Archive for June, 2010

Race to Deceive

Posted by Neal McCluskey

So busy have I been preparing for today’s release of, and Cato forum on, national curriculum standards, that I completely forgot that yesterday was the deadline for states to apply for round two of the Race to the Top. Of course, the Race is precisely what’s gotten many states to sign on to national standards.

In the end, from what I heard last night, 35 states and the District of Columbia applied for round two. Adding the two first round winners to that number means that 13 states decided applying for round 2 just wasn’t worth it. That actually says a lot bad about RTTT, considering how hard it is for state politicians to turn down federal dollars, which after all come from their citizens.

Look into the realities of round one, though, and this anomaly becomes easier to understand. I’ve already linked to a lot of the tough analysis of the first round, but just stumbled on this very insightful “reality check” on RTTT from the Center for Education Reform. CER’s concise guide is well worth reading, and along with the other reality-based critiques of RTTT paints a far different picture of the Obama administration’s signature education move (aside from colossal status quo bailouts and attempted bailouts) than anything the spinmeisters at the Education Department have been furnishing.

So RTTT, for the most part, has been much more PR stunt than driver of real reform. More ominously, it might also just be the warm-up act for the national-standards headliner.

War and the Intellectuals

Posted by Justin Logan

Apologies in advance for the epic-length post.

There’s been a fair bit of wailing and garment-rending about war on the op-ed pages.  In addition to the cloying and tiresome Mark Helprin piece to which David links below, E.J. Dionne, Glenn Greenwald, and Fred Hiatt have all touched on the subject in recent days.  One common theme is the idea that Americans are insulated from the costs and benefits of war, and that this is a problem.

To their credit, some of the writers offer proposals for redressing matters: Helprin suggests American citizens should force congressional declarations of war characterized by “extraordinary, penetrating debate” in order to ensure that decisions to go to war have been “ratified unambiguously by the American people through their constitutional and republican institutions.”  (Do we also owe the troops good decisions?)  Further, citizens must recognize that it is “unacceptable” to “starve the means to fight” in order to defray the costs of war.  “If the general population  must do with less, so be it, for the problem is only imagined.”

What planet does Helprin live on?  The ways in which citizens and legislators behave when it comes to war are shaped by the incentives each group faces.  Helprin — and the other writers — should try to think about those incentives if they actually care about solving these problems.

Read the rest of this post »

Global Warming Plaintiffs Hoisted on Their Own Petard

Posted by Ilya Shapiro

We have reached a denouement of sorts in the “blame XYZ companies for causing global warming which caused Hurricane Katrina which damaged my property” lawsuit that I’ve previously discussed and in which Cato filed an amicus brief.  When last I blogged about this, the Fifth Circuit had apparently lost its en banc quorum — a late judicial recusal left only 8 of 16 judges available to hear the appeal — and was figuring out what to do. 

Well, on Thursday the court issued an order determining that it lacked a quorum, but that the panel opinion — the one that allowed the tendentious causation claims to proceed — remained vacated.  The money quote: “In sum, a court without a quorum cannot conduct judicial business. . . .  Because neither this en banc court, nor the panel, can conduct further judicial business in this appeal, the Clerk is directed to dismiss the appeal.”  This means that the district court opinion dismissing the suit stands, though plaintiffs are free to seek Supreme Court review.  Not surprisingly, the three judges on the panel dissented from this order (which means that the order was decided by a 5-3 vote).

The upshot of all this is that the plaintiffs ended up botching their strategy of suing companies whose shares are owned by Fifth Circuit judges.  This clever legerdemain successfully removed seven judges, but that left a quorum of nine.  Of course, had the late-recusing eighth, Jennifer Elrod — who would’ve been expected to rule against the plaintiffs – recused when the first seven did, the court could not have vacated the panel opinion in the first place.  We’ll never know what happened after the court’s prior decision to grant rehearing that caused Judge Elrod to recuse, but at least we’re left with the second-best result: no strong decision from an important federal appellate court, but the reinstatment of the correct decision below.

Tuesday Links

Posted by Chris Moody

When Hurricane Katrina hit, liberals who had spent years calling President Bush a tyrant suddenly decided he wasn’t authoritarian enough when he hesitated to declare himself generalissimo of New Orleans and muster the troops for a federal War on Hurricanes.

Now the party of “drill, baby, drill” — the folks who warn that Obama’s a socialist — is screaming bloody murder because he’s letting the private sector take the lead in the well-capping operation. It’s almost enough to make a guy cynical about politics.

  • Rethinking Darfur: A new study examines policy proposals to helping a devastated land.

If You Like the VA, You’ll Love ObamaCare

Posted by Michael F. Cannon

The Obama administration sold — well, it pitched ObamaCare to the public with this promise: “It’s time we put the health of American families back in the hands of consumers – not the insurance industry.”

The Veterans Health Administration shows how incompetent the federal government is when it comes to making medicine a patient-centered enterprise.  After decades of mistreating veterans, the VHA achieved some successes in the past decade or so, such as adopting electronic medical records and improving on some measures of quality.  Yet serious deficiencies remain.  Today’s Los Angeles Times reports that the VA’s disability system is a nightmare for soldiers and sailors disabled in combat:

John Lamie survived six roadside bombings in Iraq, only to have the Department of Veterans Affairs refuse to accept three months’ worth of medical tests he underwent for jaw and shoulder wounds — tests performed by VA-approved doctors at VA facilities…

Many veterans wounded in Iraq and Afghanistan are being buffeted by a VA disability system clogged by delays, lost paperwork, redundant exams, denials of claims and inconsistent diagnoses. Some describe an absurd situation in which they are required to prove that their conditions are serious enough for higher payments, yet are forced to wait months for decisions.

“You fight for your country, then come home and have to fight against your own country for the benefits you were promised,” said [Clay] Hunt, 28, who served in Iraq and Afghanistan as a Marine Corps sniper.

It took Hunt, who lives in Brentwood, 10 months to receive VA disability payments for his injuries after the agency misplaced his paperwork…

Some veterans wait up to six months to get their initial VA medical appointment. The typical veteran of the Iraq or Afghanistan wars waits 110 days for a disability claim to be processed, with a few waiting up to a year. For all veterans, the average wait is 161 days…

Lamie, 25, an Army combat engineer who risked his life uncovering and defusing roadside bombs in Iraq, declared bankruptcy in April. He is unable to work because of his combat injuries, he said, and VA delays have left him short of cash to support his wife and four children. He gets $311 a month in food stamps.”I did everything the VA asked of me, but they block you at every turn,” Lamie said from his home in Georgia. “They play with people’s lives…They drag their feet, hoping you’ll give up. A lot of people do. Not me.”…

When he volunteered for the Marine Corps, Hunt recalled, a selling point was lifelong medical care if he were wounded.“But then the time comes to get those benefits, it turns into a lifelong battle with the VA to get what you were promised,” he said…

The experience has left [Lamie] drained and disillusioned. He said he couldn’t even look at his old Army uniform anymore.

“I can’t stand the sight of it after what I’ve gone through with the VA,” he said. “I’m not proud anymore.”

ObamaCare will produce similar horrors, and for the same reason: all economic systems serve the people who control the money.  Under ObamaCare and the VA, patients don’t control the money.  The government does.

Returning that money to consumers would put patients first, whether they’re veterans or other civilians. But such reforms won’t mean a thing until we repeal ObamaCare.

The Welfare State, Taken to Its Logical Conclusion

Posted by Michael F. Cannon

The economic tragedy unfolding in Greece is the welfare state taken to its logical conclusion.  When groups of people use the state to live at the expense of others, the feedback loop about the costs of those transfers is attenuated — often by design.  The welfare state therefore makes commitments that it cannot honor.  By the time creditors or taxpayers say, “Enough,” the welfare state has created a clash between expectations and means that leads to unrest and hardship — a clash that never had to occur.

Reuters reports that this tragedy is playing itself out in Canada, where the Medicare system is straining the budgets of taxpayers and provincial governments — even as Canada remains infamous for providing inadequate access to care.  According to Reuters, the provincial government in populous Ontario predicts that “health care could eat up 70 percent of its budget in 12 years, if all these costs are left unchecked.”  Toronto-Dominion Bank senior economist at Derek Burleton remarks:

There’s got to be some change to the status quo…We can’t continually see health spending growing above and beyond the growth rate in the economy because, at some point, it means crowding out of all the other government services.  At some stage we’re going to hit a breaking point.

The provinces are contemplating measures that would further reduce access, such as ratcheting government price controls downward, “health taxes” on medical services, and (gasp!) charging patients. (Speaking of feedback loops, an economist at Scotia Capital reasons that patients “will use the services more wisely if they know how much it’s costing…If it’s absolutely free with no information on the cost and the information of an alternative that would be have been more practical, then how can we expect the public to wisely use the service?”)

The Greek and Canadian dramas are a preview of what the welfare state, aided by its most recent expansion, will provoke here in the United States.  Again, Reuters:

Canada, fretting over budget strains, wants to prune its system, while the United States, worrying about an army of uninsured, aims to create a state-backed safety net.

Burleton captures the problem nicely:

[F]rom an economist’s standpoint, we point to the fact that sometimes Canadians in the short term may not realize the cost.

Indeed, that’s the very essence of the welfare state, and why its logical outcome is crisis.

Remember, the FCC Is Our National Censor II

Posted by Jim Harper

Last week, I referred obscurely to “folks wanting to install the FCC as the Internet’s regulator,” cautioning that this same Federal Communications Commission is our national censor.

A friendly correspondent points me to an article in Ars Technica about the demand for speech controls coming from the same groups that want the FCC to control the Internet’s infrastructure, groups such as Free Press, the Media Access Project, and Common Cause.

Is there a parry to the charge that this is a demand for censorship? The signatories to the regulatory filing “respectfully request[] that the FCC . . . inquire into the extent and effects of hate speech in media, and explore possible non-regulatory ways to counteract its negative impacts.”

The filing does not contain the words “First Amendment” or “free speech.” It means “non-regulatory” the way a cop eyeballing someone and slapping his palm with a billy club is “non-regulatory.”

The FCC is experienced with “non-regulatory” coercion. Hearings in Congress have explored how the agency uses arm-twisting to get what it wants outside of formal regulatory processes. As law professor Lars Noah testified in 1999:

Arm twisting refers to an agency’s use of threats either to impose a sanction or withhold a benefit in hopes of encouraging nominally voluntary compliance with a request that the agency could not impose directly on a regulated entity. This informal method of regulation often saddles parties with more onerous regulatory burdens than Congress had authorized, accompanied by a diminished opportunity to pursue judicial challenges.

An FCC with the power to regulate Internet access services would use it to control Internet content.  There’s no place for the FCC in monitoring or administering speech controls, nor in controlling our communications infrastructure, the Internet.

Universal Charity Vouchers. A Conservative Solution?

Posted by Adam Schaeffer

Robert VerBruggen of NRO believes that the only difference between allowing taxpayers to direct their own funds according to their individual preferences and having the government pool all tax dollars and distribute them according its collective preference is political, not principled. A mere technicality rather than a fundamental distinction.

Moreover, VerBruggen contends that it is dishonest to use tax credits instead of direct government spending.

If that’s true, why don’t we voucherize charitable giving?

The feds should eliminate the charitable tax deduction and send out the average (tax-forgiven) amount donated per adult to every citizen in the country to donate as they wish! Would this be more honest? Is there no fundamental difference between these two approaches?

Sure, some people would complain about how their tax dollars were being redistributed to, say, support abortion clinics or the Catholic Church or PETA. They would carp about how they, as taxpayers who earned that money in the first place, should be the ones to direct their money to the charity of their choice. They would complain that pooling the money and doling it out to people who didn’t earn it to use at their own discretion, according to some criteria determined by the government, is unfair and wrong. Are these just technicalities?

Is direct government spending on universal charity vouchers really no different than giving individual taxpayers the freedom to donate to the charities of their choosing?

Would universal charity vouchers be preferable to the individual tax deductions for charitable donations that we have today, from the standpoint of minimizing compulsion and social tension? To claim that school vouchers are equal to or better than tax credits on these grounds is to claim that universal government charity vouchers would be better than the system we have today.

“By letting citizens do the government’s job of allocating tax money to the preferred area,” VerBruggen insists, “politicians can avoid controversy, claiming they’re merely enabling ‘donations.’” He therefore concedes, “so maybe there’s something to Coulson’s argument about avoiding social conflict, if only because people mistakenly think there’s a meaningful difference between the two funding mechanisms.” While VerBruggen supports direct government vouchers, using “[tax expenditures] is a dishonest way to get them.”

VerBruggen seems pre-committed to charity vouchers. It’s the only honest thing to do. Anyone else on board with that?

Federal Spending Limit

Posted by Chris Edwards

The nation is facing a fiscal emergency. Debt is exploding and federal spending exceeds revenues by more than $1 trillion a year. To fix the problem, policymakers should pursue reforms on two paths.

First, policymakers should start identifying programs for termination, privatization, and devolution to the states. If a business conglomerate overexpanded and its spending ran ahead of revenues, prudent managers would start shedding low-value operations and refocusing on core activities. The federal government should do the same.

Second, policymakers should adopt new rules to bring greater discipline to federal budgeting. Right now, it’s anarchy on Capitol Hill with every member and interest group pushing for more dollars. Very few members consistently defend restraint.

The solution is for Congress to pass a law limiting annual increases in overall federal spending. Rep. Lamar Smith (R-TX) recently introduced legislation to do just that. His SAFE Act (H.R. 5323) would cap annual growth in the federal budget to inflation plus population growth.

Smith’s bill, which has 34 co-sponsors, would cap growth in all spending including defense, nondefense, and entitlements. If spending this year was $3.70 trillion, inflation was 2 percent, and population growth was 1 percent, then federal spending next year would be limited to $3.81 trillion. If Congress failed to get spending under the limit by the end of the year, the president’s budget office would be required to apply an across-the-board cut, or sequester. I’ve discussed some of the details of such a spending limit in this congressional testimony.

Rep. Smith’s spending restraint legislation is exactly the type of budget process reform that Republicans should be championing. The idea of a cap on overall spending was supported by tea partiers in their Contract from America, and it’s easy for the average citizen to understand. The idea is simply that the government’s budget shouldn’t grow faster than the average family’s budget.

With a budget cap in place, it would be easy for voters and activists to know whether Congress was living up to a basic standard of fiscal prudence. If members of Congress tried to cheat on the legal spending limit, or tried to repeal it, citizens could impose political pressure on the spendthrifts. A simple and rigid budget limit would be a high-profile symbol of restraint for people to rally around and defend.

The chart below shows actual spending since 1990 and a budget limit of population growth plus inflation, with those variables averaged over the prior five years. In the 1990s, Congress generally kept spending under the limit. Over ten years, actual spending rose an average 4.2 percent annually, which was less than the 4.6 percent average growth of the limit. By contrast, spending growth during the 2000s has far exceeded the limit, illustrating where today’s huge deficits came from.

In sum, the nation can move back toward fiscal sanity by voting out the big spenders of both parties and voting in a reform-minded Congress to terminate programs and shrink the budget. Then, if Congress passed a law capping overall spending it would lock-in those cuts and make them harder to reverse later on. This two-part process could help ratchet-down the size of government over time.

Notes: Rep. Smith does not specify a five-year average for his spending limit variables, as I’ve assumed here. Also note that federal spending is calendar year data from the National Income and Product Accounts, Table 3.2.

Bureaucrats vs. Taxpayers

Posted by Daniel J. Mitchell

The political process often resembles an unseemly racket as politicians take money from people who earn it and give it to another group in exchange for campaign cash and political support. The modern bureaucracy is a good example. Government workers have now become a cosseted elite, with generous pay, extravagant benefits, lavish pensions, and ironclad job security. In exchange for this privileged status, they reward the politicians with millions of dollars of support and a host of in-kind contributions.  I have documented many of these outrages in my “Taxpayers vs. Bureaucrats” series at the International Liberty blog. Well, now we have a video detailing how the government workforce has morphed into a fiscal nightmare for taxpayers.

There are three things in the video that deserve special emphasis. First, bureaucrats are vastly overpaid. The government data cited in the video show that total compensation for the federal civil service is twice as high, on average, as it is for workers in the productive sector of the economy. There are some bureaucrats who deserve above-average pay, such as scientists dealing with nuclear weapons, but it is outrageous that the average drone in the federal bureaucracy is getting twice as much compensation as the taxpayers (serfs) who pay their salaries.

Second, this mini-documentary debunks the silly argument (put forth by government employee unions, of course) that bureaucrats are underpaid compared to the private sector. The Department of Labor has data looking at voluntary departure rates by profession. If government workers were being underpaid, you would expect them to be more likely to leave their jobs in order to take new positions in the (supposedly higher paid) private sector. Instead, the video reveals that people in the private sector are six times more likely to switch jobs than federal bureaucrats.

Third, the video concludes with the essential point that most federal bureaucrats should be paid nothing because they work for departments and agencies that should not exist.

Last but not least, Chris Edwards deserves special mention. Much of the material in this video came from his work on this issue.