Social Security Bloviate-fest
The annual bloviate-fest on Social Security has begun, even before the Social Security Trustees’ report has been released this year. Apparently the report is to be released next week — after a three-month delay from its statutory release deadline of April 1.
There’s concern from groups interested in preserving Social Security that President Obama’s National Commission on Deficit Reduction will propose changes to the program involving benefit cuts. These groups, which include the AFL-CIO, MoveOn.org, NOW, and the NAACP have issued and allegedly rebutted five “myths” about Social Security. But their selection of myths and myth-busting arguments are weak and involves questionable arguments.
Below is a list of the twisted logic that these groups are using to convince voters that all’s well with Social Security’s finances and that we should not worry and just be happy. Also below are my reactions to the “faux-myth-busters” arguments.
Myth #1: Social Security is going broke.
Reality: There is no Social Security crisis. By 2023, Social Security will have a $4.6 trillion surplus (yes, trillion with a ‘T’). It can pay out all scheduled benefits for the next quarter-century with no changes whatsoever. After 2037, it’ll still be able to pay out 75% of scheduled benefits — and again, that’s without any changes. The program started preparing for the Baby Boomers’ retirement decades ago. Anyone who insists Social Security is broke probably wants to break it themselves.
Real Reality: We’re in a vortex, and these folks refuse to extend help. Yes, I also don’t like the “crisis” terminology. A better descriptor is “vortex,” the upper reaches of which can seem calm, for a time. But eventually, we’ll realize that what we thought was a good place to be is really an inexorable path to the doom of being spun around super fast.
Yes, Social Security will have a surplus (of Treasury IOUs) of $4.6 trillion by 2023. But, notwithstanding the “T” attached to that sum, all’s not well. By 2023, the program’s net liabilities (the shortfall of future revenues relative to future benefit commitments under existing laws) will exceed $20 trillion (note, also with a “T”). Last I checked, 20 exceeds 4.6 by about four fold.
The fact that Social Security “will be able to pay” 75% of scheduled benefits after 2037 means we would have to impose a 25% benefit cut at that time if no adjustments are made earlier. It’s said that the natural human instinct for justice emanates from a simple thought experiment — of placing oneself in the shoes of the victims. In this case, it’s those poor future souls who would have to acquiesce to a 25 percent benefit cut. But they would be forced to do so only because the faux-myth-busting authors shrieked in horror when confronted with a much smaller benefit cut that would be required now to place the program’s finances on a sustainable course. Read the rest of this post »
Even Keynesian Accounting Can’t Find All That ‘Stimulus’
From January 2009 to the present, President Obama and his team have repeatedly made grandiose claims about the economic benefits of shoveling money at shovel-ready projects or green jobs. “It is largely thanks to the Recovery Act that a second Depression is no longer a possibility,” said the President. He also claimed that lavish spending alone (not Federal Reserve actions or bank bailouts) is what prevented the unemployment rate from “getting up to . . . 15%.”
If any of that were remotely close to being true then, as a matter of simple accounting, rising federal spending would have shown up as a huge offset to falling GDP in 2009, and also as a major component of the modest increase in GDP growth in early 2010. On the contrary, the table below shows that the increase in federal nondefense spending contributed only two-tenths of one percent (0.2) to the change in GDP in 2009. That was no better than 2008 when the Recovery Act did not exist. If nondefense spending had not increased at all in 2009 (unlike 2008) then GDP would have fallen 2.8% rather than 2.6% — scarcely the difference between a recession and a “second Depression.” If nondefense federal spending had not increased at all in 2010, the economy still would have grown at a 3.6% pace in the first quarter, 2.1% in the second. Cutbacks in state and local spending were a trivial damper on GDP growth last year, contrary to recent speculation, and real state and local spending rose significantly in this year’s second quarter (unlike the first).
This is just an exercise in crude Keynesian accounting, not economics. Yet it nonetheless makes the stimulus bill look like a huge waste of money. The reason Keynesian accounting is no substitute for economics is that governments can only spend other peoples’ money. To claim that such spending is a net addition to “aggregate demand” is to ignore those other people — namely, current and future taxpayers.
Nobel Laureate Robert Lucas put it this way:
If the government builds a bridge . . . by taking tax money away from somebody else, and using that to pay the bridge builder — the guys who work on the bridge — then it’s just a wash. It has no first-starter effect. There’s no reason to expect any stimulation. And, in some sense, there’s nothing to apply a multiplier to. You apply a multiplier to the bridge builders, then you’ve got to apply the same multiplier with a minus sign to the people you taxed to build the bridge. And then taxing them later isn’t going to help, we know that.
Filed under: Finance, Banking & Monetary Policy; Government and Politics; Tax and Budget Policy
Peter Ferrara’s Too-Nice Attack on Phony Washington Budget Deals
Writing in the Wall Street Journal, Peter Ferrara of the Institute for Policy Innovation explains that Washington budget deals don’t work because politicians never follow through on promised spending cuts. This is a very relevant argument, since President Obama’s so-called Deficit Reduction Commission supposedly is considering a deal featuring $3 of spending cuts for every $1 of tax increases (disturbingly reminiscent of what was promised — but never delivered — as part of the infamous 1982 TEFRA budget scam).
Washington’s traditional approach to balancing the budget is to negotiate an agreement on a package of benefit cuts and tax increases. President Obama’s deficit commission seems likely to recommend just this strategy in December. The problem is that it never works. What happens is the tax increases get permanently adopted into law. But the spending cuts are almost never fully adopted and, even if they are, they are soon swept away in the next spendthrift budget. Then — because taxes weaken incentives to produce — the tax increases don’t raise the revenue that Congress initially projected and budgeted to spend. So the deficit reappears.
In 1982, congressional Democrats promised President Ronald Reagan $3 in spending cuts for every dollar in tax increases. Reagan went to his grave waiting for those spending cuts. Then there was the budget deal in 1990, when President George H.W. Bush agreed to violate his famous campaign pledge — “Read my lips, no new taxes,” he had said in 1988 — in pursuit of a balanced budget. But after the deal, the deficit increased substantially: to $290 billion in 1992 from $221 billion in 1990.
As the excerpt indicates, Peter’s column is solid and everything he writes is correct, but it suffers from one major sin of omission. He should have exposed the dishonest practice of using “current services” or “baseline” budgeting. This is the clever Washington practice of assuming that all previously planned spending increases should go into effect and categorizing any budget that increases spending by a lower amount as a spending cut. In other words, if the hypothetical “baseline” budget increases by 7 percent, and a budget is proposed that increases spending by 4 percent, that 4 percent spending increase magically gets transformed into a 3 percent spending cut.
Politicians love “current services” or “baseline” budgeting for two reasons. First, it allows them to have their cake and eat it too. They can simultaneously shovel more money to interest groups while telling voters they are “cutting” spending. Second, it rigs the process in favor of bigger government. This is because lawmakers who actually propose to restrain the growth of spending can be lambasted for wanting “savage” and “draconian” budget cuts totaling “trillions of dollars” when all they’re actually proposing is to have spending grow by less than the so-called baseline. But since people in the real world use honest math rather than “current services” math, they assume that spending is being reduced next year by some large amount compared to what is being spent this year. And if the phony budget cut numbers sound too big (especially for specific programs such as Medicare or Medicaid), they sometimes conclude that it would be better to raise taxes.
Filed under: Government and Politics; Tax and Budget Policy
Imports Viewed Skeptically at the Washington Post
What explains the chronically misleading depictions and interpretations of international trade in the Washington Post? Is it economic illiteracy? Intellectual indifference? Institutional bias? What?
The opening paragraph in Neil Irwin’s story (online, July 30, 2010, 9:13 am) reads:
The pace of economic growth slowed this spring, according to new government data, as Americans remained reluctant to consume and imports soared.
And a few paragraphs later:
The biggest drain on growth was imports, which rose 28.8 percent, compared with only a 10.3 percent gain in exports.
On July 14, one day after the Commerce Department’s monthly trade figures were released, revealing a slight increase in the trade deficit, the opening paragraph in the Washington Post story under the heading “Rising Imports Offset Export Gains” read:
America’s resurgent appetite for imports may undermine the Obama administration’s efforts to rekindle job growth, with a rise in overseas purchases by American businesses and households undercutting the benefits of increased U.S. sales abroad.
Education Standards at Work — the NY Debacle
President Obama today touted his Race to the Top program, which pressures states to, among other things, adopt national education standards. Also today, the New York Board of Regents revealed that it had been misleading its citizens for years, giving them an inflated notion of how well their children were performing academically. Last year 77 percent of students were ”proficient” in English according to NY state standards. This year it’s 53 percent.
So what’s to stop this from happening at a national level? In fact, what’s to stop an endless cycle of setting high standards that produce low scores, gradually dumbing the standards down to give the illusion of progress, and then resetting them to a high level again when the deceit is discovered?
At any stage of this cycle, officials can claim that students are showing improvement or that steps are being taken to raise standards — without any need to, you know, improve the schools.
Instead, we could just adopt in education the same system of freedom and incentives that’s been responsible for actual progress in every other area of human activity for the past two centuries. Or is that just too obvious?
The Letter Is Different, but the Spirit Still Lives
An update from my post yesterday about the bill to establish a Commission to End the Trade Deficit (now called the “Emergency Trade Deficit Commission”): apparently the bill that passed the House was different from the bill initially considered, and to which I linked (and commented). My apologies.
The bill that was passed had many of the most egregious provisions and provocative wording stripped out. There was no talk of eliminating the trade deficit, for example. And the provision that would have prohibited congressional consideration of any trade deal before the Commission reported is, thankfully, gone too. But I would suggest that the underlying message of the bill — that individuals cannot be trusted to make their own decisions about which products to buy, and from where — is intact. There are plenty of references to “improving trade balances,” “enhancing the competitiveness of U.S. manufacturers,” and environmental and labor standards. I stand by comments about those sentiments.
Maybe a commission is a useful way of distracting members of Congress from actually doing anything, and certainly this bill is less offensive than the original, but it still betrays an unwillingness of some members of Congress to let consumers and firms make decisions without a commission studying, reporting on, and possibly correcting them.
Are These Examples of Washington Corruption?
The “appearance of impropriety” is often considered the Washington standard for corruption and misbehavior. With that in mind, alarm bells began ringing in my head when I read this Washington Times report about Jacob Lew, Obama’s nominee to head the Office of Management and Budget. A snippet:
President Obama’s choice to be the government’s chief budget officer received a bonus of more than $900,000 from Citigroup Inc. last year — after the Wall Street firm for which he worked received a massive taxpayer bailout. The money was paid to Jacob Lew in January 2009, about two weeks before he joined the State Department as deputy secretary of state, according to a newly filed ethics form. The payout came on top of the already hefty $1.1 million Citigroup compensation package for 2008 that he reported last year. Administration officials and members of Congress last year expressed outrage that executives at other bailed-out firms, such as American International Group Inc., awarded bonuses to top executives. State Department officials at the time steadfastly refused to say if Mr. Lew received a post-bailout bonus from Citigroup in response to inquiries from The Washington Times. But Mr. Lew’s latest financial disclosure report, provided by the State Department on Wednesday, makes clear that he did receive a significant windfall. …The records show that Mr. Lew received the $944,578 payment four days after he filed his 2008 ethics disclosure.
Why did Citigroup decide to hire Lew, a career DC political operator, for $1.1 million? As a former political aide, lobbyist, lawyer, and political appointee, what particular talents did he have to justify that salary to manage an investment division? Did the presence of Lew (as well as other Washington insiders such as Robert Rubin) help Citigroup get a big bucket of money from taxpayers as part of the TARP bailout? Did Lew’s big $900K in 2009 have anything to do with the money the bank got from taxpayers? Is it a bit suspicious that he received his big windfall bonus four days after filing a financial disclosure?
See if you can draw any conclusion other than this was a typical example of the sleazy relationship of big government and big business.
Lest anyone think I’m being partisan, let’s now look at another story featuring Senator Richard Shelby. The Alabama Republican and his former aides have a nice relationship that means more campaign cash for him, lucrative fees for them, and lots of our tax dollars being diverted to such recipients as the state’s university system. Here are some of the sordid details:
Since 2008, Alabama Sen. Richard Shelby has steered more than $250 million in earmarks to beneficiaries whose lobbyists used to work in his Senate office — including millions for Alabama universities represented by a former top staffer. In a mix of revolving-door and campaign finance politics, the same organizations that have enjoyed Shelby’s earmarks have seen their lobbyists and employees contribute nearly $1 million to Shelby’s campaign and political action committee since 1999, according to federal records. …Shelby’s earmarking doesn’t appear to run afoul of Senate rules or federal ethics laws. But critics said his tactics are part of a Washington culture in which lawmakers direct money back home to narrow interests, which, in turn, hire well-connected lobbyists — often former congressional aides — who enjoy special access on Capitol Hill.
Filed under: Finance, Banking & Monetary Policy; Government and Politics; Health, Welfare & Entitlements; Political Philosophy; Regulatory Studies; Tax and Budget Policy
ADA and the ‘Chipotle Experience’
The Chipotle Mexican Grill heralds its “Chipotle Experience,” in which customers can watch their food being made behind a glass partition. Now a Ninth Circuit panel (including famously liberal judges Stephen Reinhardt and Dorothy Nelson) has ruled that the “experience” violates the Americans with Disabilities Act, to quote the AP, “because the restaurants’ 45-inch counters are too high. The company now faces hundreds of thousands of dollars in damages.” The ruling arrives just in time for the ADA’s 20th anniversary, which, as the Washington Post notes, is serving as the occasion for a virtual binge of new regulation-making by the Obama Administration and Congress.
Online reaction to the Chipotle case is tending toward the negative if not incredulous, even at places like the San Francisco Chronicle (“Good Lord, people are complaining because they can’t see a taco, get a life.”) But it’s also worth noting this significant passage (via Ted Frank at Point of Law) from the court record that the Ninth Circuit panel had to overcome:
The [district] court found that [wheelchair-using complainant] Antoninetti had failed to show irreparable injury because he had not revisited either restaurant after Chipotle adopted its written policy and because his “purported desire to return to the Restaurants is neither concrete nor sincere or supported by the facts.” It also stated that Antoninetti’s “history as a plaintiff in accessibility litigation supports this Court’s finding that his purported desire to return to the Restaurants is not sincere. Since immigrating to the United States in 1991, Plaintiff has sued over twenty business entities for alleged accessibility violations, and, in all (but one) of those cases, he never returned to the establishment he sued after settling the case and obtaining a cash payment.”
It’s an open scandal, especially in states like California that offer enhanced penalties or liberal procedural rules, that serial complainants and their lawyers carve out profitable practices visiting dozens or hundreds of businesses and leveling ADA complaints that they then settle for cash. As a phenomenon, the ADA filing mill has much in common with other forms of baleful legal “entrepreneurship” such as patent trollery, mass “citizen suit” filings against small businesses and school districts over paperwork lapses, and — the most recent to emerge — copyright mills such as the recently formed RightHaven, which has begun to acquire the rights to old newspaper articles and then mass-file lawsuits demanding thousands of dollars from bloggers, mom and pop businesses, and others who’ve ill-advisedly reprinted the articles online without permission.
Note that the objection to the litigation-mill model does not in itself depend on there being anything improper about the underlying rights being asserted (even those who think patents and copyrights in general a fine thing are free to disapprove of their use as a troll predicate). Instead, conditions are often propitious for abuse when 1) statutory damages or fines are far out of line with actual damage to a complainant; 2) the cost of legal defense can much exceed the damages at issue; 3) oft-recurring fact patterns make it easy to mass-produce plausible fill-in-the-blank complaints; and 4) the law either awards “one-way” attorney’s fees to successful complainants, as does the ADA, or at least refuses to stop the award meter at the point when a defendant proffers a change in the offending practice and adequate compensation for the complainant’s actually sustained damages, if any. Promising avenues for reform may include redefining statutory damages down to non-jackpot levels; assessing attorneys’ fees against whichever side makes trial necessary by spurning a settlement in line with actual damages; and introducing “demand before suit” procedural stages meant to put defendants on notice of a claimed infringement.
Inadvertently or not, the new ruling does afford the public a clear look at one particular kind of assembly line, presided over by lawyers rather than restaurant employees. And unlike the kind you can watch behind the glass partition at Chipotle, there’s nothing appetizing about seeing this one in action.
Foundations Need to Invest More in Private Education and Choice
Charter schools are the hot new thing.
OK, they aren’t all that new. But many people who used to have blanket objections to any increase in school choice now support (some form of) charter schools. President Obama, and even AFT President Randi Weingarten, say they support “charter” schools. The guy who made Al Gore’s documentary, Sinners in the Hands of an Angry Planet, will soon release a film about choice and charter schools.
In the midst of the charter school hype, we need to remember that the private school system has been educating low-income kids longer, better, and more efficiently than charter schools. And charter schools are now sapping this tiny remaining redoubt of civil-society success and freedom in education.
Philanthropists who care about long-term, sustainable and dynamic improvement in the education system need to refocus. They need to pull back from the charter school mirage and invest in private school choice programs and private schools that are a proven, established success with at-risk children.
Fortunately, many philanthropists see the need to save private, often Catholic, schools for the poor:
Among his many achievements, [Robert W.] Wilson is the single largest benefactor of Catholic schools in the Archdiocese of New York. Since 2007, he has donated over $30 million to inner-city Catholic education. He is also an atheist… Wilson belongs to an elite order: non-Catholic donors who are the patron saints of inner-city Catholic schools.
Read the whole article by Christopher Levenick in Philanthropy magazine. Public charter schools are often better than the regular ones. But charter systems are a pale government reflection of the legacy and possibilities found in private education.
The Power of One Entrepreneur
The Institute for Justice has launched a new economic liberties program called “The Power of One Entrepreneur.” They have five detailed reports produced by successful local writers, highlighting five individual entrepreneurs.
The power of one entrepreneur, the reports explain, is the key to helping our nation recover from this economic slump and to restoring our inner cities and countless lives through honest enterprise. Together, they showcase the importance of economic liberty and the fact that countless people are fighting Big Government to secure their American Dream.
These reports do two important things:
First, they document the positive impact one single entrepreneur can have on those around him or her, not only by offering employment, but through charitable work and mentoring to grow other entrepreneurs in the community, thereby growing the economic pie.
Second, through tangible examples, they make the point that if the government wants to do something to help Americans in this “jobless recovery,” it can do one simple thing: Get out of the way so entrepreneurs like these can be free to create jobs for themselves and for others.
This is part of IJ’s laudable long-time effort to put a human face on the issue of economic liberty — the right to earn a living free from arbitrary and unnecessary government regulation.
Filed under: Government and Politics; Law and Civil Liberties; Regulatory Studies
One Step Closer to Legally Gambling Online?
The House Financial Services Committee voted 41-22 yesterday to report a bill legalizing online gambling out of committee and onto the House floor for a vote, should the Democratic leadership choose to pursue it (Wall Street Journal [$]). This is heartening news.
As I’ve written before, though, the ability to spend your time and money as you choose doesn’t come without a price, and indeed one of the reasons the bill is having more success than previous efforts is the realization by lawmakers (following the lead of their European brethren) that gambling could be a lucrative source of revenue in these fiscally frightening times. Tuesday’s New York Times had a good story on the EU experience, with one quote from a European gambling analyst making an excellent point about the true gambling addiction in society:
“I think the penny has dropped,” said Simon Holliday, an analyst at H2 Gambling Capital. “They deregulate a little bit, like what happens and deregulate more. The governments get more addicted to the tax than the players to the games.
Some lawmakers also support this legislation because they recognize that many leading online gambling firms are European — partly because of fewer restrictions that have allowed the firms to flourish– and seek to create “American jobs for American workers” by promoting a domestic online gaming industry. The NYT article offers some sobering words for them, too, by pointing out that the Europeans are way ahead in this field. Not that the national origin of the gaming firm should matter, of course.
HTs: Radley Balko and my colleague Kurt Couchman
Filed under: Law and Civil Liberties; Telecom, Internet & Information Policy; Trade and Immigration
The Half-a-Loaf National Export Initiative
In his State of the Union address this year, President Obama announced a goal of doubling U.S. exports in five years. The “National Export Initiative” has since become the centerpiece of his administration’s trade policy, complete with its own Executive Order, organizational structure, and dedicated website.
Although I would be happy to see exports double in five years, I am skeptical of efforts to enshrine that goal as a national imperative. I worry that Five Year Plans and the setting of export targets puts the United States on the slippery slope to industrial policy, which is being touted nowadays with growing vim and vigor by columnists, politicians and other analysts who wish the United States were more like China.
But the economic straight jacket of industrial policy is not an imminent outcome of the NEI. And some of the reforms under consideration are sensible. For example, efforts to clarify, simplify, and streamline U.S. export control procedures are likely to reduce regulatory obstacles and spur meaningful export growth without imposing new burdens or diverting resources from elsewhere in the economy. Likewise, the administration’s discovery of the virtues of passing the long-pending bilateral trade agreements with South Korea, Colombia, and Panama could lead to the reduction or elimination of artificial barriers to U.S. exports in a variety of economic sectors.
But while we might rejoice in export-led economic growth, the National Export Initiative suffers from myopia, as it institutionalizes public misperceptions about how trade bestows its benefits on consumers and businesses. Just take a look at the program’s eight focus priorities:
Compare and Contrast
Fourth Amendment:
“The right of the people to be secure in their persons, houses, papers, and effects, against unreasonable searches and seizures, shall not be violated, and no Warrants shall issue, but upon probable cause, supported by Oath or affirmation, and particularly describing the place to be searched, and the persons or things to be seized.”
Supreme Court (Katz v. U.S.):
“[S]earches conducted outside the judicial process, without prior approval by judge or magistrate, are per se unreasonable under the Fourth Amendment—subject only to a few specifically established and well delineated exceptions.”
“The Obama administration is seeking to make it easier for the FBI to compel companies to turn over records of an individual’s Internet activity without a court order if agents deem the information relevant to a terrorism or intelligence investigation.”
Filed under: Law and Civil Liberties; Telecom, Internet & Information Policy
Immigration Law Ruling Half-Right But Crucially Wrong
The ruling demonstrates the problems the federal government creates when it fails to either enforce or reform our immigration laws. Judge Bolton’s hyper-technical decision — anybody who tells you this case was black-and-white isn’t a serious lawyer — got it half-right: She correctly upheld most of SB 1070 and correctly struck down two sections of SB 1070 (a small part of section 5 and all of section 6), but incorrectly struck down two other sections (2 and 3).
One of the latter, section 2 — requiring police to determine the immigration status of persons they stop, detain, or arrest if they have a reasonable suspicion that said persons are unlawfully in the United States — is the most controversial part of SB 1070 and also the most controversial part of the ruling. Judge Bolton construed section 2 as conflicting with federal law because it burdens federal resources and impedes federal agency functions, but how can it do that when the resources and agency functions in question are already (supposed to be) devoted to immigration enforcement? The government’s decision not to enforce its own laws can’t possibly preempt a state law that merely mirrors those laws — laws the federal the government is charged with enforcing.
SB 1070 is a valiant attempt to deal with the breakdown in the rule of law caused by so many people living in the legal shadows. While it’s not the best public policy — because it diverts law enforcement resources, divides police from their communities, burdens lawful residents, and ultimately harms the economy — it’s a frustrated citizenry’s perfectly understandable response to government failure. Probably the best thing to come out of this whole episode — which isn’t over by any stretch — is that it thrusts the debate over comprehensive immigration reform into the forefront of national political debates. This is a tough and nuanced issue that will end up in the Supreme Court again and again if Congress neglects to act.
Filed under: Government and Politics; Law and Civil Liberties; Trade and Immigration
Exchange by Fiat
A bunch of lawmakers — led by Reps. Defazio (D, OR), Slaughter (D, NY), Kaptur (D, OH) and Massa (D, NY) — recently introduced a bill (H.R. 1875) to establish an “Emergency Commission To End the Trade Deficit.” The House passed the bill by voice vote this afternoon.
After drawing Congress’ attention to a whole lot of scary-sounding data about the trade deficit (my colleague Dan Griswold explains why that metric is misleading as an indicator of national wellbeing), the national debt (which I agree is a problem) and the supposed death of manufacturing, the bill calls for a $2 million (for now) Commission, the purpose of which is to:
develop a trade policy plan to eliminate the United States merchandise trade deficit by January 1, 2019, and to develop a competitive trade policy for the 21st century. The plan shall include strategies necessary to achieve a balance of trade that fully reflects the competitiveness and productivity of the United States and also improves the standard of living of United States citizens. [my emphasis]
It is as though the standard of living for Americans over the past few decades of trade deficits had been falling, rather than rising. As though a balance of trade was an end in itself.
A lot of the Commission’s work would be “merely” reporting on various aspects of our trade relationship with the rest of the world. But I do not for one second think that these lawmakers will be happy to take the Commission’s report and forget about it. They’ll want to torture that data until it confesses what they want, and then they’ll want to take action based on that confession. My hunch isn’t totally baseless, either. Plenty of clues lie in section 4(5), for example, which asks the Commission for suggestions for:
(A) the development of bilateral and multilateral trade relationships based on market access reciprocity; [i.e., managed trade]
(B) the retention and expansion of the manufacturing, agricultural, and technology sectors in the United States; [sounds like a call for protection]
(C) the discouragement of the expatriation of United States plants, jobs, and production to countries that have achieved competitive advantages by permitting lower wages or lower health, safety, and environmental standards, or by imposing requirements with respect to investment, performance, or other obligations; [ditto]
A Look Back at DISCLOSE
The DISCLOSE Act, as expected, failed on a cloture vote yesterday. Let’s review why it failed as a matter of politics:
The Democrats have majorities in both chambers of Congress. Many members of those majorities were concerned that Citizens United would lead to political speech that lessened their chances of re-election. The DISCLOSE Act was an effort, within limits imposed by the courts, to discourage that speech and thus increase the chances threatened members of the majority would be re-elected.
A simple disclosure requirement imposed on independent spending would not have done the trick. Many of the groups that congressional Democrats fear would have no problem with a simple disclosure attached to their independent ads. So the House sponsors ramped up the disclosure requirement in the bill by requiring CEOs to appear in the ad endorsing its content and the revelation of donors supporting the ad. They also broadened prohibitions on speech by government contractors and companies headed by non-citizens. Supporters of the legislation argued such prohibitions would cover most of the Fortune 500. The purpose of the legislation seemed to be getting around Citizens United and reinstating the ban on corporate speech.
The effort started to come apart when the National Rifle Association demanded an exemption from the enhanced disclosure mandates. The NRA had enough support from House Democrats to kill the bill so DISCLOSE’s sponsors exempted the NRA from its requirements. Other groups also wanted an exemption. Reformers were appalled even as the the groups granted exemptions grew by the day. The bargaining process that in most legislation became all but public with DISCLOSE. Like most “reform” bills, DISCLOSE presented itself as an ethical exercise to protect the integrity of the government. One does not bargain over righteousness. Senate Democrats threatened to vote against the bill because of the NRA.
After much work and more bargaining, a majority for the bill was found in the House. On the Senate side, the sponsors needed at least one Republican vote. They could not get it. The senators from Maine correctly surmised the bill was a crude partisan undertaking even by the standards of campaign finance. They also reasonably called for Congress to take its time and produce a bill that might not cause serious unexpected consequences. But the whole point of the bill was to move quickly to protect incumbents in the majority in the fall. Democrats settled for blaming Republicans for blocking the bill and hoping voters would remember all this in five months.
A simple disclosure requirement might have passed, but it would not have been very useful politically so it was not an option. More than anything else, the three or four months devoted to DISCLOSE indicated the intensely political nature of campaign finance regulation, a species of legislation said to be devoted to the general interest in government integrity. Once again political realities belie mistaken hopes held by the general public more than the seasoned pols on Capitol Hill.
More on that Alternate QDR
Gordon Adams weighs in on the QDR Independent Review Panel, and makes the important observation that their report:
doubled down on the basic weakness of the QDR itself by failing to prioritize missions, examine risk, or set any limits. Then, rather than justifying the claim that we need to be all things to all people, the panel simply asserts that outside forces strip us of our discretion and require this mission expansion.
Nothing could be further from the truth. This lack of planning and budgetary discipline ignores the country’s economic problems and flagging political support for high defense budgets. Now is the time to take a closer look at the military’s missions, make a realistic risk calculation and reshape a smaller and better tailored force.
This is a point worth repeating. Strategy is always about choices: who you choose to fight; who you choose to help/ally with; how you choose to fight; whether you choose to fight; etc. The alternate QDR folks simply pretend that there aren’t any choices. In their formulation, we spend because we must; and if what we spend proves insufficient, then we simply must spend more.
But saying it doesn’t make it so. The fact remains that we have chosen to spend this money, in part because we have chosen an expansive foreign policy. A more restrained foreign policy, one focused on a narrower set of objectives, would allow us to spend less.
Obamacare Complexity vs Free Market Simplicity
Free markets are characterized by voluntary exchange between buyers and sellers. Mapping that relationship is absurdly simply, as this image indicates.
Indeed, the only reason I even bothered to include that image was for purposes of comparison. Here is a new flowchart prepared for the Joint Economic Committee showing the healthcare system under Obamacare.
It’s worth noting, by the way, that the system already was a disaster even before Obamacare was enacted. In the health care sector, free markets are only allowed to operate in very rare cases, such as cosmetic surgery, laser eye surgery, and (for better or worse) abortion. The rest of the sector was heavily distorted by government intervention. Obamacare simply makes a bad situation worse.
Filed under: Government and Politics; Health, Welfare & Entitlements; Tax and Budget Policy
Do More, Spend More
Defense News today features a story that unintentionally provides an window into what is wrong with the Washington Foreign Policy Establishment (WFPE)— a group of supposedly smart people that has repeatedly failed to come up with a credible plan that may enable the United States to shed some of the burdens of global governance. Indeed, the key take away from a report to be released tomorrow (“The QDR in Perspective: Meeting America’s National Security Needs in the 21st Century”), is that we shouldn’t try to shed such burdens. This message is particularly curious given that even some long-time proponents of America-As-World-Government are beginning to rethink their positions.
I wasn’t expecting much, but when I perused a draft that was flying around the wires/fibers yesterday (the official release is not until tomorrow), it was even worse than I could have imagined.
“We are concerned,” the authors explain, “by what we see as a growing gap between our interests and our military capability to protect those interests.” Fair enough. But they fail to offer a reasonable alternative that would address this imbalance by boosting the military capability of other countries, and thereby relieve the burdens that have fallen disproportionately on the backs of our soldiers, sailors, airmen and Marines. Instead, they call for more ships, more planes, and a larger force across the board, with the costs borne exclusively by U.S. taxpayers.
When the Obama administration released its National Security Strategy, I knocked the president and his senior advisors for failing to come up with a reasonable plan for forcing other countries to take responsibility for their own defense, and redistribute the burdens of policing the global commons among the many beneficiaries of a stable and peaceful international system. I had a similar view of the QDR, which spoke vaguely of sharing burdens and building partner capacity. The Obama team at least deserved credit, however, for recognizing that the United States should not indefinitely underwrite global security; we need other countries to do more.
The alternate QDR doesn’t even get that right. It instead makes a full-throated case for the United States remaining as the world’s policeman/armed social worker, and blithely expects the American people to keep spending more and more on our military.
Quiet but Deadly
Yesterday, U.S. Secretary of Education Arne Duncan announced the nineteen finalist states in the federal “Race to the Top.” In his announcement speech, Duncan was unrestrained in the glory he heaped on the $4.35-billion program (and a few others), declaring that ”as we look at the last 18 months, it is absolutely stunning to see how much change has happened at the state and local levels, unleashed in part by these incentive programs.” It was, he said, all part of a “quiet revolution” underway in education.
He was right and wrong.
Concerning the “stunning change” wrought by RTTT, we’ve heard such stratospheric hyperbole before and it is no more warranted today than it was a few months ago. Yes, RTTT has produced a fair number of paper changes, but it has yet to accomplish anything discernible when it comes to actual educational outcomes.
Get back to us in a few years, Mr. Secretary, when maybe you’ll be able to justify your horn-tooting. Maybe…
Where Duncan was right was in pointing out that there has been a quiet revolution underway orchestrated largely by Washington, but not a good one. It is the insidious spread of national standards that are unsupported by research, incompatible with great education, and most certainly federal. But those standards – and the federal tests that will be connected to them – may be laying low no longer. Tomorrow, President Obama is scheduled to give a speech to the National Urban League that will emphasize:
how his signature Race to the Top program and other initiatives are driving education reform across the country and focusing the nation on the goal of preparing students for college and careers. He will highlight the unprecedented support for and adoption of common standards by a majority of states already, and the Administration’s commitment to develop the next generation of high-quality assessments benchmarked to common standards.
With so many states having fallen to national standards, the administration seems to think it’s time to acknowledge the revolution. Hopefully, it’s not too late for a counterrevolution to succeed.
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