The President’s Spilled-Milk Joke
One of President Obama’s better applause lines the other night came when he stepped into the unaccustomed public role of a deregulator:
We got rid of one rule from 40 years ago that could have forced some dairy farmers to spend $10,000 a year proving that they could contain a spill — because milk was somehow classified as an oil. With a rule like that, I guess it was worth crying over spilled milk.
I will note for the record that we had made a bit of a hobbyhorse of EPA’s dairy-oil-spill controls, taking note of them in no fewer than four posts as the sort of regulatory overkill the Obama administration should disavow. House Republicans complain that the president is now putting himself at the head of someone else’s parade, since their members had long urged repeal of the rules and the Obama EPA under administrator Lisa Jackson had dragged its heels about going along. But I’m not going to complain. The ability to get out in front of the other side’s parades served President Bill Clinton well, and I just wish President Obama would use it more often.
Obama’s State of the Union Signals Grand Strategy Status Quo
It was clever, though a bit too opportunistic, for the president to begin and end his State of the Union address with references to Iraq, and the sacrifices of the troops. The war has been a disaster for the United States, and for the Iraqi people, of course. But the subject has always been a win-win for him. Whenever he talks about Iraq, it serves as a not-so-subtle reminder about who got us into this mess (i.e. not him).
Others might gripe about the president wrapping himself in the troops, and the flag (or, in the case of this speech, the troops’ flag). But Americans are rightly proud of our military, and there is nothing wrong with invoking the spirit of service and sacrifice that animates the members of our military. (There is something wrong with suggesting that all Americans should act as members of the military do, a point that Ben Friedman makes in a separate post.)
But while some degree of chest-thumping, “America, ooh-rah” is to be expected, this passage sent me over the edge:
America is back.
Anyone who tells you otherwise, anyone who tells you that America is in decline or that our influence has waned, doesn’t know what they’re talking about. …Yes, the world is changing; no, we can’t control every event. But America remains the one indispensable nation in world affairs – and as long as I’m President, I intend to keep it that way.
Have we learned nothing in the past decade? Have we learned anything? To say that we are the indispensable nation is to say that nothing in the world happens without the United States’ say so. That is demonstrably false.
Of course, the United States of American is an important nation, the most important, even. Yes, we are an exceptional nation. We boast an immensely powerful military, a still-dynamic economy (in spite of our recent challenges), and a vibrant political culture that hundreds of millions of people around the world would like to emulate. But the world is simply too vast, too complex, and the scale of transactions in the global economy is enormous. It is the height of arrogance and folly for any country to claim indispensability.
The president is hardly alone, however. Many in Washington—including some of his most vociferous critics in the Republican Party— celebrate the continuity in U.S. foreign policy as an affirmation of its wisdom. The president’s invocation of the “indispensable nation” line from the mid-1990s is merely the latest manifestation of a foreign policy consensus that has held for decades.
But the world has changed, and is still changing. Our grand strategy needs to adapt. When we embarked on the unipolar project after the end of the Cold War, the United States accounted for about a third of global economic output, and a third of global military expenditures; today, we account for just under half of global military spending, but our share of the global economy has fallen below 25 percent.
What we need, therefore, is a new strategy that aims to promote our core interests, but that doesn’t expect U.S. troops and taxpayers to also bear the burdens of promoting everyone else’s. After all, the values that are so important to most Americans, and that the president cited in his speech last night, are also cherished by hundreds of millions, perhaps billions, of people in many countries around the world. It is reasonable to expect them to pay some of the costs required to advance these values, and to sustain a peaceful and prosperous international order. Our current strategy still presumes that it is not.
The Trouble with the State of the Union: America Is Not a Military Unit
At both the beginning and end of his state of the union address last night, the president suggested that the country can solve its problems by modeling itself after the military. Near the start he said:
At a time when too many of our institutions have let us down, [members of the military] exceed all expectations. They’re not consumed with personal ambition. They don’t obsess over their differences. They focus on the mission at hand. They work together. Imagine what we could accomplish if we followed their example.
He ended on the same note, comparing the unity of the Navy SEAL team that killed bin Laden to the political cooperation between himself Hillary Clinton and Robert Gates, and then suggested we all follow that example:
This Nation is great because we built it together. This Nation is great because we worked as a team. This Nation is great because we get each other’s backs. And if we hold fast to that truth, in this moment of trial, there is no challenge too great; no mission too hard. As long as we’re joined in common purpose, as long as we maintain our common resolve, our journey moves forward, our future is hopeful, and the state of our Union will always be strong.
One problem with this rhetoric is its militarism. Not content to thank the troops for serving, the president has adopted the notion that military culture is better than that of civilian society and ought to guide it. That idea, too often seen among service-members, is corrosive to civil-military relations. Troops should feel honored by their society, but not superior to it. We do not need to pretend they are superhuman to thank them.
There is an even bigger problem with this “be like the troops, put aside our differences, stop playing politics, salute and get things done for the common good” mentality. It is authoritarian. Sure, Americans share a government, much culture, and have mutual obligations. But that doesn’t make the United States anything like a military unit, which is designed for coordinated killing and destruction. Americans aren’t going to overcome their political differences by emulating commandos on a killing raid. And that’s a good thing. At least in times of peace, liberal countries should be free of a common purpose, which is anathema to freedom.
The more we get shoved together under a goal, the less free we are, and the more we have to fight about. Differing conceptions of good and how to achieve it are the source of our political disagreements. Those competing ends are manifest in different parties, congressional committees, executive agencies and policy programs. Our government is designed for fighting itself, not others.
There’s no danger that this suggestion that we emulate military cooperation to make policy will actually succeed. Our politicians are hypocritical enough to rarely believe their own rhetoric about escaping politics, thankfully. But the happy talk is at least a distraction from useful thought about successful legislating. Productive deals get done by recognizing and accommodating competing ends, not by wishing them away. That means better politics, not none.
Cato Institute Scholars on the State of the Union 2012
Cato Institute scholars Malou Innocent, Chris Edwards, Neal McCluskey, Ilya Shapiro, Jerry Taylor, Dan Mitchell and Dan Ikenson respond to President Obama’s 2012 State of the Union Address.
Video produced by Caleb O. Brown, Austin Bragg and Lester Romero.
OMB Director Lew on the New Budget
President Obama will release his budget blueprint for fiscal 2012 next week. If an op-ed penned by his budget director, Jacob Lew, in Sunday’s New York Times is any indication, the administration intends to continue fiddling while the government’s finances burn.
The title of the piece, “The Easy Cuts Are Behind Us,” is a real head-scratcher. Lew’s “easy cuts” are an apparent reference to the $20 billion in savings the president proposed in his previous budgets. Considering that the president proposed total spending of $3.8 trillion last year, $20 billion in gross cuts was an insignificant gesture to say the least. In reality, the Bush administration passed the spending baton to the Obama administration two years ago and it promptly sprinted off like Usain Bolt.
Lew says:
In a little over a week, President Obama will send Congress his budget for the 2012 fiscal year. The budget is not just a collection of numbers, but an expression of our values and aspirations.
Perhaps the current budgetary state of affairs is an expression of the administration’s values and aspirations. But while an unhealthy number of Americans have become accustomed to living at the expense of their neighbor via the government, which the budget does reflect, there is growing popular recognition that saddling future generations with back-breaking debt is morally bankrupt.
Lew says:
As the president said in his State of the Union address, now that the country is back from the brink of a potential economic collapse, our goal is to win the future by out-educating, out-building and out-innovating our rivals so that we can return to robust economic and job growth. But to make room for the investments we need to foster growth, we have to cut what we cannot afford. We have to reduce the burden placed on our economy by years of deficits and debt.
This zero-sum take on the global economy is ignorant. Economic growth in “rival” countries creates opportunities for economic growth in the United States and vice-versa. My trade colleagues can better cover this ground, but the idea that our government needs to export more debt in order to out-anything is preposterous. The U.S. already out-spends its “rivals” on education and what do we have to show for it?
If the administration is concerned with our economic competitiveness, it should be looking to restrain the federal government’s heavy-hand in the economy. The federal government alone now sucks up a quarter of the country’s economic output. More government “investments” for building fancy trains might provide Joe Biden with lots of ribbon-cutting photo-ops, but such gross misallocations of taxpayer resources are not a recipe for “robust economic and job growth.”
Lew says:
We cannot win the future, expand the economy and spur job creation if we are saddled with increasingly growing deficits. That is why the president’s budget is a comprehensive and responsible plan that will put us on a path toward fiscal sustainability in the next few years — a down payment toward tackling our challenges in the long term.
According to Lew, the administration plans to do this by freezing non-security discretionary spending for five years. But several paragraphs later he acknowledges that “Discretionary spending not related to security represents just a little more than one-tenth of the entire federal budget, so cutting solely in this area will never be enough to address our long-term fiscal challenges.”
Does Lew give even a hint as to how the administration plans to “address our long-term fiscal challenges”? Nope.
In the intervening paragraphs Lew does give us a taste of the “deeper cuts” that the president will propose next week. One cut would be $300 million, or 7.5 percent, in the Community Development Block Grant program, which funds critical federal concerns like funding facade renovations for a wine bar in Connecticut and expanding a brewery in Michigan.
The Community Service Block Grant program (change one word and, voilà, a new program) would be cut in half to save a whopping $350 million. Lew says this cut was not easy for the president because “These are the kinds of programs that President Obama worked with when he was a community organizer.”
The Great Lakes Restoration Initiative would get chopped by 25 percent, or $125 million, which Lew calls “another difficult cut.” If that’s a “difficult” cut, one can only wonder what Lew would call the cuts needed to actually “address our long-term fiscal challenges.”
After punting on the long-term fiscal challenges and pretending that the relatively insignificant cuts the administration will propose represent “tough choices,” Lew begins his wrap up by warning against cutting spending:
We must take care to avoid indiscriminate cuts in areas critical to long-term growth like education, innovation and infrastructure — cuts that would stifle the economy just as it begins to recover.
The country cannot afford business as usual. And it certainly can’t afford business as has been conducted by this administration. Unfortunately, while the exact details of the president’s latest budget proposal remain to be seen, Lew’s op-ed indicates that this tiger isn’t about to change his stripes.
Rep. Hanna’s Corporate Tax Cut
Rep. Richard Hanna is one of the many new members of Congress with a no-nonsense business background. He is determined to move the GOP in the direction of major tax and spending reforms. When I chatted to the congressman, he told me that he had already read my Global Tax Revolution, so he will be well-armed in tackling business tax reform!
Hanna is off to a good start with his “American Competitiveness Act,” which would chop the federal corporate tax rate from 35 percent to 25 percent. He notes that “the average rate in the Organization for Economic Cooperation and Development countries is just over 25 percent, meaning the effective U.S. corporate tax burden, when state and local taxes are considered, can be 50 percent higher than some of our developed competitors, rendering our companies and workers less competitive.”
In his State of the Union address, President Obama said that he is willing to cut the corporate tax rate. So corporate tax reform could be the 2011 version of the Clinton-GOP welfare reforms of 1996. That is, a major pro-market success made possible by a liberal president moving to the pragmatic center.
Upcoming: On February 23, Cato will release new estimates of corporate “effective” tax rates by tax scholars Jack Mintz and Duanjie Chen. The study will shed further light on the dangerous uncompetitiveness of the U.S. corporate tax system.
Karl Rove’s Big-Government Myth
Karl Rove, the architect of Republican victories in 2000 and 2004 and Democratic victories in 2006 and 2008, denounces President Obama’s “spending binge” and “liberal activism” as described in the State of the Union address. The Wall Street Journal‘s tagline on the column is, “On Tuesday, Republicans offered an alternative to the president’s big-government vision.” What Rove omits is that he and President Bush started the spending binge, delivered big government, and indeed came into office with a big-government vision, as Ed Crane pointed out in 1999.
Just take a look at the analysis in Rove’s Wall Street Journal column:
Most of his hour-long speech was a paean to liberal activism, as the president called for redoubling outlays on high-speed rail and “countless” green energy jobs.
Liberal boondogglery indeed. But Rove’s former colleague, White House speechwriter Michael Gerson, wrote on the same day in his Washington Post column:
In his 2006 State of the Union address, which I helped write, President George W. Bush proposed a 22 percent increase in clean-energy research at the Energy Department, a doubling of basic research in the physical sciences and the training of 70,000 high school teachers to instruct Advanced Placement courses in math and science. I have no idea if these “investments” passed or made much difference. I doubt anyone knows.
Green nonsense is rampant in Washington.
Rove criticizes Obama for
a federal budget that’s increased 25% in two years, raising government’s share of GDP to 25% from roughly 20%.
Obama is a world-class spender. But spending increased 83 percent during Bush’s presidency, from $1.863 trillion to $3.414 trillion. He increased federal spending faster than any president since Lyndon Johnson. And yes, Obama is pushing the government’s share of GDP up; but Bush increased the federal government’s share of GDP by 2.2 percentage points, before the financial crisis, the bailouts, and TARP.
Nondefense Discretionary Spending Freezes
When it comes to reining in federal spending, House Republicans and the president have one idea in common: freezing nondefense discretionary spending. That category accounts for about 18 percent of total spending, so let’s see how such a freeze would affect the overall budget.
Today the Congressional Budget Office released updated budget figures and baseline projections of federal spending through fiscal 2021. Projecting the budgetary future is obviously an inexact science, and the CBO’s baseline reflects unrealistic assumptions. However, it does allow us to get an idea of the impact of a nondefense discretionary freeze on total federal spending.
Three proposals have been put forward:
- In his State of the Union address, President Obama proposed freezing nondefense discretionary spending for five years, beginning in fiscal 2012, at fiscal 2010 levels.
- The conservative House Republican Study Committee and Sen. Jim DeMint (R-SC) recently proposed freezing nondefense discretionary spending for ten years, beginning in fiscal 2012, at fiscal 2006 levels.
- Ever since the release of its “Pledge to America,” the House Republican leadership has been talking about returning spending to fiscal 2008 levels. They apparently have non-security discretionary spending in mind, which is an even smaller category than nondefense discretionary. It’s not clear if they intend to freeze it at the new lower level.
Using the CBO’s latest figures, I calculated baseline spending from fiscal 2012-2021 under ten year freezes in nondefense discretionary spending at fiscal 2006, 2008, and 2010 levels:
Note: To make an apples-to-apples comparison, I extended the proposed Obama freeze at fiscal 2010 levels from five years to ten years, and I assumed a ten year freeze at fiscal 2008 levels for the House Republicans. Also, projected annual interest payments on the debt are excluded. Therefore, the chart refers to “baseline program spending,” which is the sum of nondefense discretionary, defense, and entitlement spending.
The chart makes it excruciatingly clear that freezing nondefense discretionary spending at the levels specified or implied by Republicans and Democrats is only a start toward needed reforms in the federal budget. Congress also needs to cut defense spending, and spending on Social Security, Medicare, Medicaid, and other entitlement programs.
Krugman (Both of Them) on Competitiveness
When it became clear that President Obama would make “competitiveness” a theme of his SOTU address, I looked forward to seeing Paul Krugman’s statement pointing out how much nonsense that is. Here he is, after all, in his excellent 1997 book, Pop Internationalism (MIT Press):
…International trade, unlike competition among businesses for a limited market, is not a zero-sum game in which one nation’s gain is another’s loss. It is [a] positive-sum game, which is why the word “competitiveness” can be dangerously misleading when applied to international trade.
Sure enough, President Obama’s speech last night was peppered with references to “the competition for jobs,” “new jobs and industries take root in this country, or somewhere else, “the competion for jobs is real,” etc. And of course there was a healthy dose of the usual mercantalist obsession with exports.
Although written before the President’s address was delivered, what would Paul Krugman 2.0 think of this sort of talk? The title of his column Sunday was certainly encouraging: “The Competition Myth.” But the substance of the column went in a … er… different direction from that which I had anticipated/hoped:
…talking about “competitiveness” as a goal is fundamentally misleading. At best, it’s a misdiagnosis of our problems. At worst, it could lead to policies based on the false idea that what’s good for corporations is good for America…
So what does the administration’s embrace of the rhetoric of competitiveness mean for economic policy?
The favorable interpretation, as I said, is that it’s just packaging for an economic strategy centered on public investment, investment that’s actually about creating jobs now while promoting longer-term growth. The unfavorable interpretation is that Mr. Obama and his advisers really believe that the economy is ailing because they’ve been too tough on business, and that what America needs now is corporate tax cuts and across-the-board deregulation. [emphasis mine]
In other words, Krugman’s objections to the “competitiveness” rhetoric are based on his fear that it will lead to policies favorable to corporations, not that the whole concept is flawed.
[Disclaimer: the above is by no means an exhaustive analysis of the problematic parts of the column]
I yield to no-one in my admiration for Paul Krugman, trade economist. He made a real contribution to the discipline I’ve loved since I was a teenager. But Paul Krugman, columnist…not so much.
White House Backs Off of Obama Earmarks Pledge
In the state of the union speech last night, President Obama said with great force:
[I]f a bill comes to my desk with earmarks inside, I will veto it.
This appeared to settle the earmark question once and for all. The Republican House and Republicans in the Senate had already sworn off earmarks. Senate Democrats, who may have been holding out hope for preserving this prerogative, will not get to do earmarks. So says the president of the United States, veto pen in hand.
But late last night the White House may have begun to modify the president’s pledge. A “government reform factsheet” circulated by White House staff says, “The President intends to veto bills with special interest earmarks.” (emphasis added) This appears to create a class of earmarks that will bring the president’s veto, special interest earmarks, and a class that will not—national interest earmarks, one supposes.
Defining what is an “earmark” is difficult, though not impossible, as the groups that have worked on the earmarking problem can tell you. But the distinction between “special interest earmarks” and “national interest earmarks” appears to be something the president would make for himself. This withdraws a great deal of force from the “no earmarks” pledge.
It’s certainly possible that the “special interest” language in the fact sheet is surplussage simply meant to illustrate that earmarks are a “special interest” problem. But we will have to watch and see whether the president walks away from his statements about controlling earmarks, as he has done before.
Cato Live Blog of President Obama’s 2011 State of the Union Address and GOP Response
Please join us at 9:00pm Eastern on Tuesday, January 25, 2011 for live commentary during President Obama’s State of the Union address and the response given by House Budget Chairman Paul Ryan (R-Wisc.). Here is our panel of expert bloggers (click each name for their respective Cato@Liberty archives):
- Director of Information Policy Studies Jim Harper
- Trade Policy Analyst Sallie James
- Director of Health Policy Studies Michael F. Cannon
- Senior Fellow Daniel J. Mitchell
- Director of the Center for Educational Freedom Andrew J. Coulson
- Research Fellow in Defense and Homeland Security Studies Benjamin H. Friedman
Other Cato scholars may also be contributing.
Come back to this page at 9:00pm Eastern on Tuesday, January 25, 2011 to join us–we look forward to having you, and to sharing our insights with you.
Also, don’t forget to tune into our Facebook page immediately following this live blogging event for live video reaction to the speeches from Vice President Gene Healy and Research Fellow Julian Sanchez.
Our Brave Leaders
The Washington Post reports: “Obama has decided not to endorse his deficit commission’s recommendation to raise the retirement age, and otherwise reduce Social Security benefits, in Tuesday’s State of the Union address.”
When I read this, I thought of a song from Monty Python and the Holy Grail:
Brave Sir Robin ran away
Bravely ran away, away
When danger reared its ugly head
He bravely turned his tail and fled
Yes, brave Sir Robin turned about
And gallantly he chickened out
Bravely taking to his feet
He beat a very brave retreat
Bravest of the brave, Sir Robin.
In the movie, Sir Robin and the other knights are galloping along on horseback, except when you look closely you see that their aides are banging coconuts together only simulating the sounds of brave mounted knights.
Isn’t that what’s going on in Washington? A giant fiscal disaster looms over the nation, and our leaders are only simulating leadership. Republican leaders can’t name a single program that they would cut, and President Obama runs away from a reform to the nation’s most costly program that should be a no-brainer.
Rather than chasing the Holy Grail of “investment” spending, the president needs to sit down with his congressional knights at a roundtable and get the kingdom’s finances under control with major spending cuts.
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