Archive for March, 2010
My Big Fat Greek Budget
Since we’re already depressed by the enactment of Obamacare, we may as well wallow in misery by looking at some long-term budget numbers. The chart below, which is based on the Congressional Budget Office’s long-run estimates, shows that federal government spending will climb to 45 percent of GDP if we believe CBO’s more optimistic “baseline” estimate. If we prefer the less optimistic “alternative” estimate, the burden of federal government spending will climb to 67 percent of economic output. These dismal numbers are driven by two factors, an aging population and entitlement programs such as Medicare, Medicaid, and Social Security. For all intents and purposes, America is on a path to become a European-style welfare state.
If these numbers don’t depress you enough, here are a couple of additional observations to push you over the edge. These CBO estimates were produced last year, so they don’t count the cost of Obamacare. And as Michael Cannon repeatedly has observed, Obamacare will cost much more than the official estimates concocted by CBO. And speaking of estimates, the long-run numbers in the chart are almost certainly too optimistic since CBO’s methodology naively assumes that a rising burden of government will have no negative impact on the economy’s growth rate. Last but not least, the data above only measures federal spending. State and local government budgets will consume at least another 15 percent of GDP, so even using the optimistic baseline, total government spending will be about 60 percent of GDP, higher than every European nation, including France, Greece, and Sweden. And if we add state and local spending on top of the “alternative” baseline, then we’re in uncharted territory where perhaps Cuba and North Korea would be the most appropriate analogies.
So what do we do? There’s no sure-fire solution. Congressman Paul Ryan has a reform plan to reduce long-run federal spending to less than 20 percent of GDP. This “Roadmap” plan is excellent, though it is marred by the inclusion of a value-added tax. Bill Shipman of CarriageOaks Partners put forth a very interesting proposal in a Washington Times column to make the federal government rely on states for tax revenue. And I’ve been an avid proponent of tax competition as a strategy to curtail the greed of the political class since it is difficult to finance redistribution if labor and capital can escape to jurisdictions with better tax law. Any other suggestions?
Bad News for the Education Standards Crowd
Despite nearly two decades of state and federal standards-and-testing, as well as big increases in spending, today’s reading results from the National Assessment of Educational Progress – the so-called “Nation’s Report Card” — continue to tell a tale of stagnation. Nationally, the average fourth-grade score was 217 (out of 500) in 1992. In 2009 it was only 221. For eighth grade, the average score in 1992 was 260. In 2009 it was just 264. Oh, and eighth-graders had hit 264 by 1998, which means there hasn’t been even a smidgen of improvement since then.
“But,” will say the standardizers, “the problem is that we just haven’t set really high standards and been unrelenting in forcing schools to meet them.” You know, we haven’t been like Massachusetts, which has shown the rest of the nation the way.
Think again. It turns out there very well might be a Massachusetts Mirage.
The average eighth grade score in the Bay State went up just one, tiny point between 2007 and 2009, going from 273 to 274, and it has been stuck around 273 since 2003. Worse yet, in fourth grade the average score dropped from 236 to 234 between 2007 and 2009, and the Bay State had hit 234 as early as 2002.
Now, can we tell definitively from either the national or Massachusetts scores that centralized standards-and-accountability regimes don’t work? Nope. There are far too many variables involved in education, from child nutrition to the weather on test day, to make such a pronouncement. But we can say that those who are trying to sell us centralized control of education had also better not point to national scores, or scores in the sainted state of Massachusetts, as any kind of evidence that centralized standards-and testing works.
I’m not getting my hopes up.
Robert Wright on Being–and Not Being–”Pro-Israel”
The U.S.-Israel relationship has been in the news a lot lately. First, Israel humiliates the American Vice President by announcing an expansion of settlements in East Jerusalem during his trip to that country. Then, Gen. Petraeus states in congressional testimony [.pdf] that the Israel/Palestine imbroglio “foments anti-American sentiment, due to a perception of U.S. favoritism for Israel,” which in turn creates a dynamic where “Al Qaeda and other militant groups exploit that anger to mobilize support.”
For those with interest in the subject, Robert Wright’s piece on the New York Times’ website may be of interest. Wright looks at how chauvinistically Gary Bauer, Max Boot, and Abraham Foxman define “pro-Israel” and writes
If Israel’s increasingly powerful right wing has its way, without constraint from American criticism and pressure, then Israel will keep building settlements. And the more settlements get built — especially in East Jerusalem — the harder it will be to find a two-state deal that leaves Palestinians with much of their dignity intact. And the less dignity intact, the less stable any two-state deal will be.
As more and more people are realizing, the only long-run alternatives to a two-state solution are: a) a one-state solution in which an Arab majority spells the end of Israel’s Jewish identity; b) Israel’s remaining a Jewish state by denying the vote to Palestinians who live in the occupied territories, a condition that would be increasingly reminiscent of apartheid; c) the apocalypse. Or, as Hillary Clinton put it in addressing the American Israel Public Affairs Committee conference on Monday: “A two-state solution is the only viable path for Israel to remain both a democracy and a Jewish state.”
So, by my lights, being “pro-Israel” in the sense embraced by Bauer, Boot and Foxman — backing Israel’s current policies, including its settlement policies — is actually anti-Israel. It’s also anti-America (in the sense of ‘bad for American security’), because Biden and Petraeus are right: America’s perceived support of — or at least acquiescence in — Israel’s more inflammatory policies endangers American troops abroad. In the long run, it will also endanger American civilians at home, funneling more terrorism in their direction.
I have been and remain skeptical that Washington could successfully force a deal on the Israelis and Palestinians. To my mind, neither side seems willing to make the sorts of very painful concessions that would be necessary for peace. I think that the big problem the I/P dispute presents for the United States is less inherent in the conflict than it is in the fact that the United States has placed itself in a position, as George Kennan wrote, where “each [side] has the impression that it is primarily through us that its desiderata can be achieved, with the result that we are always first to be blamed, no matter whose ox is gored; and all this in a situation where we actually have very little influence with either party.”
But as long as we’re implicated in this sorry affair, we ought to be throwing our weight around to try to push both parties in the directions we think they ought to go. As Wright writes, smiling and nodding no matter what Israel does isn’t friendship.
The States Respond to ObamaCare
Today Politico Arena asks:
Do the 13 state attorneys general have a case against ObamaCare?
My response:
Absolutely. It will be an uphill battle, because modern “constitutional law” is so far removed from the Constitution itself, but a win is not impossible. There are three main arguments. (1) Under the Constitution, as properly interpreted, Congress has no power to enact such a plan. (2) The plan conscripts state governments into carrying out and paying for federal mandates. And (3) the individual mandate amounts to an unlawful capitation or direct tax.
If You Think Obamacare Is Bad…
Today the Senate Judiciary Committee will hold a hearing for the nomination of 39-year-old Berkeley law professor Goodwin Liu to the U.S. Court of Appeals for the Ninth Circuit. Liu’s confirmation would compromise the judiciary’s check on legislative overreach and push the courts not only to ratify such constitutional abominations as the individual health insurance mandate but to establish socialized health care as a legal mandate itself.
Yesterday Cato legal associate Evan Turgeon and I published an op-ed on the Liu nomination in the Daily Caller. Here are some highlights:
While Liu purports to develop an original approach [to constitutional interpretation], his nuanced methodology fails to generate a novel result. He may “suggest a more cautious and discriminating judicial role than one that is guided by a comprehensive moral theory,” but it is impossible to imagine a case in which Liu would reach a different outcome than a judge employing the (disfavored) “Living Constitution” analysis. And this is not surprising, given that the stated purpose of Liu’s scholarship is to establish legal justifications for “rights” foreign to the Enlightenment tradition on which our republic rests — those that make demands on others (unlike, say, the right to free speech, which makes no demands on anyone).
…Even more dangerously, Liu’s approach flouts the Constitution’s very purpose: protecting individual rights by limiting government power. As the branch responsible for interpreting the Constitution, the judiciary must defend citizens’ inalienable rights, such as the rights to life, liberty, and property, from infringement by government actors. Liu’s approach turns that role on its head. He views the judiciary not as a safeguard against state tyranny, but as a rubber stamp for any legislation that reflects popular opinion. And it’s a one-way ratchet: Liu would likely rule that the next Congress could not repeal Obamacare because it is precisely the kind of “landmark legislation” — to borrow progressive Yale law professor Bruce Ackerman’s phrase — that cannot be undone.
As a member of the ACLU and chairman of the American Constitution Society, it is no secret what kind of rights Liu would find justified by “collective values.” Liu lists “education, shelter, subsistence, health care and the like, or to the money these things cost” as examples of affirmative rights he would seek to establish in law — to constitutionalize beyond a future legislature’s reach.
Read the whole thing. Also read Ed Whelan’s series of posts on Liu at NRO’s Bench Memos blog. (I don’t agree with Ed on everything, but he’s doing a workmanlike job on this important nomination, as he did on Harold Koh.)
And if all the above isn’t enough, here’s Liu in the 2006 Yale Law Journal:
On my account of the Constitution’s citizenship guarantee, federal responsibility logically extends to areas beyond education. Importantly, however, the duty of government cannot be reduced to simply providing the basic necessities of life….. Beyond a minimal safety net, the legislative agenda of equal citizenship should extend to systems of support and opportunity that, like education, provide a foundation for political and economic autonomy and participation. The main pillars of the agenda would include basic employment supports such as expanded health insurance, child care, transportation subsidies, job training, and a robust earned income tax credit.
As Evan and I wrote:
We don’t expect a president of either party to appoint judges who adhere 100 percent to the Cato line — though that would be nice — so we do not object to every judicial nominee whose philosophy differs from ours.
Goodwin Liu’s nomination, however, is different. By far the most extreme of Obama’s picks to date, Liu would push the Ninth Circuit to redistribute wealth by radically expanding — and constitutionalizing — welfare “rights.”
The Senate needs to understand who it’s dealing with here.
A Post-Health Care Realignment?
From Franklin Delano Roosevelt’s New Deal to Joe Biden’s Big F-ing Deal, progressives have led a consistent and largely successful campaign to expand the size and scope of the federal government. Now, Matt Yglesias suggests, it’s time to take a victory lap and call it a day:
For the past 65-70 years—and especially for the past 30 years since the end of the civil rights argument—American politics has been dominated by controversy over the size and scope of the welfare state. Today, that argument is largely over with liberals having largely won. [...] The crux of the matter is that progressive efforts to expand the size of the welfare state are basically done. There are big items still on the progressive agenda. But they don’t really involve substantial new expenditures. Instead, you’re looking at carbon pricing, financial regulatory reform, and immigration reform as the medium-term agenda. Most broadly, questions about how to boost growth, how to deliver public services effectively, and about the appropriate balance of social investment between children and the elderly will take center stage. This will probably lead to some realigning of political coalitions. Liberal proponents of reduced trade barriers and increased immigration flows will likely feel emboldened about pushing that agenda, since the policy environment is getting substantially more redistributive and does much more to mitigate risk. Advocates of things like more and better preschooling are going to find themselves competing for funds primarily with the claims made by seniors.
I’d like to believe this is true, though I can’t say I’m persuaded. It seems at least as likely that, consistent with the historical pattern, the new status quo will simply be redefined as the “center,” and proposals to further augment the welfare state will move from the fringe to the mainstream of opinion on the left.
Federal Health Spending
When describing spending growth in federal programs, I often need to use words like “soaring” and “explosive.” But growth in federal health spending is almost beyond superlatives to describe it, and it will increase even faster as a result of President Obama’s new health legislation.
This chart shows total real spending by the Department of Health and Human Services, which includes the Medicare and Medicaid programs. Spending has increased almost nine-fold since 1970, and that’s after adjusting for inflation. And note how the slope of the bars increased around 1990. Health spending is truly skyrocketing and Obama has just put us into orbit.
(Data from the federal budget, historical tables, table 4.1, as deflated)
When National Standardizers Attack!
There’s just no pleasing some people who want to impose uniform curriculum standards on every public school in America. Yesterday, the Wall Street Journal ran an editorial that wasn’t even critical of national standards (save arguing that there are better reforms), yet Michael Petrilli of the standards-philic Thomas B. Fordham Institute still attacked.
What exactly did the WSJ have the temerity to write? That while there is “nothing wrong…with setting benchmarks for what the average child should know by a certain grade,” imposing national standards is not nearly as proven a reform as “school choice and accountability.”
Petrilli was having none of this, declaring that choice is fine, but that people need national standards, set by government, to be able to make better choices.
His evidence? He offered almost none, and what he did cite was poppycock.
That curriculum standards set at any level of government will produce accurate and useful information for parents flies in the face of historical and political reality. Indeed, Fordham itself has furnished abundant evidence that standards-and-testing regimes, first under state control and then under No Child Left Behind, have repeatedly produced, essentially, lies about academic “success.”
National standards, on the other hand? In his response to the Journal, Petrilli simply proclaimed that they would provide “trustworthy information.”
Not only is there no evidence to support this claim, there are good reasons to conclude the opposite. The people employed by the public schools are the most motivated to be involved in education politics and the most easily organized, giving them outsized power. Couple that with their best interest being served by being held to low or no standards, and it is clear why standards and accountability mechanisms set by political, “democratic” means — as national standards would be – have almost always been rendered hollow.
This inconvenient political reality is one reason that there is no convincing research showing that national standards drive superior educational outcomes. But don’t expect a discussion of the national-standards evidence from the Fordham folks. They seem determined to avoid it. Except, that is, for citing one, isolated factoid.
Petrilli started his attack on the Journal by implying that the paper had actually acknowledged this homerun factoid: that the ”countries that outperform us on international assessments all have national standards in place.”
Arrgh!
As I and many others have repeatedly pointed out — and as is obvious when you know the whole truth — this “evidence” is meaningless. Yes, most of the countries that beat us have national standards, but so do most of the countries that do worse! There is simply no meaningful correlation between having national standards and results on international exams.
Unfortunately, Petrilli didn’t just use the factoid to sell his national standards snake oil. He also invoked it to suggest that the WSJ editorialists had addled brains, that they had illogically acknowledged the factoid yet still soft-peddled national standards. But the Journal writers hadn’t embraced the factoid half-truth. They wrote the whole truth:
It’s true that some countries with uniform standards (Singapore, Japan) outperform the U.S., though other countries with such standards (Sweden, Israel) do worse. On the 2007 eighth-grade TIMSS test, an international math exam, all eight countries that scored higher than the U.S. had national standards. But so did 33 of the 39 countries that scored lower.
Unfortunately, this sort of evidence avoidance and distortion has been par for Fordham’s national-standards course. Indeed, in reviewing my new report that analyses the empirical evidence, Fordham’s Stafford Palmieri suggested that I simply failed to find proof that national standards work. She also concluded that that was no reason to avoid such standards. But what I actually found was that while the research is limited, what exists gives good reason to believe that national standards do not work. It’s a big difference.
Fordham’s refusal to systematically deal with the evidence is disturbing since the Institute is arguably the leading exponent of this ”reform.” But whatever Fordham does, the nation must not ignore reality. If Fordham gets what it wants it will be imposed on everyone, and then it will be too late to “discover” that it was the wrong thing to do.
Great Moments in International Bureaucracy
Greece’s fiscal disarray is a visible manifestation of Europe’s future, but the most appropriate symbol of what’s wrong with the continent comes from Brussels, where there are three “presidents” fighting over the right to represent Europe at international gatherings. The contestants include the President of the European Commission, the President of the European Council, and the European Union President (which rotates every six months among different national leaders).
While these three personalities fight over who gets to sit where and shake hands first, the real problem is that they all agree that government should be bigger, taxes should be higher, and power should be more centralized as part of the effort to create a superstate in Brussels. Inside this gilded cage, insulated from actual voters, Europe’s technocratic elite is content to enjoy a parasitical existence while the welfare states of member nations slowly but surely collapse and lead to social chaos. Here’s an excerpt from the UK-based Express about the fight between the the philosophical descendants of Louis XVI. Or would Nero be a better analogy? How about the Three Stooges? Well, you get the idea:
Promises by EU leaders that the Lisbon Treaty would herald a new era of clarity have been shattered after attempts to settle a major internal power feud resulted in a typical Brussels fudge. Bureaucrats have decided to send not just one president and his entourage to global summits but a tax-draining three. Only four months after the fanfare of Herman Van Rompuy’s appointment as European Council president, his most jealous and powerful rival in Brussels has persuaded allies to allow him to muscle in too. José Manuel Barroso, president of the European Commission, has succeeded in his demands that he should also go to diplomatic summits, such as the G20, after insisting only he has the expertise to deal with specific policy matters. At certain summits there will even be a third representative – the leader of the country holding the EU’s rotating presidency. This seems to justify criticism that the Lisbon Treaty would add to the EU’s murky waters and not be a move towards transparency. …Since the Lisbon Treaty came into force at the end of last year, arguments have raged in Brussels over which department does what. Mr Van Rompuy, the former Belgian prime minister dismissed last month by Ukip MEP Nigel Farage as a “damp rag” and a “low-grade bank clerk”, is the permanent president of the European Council.
We Passed ObamaCare, but Will It Improve Health?
The answer may not be so obvious. I’ll explore that issue at a Cato Institute policy forum this Thursday with two leading authorities on the subject: John Ayanian of Harvard Medical School and David Meltzer of the University of Chicago.
The forum is titled, “Would Universal Coverage Improve Health?” and will be held at 4pm this Thursday at the Cato Institute. Click the link for details.
Individual Mandate Is Constitutional – If You Rewrite the Constitution
House Judiciary Committee Chairman John Conyers (D-MI) was asked on Friday where in the Constitution Congress gets the power to force people to buy health insurance. He said, “Under several clauses, the good and welfare clause and a couple others.”
As it happens, there is no “good and welfare clause” — which Conyers should know, as both judiciary chairman and a lawyer. But even if you excuse his casual use of constitutional language, what he probably means — the General Welfare Clause of Article I, Section 8 — is not a better answer. What that clause does is limit Congress’s use of the powers enumerated elsewhere in that section to legislation that promotes ”the general welfare.” (So earmarks are arguably unconstitutional, though you can make a colorable argument that, when considering a pork bill as a whole, with all parts of the country getting something, that monstrosity is collectively in “the general welfare” — maybe.) In any event, the General Welfare Clause doesn’t give Congress any additional powers — and I’d be curious to know what the other “several clauses” are.
Conyers also noted that, “All the scholars, the constitutional scholars that I know . . . they all say that there’s nothing unconstitutional in this bill and if there were, I would have tried to correct it if I thought there were.” Well, Mr. Conyers, to start let me introduce you to three constitutional scholars — not fringe right-wing kooks or anything like that, but respected people who publish widely — who think Obamacare is unconstitutional. Now will you try to “correct” the bill?
Here’s video of Conyers’s full remarks on the subject (h/t Jon Blanks):
And for a survey of the various constitutional issues attending Obamacare, see Randy Barnett’s oped from Sunday’s Washington Post.
Health Care Is Cheap (Subsidies Are Not)
A column I wrote in 2002 seems more relevant than ever. Some excerpts:
Health care is cheap: Eat less fat and more veggies, take a daily walk, quit smoking, and drink a little wine with some nuts. Fail to take care of yourself, and the long-term results can be costly — like the results of never changing the oil in your car and never replacing the tires. New diagnostic and surgical technologies involve expensive equipment and skills. Even so, insurance for gigantic medical expenses is also cheap. My policy pays nothing unless annual medical bills top $2,000. Most people call that “catastrophic” insurance. I call it real insurance.
Insurance for accidental damage to cars and homes is real insurance — something to protect against emergencies, not routine expenses. We do not expect an insurance company to pay for tires and gasoline, or to pay for home painting and termite inspections. When families make their own choices and pay for them, they choose insurance only for catastrophic expenses — the car becoming a total wreck, the house burnt to the ground or the breadwinner dropping dead. If we never collect a dime from such genuine insurance, we consider ourselves lucky.
With health insurance, by contrast, we all want somebody else to pay. Each of us expects to pay less for health insurance than the insurance companies pay to hospitals, doctors and pharmacies. Sadly, that does not add up.
More than a fourth of the U.S. population already has federally subsidized health care through Medicare, Medicaid and military health benefits. If that percentage ever reached 100 percent, as some politicians promise, we might finally begin to wonder how it is possible for everybody to subsidize everybody else.
If you subsidize something, people want more of it. That increase in demand translates into a market in which prices can more easily be raised.
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