Archive for December, 2009
DC Vouchers Solved? Generous Severance for Displaced Workers
Colbert King argues that DC should continue the opportunity scholarships private school choice program on its own dime, instead of complaining that Congress is killing it off. He starts off with a refreshing dose of realpolitik: “It should come as no surprise that Democratic congressional leaders are effectively killing the program. They, and their union allies, didn’t like it in the first place.” Too true. This is what disgusts many Americans about politics, but hey, that’s the reality.
But then he seems to descend into uncharacteristic naivete with this:
If the city likes vouchers so much, why shouldn’t the District bear the cost? The answer is as clear as it may be embarrassing to voucher proponents: D.C. lawmakers don’t want to ask their constituents to shoulder the program’s expense.
That is NOT the answer. DC lawmakers are familiar with DC’s budget. DC’s FY 2009 budget, as I show in this Excel spreadsheet file, allocated $28,170 per pupil for k-12 schooling. And the average voucher amount is not $7,500, as King claims. That’s the maximum. The average is $6,620 – one quarter of what the district is spending on k-12 schooling. So operating the voucher program entirely out of the District of Columbia’s own budget would not cost a dime. And if expanded, it would save DC tens of millions, if not hundreds of millions, of dollars.
So DC lawmakers are most certainly NOT afraid of asking constituents to pay for it — it would more than pay for itself. What DC lawmakers must be afraid of is that DC schools have become a massive jobs program instead of an educational program. They must fear that if the voucher program were expanded it would put many non-teaching staff out of work — including perhaps some of their own supporters.
Well how about a realpolitik solution to that problem: offer displaced workers 18 months of severance pay at something like 75% of their current salary. That would give them plenty of time to find other work, and it could be paid for from the savings of students migrating from public schools to the voucher program. This would mean that taxpayers would not see savings in the first couple of years, but after that the District would be able to offer taxpayers generous tax cuts while also offering kids significantly better learning opportunities.
Surely the details of such a deal could be hammered out by experienced politicians and negotiators. Because, really, the status quo is insane. Why keep paying $28,000 for a worse education than the voucher program is providing for $6,600? That is sheer madness.
A Civil Liberties Roundup
Here are some interesting new items on the web:
- Cato Senior Fellow Nat Hentoff is interviewed by John W. Whitehead of the Rutherford Institute. Nat says “Obama has little, if any, principles except to aggrandize and make himself more and more important.” And “Obama is possibly the most dangerous and destructive president we have ever had.” Go here for the full interview.
- Cato adjunct scholar Harvey Silverglate is blogging this week over at the Volokh Conspiracy on his new book, Three Felonies a Day.
- Cato Adjunct Scholar Marie Gryphon, who is also a Senior Fellow with the Manhattan Institute, has just put out a new paper, It’s a Crime: Flaws in Federal Statutes That Punish Regular Businesspeople.
- Cato Media Fellow Radley Balko takes a look at the pathetic machinations in the Chicago Police Department. Reminds me of the proud boast from a patronage worker in the political machine: “Chicago ain’t ready for reform!”
Good stuff here. For more Cato scholarship, go here.
Whip (Health Care) Inflation Now?
During the runaway inflations of 1974 and 1979, Presidents Ford and Carter suggested that inflation was caused by the profligacy of American households. President Ford’s infamous “Whip Inflation Now” speech, for example, said, “Here is what we must do, what each and every one of you can do: To help increase food and lower prices, grow more and waste less; to help save scarce fuel in the energy crisis, drive less, heat less.”
Much of the recent discussion of health care costs likewise treats this as a problem caused by a demonic private insurance industry, and therefore requiring such “reforms” as expanding Medicaid to the non-poor and Medicare to the non-old.
The facts are quite different, as shown in “The Evolution of Medical Spending Risk” by Jonathan Gruber of MIT and Helen Levy of the University of Michigan, in the latest Journal of Economic Perspectives.
Gruber and Levy calculate that real private health care spending per person (in 2007 dollars) “increased from about $700 to $3,500 between 1960 and 2007, a five-fold increase.” They note that “private out-of-pocket spending has not quite doubled.” Yet “government health spending over the same period . . . increased from about $250 to $3,5000, a 13-fold increase.”
In fairness, the quality of health care has been hugely improved since 1960. And prices of physician services (which are often incorrectly compared with the overall consumer price index) have risen no faster than prices of non-medical services.
In any case, President Obama’s claim that the pace of total public and private spending on health care could somehow be “contained” by greatly increasing government spending clearly flunks 3rd grade arithmetic.
Unless the hidden agenda is to impose draconian wage and price controls and political rationing on health care providers, all the rhetorical pretense about proposed health care legislation being a way to hold down overall spending on health care is like saying the solution to chronic drunkeness is more booze.
Thursday Links
- Helping out the “Wall Street fat cats:” Bankers are responding to the incentives generated by the economic policies of the Treasury and the Federal Reserve.
- How charter schools can save states big education dollars.
- Doug Bandow: “Congress has spent the country blind, inflated a disastrous housing bubble, subsidized every special interest with a letterhead and lobbyist, and created a wasteful, incompetent bureaucracy that fills Washington. But now, legislators want to take a break from all their good work and save college football.”
- In case you missed it last week, watch Cato’s Jerry Taylor on the premier episode of Stossel.
- Podcast: “Urban Planners Romanticize Immobility“
Forecast for Copenhagen: Cloudy with a Large Chance of Nothing
The big UN climate conference at Copenhagen is supposed to produce a new schedule for greenhouse gas emissions reductions, as the 1997 Kyoto Protocol ends in 2012.
In fact, Copenhagen in 2009 is beginning to look a lot like Kyoto in 1997. Back then, the two-week conference was “deadlocked” as it drew to a close, with a major split between the United States and Europe. President Clinton had committed the U.S. to a relatively innocuous target of holding U.S. emissions of carbon dioxide constant, while the EU wanted much more costly reductions.
Vice President Gore jetted in near the end of the scheduled conference, and instructed the U.S. negotiators to be “more flexible.” The meeting was extended for days, and suddenly we agreed to reduce our CO2 emissions seven percent below 1990 levels from 2008 to 2012. For the record, we’re currently emitting about 17 percent above 1990 levels, though that number may drop a couple of percentage points in 2009 due to the recent economic malaise.
The fact that emissions and economic growth are highly correlated wasn’t lost on the Senate, which never ratified Kyoto.
This time around, President Obama will descend upon Copenhagen on the conference’s last scheduled day, December 18. He’ll be plenty flexible, which is pretty easy to do when nothing you say legally commits the U.S. to anything. That’s because what comes out of Denmark will either be an extension of Kyoto (not ratified), or a new protocol (with no hope of garnering the 67 Senate votes needed for ratification).
Nonetheless there will be a great pronouncement whenever Copenhagen ends. The betting is that the Chinese and the Indians, who have steadfastly refused to agree to reduce their overall emissions, will agree to some vague targets thanks to a bribe courtesy of U.S. taxpayers. Of course, that agreement will be contingent upon them actually getting the loot, which seems pretty unlikely given the upcoming election.
So, the more things change, the more they stay the same. The UN is going to announce a breakthrough, world-saving agreement with no real buy-in from the Chinese and Indians and no chance of approval by our Senate.
Is Greece’s Fiscal Crisis Caused by too Much Spending or too Little Revenue?
It’s been a rough couple of weeks for Greece, which has been battered by rumors of government default. Interest rates have been climbing, as investors are nervous about state finances, and the country’s debt rating has been downgraded.
Not surprisingly, Greek politicians are dealing with the crisis in large part by further increasing the tax burden. One particularly horrible idea is a 90 percent tax on bank bonus payments. I don’t know if lawmakers in Athens have heard of the Laffer Curve, but they’re about to get a real-world lesson that will teach them how punitive tax rates lead to less revenue.
For those who wonder how Greece got into this mess, here’s a quick chart I put together, based on OECD fiscal data. Don’t be surprised if America has a similar chart in about 10 years.
Colbert Report on PATRIOT & Private Spying
Stephen Colbert tackles both Obama’s flip-flop on the PATRIOT Act (“When presidents take office they learn a secret… Unlimited power is awesome!“) and the private sector’s complicity in the growth of the surveillance state—drawing heavily on the invaluable work of Chris Soghoian.
| The Colbert Report | Mon – Thurs 11:30pm / 10:30c | |||
| The Word – Spyvate Sector | ||||
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National Standardizers Just Can’t Win
I’ve been fretting for some time over the growing push for national curricular standards, standards that would be de facto federal and, whether adopted voluntarily by states or imposed by Washington, end up being worthless mush with yet more billions of dollars sunk into them. The primary thing that has kept me optimistic is that, in the end, few people can ever agree on what standards should include, which has defeated national standards thrusts in the past.
So far, the Common Core State Standards Initiative – a joint National Governors Association/Council of Chief State School Officers venture that is all-but-officially backed by Washington — has avoided being ripped apart by educationists and plain ol’ citizens angry about who’s writing the standards and what they include. But that’s largely because the CCSSI hasn’t actually produced any standards yet. Other, that is, than general, end of K-12, “college and career readiness” standards that say very little.
The Art of Foreign Policy Punditry
Foreign Policy magazine performs an important public service, publishing a compendium of the “top 10 worst predictions for 2009.” My favorite?
“If we do nothing, I can guarantee you that within a decade, a communist Chinese regime that hates democracy and sees America as its primary enemy will dominate the tiny country of Panama, and thus dominate the Panama Canal, one of the world‘s most important strategic points.“
—Rep. Dana Rohrabacher (R-Calif.), Dec. 7, 1999
Rohrabacher made this alarming prediction during a debate on the U.S. handover of the Panama Canal. His fellow hawk, retired Adm. Thomas Moorer, even warned that China could sneak missiles into Panama and use the country as a staging ground for an attack on the United States. Well, Rohrabacher’s decade ran out this December, and all remains quiet on the Panamanian front. As for China, the United States is now its largest trading partner.
Flowers and Chocolates?
The point here isn’t to poke fun at Rohrabacher, or any of the other predictors featured on the FP list. Rather, it’s to point out that predicting the future is really hard. And as Ben Friedman and I have harped on, you just can’t aspire to any predictive competence without sound theory to guide you. In order to judge that if we do (or don’t do) X, Y will happen, you need a theory connecting X to Y. So looking back at our predictions, and comparing them to the results of our policies, is a useful way to test the theories on which we based our policies in the first place.
Obama on Health Care: Half Right
President Obama gave what seems like his thousandth exclusive health care interview last night, this one to ABC News’s Charles Gibson. In trying to sell his health care plan, the president warned that if Congress does not pass legislation controlling health care costs, the federal government “will go bankrupt.” He also warned that unless health care is reformed, “your premiums will go up.”
The president is absolutely correct about that. The only problem is that, according to the president’s own chief health care actuary, the bills that Congress is now considering do nothing to restrain either federal health care spending or total health care costs. In fact, Rick Foster, chief actuary at the Center for Medicare and Medicaid Services (CMS) says that if Congress passes the bill now before the Senate, health care spending will actually increase by $234 billion more over the next 10 years than if we did nothing.
And, according to the Congressional Budget Office, the congressional bills do little or nothing to reduce the growth in insurance premiums. Even if a bill passes, premiums will roughly double by 2016, and keep rising after that. But for millions of Americans the bill will actually make things worse. According to CBO, the Senate bill would actually increase insurance premiums by 10-13 percent for Americans who buy their insurance through the non-group market, that is those who don’t receive insurance from their employer. Those 10-13 percent increases are over and above the increases that would occur if we did nothing.
On the other hand, if the president were really serious about controlling health care costs and lowering premiums, he wouldn’t need to spend trillions of dollars and take over one-sixth of the US economy; he could try some of the ideas written about here, and here, and here.
Promises, Promises
National Journal headline: “Obama Signs Spending Bill, Promises Future Restraint.”
The Consequences of Regulation
The city of Alexandria, Virginia, passed a law in 2005 to require that each cab respond to two dispatch calls every day. WAMU reports on the results:
Says [driver Chaudhry] Ahmed, “If they’re going to do this kind of stuff, then for sure we’ll be out of business and standing in line at the unemployment office.”
Alexandria created the rule back in 2005 to prevent taxi drivers from spending all their time picking up fares at hotels and the airport. Since that time, one company has closed because it couldn’t meet the requirement and another has been put on probation. But Transportation Chief Bob Garback says the city doesn’t want to shut anybody down: “Our objective is just to make sure that we have reasonable taxi service here. Shutting companies down doesn’t really serve that purpose.”
Alexandria didn’t want to shut companies down. Someone just had an idea and decided to codify it, without much thought as to where cab drivers actually find passengers, how much it costs to respond to dispatches, and so on.
No doubt most regulators and legislators don’t want to shut companies down. But special interests and activists and irate citizens press their ideas, and policymakers respond. It always seems like a good idea at the time: guarantee every worker a minimum wage, put a cap on rising rents, or make sure that banks lend money to borrowers who can’t really afford a house. And then when low-skilled workers become too expensive to hire, or builders decide they can’t make a profit on new apartment houses, or millions of mortgage holders are unable to make their payments — well, “Our objective was just to do something reasonable. We never intended to screw up the workings of the market and cause firm closings, unemployment, apartment shortages, or a wave of defaults.” But that’s the result of throwing a monkey wrench into the economy.
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