses in the air Obama style, look across America from the vantage of the famous New Yorker cover and see pitchfork brigades, forgetting that those who fill the brigades generally love America, which is more than can be said of some of the baggage that has surrounded Obama.
There is a problem in the Republican Party, to be sure. Nominally the party of limited constitutional government, it recently gave us two presidents from the same family – one standing for a “kinder and gentler” government, the other for “compassionate conservatism” — plus a career Senate nominee for president, none of whom ever really understood the party’s core principles, much less nourished them as they must be nourished from generation to generation. As a result, the party has been hollowed out intellectually and spiritually, and into that vacuum, which nature abhors, has poured an assortment of people, most from outside the party.
The struggle in democracies between intellectual rigor and populism is as old as that between Socrates and the sophists. We all know the dangers of populist demagoguery. But there is also great danger in rule by elites, which are hardly immune from demagogy and outright fraud (witness the “accounting” in the current health care debate). Achieving that balance is often difficult and messy. But I for one am encouraged by this populist movement to reform the Republican Party. I know, for example, that at the Orlando rally The New York Times referenced this past Saturday, people passed out copies of the Cato Institute’s pocket Constitution, which includes the Declaration of Independence and my preface relating the two documents with respect to their underlying principles. The people who attended the April 15 tea parties and the September 12 march on Washington were ordinary Americans who understand that something is fundamentally wrong, constitutionally, with the direction the country has taken over the past two decades, at least. They see the Republican Party, in our two-party system, as the more likely institution for changing that, but not as the party is presently constituted. Still, there are people within the party who give hope and are ready to take over. Populists working outside the party, together with those of us who do “politics” (broadly understood) for a living, may just be the spark that enables that to happen.
ObamaCare Cost-Estimate Watch: Day #157
House Democrats introduced the first complete draft of President Obama’s health plan on June 19.
Since then, Congress has spent 157 days considering the Obama health plan without ever laying eyes on a complete cost estimate.
The Senate has called up its version for floor consideration without a complete cost estimate. (Shouldn’t these eight Democratic-caucusing senators be upset about that?)
The House even passed its version — again, without a complete cost estimate.
(Cross-posted at Politico‘s Health Care Arena.)
Congress Grows Fed Up
The Wall Street Journal reported that Congress likes Fed Chairman Bernanke, but not the institution that he heads. There is growing consensus that the Fed needs to be reformed and restructured. Most notably, there are calls to strip the Fed of its supervisory authority. In practice, the new sentiment reflects the failure of the Fed to rein in risk taking by the largest banks.
The Fed is pushing back. One reserve bank president said that removing the Fed’s supervisory authority “would affect our ability to conduct monetary authority effectively.” He went on to say that without the supervisory authority, the Fed wouldn’t know enough about risks brewing in the economy. This argument is shop worn. The Fed had the authority. It fueled the housing boom with its monetary policy and failed to head off the banking crisis with its supervisory powers. And let us not forget the regional banking crises of the 1990s; the fallout of the Latin American debt crisis for Citibank; and others (e.g., the failure of Continental Illinois National Bank). All on the Fed’s watch.
Around the world, some central banks have supervisory authority over banks and some do not. There is no clear pattern for either monetary policy or bank regulation with respect to how the powers are structured and distributed. Other factors seem to matter much more. It would be useful to identify what they are.
Congress is moving a few deck chairs around as the ship sinks. No fundamental rethinking of bank regulation is occurring. The Fed is probably being made a scapegoat for Congress’s own failings. But that is how Washington works.
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