Rep. Frank Lucas (R-Farm Subsidies)
The Washington Times says that the upcoming farm bill re-write could “sow division in the GOP.” While House Republican leaders John Boehner, Eric Cantor, and Kevin McCarthy voted against the 2008 farm bill, the new chairman of the House Agriculture Committee, Frank Lucas (R-Okla.), is a dedicated supporter of farm subsidies.
The Times recalls Boehner’s comments on the 2008 farm bill:
“The farm bill has often been abused by politicians as a slush fund for bizarre earmarks and wasteful spending projects, and the latest version … is no different,” Mr. Boehner, then the GOP minority leader, said at the time.
It’s too bad then that the Boehner-friendly Republican Steering Committee, which decided the committee chairs, didn’t appear to blink at handing the agriculture committee gavel to a key supporter of the “slush fund.” And it’s not as if Lucas has been circumspect in his intentions. Lucas’s agriculture issues section on his website, which hasn’t been updated since the Republicans took back the House, makes that perfectly clear:
As Ranking Member of the Agriculture Committee, I have long been a champion of voluntary agriculture conservation programs. During the drafting of the 2002 Farm Bill, I worked to secure the largest ever increase in programs such as Environmental Quality Incentives Program, the Conservation Reserve Program, and many others. In the 2008 Farm Bill, I advocated for renewable energy provisions to be included in the farm bill which would allow rural areas to play a larger role in making the U.S. less dependent on foreign sources of energy. I am proud that the 2008 Farm Bill devotes a funding stream to renewable energy research, development, and production….
[I] will work closely with Chairman Peterson and other members of the committee to ensure that cuts are not made to agriculture producers – farmers and ranchers.
Lucas isn’t shy about touting his support from the myriad farm lobby groups either:
Still Not Serious About Cutting Spending
The howls of outrage that have greeted the report of the bipartisan National Commission on Fiscal Responsibility and Reform shows two things: 1) most Democrats have no interest in reducing the size and cost of government; and 2) few Republicans are actually serious about it.
From the initial reaction, one would think that the Commission has slashed government to the bone, throwing the elderly, poor and sick into the street. In reality, the Commission report is far from a radical document. It proposes a reduction in government spending from 24.3 percent of GDP today to 21.8 percent over the next 15 years. That’s a start. But as recently as 2000 total federal spending was just 18.4 percent of GDP — and people were hardly dying in the streets during the Clinton years.
In fact, the Commission doesn’t actually “cut” federal spending. Under the Commission’s proposal, it would rise from roughly $3.5 trillion today to more than $5 trillion by 2020. So, under the terrible “cuts” that the Commission is recommending, federal spending would still increase faster than inflation. This is the old Washington game of calling a slower increase than previously projected a “cut.”
But Democrats appear unwilling to support even this modest slowing in the growth of government. Instead they call for simply raising taxes to support a virtually unlimited amount of federal spending. Republicans, meanwhile, talk about reducing government, but fall back on bromides about reducing waste, fraud, and abuse when faced with the need to make specific cuts.
If we were serious about reducing the size, cost and intrusiveness of government, we should roll back spending to Clinton-era levels. (My colleague Chris Edwards has shown how that can be done.) That would eliminate the need for the tax increases that the commission proposes.
Alas, we still await political leadership with that amount of courage.
Can You Name the Greatest President of the Past 100 Years?
It’s tempting to say that Ronald Reagan was the best U.S. president of the past century, and I’ve certainly demonstrated my man-crush on the Gipper. But there is some real competition. I had the pleasure yesterday of hearing Amity Shlaes of the Council on Foreign Relations make the case for Calvin Coolidge at the Mont Pelerin Society Meeting in Australia.
I dug around online and found an article Amity wrote for Forbes that highlights some of the attributes of “Silent Cal” that she mentioned in her speech. As you can see, she makes a persuasive case.
… the Coolidge style of government, which included much refraining, took great strength and yielded superior results. …Coolidge and Mellon tightened and pulled [income tax rates] multiple times, eventually getting the top rate down to 25%, a level that hasn’t been seen since. Mellon argued that lower rates could actually bring in greater revenues because they removed disincentives to work. Government, he said, should operate like a railroad, charging a price for freight that “the traffic will bear.” Coolidge’s commitment to low taxes came from his concept of property rights. He viewed heavy taxation as the legalization of expropriation. “I want taxes to be less, that the people may have more,” he once said. In fact, Coolidge disapproved of any government intervention that eroded the bond of the contract. …More than once Coolidge vetoed what would later be called farm allotment–the government purchase of commodities to reduce supply and drive up prices. …Today our government has moved so far from Coolidge’s tenets that it’s difficult to imagine such policies being emulated.
But if you don’t want to believe Amity, here’s Coolidge in his own words. This video is historically significant since it is the first film (with sound) of an American President. The real value, however, is in the words that are being said.
A Novel Way of Keeping Fiscal Deficits Under Control?
Having inherited an 8 percent budget deficit from the previous socialist government, the new conservative-liberal government of Slovakia has come up with a novel way of keeping budget deficits under control in the future. Starting in 2011, salaries of government ministers will rise and fall depending on the evolution of the fiscus. Thus, a budget deficit of 5 percent will translate to a 10 percent decrease in salaries, while an (unlikely) budget surplus of 5 percent will translate into a 10 percent rise in salaries, etc. It will be interesting to see if this new measure will truly result in a more responsible fiscal policy in the years to come.
Incidentally, had the United States adopted a similar measure, President Obama’s reported salary of $400,000 in 2009 would have fallen to $320,000 in 2010.
Let’s Regulate Barney Frank’s Pay
“Rep. Barney Frank, chairman of the House Financial Services Committee, said Tuesday that he will hold a hearing this fall to examine whether regulators are being tough enough in curbing pay practices at Wall Street firms that can lead to excessively risky practices,” writes Zachary Goldfarb in the Washington Post.
Hmmm. “Pay practices that can lead to excessively risky practices.” Since Barney Frank entered Congress, federal spending has risen from $590 billion in 1980 to $3.7 trillion this year. (U.S. Budget, Historical Tables, Table 1.1) The annual deficit has risen from $74 billion to $1.5 trillion. Gross federal debt rose from $909 billion to $13.8 trillion — and to over $15 trillion next year. (Table 7.1) And all this without a major war or depression during those 30 years.
Maybe we should adjust pay practices for members of Congress to give them an incentive to avoid risky, unaffordable, out-of-control borrowing and spending.
Unserious Cost Cutters Only
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.
Fiscal Commission Testimony
I testified to President Obama’s National Commission on Fiscal Responsibility and Reform today on Capitol Hill. The Commission is tasked with creating a package of specific budget reforms by December to be considered by the House and Senate.
I suggested that the Commission propose cuts to Social Security, Medicare, Medicaid, farm subsidies, transportation subsidies, education subsidies, aid to the states, and many other activities.
Fiscal responsibility is pretty easy really–you just need to cut programs. I advised Commission members to study the recommendations on www.downsizinggovernment.org.
And I said that other countries have ditched farm subsidies and privatized Social Security, so why the heck can’t we?
My written testimony is here. The hearings are on CSPAN and being streamed at the White House website.
Crist Fiscally Responsible? Not So Fast
He did it again: Florida governor and senatorial candidate Charlie Crist cited Cato’s 2008 Governors’ Report Card as evidence of his fiscal conservative credentials, this time in a Fox News Sunday debate with his primary opponent Marco Rubio.
Trouble is, the report card’s author, Chris Edwards, has gone on the record again and again explaining how Crist has fallen hard off the fiscal responsibility wagon since the report was released two years ago.
The Florida media has publicized Edwards’ correction of the record numerous times since Crist began citing the Cato rating in his political ads. It is difficult to believe that Crist can be unaware of that.
Here’s Edwards in October 2009:
Since I wrote the report in mid-2008, the governor seems to have fallen off the fiscal responsibility horse.
In particular, Crist approved a huge $2.2 billion tax increase for the fiscal 2010 budget, even though he had promised that $12 billion in federal “stimulus” money showered on Florida over three years would obviate the need for tax increases.
About $1 billion of the tax increases are on cigarette consumers, which will particularly harm moderate-income families. The rest of the increases are in the form of higher costs for often mandatory services, such as automobile registration, which is really just a sneaky form of tax increases.
Watch the exchange below. Crist cites Cato at 8:43:
Transcript here.
Moody’s Mulls Downgrading U.S. Debt
The U.S. isn’t Greece. Yet.
Moody’s is no longer so sure about the quality of Uncle Sam’s debt. Reports the Christian Science Monitor:
The US needs to make significant government spending cuts or else risk losing its gold-plated credit rating that has made extensive borrowing so affordable, Moody’s Investor Service said late Monday.
The announcement was a sobering warning that the country’s burgeoning debt has weakened the country’s economic standing, and that US Treasury Bonds, traditionally a bullet-proof investment, could lose their sterling Aaa-rating if Washington cannot control its federal debt.
If Moody’s were to downgrade the country’s rating, the impact could be severe. It would signal to lenders worldwide that the US is no longer one of the safest places to invest money.
That, in turn, would threaten the country’s ability to borrow freely and extensively from other countries on favorable terms. Investors would likely demand a higher interest rate to finance US debt, which would push federal debt higher still.
“There’s a profound effect in this announcement,” says Max Fraad Wolff, a professor of economics at New School University in New York. “The US has always been the gold standard … and this begins to signal a fall or weakness in US global economic position. That’s a bit like a sea change.”
Obviously we are long overdue for some fiscal responsibility in Washington. And that means cutting spending across the board. Lawmakers might start by considering what programs are authorized by the Constitution–and the far larger number which represent unconstitutional political power grabs.
The Fiscal Equivalent of Defining Deviancy Down
Senator Jim Bunning of Kentucky may be the most unpopular man in Washington right now. And, as you may surmise, this means he is doing something admirable (envision Jimmy Stewart in Mr. Smith Goes to Washington and you’ll have the right context).
Republicans and Democrats want to rush through a bill to spend more money on everything from highways to healthcare to joblessness. Senator Bunning is simply saying that the new spending should be financed by reallocating some of the unspent money from the so-called stimulus. For this modest proposal, Bunning is being treated like a porcupine at a nudist camp, with both Republicans and Democrats expressing irritation that he is making it harder for them to buy votes with other people’s money.
I am delighted that Senator Bunning is putting some roadblocks in the path of bigger government, but this episode also illustrates how our hopes and expectations have been eroded. For all intents and purposes, Sen. Bunning is saying that if we want to waste money on A, B, and C, then we should not waste as much money on X, Y, and Z.
Even in the unlikely event that he succeeds, all Bunning will have accomplished to keep a bloated federal government at its current size, which is about twice as big as it was when Bill Clinton left office about nine years ago.
Whatever happened to getting rid of the Department of Education and Department of Energy? Who has a proposal to get rid of the Department of Housing and Urban Development? Are any politicians even talking about getting rid of the Department of Transportation? Or Department of Commerce? I could go on, but I’m already getting suicidally depressed.
Three cheers for Senator Bunning, but it says a lot about the era of Bush-Obama profligacy that his very modest proposal is seen as a radical idea.
Kent Conrad and Fiscal Federalism
Senator Kent Conrad (D-ND) has a reputation for being a “deficit hawk.” But the bar is apparently so low in Washington that merely paying lip service to “fiscal responsibility” is enough to earn you the hawk title in the press. In reality, Conrad is a tax and spender as a story in today’s Wall Street Journal demonstrates.
These examples illustrate Sen. Deficit Hawk’s commitment to deficit reduction and fiscal responsibility:
- “Like many in Congress, he is conflicted. He boasts a 23-year record of looking after North Dakota voters with ample farm subsidies, aid for drought-hit ranchers, defense spending and scores of pet projects. He has done little to help rein in Medicare and Social Security expenses—the U.S.’s biggest budget busters.”
Crist and Cato
Florida’s airwaves are alive with the sound of Governor Charlie Crist’s radio advertisement trumpeting his grade of “A” on Cato’s “Fiscal Policy Report Card on America’s Governors.”
I am pleased that Gov. Crist values Cato’s ratings because we work hard to make them accurate and nonpartisan. But the radio ad is making many fiscally conservative Floridians scratch their heads because of the governor’s recent policy actions.
The governor earned his Cato grade in last year’s report mainly because of his large property tax cuts and moderate spending approach. The grade was based purely on quantitative data on revenues, general fund spending, and tax rate changes.
However, since I wrote the report in mid-2008, the governor seems to have fallen off the fiscal responsibility horse.
In particular, Crist approved a huge $2.2 billion tax increase for the fiscal 2010 budget, even though he had promised that $12 billion in federal “stimulus” money showered on Florida over three years would obviate the need for tax increases.
About $1 billion of the tax increases are on cigarette consumers, which will particularly harm moderate-income families. The rest of the increases are in the form of higher costs for often mandatory services, such as automobile registration, which is really just a sneaky form of tax increases.
These tax increases will be particularly painful to Floridians in the short-term because of the recession. But Crist has also jeopardized the state’s long-term finances with his expanded subsidies for hurricane insurance. Hurricanes are a major challenge in Florida, but giving big subsidies to coastal property owners, driving private insurers out of the state, and guaranteeing a massive state bailout when the next hurricane hits strikes me as the height of fiscally irresponsibility.
More on the Crist campaign here.
Cato on Facebook
Cato on Twitter
Cato on Google+
Cato on YouTube
