Archive for February, 2011
HSR: Joe Biden Channels The Simpsons
In his customary salesman style, Vice President Joe Biden recently made a pitch to a Philadelphia crowd for a plan to spend $53 billion over the next six years on a national system of high-speed rail.
Biden’s performance brings to mind the classic Simpsons episode “Marge vs. the Monorail” in which con-man Lyle Lanley convinces the town’s residents to waste money on an exciting-sounding high-speed train that turns out to be a boondoggle.
The full episode can be viewed here, but here’s the scene in which Lanley whips the crowd into frenzied support of his plan:
The Heritage Foundation on the Patriot Act
If you wonder why House Republicans were so keen on ramming through an extension of the Patriot Act without hearings or debate, take a gander at the Heritage Foundation’s blog post and Web memo on the topic. I want to run through the latter in some detail, because I think it’s telling just how poorly the case against reform stands up to scrutiny in the rare instances when the law’s defenders feel obliged to make an argument more sustained than “Boo! Terrorists!”
Here’s how they begin:
With at least 36 known plots foiled since 9/11, the United States continues to face a serious threat of terrorism. As such, national security investigators continue to need these authorities to track down terror leads and dismantle plots before the public is in any danger. These three amendments—which have been extensively modified over the years by Congress and now include significant new safeguards, including substantial court oversight—are vital to this success.
I’ve debated co-author Jena McNeil Baker on Patriot a few times, and she invariably leads off with a running tally of foiled terror plots. I’m not sure exactly which cases make her current list, but in the past she’s cited yahoos like the Lackawanna Six, who don’t appear to have had any actual plot to dismantle, and since our last exchange the FBI has augmented the count via its innovative strategy of planning terror attacks for itself to foil.
But let’s all agree the terror threat is real and serious even without this sort of inflation. What evidence do the authors have that any of the three expiring authorities were “vital” in any of those cases? There just isn’t any. Even if it were true, the authors would have no basis in the public record for the assertion. The evidence we do have, however, suggests just the opposite. Lone Wolf has never been used, so it certainly wasn’t vital. FISA roving authority has been granted an average of 22 times per year since Patriot, and in many of those cases, investigators found they didn’t end up needing to use it. And none of the reports I can recall reading on apprehended wannabe-terrorists suggested that they were practicing sophisticated countersurveillance tactics. The Office of the Inspector General couldn’t find any major case developments attributable to 215 business record orders, which also don’t seem to be used that frequently.
If one of the sunsetting powers had played an important role in disrupting a concrete plot or attack, though, you’d think Justice Department officials would have every incentive to say so loudly and unambiguously, even if they couldn’t get into operational specifics. While these facts are suggestive, of course, I can’t say with certainty that the two powers that have actually been used definitely didn’t play a vital role in any of those (let’s be generous) 36 cases. It would be more convenient if I could say so, but I’m at something of a disadvantage here: In the absence of evidence, I lack the panache needed to make whatever sweeping assertions would help my position. I can only say that all the evidence we do have cuts against that bold claim.
We move to roving wiretaps, which we’re told are a “garden variety” surveillance tool used “routinely” in criminal investigations. The authors seem to be operating with highly idiosyncratic definitions of those terms: In 2009, there were 2,376 wiretap warrants issued for criminal investigations, of which 16 were roving. But routine or not, pretty much everyone in fact agrees that roving authority should be available for intelligence investigations. Astonishingly, the Heritage memo never even mentions the actual issue civil libertarians have with this provision: that unlike the parallel criminal authority, it permits roving warrants that don’t name an individual target. So the authors spend five paragraphs mounting an irrelevant defense of a power nobody contests in principle, but never informs their readers about the real point of controversy, let alone argue for the asymmetry.
The Growing Chorus for Criminal Justice Reform
The American criminal justice system has long been flawed. This probably isn’t news to you. What is news is the emergence of a broad chorus of organizations and leaders from across the political spectrum speaking out in support of serious reform. A few examples:
The Smart on Crime Coalition released its recommendations (and in pdf) for the 112th Congress, providing ways that the federal government can help fix the criminal justice system. Congress creates, on average, a new criminal offense every week. The urge to overcriminalize just about everything needs to be replaced with serious thought about how broadly Congress writes laws so that the drive to lock up a few bad actors does not make felons of a large portion of the citizenry.
The Smart on Crime report also points out the need for reform of asset forfeiture laws, building on the excellent Policing for Profit report produced by the Institute for Justice last year.
Conservatives see the need for reform as well. Right on Crime makes the case for a number of policy changes that not only focus law enforcement resources but aim to save taxpayer dollars.
Grover Norquist of Americans for Tax Reform, a signatory to Right on Crime’s Statement of Principles, points to recent reforms in Texas at National Review:
When the Lone Star State’s incarceration rates were cut by 8 percent, the crime rate actually dropped by 6 percent. Texas did not simply release the prisoners, however. Instead, it placed them under community supervision, in drug courts, and in short-term intermediate sanctions and treatment facilities. Moreover, it linked the funding of the supervision programs to their ability to reduce the number of probationers who returned to prison. These strategies saved Texas $2 billion on prison construction. Does this mean Texas has gotten “soft on crime”? Certainly not. The Texas crime rate has actually dropped to its lowest level since 1973.
The lesson from Texas is that conservatives can push reforms that both keep Americans safe and save money, but only if we return to conservative principles of local control, performance-based funding, and free-market innovation.
As Radley Balko recently wrote at Reason, there are points where libertarians and conservatives will differ, but there is cause for optimism in the recognition that we can’t continue to lock up so many of our citizens. The United States accounts for 5% of the world’s population, yet 23% of the world’s reported prisoners. Hopefully Jim Webb’s National Criminal Justice Commission Act will end his Senate career on a positive note, and prompt serious changes to the way that the states and federal government deal with crime.
To gain an appreciation of the scope of the problem, check out Tim Lynch’s In the Name of Justice: Leading Experts Reexamine the Classic Article “The Aims of the Criminal Law” and Harvey Silverglate’s Three Felonies a Day: How the Feds Target the Innocent.
Seattle Cop Caught on Tape
A Seattle police officer was caught on tape kicking a man who was lying face down on a sidewalk with his hands already handcuffed behind his back. Whether the off-duty cop was drunk and badgering some women, as some witnesses claim, would make the incident even worse–because the handcuffed “suspect” may well have believed he was coming to the woman’s defense from some creepy guy. In any event, kicking handcuffed persons who are not doing anything is unprofessional and illegal.
Cato held a forum on filming the police and that event can be viewed here.
Dilma Announces Spending Cuts in Brazil
The new Brazilian government of President Dilma Rousseff has announced spending cuts of 50 billion reais (approximately $30 billion) this year. This amounts to approximately 1.3% of the country’s estimated GDP for 2011. Despite good intentions, that is still a very timid effort in curbing the size of government in Brazil: Total government spending (including state and local levels) runs at almost 40% of GDP.
Perhaps the timidity of the proposal is explained by the fact that curbing the size of government is not the motivation for the spending cuts. Nor is it to avoid a looming fiscal crisis. Brazil’s estimated budget deficit for 2010 was 2.3% of GDP; not good, but still a far cry from the fiscal woes of Europe or the U.S.
Dilma’s reason for cutting spending lies in the helplessness of Brazil’s Central Bank in containing the rise of the real without harming the economy. The real has appreciated against the dollar by 38% in the last two years (thanks in large part to Ben Bernanke’s policies at the Fed). Efforts to contain this appreciation by intervening in the foreign exchange market and building up reserves led to a rise in inflation, which closed at 5.9% last year. The Central Bank has raised interest rates in order to curb inflation, but at 11.25% they are already too high and constitute a heavy burden on Brazil’s productive sector. Moreover, high interest rates are a magnet for foreign money seeking high returns, which drives up the value of the real even further.
Cutting government spending wouldn’t seem like the favored policy alternative of a left-wing technocrat such as Dilma Rousseff. However, it is the best way to bring down interest rates and control inflation under the present circumstances. It remains to be seen if the cuts do the trick, but they are certainly a positive sign from Brazil’s new president.
Secretly Happy Colleges Should Mean Overtly Angry Taxpayers
Yesterday, House Republicans introduced their preliminary list of spending cuts, cuts that were, they declared, ”to go deep.” Unfortunately, coming in at just $74 billion, they were about as deep as onion skin. After all, the total federal budget is well over $3 trillion, and the national debt now exceeds $14 trillion.
The relatively lilliputian size of the proposed cuts should give any taxpayer major queasiness over Republicans’ desire to truly rein in government. But if that doesn’t scare you, this report from Inside Higher Ed absolutely should:
Shhh. Don’t tell, and they’ll never admit it publicly. But college officials are (very quietly) feeling okay — at least for now — about how Congressional Republicans would treat the programs that matter most to higher education in their first whack at the federal budget.
Why should ivory tower denizens be secretly peppy, and taxpayers openly upset? Because the House GOP pretty much left higher ed funding untouched, despite the fact that the ivory tower is soaking in putrid, taxpayer-funded waste. Quite simply, the federal government pours hundreds of billions of dollars into our ivy-ensconced institutions every year, but what that has largely produced is atrociously low graduation rates; at-best dubious amounts of learning for those who do graduate; ever-fancier facilities; and rampant tuition inflation that renders a higher education no more affordable to students but keeps colleges fat and happy.
I’ve said it before and I will say it again: If federal politicians won’t significantly cut ”education” spending – spending that has done next to nothing to increase actual learning — then they are not serious about reining in the deficit or cutting government down to size. They are still, sadly, much more concerned about appearing to “care” about education than doing what needs to be done.
Why Ryan-Rivlin Beats ObamaCare on Costs — and Spending
Washington Post blogger Ezra Klein asks of Rep. Paul Ryan’s (R-Wisc.) Medicare voucher proposal (co-authored with former Congressional Budget Office director Alice Rivlin):
Why are the cost savings in his bill possible, while the cost savings in the Affordable Care Act aren’t?…when it comes to the ACA, Ryan firmly believes that seniors will quickly and successfully force Congress to reverse any reforms that degrade their Medicare experience. That’s a fair enough concern, of course. What’s confusing is why it isn’t doubly devastating when applied to Ryan-Rivlin.
Set aside that Klein violates Cannon’s First Rule of Economic Literacy: Never say costs when you mean spending. And that he uses the word “affordable” to describe ObamaCare.
There are two reasons why the Medicare spending restraints in the Ryan-Rivlin proposal are more likely to hold than those in ObamaCare.
First, ObamaCare’s restraints amount to nothing more than ratcheting down the price controls that traditional Medicare uses to pay health care providers. Structuring Medicare subsidies in this way — setting the prices that Medicare pays specific providers — makes it very difficult to lower those prices, because the system itself creates huge incentives for providers to organize and lobby to undo those restraints. As I explain more fully in this op-ed from September 2010, Medicare vouchers would change that lobbying game by reducing the incentives for provider groups to expend resources in the pursuit of higher Medicare spending. That gives the Ryan-Rivlin restraints a much better shot at surviving. (Seriously, it’s a pretty cool feature.)
Second, Klein predicts a backlash against Medicare vouchers because he says it amounts to “giving seniors less money to purchase more expensive private insurance.” The notion that Medicare is less costly than private insurance is pure, uninformed nonsense. Medicare and a “public option” are attractive to the Left precisely because such programs hide the full cost of their operations from enrollees and taxpayers. It is a virtue of vouchers that they would reveal to Medicare enrollees the actual prices of the coverage and services they demand, because that information will spur enrollees to be more cost-conscious when selecting a health plan and consuming medical services. That, in turn, will force insurers and providers to compete on the basis of cost to a degree never before seen in this nation, competition that will generate the sort of cost-saving innovations that Jim Capretta discusses here.
Both of these reasons boil down to the truism that nobody spends other people’s money as carefully as they spend their own. We’ll make a lot of progress in this country when the Left realizes how much damage they’ve done by ignoring that truism.
Slashing Popular Programs Contest
House Republicans proposed some (tiny) spending cuts this week and the Obama administration will likely propose some (tiny) cuts next week in the federal budget.
So get ready for a barrage of slasher stories! National Journal started us off yesterday with the headline “WH Slashes Heat for the Poor.”
Coming down the pike are dozens of stories about how policymakers are planning deep, vicious, and inhumane cuts that will undermine the foundations of the republic. A 5 percent cut to a program that has risen 50 percent in recent years will not be a simple “trim,” but a brutal, gouging “slash.”
Every single one of the upcoming cuts will be to “popular” programs. So policymakers will propose a $1 million cut to mohair subsidies, and the headline will be “Congress Slashes Popular Mohair Program.”
In reality, government spending has soared over the last decade, but I don’t want to spoil the fun. So let’s enjoy the coming crop of over-the-top slasher stories, and treat them as a genre of modern publishing art.
I propose a “Slasher Story of the Month” contest for February. Send me an email if you see a great slasher story, and I’ll get my crack assistant, Amy, to analyze the rhetorical content. The winning story will have the most frequent uses of “slash” and “popular” to describe the programs that the godless heathens in Congress and the White House plan to ransack and decimate.
(Bonus points for any editorial cartoon showing Attila the Hun with the word “GOP” on his helmet hacking away at a defenseless child with “nutrition subsidies” on her shirt).
The 1993 Clinton Tax Increase Did Not Lead to the Budget Surpluses of the Late 1990s
Proponents of higher taxes are fond of claiming that Bill Clinton’s 1993 tax increase was a big success because of budget surpluses that began in 1998.
That’s certainly a plausible hypothesis, and I’m already on record arguing that Clinton’s economic record was much better than Bush’s performance.
But this specific assertion it is not supported by the data. In February of 1995, 18 months after the tax increase was signed into law, President Clinton’s Office of Management and Budget issued projections of deficits for the next five years if existing policy was maintained (a “baseline” forecast). As the chart illustrates, OMB estimated that future deficits would be about $200 billion and would slightly increase over the five-year period.
In other words, even the Clinton Administration, which presumably had a big incentive to claim that the tax increase would be successful, admitted 18 months after the law was approved that there was no expectation of a budget surplus. For what it’s worth, the Congressional Budget Office forecast, issued about the same time, showed very similar numbers.
Since the Clinton Administration’s own numbers reveal that the 1993 tax increase was a failure, we have to find a different reason to explain why the budget shifted to surplus in the late 1990s.
Abolish Federal Job Training Programs
A report from the Government Accountability Office finds that the federal government administers 47 different employment and job training programs at a cost to taxpayers of about $18 billion. The GAO excluded another 51 programs that could be considered as providing job training assistance, such as student loan subsidies.
The takeaway from the report is that there is a lot of duplication, and thus excess bureaucracy and inefficiencies. Moreover, the GAO says that “little is known about the effectiveness of most programs.” Nonetheless, Congress unflinchingly funds these programs even though the GAO has been issuing reports with similar findings since the 1990s.
Coinciding with the GAO report, Sen. Tom Coburn (R-OK) released a paper that singles out 25 particularly egregious examples of federal job training programs abusing taxpayer dollars. It’s the sort of thing that government apologists will dismiss as “anecdotal,” but when it comes to government programs, where there is smoke, there is usually fire. And if the anecdotes help undermine support for such unwarranted federal interventions, all the better.
One problem I have with Coburn’s paper is that it concludes with recommendations that amount to rearranging the deck chairs on the Titanic (e.g., consolidate programs, narrow program objectives, and better target funds). Coburn says that these programs need better “program metrics.” However, I was once responsible for program metrics as a budget official in the state of Indiana, and I can attest that politics render such endeavors a fool’s errand.
Coburn’s paper is at its best when he cites James Bovard’s observation that the government doesn’t need to be involved in job training:
As aptly considered by scholar James Bovard, the government has taken on a role more appropriately filled by the private sector. Bovard writes, “The fallacy underlying all job training programs is that the private sector lacks the incentive to train people for jobs. This is like assuming that farmers don‘t have an incentive to buy seed, or that auto manufacturers lack incentive to seek out parts suppliers. Businessmen naturally prefer that all the factors of production – including labor – be readily available. But where there is a shortage of skills and demands for services, there will be an incentive to train.”
The American Society for Training and Develop estimates that “U.S. organizations spent $125.9 billion on employee learning and development in 2009.” In addition, there are untold private options for job seekers: headhunters, counselors, recruiters, temporary work agencies, career fairs, internet resources, charities, and various civic organizations.
As Coburn correctly puts it:
The federal government could best help displaced workers by opening foreign markets to U.S. goods and services and creating an atmosphere that attracts and retains investment and productivity in the U.S. This can be accomplished in part by reducing unnecessary regulatory burdens on small businesses and employers, and ensuring stable and predictable government policies so employers can make short- and long-term investment and management decisions.
Fixing the Economy Demands More Than a Stroll across Lafayette Park
President Obama’s visit with the Chamber of Commerce this week has infuriated the anti-business Left. But short of expropriation and nationalization, what doesn’t?
Robert Reich and NPR and the scribes at the Huffington Post just don’t get it. Their man may be in the White House, but business holds the keys to the kingdom. Whether the president’s priority is job creation or reelection, nothing matters more than sustained economic growth. And without business having confidence that policy in the United States will become more hospitable and predictable, investment and job creation will remain tepid.
The president doesn’t have nearly the leverage assumed in the delusions of groups like Public Citizen, which wrote: “What America needs is not olive branches to giant corporations but controls over the companies that sank the economy.” Back here in reality, businesses have options. Many can choose to produce and operate in other countries, where the economic environment may be more favorable. In that regard, globalization has produced a veritable Galt’s Gulch, which serves as an important check on bad economic policy. Governments are now competing with each other to attract the financial, physical, and human capital necessary to nourish high value-added, innovation-driven, 21st century economies. Gratuitously punitive anti-business policies will only chase away the companies that the president exhorts to invest and hire.
According to a survey of 13,000 business executives worldwide, conducted by the World Economic Forum, 52 countries have less burdensome regulations than the United States. Add to that the fact that the United States has the highest corporate tax rate among all OECD countries and it becomes less mysterious why U.S. businesses shift more operations abroad.
As I wrote in a December 2009 Cato paper:
Governments are competing for investment and talent, which both tend to flow to jurisdictions where the rule of law is clear and abided; where there is greater certainty to the business and political climate; where the specter of asset expropriation is negligible; where physical and administrative infrastructure is in good shape; where the local work force is productive; where there are limited physical, political, and administrative frictions.
This global competition in policy is a positive development. But we are kidding ourselves if we think that we don’t have to compete and earn our share with good policies. The decisions we make now with respect to our policies on immigration, education, energy, trade, entitlements, taxes, and the role of government in managing the economy will determine the health, competitiveness, and relative significance of the U.S. economy in the decades ahead.
The president is beginning to get it – though grudgingly. He acknowledges the burdens of excessive and superfluous regulations and bureaucracy (remember his SOTU story about the jurisdictions entangled in the salmon’s journey from salt water to fresh water to the smoker?). The president has hinted that he would like to see the corporate tax rate lowered. He knows that businesses have options to invest, produce, and hire abroad—and that oftentimes U.S. policy chases them there. But, so far, rather than push policies to encourage domestic investment, production, and hiring, the president has done the opposite, while demonizing businesses that follow the incentives to go abroad.
The president’s position during his exchange at the Chamber of Commerce was that he has made concessions to business by moving toward the center on tax and trade policy, and that now it is time for business to show good faith by investing and hiring. But Obama’s small steps toward the center come after two years of sprinting to the left on economic policy. After ObamaCare, Dodd-Frank, taxpayer bailouts, unorthodox and legally-questionable bankruptcy procedures, subsidies for select industries, Buy American and other regulations governing how and with whom “stimulus” dollars could be spent, and the administration’s tightening embrace of industrial policy, businesses want a more quiet, less intrusive, less antagonistic, predictable policy environment before they will feel comfortable playing the role Obama wants them to play.
Until that happens, the president shouldn’t expect torrents of investment and hiring from the business community.
Hugo Llorens: U.S. Ambassador or Proconsul in Honduras?
New Wikileaks cables have surfaced on the role of U.S. Ambassador to Honduras Hugo Llorens in the aftermath of the constitutional removal of Manuel Zelaya from power and the subsequent presidential election in that country. Written by Llorens himself, the cables show a disturbing pattern of interference and bullying from the U.S. diplomat in Honduras’s internal affairs.
The cables describe several meetings that Llorens had with Honduras’ president Porfirio Lobo after the general election of November 2009. In all instances, Lobo visited Llorens in his office or residence, not the other way around. During the meetings, they discussed the conformation of Lobo’s cabinet, as well as the circumstances under which Roberto Micheletti—who replaced Zelaya as president of Honduras—would leave power. Llorens insisted that Micheletti, whom he refers to as the “de facto regime leader,” had to depart “well before inauguration day,” even though he was the constitutional president of Honduras at the time. On a cable dated January 5, 2010, Llorens recalls telling then president elect Lobo that “if Micheletti continued to thumb his nose at the United States… there would be repercussions.” He specifically threatened to refuse U.S. visas to Micheletti and his supporters ever again.
Unfortunately, Lobo played well his role of subordinate leader of an otherwise independent nation. In a telling example, Llorens recalls how the president-elect asked him for suggestions on whom to appoint as Security Minister. Later, Llorens basically vetoed the appointment of Romeo Vásquez Velásquez, then head of the armed forces, as the new Defense Minister. Previously, Vásquez had been on Lobo’s “short list” of candidates for that position, but Llorens warned him of the “serious image problem” that his appointment would have since Vásquez was the head of the armed forces when Zelaya was removed from power.
In another cable dated February 16, 2010, Llorens describes another meeting in his residence where he pressed Lobo—already sworn in as president—“on the continued presence and participation in Lobo’s government of the regime [meaning, Micheletti’s previous administration] Minister of Defense Lionel Sevilla and Chief of Defense Romeo Vásquez Velásquez.” Llorens warned Lobo that “the clock was ticking” for the Honduran president to “make the needed personnel changes.” Llorens wanted any civilian or military figure from the Micheletti administration connected to the ousting of Manuel Zelaya out of the new government. It is later described how “Lobo appreciated the Ambassador’s straight forward and honest advice.” As to who should replace Vásquez as head of the armed forces, Llorens “discouraged” Lobo from appointing a general related to the ousting of Zelaya, and “suggested” the name of a different officer for that position. Llorens then told Lobo to make the changes in the armed forces “sooner rather than later.”
These revelations have created a great deal of controversy in Honduras. Columnist Juan Ramón Martínez of the Honduran daily La Tribuna wrote [in Spanish] about his country’s embarrassment after learning of President Lobo’s genuflecting attitude towards the U.S. Ambassador. Martínez says that “according to the reports sent by Llorens, the country’s sovereignty doesn’t lie on the people… but on the Ambassador of the United Sates, who has turned the president elected by the Honduran people into a personal employee…”
Martinez is right. Hugo Llorens doesn’t act as a U.S. Ambassador, but as a U.S. proconsul in Honduras.
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