Weekend Links

State of the Union Fact Check

Cato experts put some of President Obama’s core State of the Union claims to the test. Here’s what they found.

THE STIMULUS

Obama’s claim:

The plan that has made all of this possible, from the tax cuts to the jobs, is the Recovery Act. That’s right — the Recovery Act, also known as the Stimulus Bill. Economists on the left and the right say that this bill has helped saved jobs and avert disaster.

Back in reality: At the outset of the economic downturn, Cato ran an ad in the nation’s largest newspapers in which more than 300 economists (Nobel laureates among them) signed a statement saying a massive government spending package was among the worst available options. Since then, Cato economists have published dozens of op-eds in major news outlets poking holes in big-government solutions to both the financial system crisis and the flagging economy.

CUTTING TAXES

Obama’s claim:

Let me repeat: we cut taxes. We cut taxes for 95 percent of working families. We cut taxes for small businesses. We cut taxes for first-time homebuyers. We cut taxes for parents trying to care for their children. We cut taxes for 8 million Americans paying for college. As a result, millions of Americans had more to spend on gas, and food, and other necessities, all of which helped businesses keep more workers.

Back in reality: Cato Director of Tax Policy Studies Chris Edwards: “When the president says that he has ‘cut taxes’ for 95 percent of Americans, he fails to note that more than 40 percent of Americans pay no federal incomes taxes and the administration has simply increased subsidy checks to this group. Obama’s refundable tax credits are unearned subsidies, not tax cuts.”

Visit Cato’s Tax Policy Page for much more on this.

SPENDING FREEZE

Obama’s claim
:

Starting in 2011, we are prepared to freeze government spending for three years.

Back in reality: Edwards: “The president’s proposed spending freeze covers just 13 percent of the total federal budget, and indeed doesn’t limit the fastest growing components such as Medicare.

“A better idea is to cap growth in the entire federal budget including entitlement programs, which was essentially the idea behind the 1980s bipartisan Gramm-Rudman-Hollings law. The freeze also doesn’t cover the massive spending under the stimulus bill, most of which hasn’t occurred yet. Now that the economy is returning to growth, the president should both freeze spending and rescind the remainder of the planned stimulus.”

Plus, here’s why these promised freezes have never worked in the past and a chart illustrating the fallacy of Obama’s spending claims.

JOB CREATION

Obama’s claim:

Because of the steps we took, there are about two million Americans working right now who would otherwise be unemployed. 200,000 work in construction and clean energy. 300,000 are teachers and other education workers. Tens of thousands are cops, firefighters, correctional officers, and first responders. And we are on track to add another one and a half million jobs to this total by the end of the year.

Back in reality: Cato Policy Analyst Tad Dehaven: “Actually, the U.S. economy has lost 2.7 million jobs since the stimulus passed and 3.4 million total since Obama was elected. How he attributes any jobs gains to the stimulus is the fuzziest of fuzzy math. ‘Nuff said.”

Less Is More in Education Funding

Spend more money on education, the President says? Actually, we should be looking there for savings . . . here are some of the numbers:

State governments spent 35 percent of their general funds on K–12 education in 2007, according to the National Association of State Budget Officers. In contrast, Medicaid — which is continually singled out as a problematic state-budget item, even though most Medicaid funds come from the federal government — accounted for just 17 percent of general-fund expenditures. Combined, state and local governments spend 27 cents of every dollar they collect on public K–12 education system, but only 8 cents on Medicaid.

Obama’s ‘New’ Industrial Policy

Last night, after the SOTU, Politico Arena asked:

State of the Union:  How did he do?

My response:

If you don’t look behind the stirring rhetoric, this was a fine performance — and many of Obama’s supporters will leave it right there. But behind it all is a single theme: People have problems, and government’s job is to solve those problems. Obama and his people, including many in Congress, still don’t get it. The recent elections in Virginia, New Jersey, and Massachusetts were not about government doing more or better. They were not about all the subsidies or jobs programs or green initiatives Obama spoke about tonight. They were about government getting out of the way — about lowering taxes and lifting burdensome regulations so that businesses, large and small, can once again provide the jobs and the prosperity that have been crippled by the kinds of programs Obama was promoting tonight. This was micromanagement from Washington. We need management from Main Street.

Early on in his speech Obama said that many Americans don’t understand “why Washington has been unable or unwilling to solve any of our problems.” Doubtless that’s true. But many more Americans do understand why. And so, as when he said that health care reform was in trouble because he had not explained it more clearly, Obama continues to believe that the problem is with the messenger, not with the message. Fortunately, we have elections in this country. I predict that come November the people will make it clear again that we don’t need yet another round of “industrial policy.” We need less of that, and more of what this country is really about — freedom.

That’s Quite a Multiplier

Via Cato’s Director of Government Affairs, Brandon Arnold, comes this [$] bold claim by the National Journal’s Congress Daily (although, to be fair, they are just quoting the study):

U.S. wheat promotion programs increase sales more than programs for other grains and agricultural products, according to an analysis of wheat export programs released this week.

The study by Cornell University professor Harry Kaiser showed that for every dollar spent on wheat promotion, U.S. producers get $23 back in increased net revenue, Kaiser told U.S. Wheat Associates, which commissioned the study.

With that sort of return on “investment”, the U.S. government should devote all of its revenue to wheat promotion as an ultra-quick revenue raising measure. Right after they’ve bought the swampland in Florida that the U.S. Wheat Associates has to sell them.

Alternatively, since it is such a great deal, perhaps U.S. Wheat Associates should pick up all of the tab for the program, instead of saddling U.S. taxpayers with half the cost.

Monday Links

  • Beware the “Crusader Temptation”: “Afghanistan has become a target of aggressive pro-war activists in America, including feminists who believe in waging war to improve the status of women.”

Trouble in Massachusetts

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.

Federal Transportation Follies

The 2009 stimulus bill gave the U.S. Department of Transportation $50 billion to distribute to the states for highways, roads, and bridges. A House bill passed in December would add another $28 billion. According to Washington folklore, spending on infrastructure is always good because it’ll create jobs and spur economic growth. However, three recent examples are a reminder that the government often does a poor job of allocating resources.

First, an Alaska legislative audit concluded that the state should not have spent federal transportation money building a road to the site of the proposed “Bridge to Nowhere,” which was canceled after a national outcry. Alaska kept the federal money originally earmarked for the bridge, and then-Governor Sarah Palin agreed to spend $26 million of it on the road despite the fact there was no bridge.

Second, the Department of Transportation is supposed to exclude “unethical, dishonest, or otherwise irresponsible” parties from receiving federal funds. But according to a report from DOT’s inspector general, the average case took DOT officials “300 days to reach a suspension decision and over 400 days to reach a debarment decision.” For example, Kentucky awarded $24 million in transportation stimulus money to companies with officials under review by the Federal Highway Administration for bribery, theft, and obstruction of justice. The FHA took 10 months to review the companies before ultimately suspending them, but Kentucky had already given the companies the money.

Third, a Tennessee television station analyzed the state’s use of federal transportation stimulus money and found that it “spent an average of $161,500 per job created and that some paving jobs, which were temporary, cost taxpayers more than $1 million each.” The station interviewed a construction company that had been busy during the summer when it had federal money. Now its trucks are idle and the workers it hired have all been laid off.

Randal O’Toole says that “The best test of infrastructure value is whether users are willing to pay for it.” There’s almost no connection between infrastructure projects funded by federal taxpayers and the typically local users. Leaving infrastructure projects to state and local governments to fund would make more of a connection. Privatization, which would utilize tolling and other user fees, would be even better.

Tuesday Links

  • Gene Healy on today’s election in Massachusetts: “If Republican Scott Brown wins the Massachusetts special election Tuesday, the Bay State will have its first GOP senator since the era when disco was king. And Brown will have the much-derided Tea Party legions to thank.”
  • George W. Obama? “Bush’s successor—who actually taught constitutional law at the University of Chicago—is continuing much of the Bush-Cheney parallel government and, in some cases, is going much further in disregarding our laws and the international treaties we’ve signed.”
  • Podcast: “Our America Initiative” featuring former New Mexico Governor Gary Johnson. Johnson discusses out of control government spending, immigration, the Bush years, the drug war, defense policy and more.

Weekend Links

  • Jeffrey Miron on Obama’s bank fees: “Bailing out the banks was wrong, but a new tax won’t make it right.”
  • What Constitution? If Congress can order you to buy health insurance, why stop there?
  • Don’t poke the bear: There is a proposal in the Senate Foreign Relations Committee to rearm the country of Georgia.

Helping the Haitians

The tragedy unfolding in Haiti has elicited an outpouring of sympathy, and it is hardly surprising that governments and NGOs from all over the globe are mobilizing resources to aid in recovery. Help is flowing to the shattered island: teams trained in rescue operations, emergency medical services, security personnel, and financial aid. This type of assistance will likely continue for some time.

The U.S. military is also involved. Several Navy and Coast Guard vessels shipped out almost immediately. A few thousand Marines are helping to restore order, and more might soon be on the way. Such a ground presence makes sense, provided that the mission is carefully defined, and the long-term expectations are tempered by a dose of humility. The United States has, after all, intervened repeatedly in Haiti, and it remains the poorest country in the hemisphere. One might even conclude that our interventions have contributed to Haiti’s chronic problems, a consideration which should give pause to those calling for the United States to commit to a long-term project to fix the country.

One can make an argument against sending military assets to deal with such crises. A nation’s military is designed and built for one purpose — to defend the nation — and when it is deployed for missions that do not serve that narrow purpose there is a risk that the institutions will be rendered less capable of responding to genuine threats. I question the wisdom of humanitarian intervention on those grounds in my book, The Power Problem, stipulating, among other things, that the U.S. military should be sent abroad only when vital U.S. interests are at stake.

All that said, President Obama’s decision to swiftly deploy U.S. personnel to Haiti is appropriate on at least two grounds. First, sending troops into harm’s way — and usually into the middle of a civil conflict, as we did in the Balkans and in Iraq – is very different from mobilizing our formidable military assets to ameliorate suffering after a natural disaster. The latter types of interventions are less likely to engender the ire of the people on the losing end (and there always are losers). Humanitarian missions are also less likely to arouse the suspicion of neighbors who might question the intervener’s intentions. Indeed, there was a measurable outpouring of support and goodwill toward the United States after the Bush administration deployed U.S. military personnel in and around Indonesia following the horrific tsunami of late 2004. Genuine humanitarian missions, “armed philanthropy” as MIT’s Barry Posen calls it, are likely to be far less costly than armed regime change/nation-building missions that must contend with insurgents intent on taking their country back from the foreign occupier.

Another important consideration is a country’s interests in its respective region. Humanitarian crises, even those whose effects are confined within a particular country’s borders, often pose a national security threat to neighboring states. What has happened in Haiti over the past 48 hours might meet that criteria, but the White House’s immediate motivations seem purely altruistic. My frustration is that the U.S. policy since the end of the Cold War of actively discouraging other countries from defending themselves ensures that they will have little to offer when a similar natural disaster occurs in their own backyard, which means that the U.S. military is expected to act — even when our own interests are not at stake.

But that is a discussion for another time. The scale of the tragedy in nearby Haiti cries out for swift action, and I am pleased to see that many organizations — both public and private — have stepped forward to help. I wish these efforts well.

How the Media Are Covering ‘Head Start’s’ Failure

A day after it was released, here’s a roundup of how the mainstream media are covering the HHS study showing that America’s $100 billion plus investment in Head Start is a failure:

[...crickets...]

Nada. Zilch. Rien du tout, mes amis.

That’s based on a Google News search for ["Head Start" study]. The only media organs to touch on this topic so far have been blogs: Jay Greene’s, The Heritage Foundation’s, the Independent Women’s Forum, and the one you’re reading right now.

Okay. There was one exception. According to Google News, one non-blog — with a print version no less — covered this story so far. The NY Times? The Washington Post? Nope: The World, a Christian news magazine. And they actually did their homework, linking to this recent and highly relevant review of the research on pre-K program impacts.

And for those other publications in the MSM still standing at the edge of the pool: the water’s warm folks, c’mon in.

What’s really interesting, though, is that the HHS had the moral fibre to actually issue a press release about this damning study. That showed courage — and a certain panache. I particularly liked this, from HHS Secretary Kathleen Sebelius: “Research clearly shows that Head Start positively impacts the school readiness of low-income children.”

Umm, yes Ms. Secretary, but the same research shows those effects vanish by the end of first grade. I guess that information is on a need-to-not-know basis. The public needs to not know about it or the administration hasn’t got a snowball’s chance in Kauai of getting American tax payers to throw another $100 billion or so at government pre-K, as President Obama is so very keen to do.

Update:

In my original review of the coverage on this story I missed the blog that first broke the story: Early Ed Watch at the New America Foundation. One thing that distinguishes New America’s supporters of big government pre-k programs from those in the Obama administration is that the former have a good grasp of the implications of this study, writing that: “The next few weeks are probably going to be rocky ones for the Head Start community. Results released today from the Impact Study show that children’s gains from participating in Head Start, documented in a 2005 installment of the study, do not last through the end of 1st grade.”

But if the folks at the NAF recognize this reality, that begs an important question: will they now redirect their efforts to the support of programs whose benefits for disadvantaged children actually grow in magnitude the longer kids stay in school, or will they continue to push for programs like Head Start that have been proven costly failures?