Lies Our Professors Tell Us
On Sunday, the Washington Post ran an op-ed by the chancellor and vice chancellor of the University of California, Berkeley, in which the writers proposed that the federal government start pumping money into a select few public universities. Why? On the constantly repeated but never substantiated assertion that state and local governments have been cutting those schools off.
As I point out in the following, unpublished letter to the editor, that is what we in the business call “a lie:”
It’s unfortunate that officials of a taxpayer-funded university felt the need to deceive in order to get more taxpayer dough, but that’s what UC Berkeley’s Robert Birgeneau and Frank Yeary did. Writing about the supposedly dire financial straits of public higher education (“Rescuing Our Public Universities,” September 27), Birgeneau and Yeary lamented decades of “material and progressive disinvestment by states in higher education.” But there’s been no such disinvestment, at least over the last quarter-century. According to inflation-adjusted data from the State Higher Education Executive Officers, in 1983 state and local expenditures per public-college pupil totaled $6,478. In 2008 they hit $7,059. At the same time, public-college enrollment ballooned from under 8 million students to over 10 million. That translates into anything but a “disinvestment” in the public ivory tower, no matter what its penthouse residents may say.
Since letters to the editor typically have to be pretty short I left out readily available data for California, data which would, of course, be most relevant to the destitute scholars of Berkeley. Since I have more space here, let’s take a look: In 1983, again using inflation-adjusted SHEEO numbers, state and local governments in the Golden State provided $5,963 per full-time-equivalent student. In 2008, they furnished $7,177, a 20 percent increase. And this while enrollment grew from about 1.2 million students to 1.7 million! Of course, spending didn’t go up in a straight line — it went up and down with the business cycle — but in no way was there anything you could call appreciable ”disinvestment.”
Unfortunately, higher education is awash in lies like these. Therefore, our debunking will not stop here! On Tuesday, October 6, at a Cato Institute/Pope Center for Higher Education Policy debate, we’ll deal with another of the ivory tower’s great truth-defying proclamations: that colleges and universities raise their prices at astronomical rates not because abundant, largely taxpayer-funded student aid makes doing so easy, but because they have to!
It’s a doozy of a declaration that should set off a doozy of a debate! To register to attend what should be a terrific event, or just to watch online, follow this link.
I hope to see you there, and remember: Don’t believe everything your professors tell you, especially when it impacts their wallets!
Fire! Fire! Fire!
It’s summer again, which means it is the time of year for the obligatory photos of wildfires in Southern California. This particular fire, known as the Station Fire, nearly doubled in size in the last 24 hours from 98 to 164 square miles. So far, it has burned at least 18 buildings and cost the lives of at least two firefighters.
The fire began in the Angeles National Forest, and Congress will no doubt respond by giving the Forest Service even more money to suppress such fires in the future. In fact, as I show in my Cato Policy Analysis, The Perfect Firestorm, the Forest Service has, in effect, a blank check to put out fires.
It freely uses that blank check. It has so far spent about $14 million fighting the Station Fire, which supposedly threatens 12,000 homes. But it has also spent $2.5 million on Oregon’s Canal Creek Fire, which is less than half a square mile in size and does not threaten any homes or other structures. Better safe than sorry — as long as you have a blank check.
Southern California forests are extremely fire prone — their natural fire regime is to completely burn over every 50 to 100 years. Building homes in such an area might seem foolish, so naturally there have been calls for “fire plain zoning,” similar to flood plain zoning, that would restrict such construction.
Have Mexican Dishwashers Brought California to Its Knees?
An article published this week by National Review magazine blames the many problems of California on—take a guess—high taxes, over-regulation of business, runaway state spending, an expansive welfare state? Try none of the above. The article, by Alex Alexiev of the Hudson Institute, puts the blame on the backs of low-skilled, illegal immigrants from Mexico and the federal government for not keeping them out.
Titled “Catching Up to Mexico: Illegal immigration is depleting California’s human capital and ravaging its economy,” the article endorses high-skilled immigration to the state while rejecting the influx of “the poorly educated, the unskilled, and the illiterate” immigrants that enter illegally from Mexico and elsewhere in Latin America.
Before swallowing the article’s thesis, consider two thoughts:
One, if low-skilled, illegal immigration is the single greatest cause of California’s woes, how does the author explain the relative success of Texas? As a survey in the July 11 issue of The Economist magazine explained, smaller-government Texas has avoided many of the problems of California while outperforming most of the rest of the country in job creation and economic growth. And Texas has managed to do this with an illegal immigrant population that rivals California’s as a share of its population.
Two, low-skilled immigrants actually enhance the human capital of native-born Americans by allowing us to move up the occupational ladder to jobs that are more productive and better paying. In a new study from the Cato Institute, titled “Restriction or Legalization? Measuring the Economic Benefits of Immigration Reform,” this phenomenon is called the “occupational mix effect” and it translates into tens of billions of dollars of benefits to U.S. households.
Our new study, authored by economists Peter Dixon and Maureen Rimmer, found that legalization of low-skilled immigration would boost the incomes of American households by $180 billion, while further restricting such immigration would reduce the incomes of U.S. families by $80 billion.
That is a quarter of a trillion dollar difference between following the policy advice of National Review and that of the Cato Institute. Last time I checked, that is still real money, even in Washington.
How California’s Schools Brought the State to its Financial Knees
As we watch California struggle with a budget deficit larger than the entire Iranian government’s budget, it’s worth exploring how the state got there. The biggest contributing factor: a staggering collapse in educational productivity.
In 1974-75, California spent $1,373 per pupil on k-12 public schooling. By 2006-07, it was spending $10,937. Adjusting the earlier figure for inflation (to $5,286 in 2007 dollars), that still represents a more than doubling in real spending per pupil.
Of course, if California public schools had doubled student achievement and eliminated dropouts, that might justify their staggering increase in cost. They haven’t. On the most reliable available measure of state academic achievement trends, the NAEP, California public school students have seen their scores go up by about 0.2% per year at the 4th and 8th grades since state-level data became available in 1990. In other words, the state’s scores have barely budged from the low position they have long occupied. As a 2005 RAND paper observes:
California placed 48th out of 50 states on the average NAEP score across all tests, just above Louisiana and Mississippi… California’s low scores cannot be accounted for by the high percentage of minority students. California’s scores for students from families with similar characteristics are the lowest in the nation: It ranks 47th out of 47 states when we compare scores for these students.
California is in budgetary hell because of a massive collapse in the productivity of its public schools. If the public schools had just maintained the productivity level they enjoyed in 1974-75, taxpayers would now be saving $36 billion annually. That’s $10 billion more than the deficit the state is currently facing.
It’s not hard to understand why: public schooling is a monopoly. There is no field within the free enterprise sector of the economy that has had a similarly horrendous productivity collapse over the past 35 years.
California can work its way back to fiscal sanity, and jump-start educational improvement, by encouraging entrepreneurship in education via k-12 education tax credits like this one.
Filed under: Education and Child Policy; Tax and Budget Policy
Tax Marijuana to Pay for Teachers?
On my way into work this morning, I heard a report on the radio about a proposal in California to tax marijuana in order to alleviate the state’s budget meltdown. With the money the state could raise, said one supporter, California “could hire 20,000 teachers.”
Now, I have nothing insightful to say about the likely revenue or anything along those lines that would come from taxation of wacky tabacky – it’s not my issue. I can tell you, though, that the addiction that has largely brought California to its knees, ironically, is the very one that the would-be weed taxer in the story held up as a terrific target for resulting funds: state education spending, especially on teachers.
For starters, by law at least 40 percent of California’s budget must be spent on education, and considering that most education spending goes to employee salaries, by default that makes teachers one of the biggest drains on state coffers. But that’s just by default – as the quote above suggests, teachers themselves seem to have a powerful grip on the state and the minds of its people.
One bunch of teachers that almost literally has a kung-fu grip on the minds – or is it the throats? – of Californians is the California Teachers Association, a 340,000-member behemoth of a teacher union, which really says something when you consider that teachers unions are themselves the behemoths of labor unions. Little gets done affecting education without the CTA’s approval.
Then there is class-size reduction. Despite dubious evidence of the value of class-size reduction, in the mid-1990s – when the state felt flush with cash – California undertook a massive effort to bring K-3 class sizes down from an average of 29 students, to an average of 20. The undertaking required a leap from 62,226 K-3 teachers in the 1995-96 school year to 91,902 in 1998-99. According to the 2002 “capstone” report from the CSR Research Consortium, it was an expensive effort that produced at best minor improvements. Despite costing a billion dollars or more each year of implementation, researchers could find “only limited evidence linking [test score] gains to CSR.”
To be fair to the beleaguered Golden State, it’s not the only place where politicians, and often the public, seem to be constantly jonesing for more teachers and education spending. As I have laid out before, nationwide we have gone from 22.3 pupils per teacher in 1970 to 15.7 in 2005, and real per-pupil expenditures have more than doubled. Meanwhile, academic outcomes have been pretty much flat.
What explains this slavish addiction? It’s hard to say for sure, but it seems to come down to this: people feel that education is important; that the more teachers we have, the better; and that you can never spend too much on the children. But it clearly isn’t that simple. Government failure is very, very real – especially with a government monopoly as monstrous as public schooling – and sooner or later you have to pay the price for constantly doing the same crippling thing just to make yourself feel good.
Filed under: Education and Child Policy; Tax and Budget Policy
The Government Is Not the Economy
Rep. Zoe Lofgren (D-CA) is very upset that the Obama administration has rejected the California state government’s request for a bailout. She tells the Washington Post:
This matters for the U.S., not just for California. I can’t speak for the president, but when you’ve got the 8th biggest economy in the world sitting as one of your 50 states, it’s hard to see how the country recovers if that state does not.
First, presumably Lofgren knows that the federal government is projecting a deficit of $1.8 trillion for the current fiscal year — so where is this emergency aid for California to come from?
But perhaps even more importantly, Lofgren seems to confuse the state of California with the State of California. That is, she confuses the people and the businesses of California with the state government. There’s no clear and direct relationship between the two. The state government is currently running a large deficit and is warning of a “fiscal meltdown.” Of course, as it continued to issue claims of fiscal meltdown and painful cuts over the past many years, California has continued to spend. The state has nearly tripled spending since 1990 (doubled in per capita terms). It went on a spending binge during the dotcom boom and never adjusted to the lower revenues after the bust. During the Schwarzenegger years the state has increased spending twice as fast as inflation and population growth. What were they thinking?
But a bailout for the government won’t necessarily help the recovery of the state’s economy. In fact, by increasing taxes and/or borrowing, it would likely weaken the national economy. And by encouraging continued irresponsible spending by the state government, it would just be an enabler of destructive policies that suck money out of the productive sector of California’s economy. We all want the California economy to recover. But that’s not the same thing as giving more money to the California government.
My Morning Tabloid
Why is a U.S. senator’s extramarital affair on the front page of The Washington Post this morning?
Don’t get me wrong, I like a juicy sex scandal as well as the next guy. And I’m amused at my friend and former colleague Radley Balko’s Facebook comment (or was it a tweet? who can keep up with the new media?) that ”sadly, growing public acceptance for gay marriage has given yet another conservative politician no choice but to cheat on his wife.” But this affair fit Bill Kristol’s definition of good Republican behavior: “Republicans have old-fashioned extramarital affairs with other adults.” No prostitution, no underage interns, no public toilets.
So why is it front-page news?
Meanwhile, you know what’s not on the front page, today or any day so far? President Obama’s firing of the AmeriCorps inspector general, in apparent violation of a law that Senator Obama voted for, perhaps in retaliation for the IG’s investigation of Sacramento mayor Kevin Johnson, an Obama supporter. It’s an interesting story. As a Wall Street Journal lead editorial explained:
In April 2008 the Corporation [for National and Community Service] asked Mr. Walpin to investigate reports of irregularities at St. HOPE, a California nonprofit run by former NBA star and Obama supporter Kevin Johnson. St. HOPE had received an $850,000 AmeriCorps grant, which was supposed to go for three purposes: tutoring for Sacramento-area students; the redevelopment of several buildings; and theater and art programs.
Mr. Walpin’s investigators discovered that the money had been used instead to pad staff salaries, meddle politically in a school-board election, and have AmeriCorps members perform personal services for Mr. Johnson, including washing his car.
Other papers have been on the story, notably the Washington Examiner. But as even The Washington Post’s ombudsman notes, not a word in the Post (until a small story on page A19 today, featuring the Obama administration’s spin on the issue). The Post is, however, ahead of The New York Times, which has apparently not run a word on the story, even online, though it did have room for the senatorial affair.
And I have to wonder: If George W. Bush had fired an inspector general who had alleged fraud by a key Bush supporter, would the Post and the Times have covered the story?
Week in Review: Sotomayor, North Korean Nukes and The Fairness Doctrine
Obama Picks Sotomayor for Supreme Court
President Obama chose federal Judge Sonia Sotomayor on Tuesday as his nominee for the U.S. Supreme Court, the first Hispanic Latina to serve on the bench.
On Cato’s blog, constitutional law scholar Roger Pilon wrote, “President Obama chose the most radical of all the frequently mentioned candidates before him.”
Cato Supreme Court Review editor and senior fellow Ilya Shapiro weighed in, saying, “In picking Sonia Sotomayor, President Obama has confirmed that identity politics matter to him more than merit. While Judge Sotomayor exemplifies the American Dream, she would not have even been on the short list if she were not Hispanic.”
Shapiro expands his claim that Sotomayor was not chosen based on merit at CNN.com:
In over 10 years on the Second Circuit, she has not issued any important decisions or made a name for herself as a legal scholar or particularly respected jurist. In picking a case to highlight during his introduction of the nominee, President Obama had to go back to her days as a trial judge and a technical ruling that ended the 1994-95 baseball strike.
Pilon led a live-chat on The Politico’s Web site, answering questions from readers about Sotomayor’s record and history.
And at The Wall Street Journal, Cato senior fellow John Hasnas asks whether “compassion and empathy” are really characteristics we want in a judge:
Paraphrasing Bastiat, if the difference between the bad judge and the good judge is that the bad judge focuses on the visible effects of his or her decisions while the good judge takes into account both the effects that can be seen and those that are unseen, then the compassionate, empathetic judge is very likely to be a bad judge. For this reason, let us hope that Judge Sotomayor proves to be a disappointment to her sponsor.
North Korea Tests Nukes
The Washington Post reports, “North Korea reportedly fired two more short-range missiles into waters off its east coast Tuesday, undeterred by the strong international condemnation that followed its detonation of a nuclear device and test-firing of three missiles a day earlier.”
Writing in the National Interest online, Cato scholar Doug Bandow discusses how the United States should react:
Washington has few options. The U.S. military could flatten every building in the Democratic People’s Republic of Korea (DPRK), but even a short war would be a humanitarian catastrophe and likely would wreck Seoul, South Korea’s industrial and political heart. America’s top objective should be to avoid, not trigger, a conflict. Today’s North Korean regime seems bound to disappear eventually. Better to wait it out, if possible.
On Cato’s blog, Bandow expands on his analysis on the best way to handle North Korea:
The U.S. should not reward “Dear Leader” Kim Jong-Il with a plethora of statements beseeching the regime to cooperate and threatening dire consequences for its bad behavior. Rather, the Obama administration should explain, perhaps through China, that the U.S. is interested in forging a more positive relationship with [the] North, but that no improvement will be possible so long as North Korea acts provocatively. Washington should encourage South Korea and Japan to take a similar stance.
Moreover, the U.S. should step back and suggest that China, Seoul, and Tokyo take the lead in dealing with Pyongyang. North Korea’s activities more threaten its neighbors than America. Even Beijing, the North’s long-time ally, long ago lost patience with Kim’s belligerent behavior and might be willing to support tougher sanctions.
Cato Media Quick Hits
Here are a few highlights of Cato media appearances now up on Cato’s YouTube channel:
- Ted Galen Carpenter discuss the North Korean missile tests on WOR radio.
- On Fox News, Chris Edwards disputes the idea of a federal sales tax.
- Gene Healy comments on the future of Guantanamo detainees on BBC.
- On CNBC, Dan Mitchell explains why California is like the “France of America.”
- In Friday’s Cato Daily Podcast, John Samples discusses how at least three presidents used the Fairness Doctrine to squelch dissenting speech.
Filed under: Cato Publications; Foreign Policy and National Security; Government and Politics; Law and Civil Liberties
California, Here We Come
Next week the Cato Institute will hold seminars in Los Angeles and Santa Barbara. The program is the same both places.
Leda Cosmides, one of the world’s leading evolutionary psychologists, will kick things off at 11 a.m. with a talk on our intuitive ideas about fairness and justice. Then Cato’s Michael Tanner will warn about the horrors of Obamacare and Dan Mitchell will tell us that it doesn’t matter because the country’s going to be bankrupt anyway. Former California congressman and Senate candidate, and potential governor, Tom Campbell will wrap things up after lunch with a discussion of the state’s fiscal predicament.
A sobering program for sobering times. Sign up now!
Prop 13 and the California Fiscal Crisis
In the Washington Post today, columnist Harold Meyerson blames 1978’s Proposition 13 for today’s budget mess in California. That claim is not supported by the data.
First note that California’s current fiscal crisis is in its state budget. Prop 13 puts restraints on local property taxes.
Second, the most recent Census data show that total state and local general revenues in California were $293 billion in fiscal 2006. Of that, $37 billion was property tax revenue, or just 13 percent of the total. Meyerson is arguing that that level of property taxes is too low, but it is hard to see how the recent crisis could have been caused by a three-decade old constraint on such a small fraction of overall state and local revenues.
Third, on a per-capita basis, California is in the middle of the pack on property tax collections, thus even though property taxes were cut three decades ago, California governments still get a decent pound of flesh from property owners in the state.
Fourth, Prop 13 placed a supermajority requirement on state tax increases, which Meyerson laments. But that restraint has certainly not led to undertaxation in California. After an initial dip in total state/local tax revenues as a share of income in the late-1970s, California’s tax take has been steady or rising. Estimates for 2008 put the state sixth highest with respect to state and local taxes as a percentage of state incomes.
Game, Set, and Match to Sowell over Powell
With just one sentence, Tom Sowell thoroughly demolishes Colin Powell’s statist assertion that the American people want higher taxes:
Just days after Colin Powell informed us that the American people were willing to pay higher taxes in order to get government services– and that Republicans therefore needed to stop their opposition to taxes– California voters resoundingly defeated a bill to raise taxes in order to pay for the many government services in that liberal state.
“They Don’t Have the Money to Pay Us Back”
When they let their guard down, politians can say the most revealing things. In today’s Wall Street Journal, representatives of local governments in California attacked Governor Schwarnenegger’s plan to borrow $2 billion from local property tax revenues to cover some of the state’s budget shortfalls. In response, Don Knabe, chairman of the Los Angeles County Board of Supervisiors said, “They’re hijacking our dollars. They don’t have the money to pay us back. It’s a joke.”
Given that California doesn’t have the money to pay back borrowing from its local government, it’s likely they might not be able to pay back borrowing from private investors either. To solve this problem, we have the Municipal Bond Insurance Enhancement Act, on which the House Financial Services Committee held a hearing this week. To encourage investors to buy California’s risky debt, the federal government would cover any losses to the investor. We’re told that the federal government would charge bond-issuing governments insurance premiums to cover any losses, but the federal government’s history of setting rates based on politics rather than risk (have you looked at the health of the National Flood Insurance Program lately?) guarantees that the taxpayer would likely have to cover billions in losses on any guarantee of California’s debt.
Filed under: Finance, Banking & Monetary Policy; Government and Politics
The Terminator Turns into a Spendinator
Appearing on Larry Kudlow’s CNBC show, I warn that tax-and-spend policies are turning California into an American version of France. But for those who want all the gory details, Reason TV has an excellent new video.
Dan Mitchell: ‘California Is the France of America’
California voters have spoken, and they said no to California’s high tax budget balancing proposals in a special election Tuesday.
Cato scholar Dan Mitchell debated Air America founder Mark Walsh on CNBC yesterday, and called California “The France of America,” for their tax and spend policies:
Filed under: International Economics and Development; Tax and Budget Policy
No Balanced Budget, No Raise
Ben Goddard writes in The Hill about the new taxpayer revolt in California this week. The political establishment put together a package of initiatives that it thought would fix the budget process there — but the people weren’t buying it. The only thing they passed was the measure to ban salary increases for legislators if they didn’t balance the budget.
There are similar proposals floating around Capitol Hill. If bills were subject to a popular vote, it seems like such a thing would be likely to pass.
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
The California Legislature Is Being Misled
The California Assembly Committee on Revenue and Taxation is holding hearings today on bill AB 279, the “Great Schools Tax Credit Act.” This bill is much like the scholarship donation tax credit program in Florida, which is a bi-partisan success that saves the state $1.49 for every $1 it reduces state revenue.
But you wouldn’t know that if you read the Committee’s remarkably flawed official Bill Analysis.
Among other things, the Bill Analysis glaringly misrepresents Adam Schaeffer’s ”Public Education Tax Credit” paper, incorrectly calls tax credited donations public funds, omits crucial findings from other states that favor credits, and engages in unsubstantiated speculation.
To address its failings, I penned the following letter which is being distributed to the committee today.
Dear California state legislators,
The official Bill Analysis of AB 279 suffers errors of fact and omission, misrepresents the findings of a paper published by my organization, and will mislead legislators unless these problems are corrected. To address these problems, I respectfully submit this letter. Read the rest of this post »
Filed under: Cato Publications; Education and Child Policy
Feds Pay Farmers to Till the Desert
No, this headline and story is not brought to you by The Onion.
The latest proof that there’s nothing more permanent than a temporary federal program:
As drought forces families in the West to shorten their showers and let their lawns turn brown, two Depression-era government programs have been paying some of the nation’s biggest farms hundreds of millions of dollars to grow water-thirsty crops in what was once desert.
My sympathy for this farmer lies somewhere between that which I have for Bernie Madoff and Ted Stevens:
Jim Hansen, a 69-year-old cotton grower in California’s Central Valley, said his family business would crumble if the government took away low-cost water and the nearly $1.7 million in crop payments he received in 2007 and 2008.
For more on the insanity that is federal farm policy and why the USDA needs to be downsized and/or done away with, click here.
Cato on Facebook
Cato on Twitter
Cato on YouTube
Cato Tweets