Taking Over Everything (2)
“My critics say that I’m taking over every sector of the economy,” President Obama complained to George Stephanopoulos back in September. And I responded:
Not every sector. Just
And now check out the lead story in Sunday’s Washington Post:
Federal Oversight of Subways Proposed
The Obama administration will propose that the federal government take over safety regulation of the nation’s subway and light-rail systems, responding to what it says is haphazard and ineffective oversight by state agencies.
Not everything. But more and more. So much that even the growing opposition can’t keep up with it all.
Federal Education Results Prove the Framers Right
Yesterday, I offered the Fordham Foundation’s Andy Smarick an answer to a burning question: What is the proper federal role in education? It was a question prompted by repeatedly mixed signals coming from U.S. Secretary of Education Arne Duncan about whether Washington will be a tough guy, coddler, or something in between when it comes to dealing with states and school districts. And what was my answer? The proper federal role is no role, because the Constitution gives the feds no authority over American education.
Not surprisingly, Smarick isn’t going for that. Unfortunately, his reasoning confirms my suspicions: Rather than offering a defense based even slightly on what the Constitution says, Smarick essentially asserts that the supreme law of the land is irrelevant because it would lead to tough reforms and, I infer, the elimination of some federal efforts he might like.
While acknowledging that mine is a ”defensible argument,” Smarick writes that he disagrees with it because it “would presumably require immediately getting rid of IDEA, Title I, IES, NAEP, and much more.” He goes on to assert that I might ”argue that doing so is necessary and proper because it’s the only path that squares with our founding document, but policy-wise it is certainly implausible any time soon.” Not far after that, Smarick pushes my argument aside and addresses a question to ”those who believe that it’s within the federal government’s authority to do something in the realm of schools.”
OK. Let’s play on Smarick’s grounds. Let’s ignore what the Constitution says and see what, realistically, we could expect to do about federal intervention in education, as well as what we can realistically expect from continued federal involvement.
First off, I fully admit that getting Washington back within constitutional bounds will be tough. That said, I mapped out a path for doing so in the last chapter of Feds In The Classroom, a path that doesn’t, unlike what Smarick suggests, require immediate cessation of all federal education activities. Washington obviously couldn’t be pulled completely out of the schools overnight.
Perhaps more to Smarick’s point, cutting the feds back down to size has hardly been a legislatively dead issue. Indeed, as recently as 2007 two pieces of legislation that would have considerably withdrawn federal tentacles from education — the A-PLUS and LEARN acts – were introduced in Congress. They weren’t enacted, but they show that getting the feds out of education is hardly a pipe dream. And with tea parties, the summer of townhall discontent, and other recent signs of revolt against big government, it’s hardly out of the question that people will eventually demand that the feds get out of their schools.
Of course, there is the other side of the realism argument: How realistic is it to think that the federal government can be made into a force for good in education? It certainly hasn’t been one so far. Just look at the following chart plotting federal education spending against achievement, a chart that should be very familiar by now.
Filed under: Education and Child Policy; General; Law and Civil Liberties
The Problem Is Spending, not Deficits
Speaking recently a Steamboat Institute conference, I explain that big government is America’s fiscal challenge, not whether the spending is financed with taxes or borrowing.
This issue is important because the statists are trying to create the conditions for a big tax hike. We got huge spending increases under Bush, and now Obama has picked up the baton and is racing in the same direction. Needless to say, the politicians don’t care about deficits when they are spending money. But when it is time to discuss tax policy, deficits suddenly become a giant threat to the economy and turning more of our money over to the political class is the only solution.
The Q&A session also is interesting, as I pontificate about the financial crisis, Keynesian economics, the rule of law, and tax competition(both videos courtesy of the Center for Freedom and Prosperity).
Filed under: General; Government and Politics; Tax and Budget Policy
Funding ACORN
The ACORN scandal provides a good opportunity for citizens concerned about profligacy in Washington to explore some of the tools available to find out where their tax money goes.
A good place to start your research is the Federal Audit Clearinghouse on the Census website. All groups receiving more than $500,000 a year from the government are required to file a report. Just type in “ACORN” as the entity and the system pops up the group’s filings. My assistant John Nelson summarized the federal programs and amounts received by ACORN in recent years:
2003
Housing Counseling Assistance $1,168,388
Community Development Block Grants $388,273
Home Investment Partnership $8,000
Self-Help Homeownership Opportunity $204,082
Fair Housing Initiatives Program $85,000
Total $1,853,743
2004
Housing Counseling Assistance $2,209,009
Community Development Block Grants $221,007
Home Investment Partnership Program $21,092
Self-Help Homeownership Opportunity $127,183
Fair Housing Initiatives Program $105,000
Total $2,683,291
2005
Housing Counseling Assistance $2,605,558
Community Development Block Grants $367,560
Self-Help Homeownership Opportunity $153,082
Fair Housing Initiatives Program $140,917
Total $3,267,117
2006
Housing Counseling Assistance $1,955,074
Self-Help Homeownership Opportunity $59,541
Rural Housing and Economic Development $47,619
Fair Housing Initiatives Program $150,000
Community Development Block Grants $238,809
Total $2,451,043
2007
Housing Counseling Assistance $1,813,011
Self-Help Homeownership Opportunity $46,608
Rural Housing and Economic Development $30,504
Fair Housing Initiatives Program $60,000
Community Development Block Grants $372,950
Total $2,323,073
My colleague, Tad DeHaven, has discussed why these HUD programs that funded ACORN ought to be abolished completely.
Subsidy information is also available from IRS Form 990, which is filed by all non-profit groups and compiled at Guidestar and other websites. I am not an expert on this data, but Velma Anne Ruth of ABS Community Research has done a detailed analysis, which she kindly sent to me. She finds that federal funding for ACORN was about $1.7 million in 2008 and about $2.2 million in 2009.
Finally, a user-friendly website to research recipients of federal grants and contracts is www.usaspending.gov.
ACORN’s share of overall federal subsidies is tiny, but as thousands of similar organizations have become hooked on 1,800 different federal subsidy programs, a powerful lobbying force has been created that propels the $3.6 trillion spending juggernaut. ACORN’s own website touts its lobbying success in helping to pass various big government programs. So cutting off ACORN is a start, but just a small start at the daunting task of cutting back the giant federal spending empire.
Bob McDonnell: The Modern Republican
This is from the Reagan administration’s deregulatory 1981 energy plan: “All Americans are involved in making energy policy. When individual choices are made with a maximum of personal understanding and a minimum of government restraints, the result is the most appropriate energy policy.”
Many modern Republicans claim devotion to Ronald Reagan’s ideas, but they often seem to forget about the “minimum of government” thing. The following points are from Republican Virginia gubernatorial candidate Bob McDonnell’s “More Energy, More Jobs” plan:
- “McDonnell was the chief sponsor of legislation creating the Virginia Hydrogen Energy Plan.”
- “McDonnell also supported grant programs for solar photovoltaic manufacturing, tax exemptions for solar energy and recycling property, and tax credits for solar energy equipment.”
- “In order to protect Virginia’s citizens from the skyrocketing wholesale prices of electricity seen in other states, McDonnell brought together all the necessary stake holders to re-regulate electricity in Virginia.”
- “Currently, Virginia is the second largest importer of electricity behind California. This is unacceptable.”
- “Bob McDonnell will establish Virginia as a Green Jobs Zone to incentivize companies to create quality green jobs. Qualified businesses would be eligible to receive an income tax credit equal to $500 per position created per year for the first five years.”
- “The Virginia Alternative Fuels Revolving Fund was established to assist local governments that convert to alternative fuel systems . . . Bob McDonnell will expand the purpose of this fund to include infrastructure such as refueling stations, provide seed money and aggressively pursue additional grants.”
- “Bob McDonnell will make Southwest and Southside Virginia the nation’s hub for traditional and alternative energy research and development…To assist with the attraction, building and operation of major energy facilities in Southside and Southwest Virginia, we will also support the establishment of the Center for Energy.”
- “To help Virginia universities gain access to federal stimulus money, as Governor, Bob McDonnell will establish the Virginia Universities Clean Energy Development and Economic Stimulus Foundation.”
- “As Governor, Bob McDonnell will leverage stimulus funding to incentivize individuals and businesses to conduct energy audits and encourage public private partnerships between small businesses and government.”
It’s true that McDonnell’s plan has some free market elements, and also that Ronald Reagan supported some wasteful energy boondoggles. However, the degree to which the modern Republican wants to micromanage and manipulate the energy industry is remarkable. McDonnell is almost setting out a Soviet five-year plan for a substantial part of the Virginia economy. For goodness sakes, he wants to treat Virginia like a separate country and try to fix the supposed problem that it is “importing” too much energy from other states!
It’s not just energy. Look at the top-down central planning ideas that McDonnell has for “creating jobs”:
Filed under: Energy and Environment; General; Government and Politics
20-somethings Will Pay for Big Government
A front-page Washington Post story today notes that the cost of Obama-style health care reform will fall disproportionately on young adults.
Younger workers are typically more healthy than the population at large, and a significant share of them quite rationally choose not to buy health insurance, as my colleague Mike Tanner explains in a recent op-ed. The major health care plans on the table in Washington would force them to buy coverage. As the Post story explains:
Drafting young adults into any health-care reform package is crucial to paying for it. As low-cost additions to insurance pools, young adults would help dilute the expense of covering older, sicker people. Depending on how Congress requires insurers to price their policies, this group could even wind up paying disproportionately hefty premiums—effectively subsidizing coverage for their parents.
I’m beginning to see a pattern. Those same young workers will be forced to pay the bills for soaring Social Security and Medicare expenditures when the Baby Boomers begin retiring en masse a decade from now. And of course, they will be the ones paying off the $9 trillion in additional federal debt expected to be wracked up from the current explosion in federal spending.
I always thought parents were supposed to support their kids, not saddle them with bigger bills and huge debts.
Filed under: General; Health, Welfare & Entitlements
Using Gasoline to Douse a Fire? OECD Thinks Higher Tax Rates Will Help Iceland’s Faltering Economy
Republicans made many big mistakes when they controlled Washington earlier this decade, so picking the most egregious error would be a challenge. But continued American involvement with the Organization for Economic Cooperation and Development would be high on the list. Instead of withdrawing from the OECD, Republicans actually increased the subsidy from American taxpayers to the Paris-based bureaucracy. So what do taxpayers get in return for shipping $100 million to the bureaucrats in Paris? Another international organization advocating for big government.
The OECD, for example, is infamous for trying to undermine tax competition. It also has recommended higher taxes in America on countless occasions. And now it is suggesting that Iceland impose high tax increases – even though Iceland’s economy is in big trouble and the burden of government spending already is about 50 percent of GDP:
Both tax increases and spending cuts will be needed, although the former are easier to introduce immediately. The starting point for the tax increases should be to reverse tax cuts implemented over the boom years, which Iceland can no longer afford. This would involve increases in the personal income tax… Just undoing the past tax cuts is unlikely to yield enough revenue. In choosing other measures, priority should be given to those that are less harmful to economic growth, such as broadening tax bases, or that promote sustainable development, such as introducing a carbon tax.
Filed under: International Economics and Development; Tax and Budget Policy
Tuesday Links
- Will Afghanistan become Obama’s Vietnam?
- Why America’s experience in Bosnia and Iraq offers ample warning against taking the mission too far in Afghanistan.
- Paul Krugman claims a victory for Big Government, which he says “saved” the economy from an economic depression. Alan Reynolds debunks his claim and shows why bigger government produces only bigger and longer recessions.
- Podcast: Johan Norberg explores the causes of the financial crisis. For more, don’t miss his new book, Financial Fiasco: How America’s Infatuation with Homeownership and Easy Money Created the Economic Crisis.
Steele and the Left-Wing Republicans
One of the most disturbing things about the current health care debate is that some Republicans are positioning themselves as defenders of Big Government Medicare and against efforts to trim the program’s costs.
Yet the taxpayer costs of Medicare are expected to more than double over the next decade (from $425 billion in 2009 to $871 billion in 2019), and the program will consume an increasing share of the nation’s economy for decades to come unless there are serious cuts and reforms. Even the Obama administration talks about “bending the cost curve” to slow the program’s growth.
Yet Republican National Committee chairman, Michael Steele, takes to the Washington Post today to defend Medicare against any cuts, while at the same time criticizing the Democrats as “left-wing ideologues:”
- “Under the Democrats’ plan, senior citizens will pay a steeper price and will have their treatment options reduced or rationed.”
- “Republicans want reform that should first, do no harm, especially to our seniors.”
- “We also believe that any health-care reform should be fully paid for, but not funded on the backs of our nation’s senior citizens.”
- “First, we need to protect Medicare and not cut it in the name of ‘health-insurance reform.’”
- “Reversing course and joining Republicans in support of health care for our nation’s senior citizens is a good place to start.”
Steele uses the mushy statist phrasing “our seniors” repeatedly, as if the government owns this group of people, and that they should have no responsibility for their own lives.
Fiscal conservatives, who have come out in droves to tea party protests and health care meetings this year, are angry at both parties for the government’s massive spending and debt binge in recent years. Mr. Steele has now informed these folks loud and clear that the Republican Party is not interested in restraining government; it is not interested in cutting the program that creates the single biggest threat to taxpayers in coming years. For apparently crass political reasons, Steele defends “our seniors,” but at the expense of massive tax hikes on “our children” if entitlement programs are not cut.
Filed under: Government and Politics; Health, Welfare & Entitlements
Why Taxing the Rich Is Not Enough to Fund Big Government
Appearing on Fox News on Monday, Cato’s Daniel J. Mitchell explained why taxing the rich to pay for big government programs may make for a good sound bite on the campaign trail, but when there aren’t enough wealthy people to tax, the middle class ends up footing the bill.
“When politicians are aiming at the rich, it’s the middle class that winds up getting hit in the crossfire,” Mitchell said. “They use ‘tax the rich’ as the rhetoric, but they always go after the ordinary people to get more money to fund their big government schemes.”
Watch the whole thing:
Energy Mismanagment
Try as they might, supporters of big government spending cannot make federal programs work very well. The Department of Energy, for example, has been plagued by mismanagement, cost overruns, and scandals for decades.
Today, the Washington Post reports on the poor performance of DoE’s environmental clean-up programs. As I reviewed in the linked essay, these enormously costly programs have been plagued by mismanagement for at least 25 years. Last week, Lou Dobbs lambasted DOE’s National Ignition Facility in California for its huge cost overruns (Hat Tip: Harrison Moar).
I summarize these costly projects and other DoE boondoggles here. With bipartisan support for increases to energy subsidies, we can expect a raft of bipartisan boondoggles developing over coming months and years.
Filed under: Energy and Environment; Government and Politics
Does Big Government Breed Corruption and Sleaze?
Washington is riddled with both legal and illegal corruption, but why?
Perhaps it is because government is too big and has too much power. The federal budget redistributes $3.5 trillion through more than 1,800 subsidy programs. The regulatory burden is $1.2 trillion and there have been 51,000 new regulations since 1995. And there are more than 70,000 pages of tax law and regulations.
These are the reasons why Washington is a hornet’s nest of deal-making, influence-peddling, and back-scratching.
In this new video, produced by the Center for Freedom and Prosperity, I argue that reducing the size and scope of government is the only effective way to control Washington sleaze.
Filed under: Government and Politics; Tax and Budget Policy
A Poll for Tax Day
The latest poll to ask the question “would you prefer a more active government with more services and higher taxes or a smaller government with fewer services and lower taxes?” found that 66 percent prefer smaller government and lower taxes, to only 25 percent who prefer a “more active government” with more services.
Note that the poll doesn’t even say “larger government”; Rasmussen has actually made the wording more favorable toward big government.
As I’ve noted before, the usual “smaller government” question, as asked by CBS and other pollsters, is incomplete. It offers respondents a benefit of larger government — “more services” — but it doesn’t mention that the cost of “larger government with more services” is higher taxes. The question ought to give both the cost and the benefit for each option.
That’s what the Rasmussen poll does. And it shows that people prefer lower taxes to more government services.
More Reasons Not to Nationalize Health Care
Advocates of a government takeover of the health care system routinely offer up horror stories of American medicine, and no system yet has found a way around the problem of human imperfection, especially when operating in a system with such distorted incentives–most from ill-considered government policies. Yet the horror stories in nationalized health care systems are manifold and tend to be more intractable since they result from government policy.
For instance, consider the quality of care delivered by hospitals in one region in Great Britain (with a hat-tip to Philip Klein of the American Spectator for finding this story). According to the Daily Telegraph:
Sir Ian Kennedy, chairman of the Healthcare Commission, said the report is a ’shocking story’ and that there were failures at almost every stage of care of emergency patients. “There is no doubt that patients will have suffered and some of them will have died as a result,” he said.
The investigation of the trust now called the Mid-Staffordshire NHS Foundation Trust, found overstretched and poorly trained nurses who turned off equipment because they did not know how to work it, newly qualified doctors left to care for patients recovering from surgery at night, patients left for hours in soiled bedclothes, reception staff expected to judge how seriousness of patients arriving at A&E, patients left without food or drink, others who received the wrong medication or none at all, blood and faeces left on lavatories and floors, and doctors diverted away from seriously ill patients in order to treat minor ones who were in danger of breaching the four hour waiting time target.
When high mortality rates triggered questions, the trust board of directors ‘fobbed off’ investigators by saying the rates were a result of statistical errors but the Healthcare Commission found this was not that case.
The report said there was a ‘reluctance to acknowledge or even consider that the care of patients was poor’.
The trust was more concerned with hitting targets, gaining Foundation Trust status and marketing and had ‘lost sight’ of its responsibilities for patient care, the report said.
Sir Ian said: “The resulting report is a shocking story. Our report tells a story of appalling standards of care and chaotic systems for looking after patients.”
While Britain tends to be near the bottom in terms of health care system in industrialized states, there are plenty of horror stories elsewhere. Socialism doesn’t work, whether in health care or elsewhere. As Investor’s Business Daily reminds us:
The Swedish government system is no better. It also refuses to provide some expensive medication and, inhumanely, refuses to let patients buy the drugs themselves. Why? According to a Journal of American Physicians and Surgeons article, bureaucrats believe doing so “would set a bad precedent and lead to unequal access to medicine.”
Like Canadians, Swedes are subjected to long waits. They also have denial-of-care problems that sometimes lead to death.
A reasonable person would see the record of repeated failures in government-run medicine as evidence that such a system is not sustainable. Yet every central planner thinks he or she — or his or her immediate group — is smart enough to correct the flaws of socialist programs and therefore has the moral authority to force others to participate in his experiments. It is the same thinking that will move a person to say we are the ones we’ve been waiting for.
The Obama administration seems determined to waste a lot of money “stimulating” the economy. We can replace money lost. But if the administration succeeds in nationalizing the medical system directly or indirectly, the damage may prove irreversible–and deadly.
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