Archive for January, 2011
Gates’s ‘Cuts’ and the Neocons’ Lament
As I discussed last week, Defense Secretary Robert Gates’s latest attempt to “cut” the Pentagon’s budget are phony. The Secretary would ideally like to see the $78 billion over five years in savings filtered elsewhere into the budget; meanwhile, the 2012 budget will actually grow.
This hasn’t stopped uber-hawk Max Boot and a cadre of neocons from attempting to spin the Secretary’s announcement as the latest example of military downsizing that will make our services less prepared to deal with any conflict or international issue around the globe. I rebut Boot’s claims over at The Skeptics:
In his latest offering at The Weekly Standard, Boot wails that the personnel cuts “will bring the Army’s active duty strength down to 517,000—still larger than it was in 2001 but far smaller than it was in 1991, and not big enough to meet all of the contingencies for which it must prepare.”
Boot doesn’t define the “contingencies” that he wants the military to prepare for, but it seems pretty clear that he disagrees with Robert Gates’s assessment that “The United States is unlikely to repeat a mission on the scale of those in Afghanistan or Iraq anytime soon — that is, forced regime change followed by nation building under fire.”
…
One can only imagine how hysterical [the neocons] would be if Gates had actually proposed to reduce the amount of money going to the military every year. As it is, the DoD budget is slated to grow. Gates explained at last week’s press conference that his goal was “a steady, sustainable and predictable rate of growth” without explaining why the Pentagon should simply expect to see more money every year while the rest of the country is supposed to be cutting back.
My word of advice to anyone who wants to know what Gates has actually proposed: look at the facts, not the neocons’ interpretation of them.
Reply to Samuelson: It Is an Engineering Problem
In today’s Washington Post, Robert Samuelson argues that the performance of U.S. public schools is at least adequate, and that the relatively low achievement of black and Hispanic students is to be attributed to history and culture rather than to our education system. These claims are not new, and I might well have ignored them if he hadn’t got my Irish up with the off-hand comment that “what we face is not an engineering problem.” (More on that in a second.)
First, let’s dispatch the claim that public schooling is off the hook for the poor performance of low-income minority children. I’m currently undertaking a statistical study of the performance of 78 separate charter school networks in California, relative to one another and to the state’s traditional public schools. To foreshadow the results, the performance differences within socioeconomic groups are enormous even after controlling for school-wide peer effects. Among low-income Hispanic students, across grades, schools and subjects, average scores at two of the top charter networks (American Indian Public Schools and Oakland Charter Academies) are roughly 4 standard deviations above the statewide traditional public school mean. Quatre. Quattro. FOUR.
To put that in perspective, effect sizes in social science research are normally evaluated based on Jacob Cohen’s rule of thumb that 0.2 standard deviations is “small”, 0.5 is “moderate”, and anything bigger than 0.8 is “large.” To put it further in perspective, the low-income Hispanic effect sizes of two of California’s most elite and academically selective public schools are closer to 2 S.D. So the top charter networks, which accept every student who applies, massively outperform elite public schools that actively select their students based on prior test scores. Consistently. Across grades and subjects. [Note that there's also wide variation in performance among charter school networks, with many performing below the mean of traditional public schools. Further details when the paper is published in a few months].
So, no, public schooling is not off the hook. We know it is possible to dramatically raise the achievement of low-income minority students above the current public school level. The problem is that we lack a system for reliably replicating the good schools and crowding out the rest. And what kind of problem is that? Even Wikipedia knows the answer:
Engineering is the discipline, art and profession of acquiring and applying scientific, mathematical, economic, social, and practical knowledge to design and build… systems… and processes that safely realize solutions to the needs of society.
Engineering is just a broad set of tools for finding practical solutions to complex problems. One of the most useful of those tools is an aversion to reinventing the wheel, so engineers always ask how the kind of problem they’re addressing has been approached previously, in other places, even in other fields. When possible, they adapt proven solutions to the problem at hand.
So let’s all be engineers for a day on January 28th and hear what education experts from Sweden and Chile have to say about how their nations have been encouraging the replication of good schools. You can register for this unique lunchtime event here.
Government and Violence
[I]t’s worth remembering that the government initiates violence against its own citizens every day in this country, citizens who pose no threat or harm to anyone else. The particular policy that leads to the sort of violence… is supported by nearly all of the politicians and pundits decrying anti-government rhetoric on the news channels this morning. (It’s also supported by Sarah Palin, many Tea Party leaders, and other figures on the right that politicians and pundits are shaming this weekend.)
I hope Rep. Giffords—and everyone wounded yesterday—makes a full recovery. It’s particularly tragic that she was shot while doing exactly what we want elected officials to do—she was making herself available to the people she serves. And of course we should mourn the people senselessly murdered yesterday, government employees and otherwise: U.S. District Judge John Roll, Dorothy Murray, Dorwin Stoddard, nine-year-old Christina Green, Phyllis Scheck, and Gabe Zimmerman.
That said, I long for the day that our political and media figures get as indignant about innocent Americans killed by their own government—killed in fact, as a direct and foreseeable consequence of official government policy that nearly all of those leaders support—as they are about a government official who was targeted by a clearly sick and deranged young man. What happened this weekend is not, by any means, a reason to shunt anti-government protest, even angry anti-government protest, out of the sphere of acceptable debate. The government still engages in plenty of acts and policies—including one-sided violence against its own citizens—that are well worth our anger, protest, and condemnation.
The worst outcome would be for all dissent to become suspect. “Anti-government” is a concept used, essentially, to stifle debate, by conflating reasonable criticisms with the actions of lunatics. Both — of course! — are “anti-government,” and both are therefore guilty. It should be obvious what sort of agenda this furthers: Everything “government” is good.
The Case for Social Security Personal Accounts
There are two crises facing Social Security. First the program has a gigantic unfunded liability, largely caused by demographics. Second, the program is a very bad deal for younger workers, making them pay record amounts of tax in exchange for comparatively meager benefits. This video explains how personal accounts can solve both problems, and also notes that nations as varied as Australia, Chile, Sweden, and Hong Kong have implemented this pro-growth reform.
Social Security reform received a good bit of attention in the past two decades. President Clinton openly flirted with the idea, and President Bush explicitly endorsed the concept. But it has faded from the public square in recent years. But this may be about to change. Personal accounts are part of Congressman Paul Ryan’s Roadmap proposal, and recent polls show continued strong support for letting younger workers shift some of their payroll taxes to individual accounts.
Equally important, the American people understand that Social Security’s finances are unsustainable. They may not know specific numbers, but they know politicians have created a house of cards, which is why jokes about the system are so easily understandable.
President Obama thinks the answer is higher taxes, which is hardly a surprise. But making people pay more is hardly an attractive option, unless you’re the type of person who thinks it’s okay to give people a hamburger and charge them for a steak.
Other nations have figured out the right approach. Australia began to implement personal accounts back in the mid-1980s, and the results have been remarkable. The government’s finances are stronger. National saving has increased. But most important, people now can look forward to a safer and more secure retirement. Another great example is Chile, which set up personal accounts in the early 1980s. This interview with Jose Pinera, who designed the Chilean system, is a great summary of why personal accounts are necessary. All told, about 30 nations around the world have set up some form of personal accounts. Even Sweden, which the left usually wants to mimic, has partially privatized its Social Security system.
It also should be noted that personal accounts would be good for growth and competitiveness. Reforming a tax-and-transfer entitlement scheme into a system of private savings will boost jobs by lowering the marginal tax rate on work. Personal accounts also will boost private savings. And Social Security reform will reduce the long-run burden of government spending, something that is desperately needed if we want to avoid the kind of fiscal crisis that is afflicting European welfare states such as Greece.
Last but not least, it is important to understand that personal retirement accounts are not a free lunch. Social Security is a pay-as-you-go system, so if we let younger workers shift their payroll taxes to individual accounts, that means the money won’t be there to pay benefits to current retirees. Fulfilling the government’s promise to those retirees, as well as to older workers who wouldn’t have time to benefit from the new system, will require a lot of money over the next couple of decades, probably more than $5 trillion.
That’s a shocking number, but it’s important to remember that it would be even more expensive to bail out the current system. As I explain at the conclusion of the video, we’re in a deep hole, but it will be easier to climb out if we implement real reform.
George W. McDonnell
Virginia governor Bob McDonnell must be a Bush Republican. The Washington Post reports today:
Virginia Gov. Robert F. McDonnell plans a massive spending campaign that he said would unclog state roads, award thousands more college degrees and spur job creation, part of an aggressive legislative agenda he is expected to roll out this week.
McDonnell (R) will press lawmakers to approve a series of statewide projects he said would be paid in part through Virginia’s $403 million budget surplus, $337 million in higher-than-expected tax revenue, and $192 million generated through cuts and savings….
He plans to borrow nearly $3 billion over the next three years.
That doesn’t sound like the agenda of a Reagan Republican or a Tea Party Republican. It sounds a lot like the program of George W. Bush, the biggest-spending president between LBJ and, well, the president who followed Bush.
Of course, McDonnell might also be called a George Allen Republican. Allen, who served as governor of Virginia from 1994 through 1997, has a reputation as a staunch conservative. But he earned a grade of 40 on the Cato Institute’s Fiscal Policy Report Card. McDonnell seems to be headed for a similar grade.
Rep. Clyburn Wants Special Treatment at Airports
It’s fascinating to watch a member of Congress use a tragedy like Gabrielle Giffords’ shooting to seek advantage over us common folk. On Fox News Sunday this week, Representative James Clyburn (D-SC) suggested that Members of Congress should get special treatment at airports.
Airports are some of the safest places anyone can be. Don’t use your imagination—think about it: Airports teem with security personnel and security-conscious citizens. Because their travel schedules are generally unannounced, members of Congress are not any more exposed while traveling than during their other public movements. There is some risk—we know too well because of this weekend’s tragedy—when elected officials make announced public appearances, but that small risk is something they should generally continue to accept lest they fall even further out of touch with constituents.
It is vitally important that members of Congress experience air travel as the rest of us do. If they don’t, they will continue to impose its burdens on us without getting the valuable feedback of first-hand experience.
Facebook as Identity Provider
It might take Facebook awhile to turn identity provision into a revenue opportunity, but if it is a money-maker, it could be a substantial one. Simson Garfinkel has a piece in Technology Review that goes into some of the things Facebook is doing with its “Connect” service.
As security professionals debate whether the Internet needs an “identity layer”—a uniform protocol for authenticating users’ identities—a growing number of websites are voting with their code, adopting “Facebook Connect” as a way for anyone with a Facebook account to log into the site at the click of a button.
It’s a good, relatively short article, worth a read.
As an online identity provider, Facebook could facilitate secure commerce and communication in a way that’s easy and familiar for consumers. That adds value to the Internet ecosystem, and Facebook may be able to extract some of the surplus for itself—perhaps by charging sites and services that are heavy users small amounts per login via Connect. The security challenges of such a system would grow as more sites and services rely on it, of course, and Garfinkel highlights them in an accessible way—accessible as you’re going to get, anyway.
Quibbles are always more interesting, so I’ll note that I cocked my head to one side where Garfinkel asks “whether it’s a good thing for one company to hold such a position of power.” Strange.
Taking “power” in its philosophical sense to mean “a measure of an entity’s ability to control its environment, including the behavior of other entities,” Facebook Connect gives the company very little power. Separate, per-site logins—or a parallel service that might be created by Google, for example—are near at hand and easy to switch to for anyone who doesn’t like Facebook’s offering.
Ironically, Garfinkel refers to these identity services as “Internet driver’s licenses,” inviting a comparison with the power structure in the real-world licensing area. If you want to drive a car legally, there are no alternatives to dealing with the state, so the state can impose onerous conditions on licensing. Drivers’ licenses require one to share a great deal of information, they cost a lot of money (relative to Facebook’s dollar price of “free”), and switching is not an option if the issuer starts to change the bargain and enroll licensees in a national ID system. Garfinkel himself noted how drivers’ licenses enhance state power in a good 1994 Wired article.
In sum, the upsides of an identity marketplace are there, for both consumers and for Facebook. The downsides are relatively small. The “power” exercised by any provider in a marketplace for identity provision is small compared to the alternative of using states as identity providers.
Republican Sellout Watch
Grousing about the GOP’s timidity in the battle against big government will probably become an ongoing theme over the next few months. Two items don’t bode well for fiscal discipline.
First, it appears that Republicans didn’t really mean it when they promised to cut $100 billion of so-called discretionary spending as part of their pledge. According to the New York Times,
As they prepare to take power on Wednesday, Republican leaders are scaling back that number by as much as half, aides say, because the current fiscal year, which began Oct. 1, will be nearly half over before spending cuts could become law.
This is hardly good news, particularly since the discretionary portion of the budget contains entire departments, such as Housing and Urban Development, that should be immediately abolished.
That being said, I don’t think this necessarily means the GOP has thrown in the towel. The real key is to reverse the Bush-Obama spending binge and put the government on some sort of diet so that the federal budget grows slower than the private economy. I explain in this video, for instance, that it is simple to balance the budget and maintain tax cuts so long as government spending grows by only 2 percent each year.
It is a good idea to get as much savings as possible for the remainder of the 2011 fiscal year, to be sure, but the real key is the long-run trajectory of federal spending.
PAYGO, the CBO, and Repealing ObamaCare
One could argue that exempting ObamaCare from the PAYGO requirement is appropriate given the defects in current budget rules.
By law, the CBO must follow certain rules when doing cost estimates of legislation and projecting federal spending under current law. Under those rules, CBO projects ObamaCare will reduce the deficit. No question.
But Congress often defeats those budget rules by passing legislation with “pay fors” (i.e., spending cuts) that make the budget look better, yet are highly unlikely to be sustained because they are politically implausible. A good example of this is the “sustainable growth rate” formula, where Congress promises to ratchet down the government price controls that Medicare uses to pay physicians in future years. Congress has consistently reneged when those cuts come due. The pretense of future cuts that Congress writes into law makes 10-year budget projections/deficits look better than actual, unwritten policy would suggest.
This is a recognized problem. When the CBO believes that the law and actual policy are at variance, they actually do two types of cost projections: one based on the law as written and one based on the policy they think Congress is likely to adopt, based on past performance. They call the latter their “alternate fiscal scenario.”
ObamaCare opponents submit that this law is one of those instances where law and policy are at variance. So even though ObamaCare will reduce the deficit under existing budget rules, the spending cuts (actually, reductions in future spending growth) in the law were never going to take effect anyway. The CBO, CMS, and even the IMF have all discredited the idea that ObamaCare would reduce the deficit, because they all question the sustainability of ObamaCare’s spending “cuts.” Exempting ObamaCare repeal from PAYGO rules is appropriate if those rules have failed to protect taxpayers.
The Constitutional Vision of The New York Times, Again
What is it about the editorialists at The New York Times? Again today they’re ridiculing the decision by the new House to begin its business yesterday by reading the Constitution aloud. On Tuesday, with great pomposity themselves, the editors called the anticipated reading “a theatrical production of unusual pomposity.” Then in a nasty little editorial today entitled “The United States Consti …tion” — that’s not a typo; that’s their headline — they criticize House leaders for deciding not to read the “obsolete or offensive” parts of the document that are no longer law due to subsequent amendment. The Constitution was read, that is, as it exists today, which hardly seems surprising.
But it’s far more than surprising to the Times, apparently, because this “rewriting of history” deprives us of yet another opportunity to wallow in the unpleasant episodes of our past, as the Times and its followers so love to do — American unexceptionalism and all. Indeed, those offensive provisions “were written by a group of men that many in the Tea Party and elsewhere seem to consider infallible and nearly divine.”
It’s hard to make this stuff up; you have to simply quote it. Which brings us to the point of the editorial: What really troubles the Times, you see, is that Republican leaders “missed a chance to demonstrate that this document is not nailed to the door of the past. It remains vital precisely because it can be reimagined.” Well, yes, we have “reimagined” the Constitution from time to time — by amendment. But that’s not quite what the Times has in mind. No, the editors grant that the Constitution “was a work of political genius” (despite those offensive parts?), but “largely because its authors handed its interpretation to the open minds of posterity.” Through amendment? Well, not entirely, or even mainly, in today’s context. In their Tuesday piece, they revealed their hand — hardly a surprise — when they spoke of constitutional text “that the founders wisely left open to generations of reinterpretation.”
So it’s not just by amendment that we change our fundamental law: that’s how the Civil War generation removed offensive parts, legitimately; and that’s how women got the vote. But there’s another way to amend the Constitution, too — by “reinterpreting” its text. That’s how the New Dealers did it, as I discussed in this space yesterday and have more fully elsewhere. After Roosevelt’s infamous Court-packing threat, a cowed Supreme Court turned the Constitution on its head: by reading shields against power as swords of power; by turning a Constitution for limited government into one of virtually unlimited government. That’s fine with the Times. It’s not with the people the Tea Party sent to Washington, and that’s why the Times has them in its sights. What the Times champions is not constitutionalism. It’s politics. They won’t say it. We will.
This Week in Government Failure
Over at Downsizing Government, we focused on the following issues this week:
- Another example of why the U.S. Postal Service should be privatized.
- Given the federal government’s continued post-emergency bureaucratic bungling, Congress should devolve responsibility for disaster assistance to state and local governments, private insurance companies, and charities.
- Federal taxpayers helping foot the tab for renovations to a local wine bar? It sounds crazy, but that’s par for the course with HUD’s Community Development Block Grant program.
- Much of the increase in nondefense discretionary spending during the past decade came when the GOP controlled the House, Senate, and White House. So now is the GOP’s chance to start reversing all those Bush-era increases.
- Republicans should use the debt limit vote as an opportunity to press the administration for budgetary reforms that address a potentially ruinous debt burden that has been driven by the profligate spending of both parties.
Thoughts on the Debt Limit Debate
The origins of the federal government’s statutory debt limit can be traced back to 1917, when the country was borrowing money to finance the Great War. Congress has voted to increase the limit numerous times over the decades, including 10 times since 2001.
The present debt limit is $14.3 trillion, and total outstanding debt subject to the limit currently stands at just under $14 trillion. Given that policymakers don’t have the will to cut spending immediately in order to keep the debt from hitting the limit, a political battle over raising it is unfolding.
The Obama administration is basically warning that congressional (i.e., Republican) intransigence over raising the limit could potentially lead to the federal government defaulting on its debt, because it needs to borrow money in order to make its debt payments. Treasury Secretary Tim Geithner warned Congress that failing to increase the limit would result in “catastrophic economic consequences that would last for decades.” The president’s chief economic adviser, Austan Goolsbee, warned Congress not to “play chicken” over whether to raise the debt limit, as failing to do so would cause “a worse financial economic crisis than anything we saw in 2008… This is not a game. The debt ceiling is not something to toy with.”
Back in 2006, then-Senator Barack Obama apparently wasn’t concerned about the “catastrophic economic consequences” when he voted against raising the debt limit. ABC News recalls Obama’s stated reason for his “no” vote:
The fact that we are here today to debate raising America’s debt limit is a sign of leadership failure,” he said on March 16, 2006. “Leadership means that ‘the buck stops here.’ Instead, Washington is shifting the burden of bad choices today onto the backs of our children and grandchildren. America has a debt problem and a failure of leadership. Americans deserve better. I therefore intend to oppose the effort to increase America’s debt limit.
Cato on Facebook
Cato on Twitter
Cato on Google+
Cato on YouTube
