Archive for March, 2010
Smelling Your E-mail
In response to this week’s news that the beleaguered U.S. Postal Service is facing $238 billion in losses over the coming decade, Washington Post columnist Charles Krauthammer lamented the inevitable demise of the government mail monopoly:
As a conservative who believes in the market, it ought to die, but as a conservative that believes in tradition and stuff that really holds us together, I would subsidize until it dies a natural death in the next generation. But for old guys like me, keep it going for a while.
[As for] the hard-hearted younger generation — well, if you ever got a sweet-smelling love letter at 17, you’d feel otherwise. Of course, I never did, but somebody did.
You can’t smell your e-mail.
I did receive sweet-smelling love letters from a girl back home during my first year in college. Fifteen years later, my old college roommate is still making fun of me for it. But I don’t “feel otherwise” about the government mail monopoly. The sooner it disappears and is replaced by private operators unshackled from the unions and government mandates that are speeding the USPS’s demise, the better.
Krauthammer’s comment that “you can’t smell your e-mail” isn’t even true. The technology exists for scents to emit from your computer when you open an e-mail, click on a web advertisement, or play video games.
Discouraging Speech through Disclosure
David Price, a Democratic member of the House of Representatives from North Carolina, has introduced a bill, the Stand by Every Ad Act, to mandate disclosure of support for political speech by business and union officials.
Rep. Price cites three harms from such speech: “the opportunity for corporations, unions and associations to dominate the playing field, intimidating public officials and drowning out the candidates’ own messages.”
Notice that these alleged harms are caused by the speech itself and not by the fact that the speech might be anonymous. Notice also that Rep. Price provides no evidence at all that such harms will take place. Where would such evidence be found? Prior to McCain-Feingold, corporations and unions could fund speech. Several states also have permitted independent corporate expenditures. What happened in those years or those states to support Rep. Price’s extreme claims?
It is striking that two of the three harms cited by Rep. Price concern only members of Congress. He claims members will be intimidated or have their “own messages” drowned out. What Rep. Price does not say is how these problems for members of Congress would translate into problems for voters. Of course, such arguments about the welfare of voters exist, but they are not obvious to most people. Rep. Price, however, saw no need to make the connection between an alleged harm done to a member and the interests of voters. His argument is centered on the interests and concerns of incumbent members of Congress. Apparently members consider first their own interests in thinking about campaign finance regulations.
Rep. Price also ignores the fact that voters are likely to receive more information about candidates for office after Citizens United since the hand of the censor has been lifted.
Rep. Price clearly believes mandated disclosure by business and union leaders will effectively discourage them from speaking out during elections. Given that motivation behind the new disclosures laws, at what point does mandated disclosure translate into chilled speech?
One other disturbing part of Rep. Price’s case for his bill: he hopes to extend disclosure to the Internet. Of course, disclosure of Internet speech may well lead to other restrictions on speech online.
Health Cost Projections to 2019: The Doc Fix Trick Again
Congressman Paul Ryan (R-WI) takes the President to task for cooking the books on projected health care costs, most egregiously with the “doc fix” — namely, assuming Medicare slashes physician payments by 21.3% this year and subsequently lets them fall continuously in real terms.
What nobody seems to have noticed is that the same phony “doc fix” taints the new “Health Spending Projections Through 2019” from Centers for Medicare and Medicaid Services (CMS).
Drew Altman, president and CEO of the Kaiser Family Foundation, tries to downplay the CMS forecast “that the public sector will start paying more than half of the nation’s health care bill starting in 2012, and that government spending will grow faster than private spending from 2009 to 2019 (an average of 7.0% per year vs. 5.2%).”
Worrying about such spending trends is a foolish “ideological battle over the role of government,” says Altman, because rapid increases in government health spending is “just the byproduct of economic and demographic trends” (recession and an aging population). “Is government health spending out of control?” he asks; answering “NO” in capital letters. “The report simply underscores the need to control health care costs in the public and the private sectors alike.”
On the contrary, the reason government health care spending is projected to slow down to 7% a year is, the CMS explains, “due principally to the 21.3% reduction in physician payment rates . . . mandated in current law.”
Thursday Links
- Many European countries are working toward privatizing their government post offices. The United States should do the same.
- Analysis of the Chicago gun case: Supreme Court protects gun rights, fails to restore greater freedom.
- Are Supreme Court justices afraid of the plain language in the Constitution?
- A quick lesson on taxes.
- Six reasons to downsize the federal government.
Justices seemed afraid of the plain language of the Constitution.
- Podcast: “‘Privileges or Immunities’ Has Meaning” featuring Clark Neily, senior attorney for the Institute for Justice.
Our Little Scholars
As I mentioned a few days ago, today is the “Day of Action” in California — and, it turns out, elsewhere – when college students and just general protectors of public schooling are supposed to take to the streets and demand that taxpayers fork over not one less red cent to students and schools.
Ironically, the mindless, property-destroying, absurd goings-on that have surrounded past such demonstrations in Cali — and are already in evidence today – brilliantly illustrate one major reason we need to cut higher education subsidies, not increase them. Clearly, too many college students have both far too much time on their hands, and far too little self control, to justify spending hard-earned taxpayer dough on their “education.”
But at least the ostensible motivation behind recreational rioting in California has been slightly related to a principle — namely, the principle that taxpayers owe students stuff. That’s actually a better excuse for taking to the streets than what set off last night’s student riots in College Park, Maryland: a victory in a basketball game. (To be fair, University of Maryland students also riot after losses – they’re no fair weather fans!)
And to think — one of the reasons we’re supposed to support massive subsidies for students is that it serves the common good. Go figure.
Will Taxing Foreign Visitors Promote Tourism?
President Obama is taking a break today from promoting a more federalized health-care system to sign a bill creating a federalized tourist promotion campaign.
In a closed ceremony at the White House, the president signed the Travel Promotion Act. After gaining final passage by the Senate last week, the bill will raise an estimated $200 million a year by imposing a $10 tax on visitors to the United States from countries where they are not required to obtain a visa. The revenue will be used to create and fund a new agency, the Corporation for Travel Promotion, that would work with the U.S. tourism industry to promote the United States as a global travel destination.
I’m all for promoting tourism to the United States. Tourism is an important “service export” that generates more than $100 billion a year in earnings from foreign travelers to the United States. But a new federal agency and a new tax on travel are not the right way to drum up more tourism business.
First, just on principle, promoting a particular industry should be the business of that industry, not the business of government. Americans also export billions of dollars worth of farm goods, semiconductors, machinery, aircraft, pharmaceuticals, and chemicals, along with financial, education, insurance, and other services. None of those industries deserves their own tax-financed promotion board either. If the payoff from promotion is so huge, the industry should be willing to bear its cost without the aid of the government.
More practically, it goes against basic economic logic to promote tourism to the United States by imposing new costs on tourists. Granted, $10 is not a large amount, but the demand curve for tourism is downward sloping – as it is in every other market. A higher price will lead to less demand, not more. As a spokesman for the International Air Transport Association told ABC News:
It’s absolutely counterintuitive. To us, we’re saying we’d love to see more people visit the United States, but we’re going to charge you more for the privilege of entering the country. We are in favor of increased tourism and visitation… but let’s look at our priorities. We don’t think that videos and billboards are necessarily a priority. Instead, we should be focusing on how to make customs and immigration easier for people.
As I argued in a previous post, the U.S. government should be doing more to keep dangerous people off flights to the United States instead of making it even more difficult for perfectly harmless tourists and business travelers to get on those same flights.
Ray LaHood as Santa Claus
U.S. News & World Report’s columnist Paul Bedard reports that Transportation secretary Ray LaHood told him that it’s fun playing Santa Claus to states and cities around the nation.
So let’s take a look at some recent examples of DOT gift-giving with federal taxpayers’ money:
- DOT’s Federal Highway Administration helped restore an old brewery in Petosi, Wisconsin with a $450,000 gift. That should make taxpayers want to drink.
- DOT is sending $116,000 to Calaveras County, California to restore a train that operated in the 1920s.
- Dolgeville, New York intends to use DOT stimulus money to repair sidewalks even though the village acknowledges that the new sidewalks will have to be torn up and replaced again due to impending water and sewage line upgrades. Keynes would be particularly proud of this one. Last year the city received a $1 million gift from DOT for the “installation of period street lights, trees, accent pavers, street furniture and sidewalk improvements” on the city’s Main Street.
- Cascade County, Montana plans on spending $75,000 of DOT money on the Montana Museum of Railroad History.
- The Michigan Department of Transportation plans on spending $5 million in federal DOT money on a bunch of projects that are of unquestionable national importance: cobblestone streets in Grand Rapids; exhibits at the Detroit Science Center; rehabilitating the historic Quincy and Torch Lake Railroad Engine House in the Upper Peninsula; a bridge for bicyclists and pedestrians over the Clinton River in Utica and bike racks at several locations in Wayne, Oakland, and Macomb counties.
- Boone County Regional Airport in Arkansas plans on using $50,000 in DOT money to market SeaPort Airlines. Fly, fly away taxpayer money.
These projects might be worthwhile, but they should be paid for by the local interests who can best judge their worth.
In his 1932 book, Congress as Santa Claus, constitutional scholar Charles Warren offered a prescient warning on the dangers of federal subsidization of state and local affairs:
The continuance of this practice of shifting to the National Government responsibility for payment for matters which formerly were dealt with by individual initiative, by community cooperation, by voluntary organizations, or by local or State governments – the continuance of this practice of making drafts on the National Treasury to carry out purposes not within the enumerated or implied powers of the National Government will inevitably have two results.
So far as these Government donations consist of direct appropriations for private or local interests, they will deaden and finally destroy the eagerness or willingness of State Governments and local communities to pay for their own needs. So far as they take the shape of the so-called Federal Aid laws for local projects to be matched by local appropriations, they will have ‘a tendency to induce excessive expenditures by State and municipal governments, with top-heavy bond issues and oppressive local taxation.’
I doubt in Warren’s worst nightmares could he have envisioned the examples of DOT spending above, let alone the existence of a $90 billion federal Department of Transportation.
A Clash of Worldviews on Free Trade
If you want to witness the clash of two worldviews on trade, check out the online debate I’m having with Ian Fletcher of the U.S. Business and Industry Council. A self-described protectionist, Fletcher has written a new book with the unambiguous title, Free Trade Doesn’t Work: What Should Replace it and Why. In the opposite corner, I argue for eliminating barriers to trade, drawing on my own recent book, Mad about Trade: Why Main Street America Should Embrace Globalization.
The debate is being hosted by the International Economic Law and Policy Blog. We’ve already filed two 600-word posts each, with a third to come at the end of this week and concluding arguments early next week.
Senator Bunning Exposes Washington’s Fiscal Frauds
President Obama and many other politicians in Washington are big fans of pay-as-you-go budgeting, which means they want any new spending or tax relief offset (or “paid for”) with tax increases or spending cuts from other parts of the budget. Or at least that’s what they claim. But when Senator Bunning took them at their word and blocked a $10 billion spending bill because his colleagues were unwilling to make some tiny changes elsewhere, he was treated like a leper. Even his Republicans colleagues largely disapproved of his actions (so much for having learned any lessons from the drubbings they took at the polls in 2006 and 2008). Attacked from all sides, Bunning eventually relented in exchange for an offset vote (which was defeated, of course). What makes this episode interesting is not the specific policies that were being considered. As I posted earlier this week, Bunning was not even trying to shrink the size of government. Indeed, his “offset” was actually a tax increase (getting rid of a special tax break for paper manufacturing).
But this incident does expose the gross hypocrisy of the supposed deficit hawks in Washington. President Obama and the Democrats (and many Republicans) pretend they care about deficits, but their concerns magically disappear whenever there is a chance to buy votes by spending other people’s money. When tax cuts or tax increases are being debated, however, many of these same politicians piously declare their unwavering opposition to red ink (unless, of course, it’s a special tax break for a contributor). But perhaps it’s no surprise to discover that politicians think higher taxes are the solution to the over-spending problem in Washington.
What about the organizations that supposedly exist to fight deficits, such as the Concord Coalition and the Committee for a Responsible Federal Budget (they should be fighting spending instead, but let’s set that issue aside). Folks from these groups often ask politicians to be courageous and make “tough choices.” So I went to the Concord Coalition’s homepage and was shocked, shocked to find nothing about Bunning’s effort. I checked the blog and the press releases and found lots of tough rhetoric, but not one word of praise (or one word of any sort) for a Senator who tried to put the Concord Coalition’s words into action. And what about the Committee for a Responsible Federal Budget? Same song, second verse. Not a mention of Bunning on the homepage, blog, or in the press releases. (See update below)
Anybody care to make any predictions whether these groups will be similarly silent when President Obama’s “Fiscal Responsibility Commission” unveils a big tax hike?
Mea Culpa: On another matter, I have to confess an error. I did an interview for NBC affiliate stations on the financial mess at the Postal Service. I haven’t spent any time on that issue, so I quickly scanned some material from my Cato colleagues Chris Edwards and Tad DeHaven and saw that Congress had given an indirect bailout to the Postal Service by suspending $4 billion of required pre-funding for retiree health benefits. I then went on the air and said that this was a taxpayer subsidy for the Postal Service’s lavish pay and benefits. The Postal Service does have lavish pay and benefits, and the indirect bailout may lead to a direct infusion of taxpayer money at some point in the near future, but what I said I was wrong because no taxpayer money is currently being allocated (and I would have avoided the mistake if I paid closer attention to what Chris and Tad wrote). So, please, postal workers, don’t go…um…postal on me.
Mea Culpa, Part II: I am getting sloppy in my old age. Maya MacGuineas of the Committee for a Responsible Federal Budget nailed me fair and square. CFRB did say something nice about Bunning on its blog back on February 26. I should have scrolled down farther. I did just check the Concord Coalition blog, all the way back to the beginning of the year, and was relieved (from a personal perspective, not on policy grounds) to find no mention of Bunning’s effort.
Obama’s HSA Gambit a Net Minus?
President Obama evidently thinks that if he promises not to kill health savings accounts (HSAs), opponents will swoon for his government takeover of health care. If that doesn’t do the trick, he should make clear that his health plan would not eliminate other things too, like the Defense Department and puppies.
Of course, that hollow gesture didn’t win the president any Republican support. But it may have cost him some Democratic support — or at least frayed the nerves of a few House Democrats. According to CongressDaily:
Liberals, meanwhile, are fuming over an addition Obama made to his proposal to make the effort appear bipartisan and possibly switch the votes of moderate Democrats who opposed the House bill last year.
The Congressional Progressive Caucus co-chairman, Rep. Raul Grijalva, D-Ariz., said Wednesday he is disturbed and bitter about an addition he said goes against Democratic principles.
“I’ve been leaning ‘no’ for a long time. That hasn’t changed,” Grijalva said about voting for the healthcare overhaul the Senate passed in December and a package of changes that would move through a separate bill through reconciliation.
Obama indicated he might be open to a provision that would encourage the use of health savings accounts, a tax-exempt savings account that typically is used in conjunction with a high-deductible plan. The provision would allow the exchanges to offer high-deductible plans.
“For some of us, the bitterness about HSAs in and the public option completely out, I don’t know how long that’s going to linger,” Grijalva said.
Which tends to confirm what HSA supporters have long feared: killing HSAs is the Left’s game plan.
A Government Man
This afternoon Politico Arena asks:
Will the president’s health care remarks today sway enough votes to pass ObamaCare through “reconciliation”?
My response:
Who knows? What they show beyond all doubt, however, is the mind-set of the president and the bill’s proponents. Consider just a few of his opening words: “Everything there is to say about health care has been said and just about everyone has said it. So now is the time to make a decision about how to finally reform health care so that it works, not just for the insurance companies, but for America’s families and businesses.”
Notice first the insinuation that health care works today for the insurance companies, but not for the rest of us. Obama has to have his foil, this man with no experience in the private sector and little understanding of how that sector works. But notice, more importantly, that we need “to finally reform health care so that it works” — the implication being that this is a collective undertaking, the only question being how to do it. “We’re all in this together.” In the private sector, if we can’t reach an agreement about some proposed undertaking, we walk away. That seems inconceivable to Obama. He’s a government man: conceiving public solutions to private problems is what his life is all about.
I suppose you could say that government is so enmeshed in health care today that there are only public solutions to the problems government is largely responsible for having created — starting with the favorable tax treatment employer-provided health care affords. But the direction of reform needn’t be toward even greater government. It might be toward less government, as with health savings accounts. But that approach has been rejected from the start by Obama and his Democratic supporters. They move in only one direction.
Six Reasons to Downsize the Federal Government
1. Additional federal spending transfers resources from the more productive private sector to the less productive public sector of the economy. The bulk of federal spending goes toward subsidies and benefit payments, which generally do not enhance economic productivity. With lower productivity, average American incomes will fall.
2. As federal spending rises, it creates pressure to raise taxes now and in the future. Higher taxes reduce incentives for productive activities such as working, saving, investing, and starting businesses. Higher taxes also increase incentives to engage in unproductive activities such as tax avoidance.
3. Much federal spending is wasteful and many federal programs are mismanaged. Cost overruns, fraud and abuse, and other bureaucratic failures are endemic in many agencies. It’s true that failures also occur in the private sector, but they are weeded out by competition, bankruptcy, and other market forces. We need to similarly weed out government failures.
4. Federal programs often benefit special interest groups while harming the broader interests of the general public. How is that possible in a democracy? The answer is that logrolling or horse-trading in Congress allows programs to be enacted even though they are only favored by minorities of legislators and voters. One solution is to impose a legal or constitutional cap on the overall federal budget to force politicians to make spending trade-offs.
5. Many federal programs cause active damage to society, in addition to the damage caused by the higher taxes needed to fund them. Programs usually distort markets and they sometimes cause social and environmental damage. Some examples are housing subsidies that helped to cause the financial crises, welfare programs that have created dependency, and farm subsidies that have harmed the environment.
6. The expansion of the federal government in recent decades runs counter to the American tradition of federalism. Federal functions should be “few and defined” in James Madison’s words, with most government activities left to the states. The explosion in federal aid to the states since the 1960s has strangled diversity and innovation in state governments because aid has been accompanied by a mass of one-size-fits-all regulations.
For more, see DownsizingGovernment.org.
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