Archive for the ‘Tax and Budget Policy’ Category
A Democratic Congress, Scary? Compared to What?
The office of House Majority Whip Roy Blunt (R-MO) has produced a document titled “Pelosi’s House.” It is a list of
out-of-the-mainstream bills introduced by Democratic Members [that] deserve particular attention because the principle [sic] advocates are the very individuals who would be in a position to schedule committee markups and move the legislation through the Congress should the Democrats take control.
The list includes bills that would nationalize health care, create an adult diaper benefit under Medicare, reduce mandatory minimum sentences for crack cocaine, etc.
The list is less scary than its authors seem to think. Reducing jail time for selling crack cocaine is actually a good idea. And most of the bills have little support even among Democrats. A bill that would nationalize health care has only 19 cosponsors, which is less than 10 percent of Democratic House members and less than 5 percent of the full House.
I mean really. If the Democrats were to take control of the House, probably the worst they could do is add an expensive new prescription drug entitlement to Medicare.
Oh, wait. The Republicans already did that. So the Democrats would have to shoot for something else, like a new adult diaper entitlement. At least the GOP would go back to opposing such things. Right?
The Search for a Libertarian Democrat
In his writings about “libertarian Democrats,” Markos “Kos” Moulitsas always cites Montana Gov. Brian Schweitzer as Exhibit A. In the current Cato Unbound symposium, he writes:
Mountain West Democrats are leading the charge. At the vanguard is Montana Governor Brian Schweitzer, who won his governorship the same day George Bush was winning Montana 58 to 38 percent. While the theme of Republican corruption played a big role in Schweitzer’s victory, he also ran on a decidedly libertarian Democrat message.
Hope springs eternal. But alas, in Cato’s “Fiscal Policy Report Card on America’s Governors,” released Thursday, Schweitzer gets an F for his taxing and spending policies. Author Stephen Slivinski writes, “Spending in his first proposed budget exploded.” Plus he reinstated an expiring tax.
We’re still waiting for a libertarian Democrat. Really. We’d love to find one.
Grading the Governors
Today, the Cato Institute released the eighth biennial report card on the nation’s governors. It provides an index of fiscal restraint for each governor based on multiple objective measures of fiscal performance. This year there are 23 variables on which the governors are graded – more than the 15 variables of the 2004 report card. The methodology has been improved this time, too. You can find a copy of the report here.
The formula for success in the report card is simple: If a governor cuts taxes and spending the most, he will get a high grade. Raise taxes and spending the most, he’ll get a low grade.
Cutting taxes is important, at least, because doing so makes a state more economically competitive. As I report in the study, between 1990 and 2005 the rates of growth in employment and personal income in the top 10 tax-raising states were lower than the national average. The tax-cutting states, on the other hand, saw economic growth faster than the national average.
Cutting taxes is also important because it reduces the amount of private-sector resources that the government can stake a claim to. Yet that’s only part of the story. While this sounds elementary, it’s a key point. The report card tries to capture how fond a governor is of big government. There are many governors who cut merely cut taxes and think it’s enough to get them a good grade. But if they increase spending, they really haven’t cut the size of government. Thus, the top grades will always go to the governors who keep taxes and spending under control simultaneously. It’s something you rarely find among most governors, Republican or Democrat. That’s why there are always so few “A” and “B” grades in the report card.
Taxing Times
Washington Post headlines Thursday read “Poll Shows Support for Tax Increase” (front page) and “In N.Va., Open to More Taxes” (jump page). And on the website ”Poll Shows Support for Tax Increase.” Well . . . sort of.
It’s true that voters in Northern Virginia (the Washington suburbs), though not the rest of Virginia, want to spend more money on roads. And they support allowing voters to approve local tax increases for roads. But if you read down to the 19th paragraph, on the second jump page, you’ll find that they don’t actually like the idea of raising taxes. Even in Northern Virginia, only 21 percent of respondents said that raising taxes was a good way to pay for increased transportation spending. Twenty-nine percent preferred tolls, and 22 percent said other spending should be reduced. In the rest of Virginia, tolls were more popular and tax increases even less popular.
Sometimes it just seems that journalists like taxes. Which is their right as Americans. But they should be careful about how they present voters’ opinions. In this case, even though voters would like to spend more on transportation, they believe either that users should pay through tolls or that less-essential spending could be found somewhere in the state’s $37 billion annual budget. Seventeen percent statewide seems like fairly minimal “Support for Tax Increase.”
If You Cut the Budget, The Terrorists Win!
Peter Beinart tells readers of this week’s New Republic that the conservative critics of President Bush need to just get over themselves.
As Beinart writes:
To listen to Bush’s critics, you would think that discretionary, nonsecurity-related spending has exploded on his watch. [Note: Emphasis is mine — you’ll see why this is important in a minute]. But it hasn’t. As the Center on Budget and Policy Priorities has shown, when you take account of inflation and population growth, it grew a mere 2 percent between 2001 and 2006. And, as a percentage of GDP, it actually fell. What has exploded — rising 32 percent after inflation and population growth — is spending on defense, homeland security, and international affairs. And the people most responsible for those increases are conservatives themselves, who demanded an expansive war on terrorism.*
The first half of the claim boils down to this: If you strip away defense, homeland security, entitlement spending and international aid — what Beinart calls “discretionary, nonsecurity-related spending” — you discover that government hasn’t really grown all that much by historical standards.
The problem? Those categories account for 80 percent of the entire federal budget.
Call it the “Yeah, but” defense. Yeah, the budget has expanded massively, but if you take away the really big categories — and don’t feel compelled to clarify how you’re defining those big categories — then we come off looking really good! (Of course, as I’ve pointed out elsewhere, the GOP really doesn’t come off looking good. Let’s just assume they do for the sake of argument.) Read the rest of this post »
University Lockdown Costs You Plenty
Gallaudet University, the only university in the world focused specifically on deaf and hard-of-hearing students, is locked down. Some students — though it’s never clear how many or what percentage of the overall student body — have barred the entrance to the school to protest the pending installation of a new president, Jane K. Fernandes.
The complaints against Fernandes are myriad, ranging from displeasure with her purported top-down management style to accusations that the presidential search process was not racially inclusive. No one issue, though, appears to be an overriding concern, nor do the reported issues, together, seem to justify students taking the school over Taps style, with football players providing muscle at the gates and even Gallaudet’s elementary and high schools shut down.
As overblown as all this seems, though, it shouldn’t be of much concern outside the university, right? After all, isn’t Gallaudet a private college, meaning that whether or not students shut it down should ultimately be a matter between the students, the school, and maybe a few parents who’d like to know what their tuition payments are going for?
If only.
For one thing, almost all American institutions of higher education receive substantial funds from taxpayers, whether it’s state money going directly to public colleges or federal dollars going to research grants, student aid, or just plain pork at public and private schools. As a result, almost any college shutdown not only costs students and schools time and money, but taxpayers as well. Read the rest of this post »
This is Progress?
The news of the incredible shrinking deficit is sure to be added to the list of accomplishments that Republican candidates — eager for any good news they can use to their advantage — will tout on the campaign trail.
Although the deficit is certainly smaller, it’s not because the White House and Congress suddenly have a newfound respect for spending discipline. Federal spending grew in excess of 7 percent this fiscal year. That’s faster than the expected growth in GDP of 6.5 percent. Besides, the federal budget is chomping on 20 percent of GDP. It consumed 18.5 percent of GDP when George W. Bush was inaugurated. And unfunded liabilities of entitlement programs continue to grow. Remind me again how this is progress?
Prediction: For the next few weeks, Republican candidates will be engaged in an attempt to persuade fiscally conservative voters to forget everything that annoyed them about the GOP’s rush to expand government and instead welcome a much larger federal budget simply because it’s closer to being balanced.
It’s more than enough to make you wonder whether the Republicans are really a party of smaller government anymore.
Medicaid & the Free-Market Movement
This weekend, something pretty important happened, at least with regard to how the free-market movement approaches Medicaid and medical care for the needy.
Saturday was the final day of the State Policy Network’s 14th annual meeting in Milwaukee. The State Policy Network provides guidance to 48 state-focused free-market think tanks in 42 states. Part of the annual meeting was a panel on Medicaid, the joint federal-state program originally created to provide medical care to the truly needy.
A Disservice to the Poor
There’s much ado at the Legal Services Corporation (LSC), the federally funded organization intended to provide legal assistance to the poor.
Last month, the AP catalogued a pattern of excessive spending at the LSC. Then, as I indicated in my National Review Online article, the LSC Board contemplated firing the employee who had unearthed much of the extravagance. This employee, LSC Inspector General Kirt West, has also found other questionable practices at the LSC and begun an investigation of the Board itself.
Earlier this week, at a congressional hearing, the chairman of the LSC Board denied that board members had considered dismissing West. This was shocking given strong evidence to the contrary — namely, meeting transcripts from January in which the board’s vice-chair said of West, “[H]e’s got to shape up or we will ship him out.” At the same meeting, another board member said flatly, “He doesn’t belong as the Inspector General of this organization.”
This is yet another sorry chapter in the history of the LSC. For over 20 years, this organization has continued to misuse taxpayer dollars to advocate political causes. Is it time to pick up the mantle of Ronald Reagan and finally abolish the LSC?
Tell Me That’s Not Your Final Answer
The congressionally chartered “Citizens’ Health Care Working Group” today released its final recommendations on how to reform America’s health care sector. (I commented on their interim recommendations here and here.)
As with many GOP-led health care reform efforts, this one began with leftist premises about the role of government. Recommendation #1 is that the federal government should “Establish Public Policy that All Americans Have Affordable Health Care.” Recommendation #2 is that the feds should “Guarantee Financial Protection Against Very High Health Care Costs.” (The group inadvertently neglected to cite any passage from the U.S. Constitution that actually grants Congress the power to do such things.)
Given those premises, there was little doubt that the group would recommend left-wing reforms. For example, the group claims to have developed both a “market–based model” and a “social insurance model” for achieving universal coverage. Yet the former is a mirror image of the statist Massachusetts health plan. What kind of “market-based model” increases taxes and government spending while forcing individuals to purchase government-defined insurance policies? Good grief.
I would give my right eye for a health care reform panel that would make this its charter:
To make health care of ever-increasing quality available to an ever-increasing number of people.
To me, that doesn’t just seem simple and non-controversial, it seems to be what everyone involved in health policy wants.
Moreover, a mission like that would force the panel to consider not just the goodness of its intentions, its knowledge of today’s health care sector, or its ability to do math, but also the incentives that its recommendations would create, and their long-term impact.
Let’s hope some enterprising panel-creator is reading this.
Aside from That, Mrs. Lincoln, How Did You Enjoy the Show?
A website called TheBudgetGraph.com offers a visual representation of federal spending based on President Bush’s proposed budget for fiscal year 2007. (Click here, then click on “View the Graph.”) It is truly a monstrosity.
But look more closely and you’ll notice that it only counts budget items to which Congress must fix a dollar amount every year. It completely ignores those parts of the federal budget where the dollar amount is set automatically by formula. (Those two categories are usually called “discretionary” versus “mandatory” expenditures, but that bifurcation is misleading. Nearly all expenditures are discretionary, with the possible exception of interest payments on the national debt.)
That latter category — which includes Social Security, Medicare, Medicaid, interest payments on the debt, etc. — comprises 63 percent of the federal budget. That makes “The Budget Graph” more like “a visual guide to where one-third of your federal tax dollars go.”
Were the graph to count the entire budget, heck, I’d probably buy the poster.
(HT: Frederic Sautet.)
Medicare Politics Will Sink Quality Efforts
As David Hyman explains in Medicare Meets Mephistopheles (book forum today), Medicare’s already-high tax burden is set to explode when the baby boomers begin to retire in 2011. Yet for all that money, the quality of care that Medicare delivers is downright mediocre.
Some members of Congress, led by Senate Finance Committee chairman Chuck Grassley (R-IA), are using the threat of a cut in Medicare payments to force physicians to accept tying those payments to government-defined quality measures.
Physicians, led by the American Medical Association, are essentially responding, “Ditch the planned pay cut — then we’ll talk.”
Who’s right? Whose approach will get seniors and taxpayers the most value for their Medicare dollars? No one really knows, and thus all the political wrangling.
But one thing can be known: the approach that Congress chooses will be determined by raw political power — not by what provides the greatest value. For example, if the physicians get their way, every bit of quality improvement will cost taxpayers more money, because the AMA won’t even support pay cuts for lousy doctors.
As I explain in a recent paper, that is exactly why we don’t want Congress itself in the business of measuring and rewarding health care quality. That task is better left to a competitive market process. Congress should confine “pay-for-performance” to private Medicare plans, and encourage greater enrollment in private plans by giving seniors risk-adjusted vouchers rather than a defined benefit.
Filed under: Cato Publications; General; Health Care; Tax and Budget Policy
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