ACORN Challenge for the GOP
Republicans are all over the ACORN scandal and calling for an end to federal subsidies for the group. Well that’s great, but it’s not exactly going out on a limb and pushing for a major budget reform.
Why doesn’t the GOP use this as an opportunity to call for completely ending the programs that funded ACORN? Wouldn’t it be better to save the $13 billion a year that HUD spends on so-called “community development” programs, rather than just the few million dollars a year that taxpayers spend on ACORN?
The federal programs that funded ACORN are particularly wasteful ones, including Community Development Block Grants, Housing Counseling Assistance, and others as Tad DeHaven has explained.
At a minimum, the GOP should be arguing that with deficits of $1 trillion the federal government cannot afford to intervene in classic local and private activities such as community development. Boehner and Canter want the IRS to cut ties with ACORN, but they should be leading the charge to end porky “community development” spending altogether.
Filed under: Government and Politics; Tax and Budget Policy
Pork Politics
Last night I received a press release from the National Republican Senatorial Committee entitled “Lincoln Votes to Protect Millions in Taxpayer Funds for Little-Used Pennsylvania Airport.” Lincoln would be Arkansas Democrat Senator Blanche Lincoln. According to the NRSC press release:
In a remarkable vote on the Senate floor this afternoon, U.S. Senator Blanche Lincoln (D-AR) made clear that despite rising federal deficits and a record national debt, she still stands firmly on the side of more wasteful Washington spending. Lincoln today helped defeat an amendment, offered by U.S. Senator Jim DeMint (R-SC), to the annual transportation appropriations bill that would end taxpayer subsidies for the John Murtha Airport, a little used 650-acre facility in Johnstown, Pennsylvania that has received at least $200 million in taxpayer funding. U.S. Congressman John Murtha (D-PA), who the airport was named after and who has been the subject of a number of ethics-related stories in recent months, has personally directed $150 million in federal funds to the facility even though it only has 3 flights daily to one destination: Washington, D.C.
When I went to the NRSC’s website I noticed similar press releases for other Democrat senators who I’m assuming are on the outfit’s election hit-list. Having never received an NRSC press release before, I’m assuming I received this one because I ripped Senator Lincoln in a blog post last week. If that’s the case, I’m impressed with the NRSC’s resourcefulness. Regardless, it made me curious to find out if any Republican senators voted with Lincoln and the other Democrats.
In fact, yes, two Republicans did vote to keep the federal money flowing to Murtha’s airport: George Voinovich of Ohio and Christopher “Kit” Bond of Missouri. Both are members of the third party in Congress: Appropriators. Given that he is the ranking member of the Appropriations Committee’s Subcommittee on Transportation, Housing and Urban Development, it’s not a surprise that Bond voted against an amendment unfriendly to a larded-up transportation appropriations bill. Both are retiring at the end of their terms in 2010, so the NRSC apparently wasn’t too worried about charges of hypocrisy.
With the exception of the aforementioned, all Republican senators voted for the amendment, including appropriators like Murkowski, Collins, Cochran, and Bennett. None of those folks are exactly known as fiscal tightwads. So what gives? Will these senators be headlining tea parties in the near future?
Filed under: Government and Politics; Tax and Budget Policy
Cap ‘n Trade: The Ultimate Pork-Fest
Some naive people might have been convinced that the U.S. House voted to wreck the American economy by endorsing cap and trade because it was the only way to save the world. But even many environmentalists had given up on the bill approved last Friday. It is truly a monstrosity: it would cost consumers plenty, while doing little to reduce global temperatures.
But the legislation had something far more important for legislators and special interests alike. It was a pork-fest that wouldn’t quit.
As the most ambitious energy and climate-change legislation ever introduced in Congress made its way to a floor vote last Friday, it grew fat with compromises, carve-outs, concessions and out-and-out gifts intended to win the votes of wavering lawmakers and the support of powerful industries.
The deal making continued right up until the final minutes, with the bill’s co-author Representative Henry A. Waxman, Democrat of California, doling out billions of dollars in promises on the House floor to secure the final votes needed for passage.
The bill was freighted with hundreds of pages of special-interest favors, even as environmentalists lamented that its greenhouse-gas reduction targets had been whittled down.
Some of the prizes were relatively small, like the $50 million hurricane research center for a freshman lawmaker from Florida.
Others were huge and threatened to undermine the environmental goals of the bill, like a series of compromises reached with rural and farm-state members that would funnel billions of dollars in payments to agriculture and forestry interests.
Automakers, steel companies, natural gas drillers, refiners, universities and real estate agents all got in on the fast-moving action.
The biggest concessions went to utilities, which wanted assurances that they could continue to operate and build coal — burning power plants without shouldering new costs. The utilities received not only tens of billions of dollars worth of free pollution permits, but also billions for work on technology to capture carbon-dioxide emissions from coal combustion to help meet future pollution targets.
That deal, negotiated by Representative Rick Boucher, a conservative Democrat from Virginia’s coal country, won the support of the Edison Electric Institute, the utility industry lobby, and lawmakers from regions dependent on coal for electricity.
Liberal Democrats got a piece, too. Representative Bobby Rush, Democrat of Illinois, withheld his support for the bill until a last-minute accord was struck to provide nearly $1 billion for energy-related jobs and job training for low-income workers and new subsidies for making public housing more energy-efficient.
Representative Joe Barton, a Texas Republican staunchly opposed to the bill, marveled at the deal-cutting on Friday.
“It is unprecedented,” Mr. Barton said, “but at least it’s transparent.”
This shouldn’t surprise anyone who follows Washington. Still, the degree of special interest dealing was extraordinary. Anyone want to imagine what a health care “reform” bill is likely to look like when legislators finish with it?
Filed under: Energy and Environment; Government and Politics; Tax and Budget Policy
Beyond Irony
Karl Rove should have been named Man of the Year at some point by the Democratic National Committee. The political consultant/Bush adviser played a big role in expanding the burden of government, convincing Bush to saddle the nation with fiscal disasters such as the “no-bureaucrat-left-behind” education bill, the corrupt farm bills, the pork-filled transportation bills, and the horrific new entitlement for prescription drugs. He also helped ruin the GOP image with his inside-the-beltway version of “compassionate conservatism,” thus paving the way for big Democratic victories in 2006 and 2008.
I can understand why libertarians have no desire to listen to his advice, but I’m baffled why Republicans or conservatives would give him the time of day. Yet he is a constant presence on FOX News and has a weekly column in the Wall Street Journal. With no apparent irony, his latest WSJ column is entitled “How to Stop Socialized Health Care.” Too bad he didn’t follow his own advice in 2003 when pulling out all the stops to enact the biggest entitlement in four decades.
Filed under: Government and Politics; Health, Welfare & Entitlements
Should You Vote on Keeping Your Local Car Dealership?
There are lots of reasons Washington should not bail out the automakers. Whatever the justification for saving financial institutions — the “lifeblood” of the economy, etc., etc. — saving selected industrial enterprises is lemon socialism at its worst. The idea that the federal government will be able to engineer an economic turnaround is, well, the sort of economic fantasy that unfortunately dominates Capitol Hill these days.
One obvious problem is that legislators now have a great excuse to micromanage the automakers. And they have already started. After all, if the taxpayers are providing subsidies, don’t they deserve to have dealerships, lots of dealerships, just down the street? That’s what our Congresscritters seem to think.
Observes Stephen Chapman of the Chicago Tribune:
The Edsel was one of the biggest flops in the history of car making. Introduced with great fanfare by Ford in 1958, it had terrible sales and was junked after only three years. But if Congress had been running Ford, the Edsel would still be on the market.
That became clear last week, when Democrats as well as Republicans expressed horror at the notion that bankrupt companies with plummeting sales would need fewer retail sales outlets. At a Senate Commerce Committee hearing, Chairman Jay Rockefeller, D-W.Va., led the way, asserting, “I honestly don’t believe that companies should be allowed to take taxpayer funds for a bailout and then leave it to local dealers and their customers to fend for themselves.”
Supporters of free markets can be grateful to Rockefeller for showing one more reason government shouldn’t rescue unsuccessful companies. As it happens, taxpayers are less likely to get their money back if the automakers are barred from paring dealerships. Protecting those dealers merely means putting someone else at risk, and that someone has been sleeping in your bed.
The Constitution guarantees West Virginia two senators, and Rockefeller seems to think it also guarantees the state a fixed supply of car sellers. “Chrysler is eliminating 40 percent of its dealerships in my state,” he fumed, “and I have heard that GM will eliminate more than 30 percent.” This development raises the ghastly prospect that “some consumers in West Virginia will have to travel much farther distances to get their cars serviced under warranty.”
Dealers were on hand to join the chorus. “To be arbitrarily closed with no compensation is wasteful and devastating,” said Russell Whatley, owner of a Chrysler outlet in Mineral Wells, Texas.
Lemon socialism mixed with pork barrel politics! Could it get any worse? Don’t ask: after all, this is Washington, D.C.
Filed under: Finance, Banking & Monetary Policy; Government and Politics; Tax and Budget Policy
So Much for the Obama Administration’s Fiscal Free Lunch
So far the Obama administration has been enjoying the ultimate fiscal free lunch. Massive borrowing, massive spending, lower taxes, and low interest rates.
Alas, all good things must come to an end.
The nation’s debt clock is ticking faster than ever — and Wall Street is getting worried.
As the Obama administration racks up an unprecedented spending bill for bank bailouts, Detroit rescues, health care overhauls and stimulus plans, the bond market is starting to push up the cost of trillions of dollars in borrowing for the government.
Last week, the yield on 10-year Treasury notes rose to its highest level since November, briefly touching 3.17 percent, a sign that investors are demanding larger returns on the masses of United States debt being issued to finance an economic recovery.
While that is still low by historical standards — it averaged about 5.7 percent in the late 1990s, as deficits turned to surpluses under President Bill Clinton — investors are starting to wonder whether the United States is headed for a new era of rising market interest rates as the government borrows, borrows and borrows some more.
Already, in the first six months of this fiscal year, the federal deficit is running at $956.8 billion, or nearly one seventh of gross domestic product — levels not seen since World War II, according to Wrightson ICAP, a research firm.
Debt held by the public is projected by the Congressional Budget Office to rise from 41 percent of gross domestic product in 2008 to 51 percent in 2009 and to a peak of around 54 percent in 2011 before declining again in the following years. For all of 2009, the administration probably needs to borrow about $2 trillion.
The rising tab has prompted warnings from the Treasury that the Congressionally mandated debt ceiling of $12.1 trillion will most likely be breached in the second half of this year.
Last week, the Treasury Borrowing Advisory Committee, a group of industry officials that advises the Treasury on its financing needs, warned about the consequences of higher deficits at a time when tax revenues were “collapsing” by 14 percent in the first half of the fiscal year.
“Given the outlook for the economy, the cost of restoring a smoothly functioning financial system and the pending entitlement obligations to retiring baby boomers,” a report from the committee said, “the fiscal outlook is one of rapidly increasing debt in the years ahead.”
While the real long-term interest rate will not rise immediately, the committee concluded, “such a fiscal path could force real rates notably higher at some point in the future.”
Alas, this is just the beginning. Three quarters of the spending in the misnamed stimulus bill (it would more accurately be called the “Pork and Social Spending We’ve Been Waiting Years to Foist on the Unsuspecting Public Bill”) occurs next year and beyond, when most economists expect the economy to be growing again. Moreover, much of the so-called stimulus outlays do nothing to actually stimulate the economy, being used for income transfers and the usual social programs.
However, we will be paying for these outlays for years. Even as, the Congressional Budget Office warns, the GDP ultimately shrinks as federal expenditures and borrowing “crowd out” private investment. Indeed, the CBO figures that incomes will suffer a permanent decline–even as taxes are climbing dramatically to pay off all of the debt accumulated by Uncle Sam.
And you don’t want to think about the total bill as Washington bails out (almost $13 trillion worth so far) everyone within reach, “stimulates” (the bill passed earlier this year ran $787 billion) everything within reach, and spends money (Congress approved a budget of $3.5 trillion for next year) within reach. Indeed, according to CBO, the president’s budget envisions increasing the additional collective federal deficit between 2010 and 2019 from $4.4 trillion to $9.3 trillion.) Then there will be more federal spending for wastral government entities, such as the Federal Housing Administration; failing banks, which are being closed at a record rate by the FDIC; pension pay-offs for bankrupt companies, administered by the Pension Benefit Guaranty Corporation; and covering the big tab being up run up by Social Security and Medicare, which currently sport unfunded liabilities of around $100 trillion.
Oh, to be an American taxpayer — and especially a young American taxpayer — who will be paying Uncle Sam’s endless bills for the rest of his or her life!
Filed under: Finance, Banking & Monetary Policy; Government and Politics; Health, Welfare & Entitlements; Tax and Budget Policy
The Politics of Budget-Cutting
In Washington, the symbolic almost always trumps the substantive. Thus, legislators complain, for good reason, about pork and earmarks, which ran about $35 billion at their maximum, and ignore entitlements, which entail some $100 trillion in unfunded liabilities.
So it is with President Obama. He continues the endless bailouts, which cumulatively now run around $13 trillion. He proposed a $3.6 trillion budget and will leave us with a $1.4 trillion deficit next year–and nearly $5 trillion in additional debt on top of the massive deficits already projected over the coming decade. But he asked his Cabinet officers to chop $100 million in administrative expenses.
And he says he doesn’t need a new helicopter. Fiscal responsibility in action.
Alas, the helicopter, while costing billions, isn’t an easy budget target.
Reports the New York Times:
At a Washington conference on fiscal responsibility in February, President Obama tried to set the tone by saying he did not need the new costly presidential helicopters that had been ordered by the Bush administration.
“The helicopter I have now seems perfectly adequate to me,” he said to laughter. On a more serious note, he added, “I think it is an example of the procurement process gone amok. And we’re going to have to fix it.”
But the president is learning that in the world of defense contracting, frugality can be expensive. Some lawmakers and military experts warn that his effort to avoid wasting billions of dollars could end up doing just that.
The administration’s plan to halt the $13 billion helicopter program, announced this month, will leave the government with little to show for the $3.2 billion it has spent since the Bush administration set out to create a futuristic craft that could fend off terrorist attacks and resist the electromagnetic effects of a nuclear blast.
Critics say the Pentagon would also spend at least $200 million in termination fees and perhaps hundreds of millions to extend the life of today’s aging fleet. As a result, several influential lawmakers and defense analysts are now calling for a compromise that would salvage a simpler version of the helicopter that is already being tested.
They say it could be a more palatable alternative in tough economic times than seeking new bids for a more advanced craft, which has proved difficult to develop.
No wonder Washington is known as a place where everything about government is permanent. Once you start spending money on a program, it becomes extremely hard to stop. Part of that is the political dynamic of interest groups, the problem so well dissected by the Public Choice economists. And part of it is legal and procedural. Contracts are let, cancellation fees are due. It’s bad to waste money on a gold-plated helicopter. It seems even worse to waste money developing a gold-plated helicopter, and then getting nothing at all by canceling it.
There is, however, an amazingly simple solution, of which Congress and the president apparently are not aware.
Don’t spend the money in the first place. Eschew new programs. Say no to special interests. Let taxpayers keep more of their own money.
This approach would seem to make sense at any time. But especially today, with the federal government facing a deficit approaching $2 trillion in 2009.
Didn’t Nancy Reagan lecture us to “just say no”? We should invite her back for a return tour of Washington, only she should talk about federal spending this time.
The Global Economy Is Not Immune to Swine Flu
World governments should be careful not to play politics with the Mexican swine flu outbreak. The health consequences should of course be rigorously addressed—but without adding economic consequences, which is what several countries appear poised to do.
Public health scares have a history of seeping into trade policy without anything resembling sufficient consideration of the evidence. Governments in Russia and East Asia are already banning pork exports from Mexico, even though there is zero evidence that they pose a health hazard. It hearkens back to unfounded bans of U.S. beef in recent years by the European Union and South Korea.
If the U.S. government jumps on board, U.S. exports could be targeted for retaliatory trade actions. One quarter of U.S. pork production is exported, as well as billions of dollars of our soybeans used as feed by foreign hog farmers.
Exploiting this crisis could turn what is so far a manageable health problem into an unnecessary trade and diplomatic conflict. Obviously the global economy does not need the extra strain.
No Wonder the GOP Has No Credibility on Spending
You would think Barack Obama’s tsunami of federal spending would provide an easy target for Republicans. But they apparently haven’t learned the right lessons after two successive electoral debacles.
Earmarks don’t account for a lot of money in Washington terms. You know, just a few billion dollars out of trillions or quadrillions or whatever we are now up to — it’s so easy to lose track!
Nevertheless, earmarks are a powerful symbol. So trust the “stupid party” to muff its chance. Reports Politico:
Bashing Democrats on the day President Obama signed the $410 billion omnibus spending bill was the easy part for Republican leaders Wednesday.
But getting Rep. John Boehner and Sen. Mitch McConnell on the same page on earmarks will be a lot tougher.
At a joint press conference designed to present a united Republican front against Democratic spending habits, McConnell (R-Ky.) and Boehner (R-Ohio) appeared to diverge on earmark reform.
“I think the president missed a golden opportunity to really fulfill his campaign commitment to not sign bills that have a lot of wasteful spending and are overburdened with earmarks,” Boehner said. “If you look at the earmark reforms that he proposed, the question I have is, ‘Where’s the beef?”
McConnell declined to answer the question about earmarks, and instead criticized the president’s contention that the omnibus bill was simply last year’s unfinished business.
“Let me tell what was not last year’s business was plussing the bill up 8 percent, which is twice the rate of inflation,” McConnell said. “This bill is not last year’s business. … It further illustrates my point that when you add up the stimulus and the omnibus, the spending in the first 50 days of the administration [comes] at a rate of $1 billion an hour.”
Republicans have tried to come up with a unified earmark reform plan, but have struggled as GOP appropriators are reluctant to sign on. McConnell is on the Senate Appropriations Committee and has called for earmark reforms, but he and many lawmakers defend Congress’ constitutional right to direct spending.
In the omnibus bill, McConnell secured some $75 million worth of earmarks, while Boehner, a long-time critic of earmarks, did not. Boehner says Congress should freeze earmarks for the rest of the year, saying it leads to wasteful and potentially corrupting Washington spending.
Of course, Democrats have taken not. In signing the latest spending bill President Barack Obama landed a nice blow against GOP hypocrisy:
And I also find it ironic that some of those who rail most loudly against this bill because of earmarks actually inserted earmarks of their own and will tout them in their own states and their own districts.
If Congress can’t take a vow of poverty on distributing pork when the nation faces a $1.3 trillion budget deficit and trillions more in deficits over the coming years, then it isn’t likely ever to be more responsible with the public’s money.
Republicans, Democrats, and Appropriators…and Pork
I’m sympathetic to the oft-repeated saying that there are really three parties in Washington: Republicans, Democrats, and Appropriators. This situation is likely to be demonstrated this evening when Republican members of the Senate Appropriations Committee provide enough votes for Democratic Sen. Harry Reid to close off debate and proceed to final passage of the pork-laden $410 billion fy2009 omnibus appropriations bill.
Greasing the skids for bigger government will be almost $8 billion in earmarks contained in the bill. Fox News is pointing out that almost all of the Republican Senators expected or likely to support the Democratic measure stand to deliver quite a bit of pork to constituents and special interests. Not coincidentally, all of the senators named, except Sen. Snowe of Maine, are appropriators. As a matter of fact, if you look at the top 20 senators (both parties) in terms of dollars of earmarks secured for this bill, 15 are appropriators.
Bottom line: Appropriators love spending and they particularly love pork. Sen. Snowe just likes the government spending other people’s money.
**Update: Cloture was invoked on a 62-35 vote and the legislation subsequently passed by voice vote. Every single Democratic member of the Senate Appropriation Committee voted for cloture. Republican appropriators Sens. Cochran, Specter, Bond, Shelby, Alexander, and Murkowski voted yes; Sens. McConnell, Gregg, Bennett, Hutchison, Brownback, Collins, and Voinovich voted no. Thus, without the support of these Republican appropriators, the bill would have been effectively killed. Of the top 20 recipients of earmarks in the bill, only 2 — Sens. Inhofe and McConnell — voted no.
Republicans and Earmarks
This week, a handful of fiscally conservative Republican senators have been trying to cut earmarks out of the $410 billion omnibus appropriations bill. According to Taxpayers for Common Sense, the legislation contains 8,570 earmarks worth $7.7 billion.
Senator Tom Coburn (R-OK) has sought to strike specific items, like the $200,000 earmark for Tattoo Removal Violence Prevention Outreach Program in Burbank, California and the $1.9 million earmark to the Pleasure Beach Water Taxi Service in Connecticut.
Senator John McCain (R-AZ) has taken a broader approach by introducing an amendment to strike all earmarks from the bill and revert to last year’s spending levels.
Not surprisingly, they have been unsuccessful. And given recent events, one must wonder if these efforts by fiscal conservatives are even welcomed by members of their own party.
The amendments introduced by Coburn and McCain were defeated by opposition from not only by the majority of Democratic senators, but also many Republican appropriators, like Senators Thad Cochrane (R-MS) and Lisa Murkowski (R-AK).
And despite his occasional anti-earmark rhetoric and support for the Coburn and McCain amendments, Senate Minority Leader Mitch McConnell (R-KY) is one of the chief beneficiaries of the earmark-laden omnibus bill. Reports suggest he requested either $75 or $51 million for his home state of Kentucky. Either way, he will obtain far more than his Democratic counterpart, Senate Majority Leader Harry Reid (D-NV), whose earmark requests total $26 million.
Democratic Senator Claire McCaskill (D-MO) has been fairly consistent in her criticism of the earmarking process and, for the most part, has voted accordingly. Proving that Republican affection for earmarking is a bicameral phenomenon, her stance attracted ire from Representative Roy Blunt (R-MO), formerly one of the highest-ranking Republicans in House, who said he “would hope that Claire would change her mind on this,” as he praised Senator Kit Bond’s (R-MO) prowess at earmarking.
Now, earmarks make up a relatively small slice of the overall budget, but as Coburn has noted, the problem with earmarks is ‘‘the hidden cost of perpetuating a culture of fiscal irresponsibility. When politicians fund pork projects they sacrifice the authority to seek cuts in any other program.”
For more on earmarks, check out the “Corporate Welfare and Earmarks” chapter of the Cato Handbook for Policymakers.
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