When Rep. Jim Oberstar (D-MN) lost his bid for reelection in November, it brought to an end a congressional career that spanned nearly a half century. As a former chairman of the House Transportation Committee, Oberstar’s faith in the ability of the federal government to turn taxpayer water into wine was typical for a politician ensconced in the Washington Beltway bubble.

Oberstar reemerged this week to voice his support for legislation reauthorizing the Economic Development Administration, which is still being debated on the Senate floor. In an op-ed written for The Hill, Oberstar says that “It is disheartening to see that the agency I helped create more than 45 years ago which has had constant bipartisan support is now under unwarranted partisan attack in an economic environment when the kinds of jobs this agency helps create are needed more than ever.”

Oberstar says that it is “particularly troubling” that the EDA is receiving scrutiny after being unanimously reauthorized only three years ago. And without specifically naming him, Oberstar takes a shot at Sen. Jim DeMint (R-SC) for turning against the agency after having previously “supported and praised EDA investments in his home state.” Considering how rare it is for a member of Congress to admit to having made a mistake, I’d say that DeMint’s recent admission in the Wall Street Journal that he was wrong to have supported the EDA is refreshing.

DeMint correctly noted that the mistaken rationale behind the EDA’s creation during the Great Society is the same as the Democrat’s $814 billion stimulus bill: government programs can solve economic problems. Indeed, the longer the economic recovery remains sluggish and uncertain, the more the American people are questioning the ability of the federal government to simply turn on the money spigot and make the pain go away. For people like Jim Oberstar, that’s an unsettling development.

Many Americans are starting to understand what my colleagues and I have been repeatedly pointing out: there’s no free lunch when it comes to government programs. As a Cato essay on the Economic Development Administration explains, claims of the benefits from spending only look at half of the equation:

The EDA does create government jobs, and perhaps some private sector jobs, but that is only the visible effect. What is invisible, or ignored by policymakers, are the jobs never created because of the taxes that were raised to pay for EDA programs. Every dollar that the government extracts from the economy to pay for programs destroys more than a dollar of private sector economic activity. Taxation reduces the resources available for private sector job creation, and it also distorts the economy by altering price signals for working, saving, and other productive activities.

Oberstar offers anecdotal evidence of the EDA’s successes and trots out the familiar job creation and private sector leveraging claims often made by the agency’s proponents. For instance, he touts the EDA’s “exclusive mission of creating and retaining American jobs by leveraging private investment in the nation’s economically distressed communities and every dollar that the agency invests leverages another $6.90 in private/public investment to create the economic environment for small business to grow and prosper.”

One of the examples Oberstar cites as an example of an EDA success is support for “Washington State’s growing wine industry which currently employs more than 14,000 people and generates more than $3 billion to the state’s economy.” That’s an odd choice after touting the EDA’s assistance to the “nation’s economically distressed communities.” Besides, why should federal tax-paying winemakers in states other than Washington have to effectively subsidize their competition? And as the Cato essay notes, if the EDA is “generating real returns” as Oberstar states, then “surely local entrepreneurs and venture capitalists would be interested in funding such projects without government help.”

Finally, Oberstar singles out Cato for citing “three decade old GAO reports” in our criticism of the EDA. Actually, Cato’s essay on the EDA cites reports going back three decades.

Oberstar Comes to the EDA’s Defense is a post from Cato @ Liberty - Cato Institute Blog

George Will makes a good point in his latest column: Democrats maintain a peculiar “conviction that whatever government programs exist should forever exist because they always have existed.” Will’s observation centers around the shameless Democratic attacks on Rep. Paul Ryan’s (R-WI) proposal to reform Medicare and Medicaid.

According to Will, “Ryan’s plan would alter Medicare. But Medicare has existed in its current configuration for only 46 of the nation’s 235 years.” Actually, “current configuration” isn’t quite accurate. For example, Medicare’s prescription drug component added by Republicans, which Ryan voted for, went into effect only five years ago.

Regardless, I agree with Will that so-called “progressives” have a “constricted notion of the possibilities of progress”:

The hysteria and hyperbole about Ryan’s plan arise, in part, from a poverty of today’s liberal imagination, an inability to think beyond the straight-line continuation of programs from the second and third quarters of the last century. It is odd that “progressives,” as liberals now wish to be called, have such a constricted notion of the possibilities of progress.

Yes, Ryan’s plan displays “imagination” and I would add that it took political guts to suggest the reforms knowing that the left would nail him to the cross. However, let’s not forget that Ryan’s plan would also further cement these twin pillars of the federal welfare state. For all the silly accusations that Ryan is proposing to “privatize” Medicare, his plan repeatedly states that his aim is to “save” it:

Letting government break its promises to current seniors and to future generations is unacceptable. The reforms outlined in this budget protect and preserve Medicare for those in and near retirement, while saving and strengthening this critical program so that future generations can count on it to be there when they retire.

I wasn’t born yesterday, so I understand Ryan’s assurance to “those in and near retirement” that Medicare as they know it won’t be touched. However, I can’t square Ryan’s reference at the outset of his plan to the “timeless principles of American government enshrined in the U.S. Constitution – liberty, limited government, and equality under the rule of law” with his intention to strengthen “this critical program so that future generations can count on it be there when they retire.”

Now that Ryan’s plan has taken its inevitable beating from demagoguing Democrats, the GOP appears to be upping the “save Medicare for future generations” rhetoric.

Here’s tea party favorite Sen. Marco Rubio (R-FL) as reported by Politico:

‘I understand the benefits that Medicare brings to America. It should be a part of our country,’ Rubio added. ‘I want Medicare to exist in a way that is unchanged for people that are in Medicare now. I want Medicare to exist when I retire. I want Medicare to exist when my children retire. And I don’t want Medicare to bankrupt itself for our country. And Medicare, as it’s currently structured, will go bankrupt.’

If that’s what Rubio, Ryan, and the rest of the congressional Republicans desire, then thank you for being honest. But please stop wrapping the intention to maintain for eternity a gigantic federal welfare state in the mantle of individual liberty, limited government, and the Constitution.

Support for the Eternal Federal Welfare State Is Bipartisan is a post from Cato @ Liberty - Cato Institute Blog

Self-anointed elites have been relentless in prodding government planners to apply their enlightened solutions for the purported benefit of the ignorant masses. As a result, the federal government has become a Super Nanny monitoring and guiding the intimate activities of the nation’s 300 million inhabitants. However, the government is not altruistic and does not have the solutions for how people should live their lives.

The amalgamation of programs and regulations that constitute the federal government is basically a reflection of the myriad special interests that have won a seat at Uncle Sam’s table. Government consists of fallible men and women who are naturally susceptible to pursuing policies that have less to do with the “general welfare” and more to do with rewarding the privileged birds incessantly chirping in their ears.

One result is that government programs often work at cross purposes. A perfect illustration is the confused U.S. Department of Agriculture, which spends taxpayer money subsidizing fatty foods while at the same time setting nutritional guidelines with the purported aim of getting Americans to eat healthier.

The New York Times explains:

Domino’s Pizza was hurting early last year. Domestic sales had fallen, and a survey of big pizza chain customers left the company tied for the worst tasting pies.

Then help arrived from an organization called Dairy Management. It teamed up with Domino’s to develop a new line of pizzas with 40 percent more cheese, and proceeded to devise and pay for a $12 million marketing campaign.

Consumers devoured the cheesier pizza, and sales soared by double digits. “This partnership is clearly working,” Brandon Solano, the Domino’s vice president for brand innovation, said in a statement to The New York Times.

But as healthy as this pizza has been for Domino’s, one slice contains as much as two-thirds of a day’s maximum recommended amount of saturated fat, which has been linked to heart disease and is high in calories.

And Dairy Management, which has made cheese its cause, is not a private business consultant. It is a marketing creation of the United States Department of Agriculture — the same agency at the center of a federal anti-obesity drive that discourages over-consumption of some of the very foods Dairy Management is vigorously promoting.

Urged on by government warnings about saturated fat, Americans have been moving toward low-fat milk for decades, leaving a surplus of whole milk and milk fat. Yet the government, through Dairy Management, is engaged in an effort to find ways to get dairy back into Americans’ diets, primarily through cheese.

Your tax dollars are being used by the USDA to help Domino’s Pizza (and Taco Bell, Pizza Hut, Wendy’s, and Burger King according to the article) sell its product. Of course, the government isn’t trying to help these fast food giants so much as it’s trying to help a particularly favored special interest: farmers.

While calls to get rid of subsidies for Dairy Management would obviously be on target, the better move would be to get rid of the entire USDA, which the New York Times comically refers to as “America’s nutrition police.” The USDA has been around for almost 150 years, and yet Americans have never been fatter. If there’s a solution to America’s obesity “problem,” it won’t be found in Washington. In a free society, the only solution is to make individuals responsible for the consequences of their own decision-making.

See these essays for more on downsizing the U.S. Department of Agriculture.

Government Cheese is a post from Cato @ Liberty - Cato Institute Blog

From Franklin Delano Roosevelt’s New Deal to Joe Biden’s Big F-ing Deal, progressives have led a consistent and largely successful campaign to expand the size and scope of the federal government. Now, Matt Yglesias suggests, it’s time to take a victory lap and call it a day:

For the past 65-70 years—and especially for the past 30 years since the end of the civil rights argument—American politics has been dominated by controversy over the size and scope of the welfare state. Today, that argument is largely over with liberals having largely won. [...] The crux of the matter is that progressive efforts to expand the size of the welfare state are basically done. There are big items still on the progressive agenda. But they don’t really involve substantial new expenditures. Instead, you’re looking at carbon pricing, financial regulatory reform, and immigration reform as the medium-term agenda. Most broadly, questions about how to boost growth, how to deliver public services effectively, and about the appropriate balance of social investment between children and the elderly will take center stage. This will probably lead to some realigning of political coalitions. Liberal proponents of reduced trade barriers and increased immigration flows will likely feel emboldened about pushing that agenda, since the policy environment is getting substantially more redistributive and does much more to mitigate risk. Advocates of things like more and better preschooling are going to find themselves competing for funds primarily with the claims made by seniors.

I’d like to believe this is true, though I can’t say I’m persuaded. It seems at least as likely that, consistent with the historical pattern, the new status quo will simply be redefined as the “center,” and proposals to further augment the welfare state will move from the fringe to the mainstream of opinion on the left.

That said, it’s hardly unheard of for a political victory to yield the kind of medium-term realignment Yglesias is talking about. The end of the Cold War destabilized the Reagan-era conservative coalition by essentially taking off the table a central—and in some cases the only—point of agreement among diverse interest groups. Less dramatically, the passage of welfare reform in the 90s substantially reduced the political salience of welfare policy. The experience of countries like Canada and the United Kingdom, moreover, suggests that if Obamacare isn’t substantially rolled back fairly soon, it’s likely to become a political “given” that both parties take for granted. Libertarians, of course, have long lamented this political dynamic: Government programs create constituencies, and become extraordinarily difficult to cut or eliminate, even if they were highly controversial at their inceptions.

We don’t have to be happy about this pattern, but it is worth thinking about how it might alter the political landscape a few years down the line.  One possibility, as I suggest above, is that it will just shift the mainstream of political discourse to the left. But as libertarians have also long been at pains to point out, the left-right model of politics, with its roots in the seating protocols of the 18th century French assembly, conceals the multidimensional complexity of politics. There’s no intrinsic commonality between, say, “left” positions on taxation, foreign policy, and reproductive rights—the label here doesn’t reflect an underlying ideological coherence so much as the contingent requirements of assembling a viable political coalition at a particular time and place.  If an issue that many members of one coalition considered especially morally urgent is, practically speaking, taken off the table, the shape of the coalitions going forward depends largely on the issues that rise to salience. Libertarians are perhaps especially conscious of this precisely because we tend to take turns being more disgusted with one or another party—usually whichever holds power at a given moment.

The $64,000 question, of course, is what comes next. As 9/11 and the War on Terror reminded us, the central political issues of an era are often dictated by fundamentally unpredictable events. But some of the obvious current candidates are notable for the way they cut across the current partisan divide. In my own wheelhouse—privacy and surveillance issues—Republicans have lately been univocal in their support of expanded powers for the intelligence community, with plenty of help from hawkish Democrats. Given their fondness for invoking the specter of soviet totalitarian states, I’ve hoped that the folks mobilizing under the banner of the Tea Party might begin pushing back on the burgeoning surveillance state. Thus far I’ve hoped in vain, but if that coalition outlasts our current disputes, one can imagine it becoming an issue for them in 2011 as parts of the Patriot Act once again come up for reauthorization, or in 2012 when the FISA Amendments Act is due to sunset. In the past, the same issues have made strange bedfellows of the ACLU and the ACU, of Ron Paul Republicans and FireDogLake Democrats.  Obama has pledged to take up comprehensive immigration reform during his term, and there too significant constituencies within each party fall on opposite sides of the issue.

Further out than that it’s hard to predict. But more generally, the possibility that I find interesting is that—against a background of technologies that have radically reduced the barriers to rapid, fluid, and distributed group formation and mobilization—the protracted health care fight, the economic crisis, and the explosion of federal spending have created an array of potent political communities outside the party-centered coalitions. They’ve already shown they’re capable of surprising alliances—think Jane Hamsher and Grover Norquist.  Suppose Yglesias is at least this far correct: The next set of political battles are likely to be fought along a different value dimension than was health care reform. Precisely because these groups formed outside the party-centered coalitions, and assuming they outlast the controversies that catalyzed their creation, it’s hard to predict which way they’ll move on tomorrow’s controversies. It’s entirely possible that there are latent and dispersed constituencies for policy change outside the bipartisan mainstream who have now, crucially, been connected: Any overlap on orthogonal value dimensions within or between the new groups won’t necessarily be evident until the relevant values are triggered by a high-visibility policy debate.  Still, it’s reason to expect that the next decade of American politics may be even more turbulent and surprising than the last one.

A Post-Health Care Realignment? is a post from Cato @ Liberty - Cato Institute Blog

The President has announced a government crackdown on Medicare and Medicaid fraud. The effort appears to be an attempt to make it easier for Americans to swallow the health care “reform” he’s trying to shove down their throats. As House Republican leader John Boehner correctly asked, “Why can’t we crack down on fraud without a big-government takeover of health care?”

As I’ve noted before, improper payments made by Medicare and Medicaid is may well be $50 billion more than the already appalling $100 billion annual figure the president cited. Administrative efforts to rein in fraud and abuse are welcome, but they won’t solve the huge and fundamental inefficiencies of these programs. Because the law requires government health care programs to quickly get payments out the door, Uncle Sam will always be engaged in a costly game of “pay and chase.”

The broader problem is that government programs aren’t subject to market discipline. Policymakers and administrators have little incentive to be frugal because they face few or no negative consequences when playing with other people’s money.

Most of us have noticed how good private companies can be at reducing fraud. I recently received a call about questionable charges on my Discover credit card. After quizzing me on a list of purchases made with my card in the past 24 hours, it became clear that someone had gotten control of my account. Discover immediately closed the account, opened an investigation, and removed me from any liability for the fraudulent charges.

What amazed me is that I only had about $300 worth of charges on my card. It’s not a big account and thus not a big money maker for Discover. Yet, within 24 hours of a string of suspicious charges, the company was right on top of it before I even realized anything nefarious was going on. Private markets don’t always work this well, but government programs almost never do.

A Tale of Two Frauds is a post from Cato @ Liberty - Cato Institute Blog

Yesterday, Cato released a new study, “The Massachusetts Health Plan: Much Pain, Little Gain,” which showed that official estimates overstate the gains in health insurance coverage resulting from a 2006 Massachusetts law by at least 45 percent.  The study also finds: supporters understate the law’s cost by nearly 60 percent; government programs are crowding out private insurance; self-reported health improved for some but fell for others; and young adults are responding to the law by avoiding Massachusetts.

Given that the Massachusetts health plan bears a “remarkable resemblance” to the Obama plan, the study should serve as a warning sign to members of Congress, says Michael Cannon, director of health policy studies.

The study has received coverage in Investor’s Business Daily, The Wall Street Journal, The Washington Post, Detroit News, The Washington Times, the Reason Foundation and the Pioneer Institute.

Trouble in Massachusetts is a post from Cato @ Liberty - Cato Institute Blog

The Obama administration and its allies in Congress want the federal government to expand its role in subsidizing health care. We are told that this expansion will restrain rising health care costs. But an OMB report yesterday that the government made $98 billion in improper payments last year — $55 billion of which came from Medicare and Medicaid — ought to raise suspicions about that claim.

According to Reuters, OMB Director Peter Orszag told reporters that the embarrassing figures from Medicare and Medicaid demonstrate the need for health care reform. I would concur if “reform” meant reducing the government’s role in health care. However, he means the opposite, which raises the question of how giving more money to an already waste-prone and bureaucratic federal health system can possibly make sense for the economy.

The administration has promised to cut down on improper payments with the aid of a new executive order. According to the Associated Press:

Under the executive order, every federal agency would have to maintain a Web site that tracks improper payments, error rates and outstanding payments. If an agency doesn’t meet targets for reducing error rates for two years in a row, the agency director and responsible official will have to directly report to OMB to explain the delinquency and new actions they will take.

Somehow I doubt this will amount to much of a deterrent. The AP also said the administration plans to impose penalties on government contractors who receive improper payments. But last month it was reported that “the Department of Defense awarded nearly $30 million in stimulus contracts to six companies while they were under federal criminal investigation on suspicion of defrauding the government.”

Democrat Tom Carper, chairman of the Senate subcommittee on federal financial management, seemed to partly understand the broader meaning of the improper payment estimates:

It goes without saying that these results would be completely unacceptable in the private sector, as they should be in government, especially at a time of record deficits…Unfortunately, these numbers may still be just the tip of the iceberg since they don’t even include estimates for several major programs, including the Medicare prescription drug plan.

Yes, Senator, which is precisely why bigger government – be it stimulus, bail outs, or health care reform – is an inferior option to letting the marketplace provide for our wants and needs.

Carper is also right about the $98 billion figure being the “tip of the iceberg.” As has been noted here before:

The Government Accountability Office estimates that the two major government health programs are currently losing a combined $50 billion annually to such payments. But that estimate probably low-balls the actual losses. Harvard’s Malcolm Sparrow, a top specialist in health care fraud, estimates that 20 percent of federal health program budgets are consumed by improper payments, which would be a staggering $150 billion a year for Medicare and Medicaid.

See this essay for more on fraud and abuse in government programs.

$98 Billion in Improper Payments is a post from Cato @ Liberty - Cato Institute Blog

Did you know that the average American family spends $1,000 each year on the U.S. Department of Agriculture, whether or not it consumes that agency’s services?  Or that the federal government annually spends $1,500 per household on net interest costs alone?

In an ongoing effort to shed light on runaway government spending and expose wasteful government programs, Cato launched a new Web site today that examines the federal budget department-by-department to see which agencies can be reformed or terminated. DownsizingGovernment.org describes which programs are wasteful, damaging and obsolete in an era of trillion-dollar deficits.

The research exposes that many public outlays—though vigorously defended by the politicians who created them and the constituencies they purport to help—are remarkably ineffective at achieving their core aims.

Here are just a few examples:

• Though the Department of Education’s annual budget has more than tripled in real dollars since 1970, that period has not been marked by any tangible improvement in student performance.

• The Department of Housing and Urban Development operates a rural subsidies program even though hundreds of other federal programs benefiting rural constituencies already exist.

• HUD has been characterized by scandalous graft and cronyism under both Republican and Democratic presidents for three decades. The rate at which senior HUD officials have been investigated or prosecuted is chilling, and government watchdogs have found dozens of instances where officials’ private-sector contacts were showered with public money for projects.

Appearing on CNBC Monday, DownsizingGovernment.com editor Chris Edwards explained more about the site:

Plus, keep track of where your tax dollars are going by following DownsizingGovernment.com on Twitter (@DownsizeTheFeds) and Facebook.

Cato Launches New Web Site Exposing Wasteful Government Spending is a post from Cato @ Liberty - Cato Institute Blog

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.

Funding ACORN is a post from Cato @ Liberty - Cato Institute Blog

Duncan “Atrios” Black sums up and amplifies on a much longer post by Salon’s Glenn Greenwald as follows:

Just adding on to Glenn’s post, much opposition to the government actually doing anything decent for people comes from the idea that the government is going to take my tax money and give it to people who don’t deserve it. The problem is that for decades the Dems have tried to get around this by making sure policies and programs were relatively small and incremental, everything targeted and means tested. But doing that effectively confirmed the critics’ point. The big (giant) government programs which are most popular are the ones which are universal – Social Security and Medicare – and other less controversial government programs, like highway spending, are also perceived to benefit people across the board.

There’s a couple of interesting things going on here that seem worth unpacking.  The first is actually a legitimate point about how valid arguments against various kinds of redistribution tend, with unsettling ease, to shade into unsavory demonization of the folks on the receiving end of the transfer. Suppose someone suggests that the government should, either by regulation or direct subsidy, ensure that the indigent are provided with health care or that insolvent homeowners are protected from foreclosure. Now, there are a few types of objections people might raise. There’s an argument from efficiency and incentives: To the extent that the risks associated with individual financial or lifestyle choices are borne by the public, there’s a familiar problem of “moral hazard” reducing incentives for prudence. And there’s an argument from property and autonomy, to the effect that even if people ought to help others in need, each person is entitled to decide whether and how to do so without compulsion. Neither of these implies any blanket judgment about the folks who find themselves in need of aid. The first argument does suggest that redistributive policy will make it rational for people to take more risks at the margin, but it does not follow from either that people who are having trouble meeting their mortgage payments, or people who get sick and cannot afford care, are bad or foolish or irresponsible or otherwise deserving of their fate. And it is a good thing for these arguments that no such conclusion follows, because it’s clearly not true.

Yet in popular political rhetoric, it’s disturbingly easy to find just such a leap being made. Think of Rick Santelli’s jeremiad against “losers” under foreclosure getting bailed out by government. Is it just that people are inherently spiteful or unkind? In fact, the tendency to assume that people who are badly off must deserve it may be a result of what social psychologists call the Just World Hypothesis. In brief, faced with evidence that the world is often arbitrary and unfair, and that bad things often happen to good people, many of us prefer to preserve our faith in a basically fair and benevolent universe by assuming that the badly off must somehow deserve their fates—which is a stronger and (I think) rather morally uglier proposition than the more plausible notion that people are often significantly responsible for their fates.

There are at least three reasons to take some care to avoid this implication, given how easily human beings fall into it. The first is just that it’s an ugly and callous attitude to have toward people who will often deserve our compassion whether or not they ought to receive government aid. The second is that people will readily—and sometimes intentionally—misconstrue an argument about incentives as an argument about the moral worthiness or personal virtue of the proposed recipients, which does not make for a particularly fruitful conversation. Finally, there’s a paradoxically quite authoritarian implicit premise lurking behind this sort of argument—to wit, that it’s the job of the government  to determine who is or is not morally deserving of its largess, and that the central question is whether this or that particular class of prospective recipients qualifies. That’s a frame people across the spectrum ought to be uncomfortable with.

As Atrios points out, strategic response to this on the part of progressives has been to embed what are essentially welfare programs within an elaborate—and functionally, if not politically, superfluous—superstructure of universal social insurance. My colleague Will Wilkinson has pressed this point cogently in the context of Social Security. The rationale for the program is ultimately that we hope it will prevent people from being mired in poverty in old age. There is no sane reason, on this rationale, for cutting Bill Gates a check when he reaches the age of eligibility—but we do it this way because progressives believe, perhaps correctly, that a means-tested aid program for the indigent elderly would be more politically vulnerable to cuts. Which, I think, underscores the perverse effect of thinking in terms of the desert of the recipients, since there’s no actually-valid argument on which a universal need-blind benefit makes more sense than a narrow means-tested one. So one more reason to eschew desert-centered political discourse: It gives rise to policy that’s less intelligent whether your underlying commitments are progressive or libertarian.

Don’t Leave Room for Desert is a post from Cato @ Liberty - Cato Institute Blog

President Obama and other leading Democrats have proposed creating a new government health insurance program as an “option” for Americans under the age of 65. In a new study, Cato scholar Michael F. Cannon shows that government programs cost more and deliver lower-quality care than private insurance. “If Congress wants to make health care more efficient and increase competition in health insurance markets, there are far better options,” argues Cannon.

Fannie Med? Why a "Public Option" Is Hazardous to Your Health, Cato Policy Analysis No. 642

Why a “Public Option” Is Hazardous to Your Health is a post from Cato @ Liberty - Cato Institute Blog

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:

Why Taxing the Rich Is Not Enough to Fund Big Government is a post from Cato @ Liberty - Cato Institute Blog

The Wall Street Journal‘s Numbers Guy tackles the question:

The Census Bureau estimates that the number of uninsured amounts to 45.7 million people. But the agency might be over-counting by millions due to faulty assumptions…

Even though legislation won’t cover many of them, illegal immigrants are especially difficult to enumerate: Few raise their hands to be counted. Prof. [Jonathan] Gruber estimates they make up about 13% of the uninsured today, or nearly six million people of that 45 million number…

Of the rest, some people are eligible for health insurance but don’t know it and many can afford it but don’t want it. About 43% of uninsured nonelderly adults have incomes greater than 2.5 times the poverty level, according to a report released Tuesday by the business-backed Employment Policies Institute.

He left out a few things, though.

The estimate of 46 million uninsured, which comes from a less-than-ideal government survey, has been the occasion of a fraud on the public.  For 20 years, the Church of Universal Coverage told us that 40-some million Americans are uninsured for the entire year.  Then, experts including the non-partisan Congressional Budget Office said that no, 40-some million is the number who are uninsured on any given day, and a lot of those people quickly regain coverage.  The number of Americans who are uninsured for the entire year is actually 20-30 million.  Yet the Church of Universal Coverage kept using that 40-some million estimate as if nothing had happened – even though the meaning of that estimate had completely changed.

The Congressional Budget Office also reports that as many as 15 percent of those 20-30 million chronically “uninsured” are eligible for government programs, so they’re effectively insured.

According to economists Mark Pauly of the University of Pennsylvania and Kate Bundorf of Stanford, as many as three-quarters of the uninsured could afford coverage but choose not to purchase it.  Again, according to the Congressional Budget Office, 60 percent of the uninsured are under age 35, and 86 percent are in good-to-excellent health.

Government intervention has made health insurance unnecessarily expensive for them, so these folks quite sensibly don’t want to be ripped off.  Mandating that they buy coverage is really about hunting them down and taxing them.

How Many Uninsured Are There? is a post from Cato @ Liberty - Cato Institute Blog

Each semester, when I speak to Cato’s new employees and interns, I give them a quick discussion of some of the reasons that government tends to grow, such as the problem of concentrated benefits and diffuse costs and what James Payne called “the culture of spending.” In his book by that title, Payne noted:

The congressman lives in a special world, a curiously isolated world that is dominated by the advocates of government action. He is subjected to a broad chorus of persuasion that incessantly urges the virtues of spending programs. Year after year he hears how necessary government programs are.

Day after day, year after year, people come to the congressman’s office with stories about why some particular government program is needed — to help their grandfather, their brother-in-law, their community — and rarely if ever does a constituent fly to Washington to urge his congressman to vote against any particular one of the myriad programs that add up to his entire income tax bill.

The Washington Post has a great illustration of this problem in the Sunday paper. The little town of Owego, New York, was excited to hear that Lockheed Martin would build the new presidential helicopter — it’s called Marine One, though fortunately for Lockheed the government wanted 23 of them — at a plant in Owego. But as the price tag ballooned from $6.8 billion to $13 billion, even politicians began to see it as an unnecessary expense. The military canceled the program on June 1. Hundreds of jobs will be lost in Owego. And as the Post writes:

An 11-year-old Owego girl, whose parents are longtime Lockheed employees, recently hand-wrote a letter to Obama. It was published in the local newspaper and quickly became a voice for her shaken community.

“Lockheed is the main job source in Owego,” Hailey Bell, now 12, wrote. “If you shut down the program, my mom may lose her job and a lot of other people too. . . . Owego will be a ghost town. I’ve lived here my whole life and I love it here! Please really, really think it over.”

I’m sure she loves her parents and her town. And there’s no reason to expect Hailey to understand what $13 billion means to taxpaying Americans all over the country. But this is just the kind of story that members of Congress hear all the time: save my parents’ jobs, save my community, save our farms. And it all adds up to a $4 trillion federal budget with a $1.8 trillion deficit. (And by the way, if you Google “fiscal 2009 budget,” you will quickly find the Obama administration’s budget page, which somewhat oddly does not show the actual budget totals but does invite you to “Use the map below to learn more about how the President’s 2010 Budget is restoring long-term opportunity and prosperity in your state.”)

For a more, shall we say, adult view of what it means to direct federal dollars to particular areas, we might turn to an advertisement in the Durango, Colorado, Herald in 1987, which touted the Animas-La Plata dam and irrigation project  and made explicit the usual hidden calculations of those trying to get their hands on federal dollars:

Why we should support the Animas-La Plata Project: Because someone else is paying the tab! We get the water. We get the reservoir. They get the bill.

That’s the way they tell it back home, usually without putting it in writing. In public and in Washington, they say, “Without this dam, our little town will waste away. Only you can save us, Mr. Congressman.” And it’s bankrupting us.

The “Culture of Spending” from the Mouths of Babes is a post from Cato @ Liberty - Cato Institute Blog

In today’s Washington Post, Dana Milbank does a typically brilliant job deconstructing the activities of Congress. He looks at how members of the various defense committees put their energies into fighting for home-state hand-outs rather than focusing on broader defense issues from a national perspective.

The dominance of parochial interests over the general public interest is, of course, a long-standing problem in Congress. Members from cotton-growing states gravitate to the farm committees in order to defend cotton interests, while members from inner cities gravitate to committees overseeing urban affairs to defend programs that subsidize their constituents.

The result is that Congress spends a lot of money on items that don’t have broad public support, and it spends little time actually considering policies from a national perspective.

A partial solution to the problem would be mandatory committee rotations every two years in the House and Senate. All committee assignments would be made by random selection at the beginning of each Congress.

People will say: “You can’t do that because members on particular committees are often experts in their field.” That would be a good argument if members used their expertise to serve the general interest of the public. Rep. Jack Murtha is an expert on defense issues, and in theory he could be spending his and his staff’s time probing Pentagon operations, reviewing administration defense strategies, overseeing procurement programs to reduce waste, and other public-spirited activities.

But that is apparently not what Murtha and most other members of Congress spend their time doing. Anyone who watches congressional committee action on C-SPAN can see the pattern that Milbank describes–members use their brief time with important witnesses to get in on-the-record statements in support of favored special interests. And their staffs spend most of their time figuring out how to maximize the home-state grab from the budget, not examining big-picture policy issues.

We have a $3 trillion government because members of Congress love to spend money, as a sort of general proclivity. But they are particularly addicted to spending money on their home states. Random committee assignment would help to disrupt that addiction, and it would allow members to adopt a more neutral and critical eye on matters in front of the committees that they were assigned.

Rotating Congress is a post from Cato @ Liberty - Cato Institute Blog

At Capitol News Connection, brought to you each morning by your tax dollars, they reported this morning:

With more than a trillion tax dollars tied up in the Troubled Asset Relief Program and stimulus spending, Congress is trying to figure out how to account for every penny.

Uh-huh. Congress is always on top of our federal dollars.

Coincidentally, just hours after the CNC report, the Government Accountability Office released a report warning about the lack of oversight procedures in the kitchen-sink stimulus bill. And a few days earlier the inspector general for the TARP program reported that Treasury has no real details on how TARP funds are being spent. In fact, IG Neil Barofsky told Congress that there were 20 criminal investigations into possible TARP fraud already underway.

Two months ago Barofsky and the comptroller general had warned of the likelihood of waste in huge new government programs:

Neil Barofsky, the special inspector general for the $700 billion Troubled Asset Relief Program, told a House subcommittee that the government’s experiences in the reconstruction of Iraq, hurricane-relief programs and the 1990s savings-and-loan bailout suggest the rescue program could be ripe for fraud…

Gene Dodaro, acting comptroller general of the U.S., told the subcommittee that a reliance on contractors and a lack of written policies could “increase the risk of wasted government dollars without adequate oversight of contractor performance.”

One of Greg Mankiw’s readers worked on the new Department of Homeland Security and reported recently:

[Y]ou cannot juice up a government agency’s budget by tens of billions (or in the case of the stimulus package, hundreds of billions) and expect them to be able to process the paperwork to contract it out, much less oversee the projects or even choose them with any kind of hope for success. It’s like trying to feed a Pomeranian a 25 lb turkey. It’s madness. It was years before DHS got the situation under control and between the start and when they finally assembled a sufficiently capable team of lawyers, contracting officials, technical experts and resource managers, most of the money was totally wasted.

Linda Bilmes, coauthor with Nobel laureate Joseph Stiglitz of The Three Trillion Dollar War: The True Cost of the Iraq Conflict, analyzes the massive problems in three somewhat smaller government projects — the Iraqi reconstruction effort, Hurricane Katrina reconstruction, and the Big Dig artery construction in Boston — and finds that “in any organization that starts to increase spending very rapidly there are risks of waste, fraud and inefficiency.”

Milton Friedman summed up the basic problem with government waste back in 2002:

When a man spends his own money to buy something for himself, he is very careful about how much he spends and how he spends it. When a man spends his own money to buy something for someone else, he is still very careful about how much he spends, but somewhat less what he spends it on. When a man spends someone else’s money to buy something for himself, he is very careful about what he buys, but doesn’t care at all how much he spends. And when a man spends someone else’s money on someone else, he doesn’t care how much he spends or what he spends it on. And that’s government for you.

Members of Congress can make all the speeches they want about their commitment to ferreting out waste and fraud, but waste and fraud are inevitable in government spending and inevitably large in such massive programs. Some people think that’s fine. At least they’re realistic. But reporters shouldn’t fall for politicians promising to spend unprecedented sums of other people’s money quickly and wisely.

Waste, Fraud, and Stimulus is a post from Cato @ Liberty - Cato Institute Blog

Too many people in Washington look out upon the beauty and bounty of America and see a vast wasteland, enlivened only by government programs. If government isn’t doing it, they think, then it isn’t being done. When the Republicans threatened to nick the budget of the National Endowment for the Arts, First Lady Hillary Rodham Clinton wailed that the proposal “not only threatens irrevocable damage to our cultural institutions but also to our sense of ourselves and what we stand for as a people.” Seriously, she thought that if the then-$167 million of the NEA were eliminated, the $37 billion that Americans spent on the arts that year would somehow disappear in a puff of smoke?

Sen. Edward M. Kennedy was even more sweeping when he said  in 1992, “The ballot box is the place where all change begins in America” — conveniently forgetting the market process that has brought us such changes as the train, the skyscraper, the automobile, the personal computer, and charitable or self-help endeavors from settlement houses to Alcoholics Anonymous to Comic Relief.

And today the Washington Post weighs in with the chart below. It’s titled “Percent of GDP spent on social/family expenditures,” and it shows the United States at a shockingly low 0.7 percent, while Obama-esque countries like Sweden and France are above 3 percent. But could it really be true that America spends less than 1 percent of its wealth on families and children? Of course not. The proper title for the chart would be “Percent of GDP spent by government on social/family expenditures.” (Indeed, given the federal nature of the United States, it’s possible that the proper title would be “Percent of GDP spent by the central government on social/family expenditures.”) Every American family spends a large portion of its income on children’s needs, and a larger portion on the needs of children and parents.

The point of the article, as the caption above the chart indicates, is to argue that the Japanese government needs to spend more on programs that would encourage women to join the paid workforce. (If the government hired all the mothers in Japan and paid them to care for their neighbors’ children, would that be a better world? It certainly would raise Japan’s position on the Post’s chart!) If that’s what Post reporters believe, they’re certainly free to advocate that position. But they shouldn’t assume or imply that the government is the entire society. Families in Japan and the United States spend most of their income — or at least most of their after-tax income — on child and family needs. The chart ignores that reality and seeks to make Japanese and Americans embarrassed that government taxes and spends less in their countries than in the European welfare states.

Washington’s Government-Centric View of the World is a post from Cato @ Liberty - Cato Institute Blog

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.

Feds Pay Farmers to Till the Desert is a post from Cato @ Liberty - Cato Institute Blog