My Cato colleague John Cochrane – who is way smarter than I am — has a generally excellent op-ed in today’s Wall Street Journal on ObamaCare’s contraception mandate:

Salting mandated health insurance with birth control is exactly the same as a tax—on employers, on Catholics, on gay men and women, on couples trying to have children and on the elderly—to subsidize one form of birth control…

The tax rate and spending debates that occupy the media are a small part of the effective taxes and spending that the government achieves by these regulatory mandates…

The natural compromise is simple: Birth control, abortion and other contentious practices are permitted. But those who object don’t have to pay for them. The federal takeover of medicine prevents us from reaching these natural compromises and needlessly divides our society…

Sure, churches should be exempt. We should all be exempt.

My only quibble is with his claim, “Insurance is a bad idea for small, regular and predictable expenses.”

That’s generally true. But medicine is an area where, potentially at least, small up-front expenditures (e.g., on hypertension control) could prevent large losses down the road. So it may be economically efficient for health plans to cover some small, regular, and predictable expenses. Both the carrier and the consumer would benefit. In fact, that would be the market’s way of telling otherwise uninformed consumers, “Hey! Controlling your hypertension is a really good for you!” And really, if someone is so risk-averse that they want health insurance with first-dollar coverage of everything – and they’re willing to pay the outrageous premiums that would accompany such coverage — why should we take issue with that?

ObamaCare’s contraceptive-coverage mandate demonstrates that government does  a horrible job of picking only those types of “preventive” services for which first-dollar coverage will leave consumers better off. But I also think advocates of free-market health care generally need to let go of the idea that health insurance exists only for catastrophic expenses.

Cochrane on ObamaCare’s Contraceptive-Coverage Mandate is a post from Cato @ Liberty - Cato Institute Blog

In a new op-ed, I have the regrettable task of pointing out to my fellow Washingtonians (of the PNW rather than D.C. variety) that we have increased public school spending in the past decade by $1.6 billion and gotten _________ in return. Nothing. Nada. Rien du tout, mes concitoyens.

NAEP scores are pretty much flat at the end of high school, as are SAT scores. It is hard to argue that we really care about children’s education when we’re willing to waste $1.6 billion that is purportedly meant for that purpose. If politicians and voters in the Evergreen State do decide, at some point, to do something for children, the first step would be to stop wasting that $1.6 billion. The next step would be to follow the lead of other states, like Florida, that have found ways to improve student achievement while _lowering_ taxes.

And the Other Washington Is Messed Up, Too is a post from Cato @ Liberty - Cato Institute Blog

…Apparently, when you are the District of Columbia public school system. The Washington Times reports today on a candle-light vigil beseeching the federal government for extra cash for new computers. The group organizing the vigil, OurDC, shares this “horror story” from former technology teacher Toval Rolston:

I’ve been in D.C. schools where the computers are so antiquated that you can’t even download a basic pdf file; our children don’t have the tools to compete in today’s high tech world.

The twin implications of this plea are that DC schools are underfunded and that more money will actually be spent wisely. The first statement is false and the second is decidedly unlikely. The last time I calculated total spending on K-12 education in DC, from the official budget documents, it came out to over $28,000 per pupil (the linked post points to a spreadsheet with all the numbers).

How do you manage to spend $28,000 per pupil and not manage to keep your computer hardware up to date? Or, for that matter, manage to have among the worst academic performance in the country? Maybe, just maybe, it has something to do with not being capable, or perhaps even inclined, to spend the money on what works.

The Washington Times, by the way, points out that OurDC is headquartered at the same address as the Service Employees International Union. Go figure.

When Is $28,000 per Pupil Not Enough? is a post from Cato @ Liberty - Cato Institute Blog

The New York Times weighs in this morning with a timely and sensible editorial on military spending. The main focus is on the increasingly outdated pay and benefits system for the nation’s troops. Some choice excerpts:

Military pay, benefit and retirement costs rose by more than 50 percent over the…decade (accounting for inflation). Leaving aside Afghanistan and Iraq, those costs now account for nearly $1 out of every $3 the Pentagon spends.

Much of that is necessary to recruit and retain a high-quality, all-volunteer military….But current military pay, pension systems and retiree health care benefits are unsustainable and ripe for reform.

[...]

The retirement system is both unfair and increasingly expensive. Most veterans, including many who have served multiple combat tours, will never qualify for even a partial military pension or retiree health benefits. These are only available to those who have served at least 20 years. Those who do qualify can start collecting their pensions as soon as they leave service, even if they are still in their late 30s, making for huge long-term costs.

So far, so good. Two essential points bear repeating.

First, the rise in military spending over the past decade has not been driven solely by the costs of the wars in Iraq and Afghanistan. Pentagon costs are growing, and the rate of growth is rising. Programmatic reform is needed to reign in those costs; avoiding stupid wars won’t solve the problem (although it won’t hurt).

Second, the current system disproportionately rewards individuals who stay in the service for 20-plus years, and undercompensates those men and women who serve several tours, but who do not qualify for military retirement. A better system would allow anyone who has served to retain some of what they paid (or what taxpayers paid for them) into a portable retirement account that they control. Private industry has been steadily moving away from a fixed-benefit, pension-style system for years. I have heard the arguments against such a move, but I don’t find them particularly convincing.

One point from the Times editorial, however, calls out for clarification. The editors claim on two separate occasions that current military spending patterns are “unsustainable.” They conclude:

The United States already has a comfortable margin of [military] dominance….The Pentagon’s ambitions expanded without limit over the Bush era, and Congress eagerly wrote the checks. The country cannot afford to continue this way, and national security doesn’t require it. (emphasis added)

The latter point, “national security doesn’t require it,” is crucial, correct, and should be repeated at every opportunity. The former assertion, “the country cannot afford” it, is false. Repeating that claim plays into the hands of the inveterate hawks who never saw a war, or a weapon system, that wasn’t deserving of more lives/money.

The hawks are correct to point out that the United States has in the past, and could in the future, choose to spend as much or more on our military. Current spending levels amount to about five percent of GDP (when including the costs of the wars), and military spending as a share of total government spending has been falling steadily for years. According to the hawks, it is other spending, or too little revenue, that is putting our children and grandchildren into debt.

I wish that the Times had spent more time hammering the point that such spending is unnecessary. Contrary to anecdote and the evening news, the international system is remarkably stable and peaceful. The United States need not spend more than we did at the height of the Cold War in order to be secure from most threats. And those few genuine threats to our security could be handled with a smaller, more efficient military—if we offloaded some responsibilities to other countries that have sheltered under the U.S. security umbrella for decades.

The Times doesn’t directly address that last point. By focusing most of their attention on programmatic reforms to pay and benefits, and a bit on costly procurement of unnecessary weapons, but not enough to the underlying flawed assumptions that drive military spending, the editors contribute to the misconception that the U.S. military should continue to be the world’s policeman, and find ways to do this on the cheap.

That is unfortunate. Spending more than we need to doesn’t make us stronger. Ignoring our favorable strategic circumstances is simply stupid. We spend too much on our military because we ask our troops to do too much. To spend less, we must do less. The good news is that we can. The bad news is that too few people understand that.

Strength vs. Stupidity is a post from Cato @ Liberty - Cato Institute Blog

If you looked at the new CBO report on the budget, you may have noticed that federal spending this year will be $3.6 trillion.

In fact, federal spending this year will top $4 trillion. But virtually all reporters and budget wonks (including me) routinely use the lower number when discussing total federal spending. I don’t think the higher $4 trillion number even appears anywhere in the CBO report.

The $3.6 trillion figure is “net” outlays. But “gross” outlays, or total spending, is quite a bit higher. The difference is caused by “offsetting collections” and “offsetting receipts.” These are revenue inflows to the government that are netted against spending at the program level, agency level, or government-wide level. Some examples are national park fees, Medicare premiums, and royalties earned on mineral deposits. There are hundreds of these cash inflows to the government that offset reported spending.

Details on these revenue offsets can be found in Chapter 16 of OMB’s Analytical Perspectives (pdf). In fiscal year 2010, net federal outlays were $3.456 trillion, but gross outlays were $4.057 trillion. Thus, gross outlays were 17 percent larger than widely reported net outlays.

In FY 2011, OMB expects gross outlays to be about 15 percent larger than net outlays. Thus, gross outlays this year will be $4.1 trillion, compared to net outlays of $3.6 trillion. As a share of GDP, gross outlays will be about 27.3 percent of GDP, compared to net outlays of 23.8 percent.

Accounting for offsets in this manner is a long-standing convention, but it is one of the sneaky ways that Washington tries to hide its large intrusion into the economy. Certainly, the CBO and OMB should include more prominent presentations of gross outlays in their regular budget updates.

For citizens and reporters, a rule-of-thumb to remember is that total federal spending is 3 to 4 percentage points of GDP larger than usually reported by officials.

Federal Spending Hits $4.1 Trillion is a post from Cato @ Liberty - Cato Institute Blog

House Speaker John Boehner is scrambling to revise his budget plan after the CBO found that it would only cut spending by $850 billion, not the $1.2 trillion promised.

However, the Boehner plan doesn’t actually cut spending at all. The chart shows the discretionary spending caps in the Boehner plan. Spending increases every year—from $1.043 trillion in 2012 to $1.234 trillion in 2021. (This category of spending excludes the costs of wars in Iraq and Afghanistan).

The “cuts” in the Boehner plan are only cuts from the CBO baseline, which is an imaginary path of future spending designed as a planning tool for Congress. Boehner can propose to spend any amount in any future year he wants, and in this plan he choose to have a steadily rising spending path.

The Boehner plan also doesn’t cut spending in a more fundamental way. It doesn’t lay out any particular programs or agencies to terminate. I’m in favor of spending caps as a secondary enforcement mechanism, but actual cuts have to come first. A caps-only plan like Boehner’s just kicks the can down the road. At best, it simply nudges future legislators to actually cut something specific.

Why doesn’t the House leadership propose real cuts? They’ve certainly got the resources and expertise to do the job. A single senator — Tom Coburn — produced a 620-page report last week detailing hundreds of programs to cut and terminate. Coburn and his staff read through thousands of articles and reports on the real-world performance of federal programs, and they made a good case for each particular cut they proposed.

Republican leaders can’t hide behind baselines forever. If they really want a smaller government as they keep claiming, they’ve got to target particular programs and agencies and begin a national debate about terminating them.

Boehner Plan Doesn’t Cut Spending is a post from Cato @ Liberty - Cato Institute Blog

These are the times that try budget analysts’ souls—especially budget analysts who’d like to see Washington dramatically cut spending. The debate over lifting the debt ceiling has produced a number of proposals from Capitol Hill—none of them have been worth celebrating. We can now add House Speaker John Boehner’s latest proposal to the pile.

Boehner’s proposal boils down to the following: cap discretionary spending over 10 years to achieve $1.2 trillion in savings; have (another) bipartisan group of policymakers come up with $1.8 trillion in “deficit reductions” over ten years; and get a vote on a balanced budget amendment. In exchange, the president would get to increase the deficit by $900 billion this year and by another $1.6 trillion next year.

Here are some thoughts on Boehner’s plan:

• Under the Congressional Budget Office’s optimistic spending baseline, the federal government will spend $46 trillion over the next ten years. Obviously, reducing spending by $1.2 trillion oven ten years is relatively small.

• The same dysfunctional congress that treats entitlement programs like lit sticks of dynamite is supposed to come up with $1.6 trillion in “deficit reduction.” Note that we’re not even talking specifically about spending cuts here, so that figure would likely include tax increases assuming they’re able to even come up with something.

• Under the Boehner plan, spending and debt will continue to rise. At the most, the plan would produce an average of $300 billion a year in cuts in exchange for increasing the debt ceiling by $2.5 trillion over the next two years.

• Boehner’s bill includes language that tightens up the definition of what constitutes “emergency” spending. Congress regularly slaps the “emergency” designation on all sort of non-emergency spending bills. I have no faith that the new language will stop the foxes guarding the henhouse from continuing to devour chickens.

• Where are the immediate spending cuts? Once again, we have the promise of cuts but no specifics. Even if the discretionary caps hold the line on that portion of spending, total federal spending (and debt) will continue its unsustainable upward climb. Entitlement spending is the biggest driver of our long-term budgetary problems but entitlement spending isn’t capped under the Boehner plan.

In sum, this plan is another stinker. But with Harry Reid controlling the Senate and Barack Obama sitting in the White House, the votes just aren’t there to get a plan passed that sufficiently addresses our fiscal mess by reining in the size and scope of government.

Thoughts on the Boehner Plan is a post from Cato @ Liberty - Cato Institute Blog

Charles Krauthammer is absolutely right that Republicans must call President Obama’s bluff on the debt-limit vote. I suggested that the House GOP pass $2 trillion in cuts tied to a $2 trillion debt increase, thus handing the matter over to the Senate and the president and refusing to budge.

Krauthammer has the same idea, but with $500 billion in cuts and a $500 billion debt increase. That would certainly be better than Senator McConnell’s chicken-out plan, and it would have the advantage of being so modest in size that I think it would ultimately get large support in the Senate from moderates.

The cuts–small “trims” really–could be taken right from Obama’s own Fiscal Commission report. The table below illustrates how modest and limited are the reforms needed to hit $500 billion in savings over 10 years. Indeed, the data from the commission only covers a nine-year period and includes just some of the proposed entitlement savings.

It would be blindingly obvious to most voters that Obama would be responsible for a debt default if he couldn’t bring himself to sign such modest cuts that were proposed by his own fiscal commission. Then, when the government runs up against the debt limit again five months from now, the GOP should have another package of cuts ready to be passed. This next time they could perhaps focus on discretionary program terminations, some of which I’ve proposed here.

Debt-Limit Deal: $500 Billion Cut Option is a post from Cato @ Liberty - Cato Institute Blog

Last week, a motion to proceed on a budget resolution introduced by Sen. Rand Paul (R-KY) was decisively defeated in the Senate (7 in favor, 90 opposed). Paul’s proposal would have balanced the budget in five years (fiscal year 2016) through spending cuts and no tax increases. Social Security and Medicare would not have been altered. Instead, the proposal merely instructed relevant congressional committees to enact reforms that would achieve “solvency” over a 75-year window.

That’s hardly radical.

Paul’s proposed spending cuts were certainly bold by Washington’s standards, but they weren’t radical either. For example, military spending would have been cut, in part, by reducing the government’s bootprint abroad. From the Paul proposal:

The ability to utilize our immense air and sea power, to be anywhere in the world in a relatively short amount of time, no longer justifies our expanded presence in the world. This budget would require the Department of Defense to begin realigning the over 750 confirmed military installations around the world. It would also require the countries that we assist to begin providing more funding to their own defense. European, Asian, and Middle Eastern countries have little incentive to increase their own military budgets, or take control of regional security, when the U.S. has consistently subsidized their protection.

Over 750 confirmed military installations around the world. That’s enough to make a Roman emperor blush. Isn’t continuing to go deeper into debt to subsidize the defense of rich allies the more “radical” position? (See these Cato essays for more on downsizing the Department of Defense.)

Other cuts included eliminating the Department of Housing & Urban Development, the Department of Energy, and most of the Department of Education. But unlike most Republicans, Paul didn’t apologize for the cuts or use the debt dilemma as a cop out. Instead, he explains in his plan why these federal activities are counterproductive and should be devolved to the states or left to the private sector.

It’s disappointing that Paul could only get seven Republicans and no Democrats to support his budget. For all the bluster about needing to cut spending, not raise taxes, and stop the Obama administration’s big government agenda, most Republican senators said “no dice” when given the chance to vote in favor of a plan that would accomplish all three objectives and balance the budget in five years.

Senate Vote on Rand Paul’s Budget is a post from Cato @ Liberty - Cato Institute Blog

All the talk of spending cuts in Washington is fictitious. Even the House Republican Study Committee budget allows spending to increase, on average, by 1.7 percent each year for the next decade. The Ryan budget, which critics deride for its “savage” cuts, allows spending to rise by an average of 2.8 percent each year. And Obama’s budget allows spending to climb, on average, by 4.7 percent each year—which is more than twice the projected rate of inflation.

Too bad American policymakers can’t copy the Baltic nations of Estonia, Latvia, and Lithuania. Like the United States, these nations got in fiscal trouble, thanks to the combination of excessive spending and an economic downturn triggered by falling real estate prices.

But unlike the United States, these nations didn’t follow the Keynesian policy of more deficit spending. Lawmakers in the Baltic nations recognized, to borrow the words of Dan Hannan, that “you cannot spend your way out of recession or borrow your way out of debt.”

So they reduced spending. Not in the Washington sense, where politicians get to increase spending and call it a cut because outlays didn’t rise even faster. The Baltic nations imposed real cuts. And not just for one year, but in both 2009 and 2010. Here’s the data from the European Union for the Baltic nations.

Interestingly, it appears that fiscal restraint has been very successful for the Baltic nations. After suffering a steep downturn, economic growth has returned. Amazingly, Estonia is even back to having a budget surplus.

It’s also worth noting that other nations have enjoyed great success with fiscal restraint. This video shows how Canada, Ireland, Slovakia, and New Zealand dramatically reduced the burden of government spending by freezing or capping outlays. Not quite as impressive as what’s happened in the Baltics, but definitely very good compared to what’s been happening in the United States.

Let’s Copy the Baltic Nations and Really Cut Spending is a post from Cato @ Liberty - Cato Institute Blog

• Regulatory privilege is not consistent with competitive markets–that’s why Fannie Mae and Freddie Mac need reform.
• Thank goodness the U.S. Supreme Court found that education tax credits are not consistent with the fictitious notion of a “tax expenditure.”
• President Obama’s budget plan is not consistent with either his own deficit commission’s plan or the Constitution.
• The modern “Executive State” is not consistent with Article II of the Constitution.
• Cyberbullying laws are not consistent with the First Amendment and our concept of free speech:

Monday Links is a post from Cato @ Liberty - Cato Institute Blog

Reason.tv (and Europe) aptly reminds us that a government shutdown won’t exactly halt the wheels of government. Enjoy!

I talked to Dan Mitchell this week on why the standard narratives about government shutdowns are largely myth.

Countdown to ‘Shutdown’? is a post from Cato @ Liberty - Cato Institute Blog

Today POLITICO Arena asks:

Will there be a budget deal? And has Obama shown himself to be a capable leader throughout this budget impasse?

My response:

Will there be a budget agreement? Who knows. Has Obama shown himself to be a capable leader in this budget battle? Please. One thing is clear, though: It’s beyond rich for Democrats to blame Republicans for this budget impasse.

Let’s  remember that we’re talking about the budget for the fiscal year that began last October, which should have been passed well before then — when Democrats held the White House and both chambers of Congress by wide margins. In all that time, however, they couldn’t pass even one appropriations bill. Why? Because they were trying to game the November elections.

Well they lost those elections — big time. Yet even in the lame-duck session, when they still held all the cards, they couldn’t pass a budget. Now they blame the Republicans? For listening to the voters? What do they think those elections were about? Chopped liver?

The Budget Impasse: Who’s to Blame? is a post from Cato @ Liberty - Cato Institute Blog

Today POLITICO Arena asks:

Paul Ryan’s budget — hard-headed fiscal sanity or inhumane?

My response:

Either we discipline ourselves, painfully, or soon enough the Chinese and other lenders will do it for us, more painfully still, by refusing to loan to us any longer at currently low interest rates. And in that event, the debt service will be all consuming. Neither individuals nor nations can go down the road we’re on without paying the price.

Margaret Thatcher put it plainly: “The trouble with socialism” — let’s be honest, we’re socializing the costs of our appetites by imposing them on our children and grandchildren – ”is that eventually you run out of other people’s money.”

Inhumane? The inhumanity is among those demagogues who put us on this path, promising something for nothing year in and year out. Paul Ryan deserves our gratitude for biting the bullet at last. The ball is now in the court of the demagogues.

Paul Ryan and Political Discipline is a post from Cato @ Liberty - Cato Institute Blog

The Washington Post said today that a plan to “cut $33 billion from the federal budget” would be “the largest one-time reduction in U.S. history.”

Really?

The $33 billion in Democratic-proposed cuts are less than 1 percent of this year’s total spending, so we are considering very small cuts here. However, it is also true that Congress has been far more interested in growing spending than in cutting in recent decades. Still, the Washington Post said “in U.S. history,” which is a long time.

This federal budget table shows total federal spending since 1901. Total spending fell in 22 years out of the last 110 years. In 19 of those 22 years, spending was cut by more than 1 percent, or more than this year’s proposed Democratic cuts of $33 billion.

Indeed, even with $33 billion in cuts, total federal spending will still rise by more than $200 billion this year due to rising “entitlement” costs. And even in raw nominal dollars, the Washington Post isn’t correct because total federal spending fell $37 billion in 1946 and $61 billion in 2010.

We can also consider the $33 billion in proposed cuts within the applicable budget category–nondefense discretionary (NDD) spending. And we can adjust for inflation in order to fairly compare cuts in different time periods.

A $33 billion cut would reduce NDD this year by about 7 percent in constant dollars. This budget table shows that President Reagan and Congress cut NDD by 13 percent in 1982 in constant dollars.

So here is what we have discovered: Congress has reduced overall spending numerous times in the past; total spending will rise substantially this year even with proposed cuts; and Reagan cut nondefense discretionary spending more than the current $33 billion proposal would.

One year of small budget cuts won’t solve our fiscal problems. The budget-cutting drives of the early 1980s and mid-1990s made a bit of progress because they were sustained over a number of years while the economy boomed. Thus, the real challenge for Republicans will be whether they can follow up this year’s small cuts with much bigger cuts next year and beyond.

Largest Spending Cut Ever? is a post from Cato @ Liberty - Cato Institute Blog

• How can we have an “adult conversation” on the budget if the White House won’t release its budget and deficit projections to the public?
• A new guide to India’s uneven spread of economic freedom could help state-level policymakers there improve the welfare of citizens there.
• “When the Cato guy tells you someone is corrupting the idea of HSAs, pay attention.”
• Despite having the bully pulpit, and despite touting opinion polls in favor of reform, the Obama administration finds it necessary to use taxpayer funds to tell Googlers what’s best for them.
• Indiana Governor Mitch Daniels has doubled down on the social issues truce–Cato’s John Samples talked about this on Friday on the Cato Daily Podcast:

Monday Links is a post from Cato @ Liberty - Cato Institute Blog

I’m a bit late to the party in commenting on the passage of the Rooney Amendment, a successful effort on the part of 2nd-term Republican Tom Rooney (R-Fla.) to strip funding for the F-136, an engine that the Pentagon doesn’t want for the F-35 Joint Strike Fighter.

A few additional thoughts: unlike nearly all other amendments to the CR, Rooney’s passed, and fairly easily. Part of the reason is strong administration support for the effort, key especially to securing votes from Democrats — those who don’t have F-136 plants in their districts, that is. But Gates had signaled his displeasure many times previously, so that alone doesn’t explain this rare victory for budget hawks.

I would guess that an additional factor is the slew of new Republicans elected on a platform of fiscal prudence. Having Rooney as a champion for the cause certainly helped, with 110 Republicans voting for the amendment (vote tally here). A majority within the GOP still treat weapons contractors with kid gloves, but claiming that every single weapon system is essential to the nation’s survival can get pretty laughable, especially when the Secretary of Defense and all the relevant uniformed officers disagree. 

(Speaking of laughable, wouldn’t it be absurd for the Obama administration to threaten to veto the CR because it now has too little money for the Pentagon? Wait. That happened.)

Much as I would like to dwell on the defeat of the F-136 in the House, however, I am sobered by the reality of budgeting for the military. This is hardly the final blow in this battle. Opponents and supporters of the extra engine in the Senate have already lined up their forces. The engine might yet re-emerge. And we must not lose sight of the fact that the total amount saved – $450 million — is tiny relative to the Pentagon’s budget of around $540 billion in this fiscal year. Perhaps rather than debating the need for a second engine, we should be debating the need for a plane that is grossly over budget, badly behind schedule, and riddled with performance problems?

So kudos to Congressman Rooney for leading this fight, but there is still much, much more to do to bring military spending down to reasonable levels. (For example, removing U.S. troops from Europe, a policy that already enjoys considerable support.)

Thoughts on the F-35′s Extra Engine is a post from Cato @ Liberty - Cato Institute Blog

There has been an on-going discussion recently about the Tea Party’s foreign policy views and how this might influence the upcoming election and new members of Congress.  In an essay at the Daily Caller last week, the Heritage Foundation’s Jim Carafano addressed this question and the claim that the new “Defending Defense” initiative— led by Heritiage, AEI, and the Foreign Policy Initiative—is aimed at co-opting the Tea Party movement (for more on the substance, or lack thereof, of “Defending Defense,” see Justin Logan’s response here).

Over at The Skeptics blog, I take issue with Carafano’s assessment of the Tea Party’s foreign policy views:

With respect to Carafano’s assessment of the Tea Partiers’s views on foreign policy and military spending, most of what he puts forward is pure speculation. Little is actually known about the foreign policy views of a movement that is organized primarily around the idea of getting the government off the people’s backs. It seems unlikely, however, that a majority within the movement like the idea of our government building other people’s countries, and our troops fighting other people’s wars.

Equally dubious is Carafano’s claim that the Tea Party ranks include “many libertarians who don’t think much of the Reagan mantra ‘peace through strength’” but an equal or larger number who are enamored of the idea that the military should get as much money as it wants, and then some. Carafano avoids a discussion of what this military has actually been asked to do, much less what it should do. By default, he endorses the tired status quo, which holds that the purpose of the U.S. military is to defend other countries so that their governments can spend money on social welfare programs and six-week vacations.

Tea Partiers are many things, but defenders of the status quo isn’t one of them. This movement is populated by individuals who are incensed by politicians reaching into their pockets and funneling money for goo-goo projects to Washington. It beggars the imagination that they’d be anxious to send money for similar schemes to Brussels, Paris, Berlin and Tokyo, and yet that is precisely what our foreign policies have done — and will do — so long as the United States maintains a military geared more for defending others than for defending us.

Click here to read the entire post.

The Tea Party and Foreign Policy is a post from Cato @ Liberty - Cato Institute Blog

In a new Governing column entitled “Serious Cost Cutters Only, Please,” William Eggers and John O’Leary offer advice “for those public leaders who are looking to make structural changes that will bend the cost curve of government down.”

The target audiences are state officials who presently find themselves in the politically unrewarding position of not being able to spend as much as they’d like to because the recession has constrained revenues. Eggers and O’Leary correctly warn that policymakers shouldn’t “kick the can” down the road by pursuing short-term strategies that could prove costly in the long-run.

Unfortunately, their recommendations are of the pie-in-the-sky “good government” variety.

The piece caught my eye because I have first-hand state government experience with some of their suggestions:

The first lesson is that it is virtually impossible for the secretaries and department heads charged with running operations to come up with sufficient savings themselves to deliver the necessary cost savings. The best approach by far is to establish a dedicated team, located physically and philosophically close to the chief executive, and charge them with developing a set of recommendations that the mayor or governor can then direct her lieutenants to execute.

I spent two years working for such a dedicated team within Indiana Gov. Mitch Daniels’ Office of Management and Budget. The group, “Government Efficiency and Financial Planning,” was originally tasked with conducting a “long-overdue inventory of the state’s operations.” We produced two reports with hundreds of recommendations for making state government more “efficient” and “effective.”

The governor never directed his “lieutenants to execute” very many – if any – of the recommendations. In fact, the lieutenants were so worried about the potential political fallout from the issue of the second report that it was intentionally released when nobody was looking. They needn’t have worried because those interests who might have had cause for concern already saw that the first report was basically inconsequential.

Eggers and O’Leary continue:

There is likely to be some internal friction between the cost reduction team and the various department leaders. That is by design. The cost reduction team is supposed to be disruptive.

GEFP was somewhat disruptive, but not very effective. The governor’s lieutenants typically either sided with the department leaders or did little to support GEFP. The reason was simple. The perceived political costs of GEFP’s efforts usually exceeded the perceived political benefits. Department heads, on the other hand, can create favorable (and unfavorable headlines) and thus possess greater pull.

The sorry story of the Indiana Economic Development Corporation is instructive. A recent series of investigations by an Indianapolis reporter found that the IEDC had long been taking undeserved credit for job creation. When the reporter tried to visit some of the companies celebrated in IEDC news releases, he found empty fields, vacant lots and deserted factories. When he asked the head IEDC official to provide the public with evidence to support the agency’s claims, the IEDC head refused.

The IEDC, which was created by Gov. Daniels, was portrayed quite differently in the first GEFP report released in late 2006:

The previous Department of Commerce was responsible for a wide range of programs that included economic development, energy, community development and revitalization, agriculture, and tourism. The priorities of these programs were difficult to discern while mired within the former structure. The dismantling of the previous department into the Indiana Economic Development Corporation, Office of Energy and Defense Development, Office of Community and Rural Affairs, Office of Tourism Development, and Department of Agriculture has enhanced the profile of their respective programs and allowed for greater focus and accountability. Each of these areas now has a strategic plan that identifies its mission and long-term goals.

Adding insult to taxpayer injury is this gem of a quote that’s contained in the report’s introductory section on transparency:

Information on government performance mainly comes from agency heads and program managers. Human nature will incline agency heads and program managers to report results that show their programs in the best possible light. Naturally, agencies have little incentive to report information that would demonstrate inefficient or ineffective performance.

The last I heard, GEFP is now in charge of overseeing how Indiana spends its share of Obama’s stimulus money. The 2006 report, now a distant memory, stated in bold font that “outcomes and results matter.” Unfortunately for Indiana taxpayers, the outcome certainly hasn’t been a smaller state government or lower state taxes.

Eggers and O’Leary rightly acknowledge that politics make government cost cutting efforts difficult. But at the end of the day, politics almost always trumps policy. Government is not a business, and attempts to make it operate like one are a fool’s errand.

More importantly, when Eggers and O’Leary talk about cutting government costs, they’re not really talking about net cuts. Taxpayers bear the cost of government. Therefore, a net cut in government costs would mean a reduced burden on taxpayers. Making government “more efficient” is all well and good, but if the “savings” just get plowed into other programs – as has been the case in Indiana – then taxpayers aren’t any better off.

What structural changes can be made to avoid the long-term fiscal problems that concern Eggers and O’Leary?

I’ve concluded that a strong statutory limit on state spending and/or revenues is the best option. That such limits, like Colorado’s TABOR, are effective is proven by the vociferous opposition they generate from interests that depend on state largess.

Another sign is that it’s rare for an authoritative state policymaker to pursue such a measure for the obvious reason that it would inhibit the  ability to spend other people’s money. Once again, my time in state government was instructive.

When I suggested to Gov. Daniels that he consider pushing a measure like Colorado’s TABOR, he replied that he “guess he didn’t see the need for that.” A Daniels lieutenant would later instruct me, at the governor’s behest, to create a taxpayer rebate mechanism (a component of TABOR). However, I was told that the mechanism couldn’t “cost” much because the governor didn’t want his second-term spending “priorities” to be jeopardized. I was also told it had to “look good” to voters for purposes of boosting Daniels’ reelection prospects.

The bottom line is that policymakers of all stripes say they want taxpayer money spent more efficiently and effectively. If I had a dime for every time I heard a politician promise to root out “waste, fraud, and abuse” I’d be snorkeling in the Caribbean instead of writing this blog post. Therefore, if taxpayers want structural changes that will limit the burden of government, they’re going to have to demand that policymakers offer more than just platitudes.

Unserious Cost Cutters Only is a post from Cato @ Liberty - Cato Institute Blog

The White House is claiming that the so-called stimulus created between 2.5 million and 3.6 million jobs even though total employment has dropped by more than 2.3 million since Obama took office. The Administration justifies this legerdemain by asserting that the economy actually would have lost about 5 million jobs without the new government spending.
 
I’ve decided to adopt this clever strategy to spice up my social life. Next time I see my buddies, I’m going to claim that I enjoyed a week of debauchery with the Victoria’s Secret models. And if any of them are rude enough to point out that I’m lying, I’ll simply explain that I started with an assumption of spending -7 nights with the supermodels. And since I actually spent zero nights with them, that means a net of +7. Some of you may be wondering whether it makes sense to begin with an assumption of “-7 nights,” but I figure that’s okay since Keynesians begin with the assumption that you can increase your prosperity by transferring money from your left pocket to your right pocket.
 
Since I’m a gentleman, I’m not going to share any of the intimate details of my escapades, but I will include an excerpt from an editorial in today’s Wall Street Journal about the Obama Administration’s make-believe jobs.

President Obama’s chief economist announced that the plan had “created or saved” between 2.5 million and 3.6 million jobs and raised GDP by 2.7% to 3.2% through June 30. …We almost feel sorry for Ms. Romer having to make this argument given that since February 2009 the U.S. economy has lost a net 2.35 million jobs. Using the White House “created or saved” measure means that even if there were only three million Americans left with jobs today, the White House could claim that every one was saved by the stimulus. …White House economists…said the unemployment rate would peak at 9% without the stimulus (there’s your counterfactual) and that with the stimulus the rate would stay at 8% or below. In other words, today there are 700,000 fewer jobs than Ms. Romer predicted we would have if we had done nothing at all. If this is a job creation success, what does failure look like? …All of these White House jobs estimates are based on the increasingly discredited Keynesian spending “multiplier,” which according to White House economist Larry Summers means that every $1 of government spending will yield roughly $1.50 in higher GDP. Ms. Romer thus plugs her spending data into the Keynesian computer models and, presto, out come 2.5 million to 3.6 million jobs, even if the real economy has lost jobs. To adapt Groucho Marx: Who are you going to believe, the White House computer models, or your own eyes?

Obamanomics and my Seven Steamy Nights with the Gals from Victoria’s Secret is a post from Cato @ Liberty - Cato Institute Blog