Coburn Report on Subsidies for Millionaires
Sen. Tom Coburn’s (R-OK) new report on the various federal subsidies being collected by millionaires deserves applause for not resorting to class warfare rhetoric in making the point that it’s silly for wealthy folks to receive taxpayer handouts:
We should never demonize those who are successful. Nor should we pamper them with unnecessary welfare to create an appearance everyone is benefiting from federal programs.
Coburn says that “this reverse Robin Hood style of wealth redistribution is an intentional effort to get all Americans bought into a system where everyone appears to benefit.” That’s true. Whether it is food subsidies or unemployment benefits, the cheerleaders for federal redistribution schemes would have the public believe that it’s all about “helping those in need” when in fact it’s really about fostering dependency on taxpayers. A dirty little secret that the media typically fails to recognize is that many of the people pushing for these programs stand to financially benefit themselves. And as we have documented over at DownsizingGovernment.org, government programs do a poor job of helping the people that they purportedly serve.
Senate Spares Rural Development Subsidies
An amendment to a Senate appropriations bill introduced by Sen. Tom Coburn (R-OK) that would have reduced funding for rural development subsidies at the Department of Agriculture by $1 billion was easily voted down today. Only 13 Republicans voted to cut the program. Thirty-two Republicans joined all Democrats in voting to spare it, including minority leader Mitch McConnell (R-KY), ranking budget committee member Jeff Sessions (R-AL), and tea party favorite Marco Rubio (R-FL).
This was a business-as-usual vote that will receive virtually no media attention. However, it is a vote that symbolizes just how unserious most policymakers are when it comes to making specific spending cuts. That’s to be expected with the Democrats. On the other hand, Republicans generally talk a good game about the need to cut spending and they rarely miss an opportunity to criticize the Obama administration for its reckless profligacy. Republicans instead fall back on their support of a Balanced Budget Amendment and other reforms like biennial budgeting.
I think most Republicans are in favor of a BBA because they believe it gets them off the hook of having to name exactly what they’d cut. There are several reasons why Republican policymakers won’t get specific: 1) they really don’t want to cut spending; 2) they’re afraid of cheesing off special interests and constituents who benefit from government programs; 3) they’re more concerned with being in power and getting reelected; 4) they’re just plain ignorant of, or disinterested in, the particulars of government programs.
As for biennial budgeting, Republicans would have us believe that appropriating money every other year will give policymakers more time to conduct oversight of government programs. I think it’s another cop-out. Coburn’s office put out plenty of information on the problems associated with USDA rural development subsidies (see here). A Cato essay on rural development subsidies provides more information, including findings from the Government Accountability Office that are readily available to policymakers.
(Note: I worked for both Jeff Sessions and Tom Coburn.)
Budget Plans: Gang of Six and Senator Coburn
The “Gang of Six” senators has released an outline of budget reforms that would supposedly reduce deficits by $3.7 trillion over 10 years. Revenues would rise by at least $1 trillion, while spending would be theoretically trimmed by various procedural mechanisms. The plan promises to “strengthen the safety net,” “maintain investments,” and “maintain the basic structure” of Medicare and Medicaid, which doesn’t sound very reform-minded to me.
The Gang of Six plan is a grander version of Sen. Mitch McConnell’s recent debt-limit proposal, which was aimed at putting off any spending cuts. The Gang outline has a few specific cuts, but the document mainly consists of promises to restrain spending and raise taxes in the future.
I’m surprised that Sen. Tom Coburn supports the Gang plan because his office has just released a massive study chock-full of specific spending-cut ideas. The Gang plan is all about avoiding specifics, while Coburn’s plan has 621 pages of details.
Coburn’s “Back in Black” plan would reduce deficits by $9 trillion over the next decade. The plan includes some tax increases, but the core of the document is a line-by-line analysis of every department’s budget, with lists of programs to cut and terminate. The plan includes a wealth of useful information that will aid policymakers interested in cutting spending for years to come.
So congratulations to Roland, Joelle, and the whole Coburn team for their late nights spent pouring through the budget, and for their great job documenting their findings with more than 3,000 endnotes.
Every Senate and House office should perform a similar exercise of proposing specific cuts. The government faces a debt crisis, yet only Coburn, Sen. Rand Paul, and perhaps a few others in Congress have put any effort into identifying unneeded programs.
Look on the official websites of most members of Congress and you will see discussions in support of spending on education, seniors, energy, research, highways and many other activities. When members are in front of TV cameras, they sound like they take the debt crisis seriously, but most congressional websites reveal a different mindset where federal spending is always wonderful and helpful to society.
Coburn’s staff tells me that about a dozen staffers chipped in on its Back in Black effort in recent months. If other House and Senate offices went through such an exercise, it would help members clarify their positions about the role of government and help them think about spending trade-offs.
My summer homework assignment for every congressional office is to go through a Coburn/Paul-style budget downsizing exercise. That could lead to more serious spending debates and more concrete proposals than the generally meaningless bullets points issued by the Gang of Six.
Will Obama Comply with the War Powers Resolution?
Six Republican senators are challenging President Obama’s authority to conduct an open-ended war in Libya without congressional authorization. The six conservative lawmakers (Rand Paul (R-KY), Jim DeMint (R-SC), Mike Lee (R-UT), Ron Johnson (R-WI), Tom Coburn (R-OK), and John Cornyn (R-TX)) sent a letter to the president on May 18th asking if he intends to comply with the War Powers Resolution. The full text of the letter can be found here.
The law stipulates that the president must terminate military operations within 60 days, unless Congress explicitly authorizes the action, or grants an extension. The clock on the Libya operation started ticking on March 21, 2011. Congress has neither formally approved of the mission, nor has it granted an extension. Therefore, the 60-day limit expires tomorrow, May 20th.
Last week at The Skeptics, I noted Deputy Secretary of State James Steinberg’s testimony before the Senate Foreign Relations Committee, in which he suggested that the administration wanted to comply, but was consulting with Congress about how to do so. The New York Times presented some of the creative ideas that the administration was considering in order to adhere to circumvent the law. But the senators can read the Times, too. In their letter to the president, they write:
Last week some in your Administration indicated use of the United States Armed Forces will continue indefinitely, while others said you would act in a manner consistent with the War Powers Resolution. Therefore, we are writing to ask whether you intend to comply with the requirements of the War Powers Resolution. We await your response.
Let me be clear about one thing: I’m not a huge fan of the War Powers Resolution, per se. To me, it is silly, sort of like a law that affirmed the Congress’s authority to levy taxes, borrow and coin money, and establish Post Offices. In the same section where these powers are delegated, the Constitution clearly stipulates that Congress shall have the power to declare war. So why does there also need to be legislation?
Most presidents have complied with the spirit of the War Powers Resolution, but more out of deference to the notion that Congress has some role in whether the United States goes to war, not out of genuine conviction that Congress does/should have the most important role in deciding such things. By all appearances, President Obama is bypassing the charade.
I anxiously await his response to the senators’ letter, and am likewise curious to see if other senators raise questions about the administration’s intentions.
Norquist Is Right, Coburn Is Wrong: Tax Increases Undermine Good Fiscal Policy
There’s a significant debate now taking place in Washington — largely behind closed doors, but sometimes covered by the media — on whether fiscal conservatives should maintain a rigid no-tax-increase position. One side of the debate features Grover Norquist of Americans for Tax Reform, which is the organization that maintains the no-tax-increase pledge. The other side features Sen. Tom Coburn of Oklahoma, who is part of a small group of GOP senators who might be willing to increase the tax burden as part of a deal that supposedly reduces deficits.
I’m a huge fan of Senator Coburn, who was in favor of cutting wasteful spending before it became fashionable. His office, for instance, releases a “Pork Report” every couple of days. You shouldn’t read it if you have high blood pressure, because it will confirm (and reconfirm, and reconfirm, ad nauseum) your worst fears about tax dollars getting wasted.
Nonetheless, I’m on Grover’s side on this tax debate, for two reasons.
First, we have a spending problem, not a revenue problem or a deficit/debt problem. Red ink is undesirable, to be sure, but it is a symptom of the underlying problem of a government that is too big and spending too much.
But don’t believe me. Here is a chart from the House Budget Committee showing long-run projections for spending and revenues over the next 70 years. As you can see, the long-run fiscal shortfall is completely caused by higher spending. In other words, 100 percent of red ink is due to government spending. So why put taxes on the table?
The Other For-Profit College Scandal
Because the evidence of wrongdoing and evasion is so clear, and the effect has been so damaging, I have devoted a lot of pixels to the GAO’s horrendous ”secret shopper” report on for-profit colleges, as well as the stonewalling about what caused the initial report to be so biased. A potentially even bigger story, though, is what appears to be the machinations of an unholy alliance of Department of Education officials, Senate HELP Committee chairman Tom Harkin (D-IA), and Wall Street short-sellers hoping to make big bucks off the demise of for-profit schools. This Daily Caller article, and the connected video of Senator Tom Coburn (R-OK), are good places to start learning more about this, as is the website of Citizens for Responsibility and Ethics in Washington.
The problems with understanding scandals like this, of course, are trying to get the truth about things that have gone on almost entirely in real or virtual back rooms; knowing what is legal and what isn’t; and just figuring out who’s who. Such scandals also reveal little about whether for-profit schools are actually more or less effective than other higher ed sectors, arguably the main public policy concern.
What this sort of thing does start to reveal, though, is just how far out of public view policy is often made, as well as how people try to profit directly from government action. In other words, it’s a great case study in public-choice theory, and just how un-Schoolhouse Rock Washington really is.
So I can’t tell you everything about who said what to whom. However, at the very least it is clear, for instance, that famed short seller Steve Eisman had a huge amount to gain by testifying that for-profits are bad and there is a “bubble” in proprietary higher ed about to burst. After all, were either the Education Department or Senator Harkin — or both — to use his testimony to attack for profits, as indeed they have, Eisman would have a highly profitable self-fulfilling prophecy on his hands.
No matter how you feel about for-profit colleges – and my feelings are decidedly mixed– learning about how policy is really made can be a very unsettling thing. In fact, it can make you feel more than just a little sick.
GAO Report on Duplicative Programs
A Government Accountability Office report on duplicative federal programs is prima facie evidence that the government is a bloated mess. For example, there are 82 federal programs involved in teacher quality, 80 programs involved in economic development, and over 100 programs involved in surface transportation.
Sen. Tom Coburn (R-OK) summed it up best in his press release on the GAO report:
This report confirms what most Americans assume about their government. We are spending trillions of dollars every year and nobody knows what we are doing. The executive branch doesn’t know. The congressional branch doesn’t know. Nobody knows.
Nobody knows because no human being could possibly keep sufficient tabs on thousands of programs in a $3.8 trillion federal budget. Compounding the problem is the fact that policymakers devote much of their time to fundraising, campaigning, and other distracting activities.
The report’s takeaway, therefore, should be that the federal government’s scope needs to be drastically curtailed. Unfortunately, a typical response to the report has been to cite it as further evidence that policymakers must “eliminate waste” and “make government more efficient.” Coburn says “This report also shows we could save taxpayers hundreds of billions of dollars every year without cutting services. And, in many cases, smart consolidations will improve service.”
No, no, no.
Most of the “services” discussed in the report need to be eliminated, not consolidated. Turning 82 teacher quality programs into, say, 10 doesn’t change the fact that the federal government should not be involved in education in the first place. (Not to mention that the federal government’s involvement in education has been a failure.)
Throughout the decades, numerous efforts have been undertaken to clean up the federal bureaucracy (e.g., Hoover Commission, Grace Commission, and Al Gore’s “Reinventing Government”). None of these house cleaning endeavors curbed the federal government’s expansion, let alone tamed the bureaucratic wilds.
James Madison wrote in Federalist 45 that the powers delegated to the federal government by the Constitution “are few and defined.” However, the federal government gradually assumed powers that are now many and undefined. Excessive bureaucracy is a natural, and inevitable, result. Thus, those policymakers who are sincerely concerned with bureaucratic duplication and waste should focus their efforts on reinstituting limits on the government’s capacity to spend. Policymakers who pretend otherwise are just wasting their time — and that of taxpayers.
Abolish Federal Job Training Programs
A report from the Government Accountability Office finds that the federal government administers 47 different employment and job training programs at a cost to taxpayers of about $18 billion. The GAO excluded another 51 programs that could be considered as providing job training assistance, such as student loan subsidies.
The takeaway from the report is that there is a lot of duplication, and thus excess bureaucracy and inefficiencies. Moreover, the GAO says that “little is known about the effectiveness of most programs.” Nonetheless, Congress unflinchingly funds these programs even though the GAO has been issuing reports with similar findings since the 1990s.
Coinciding with the GAO report, Sen. Tom Coburn (R-OK) released a paper that singles out 25 particularly egregious examples of federal job training programs abusing taxpayer dollars. It’s the sort of thing that government apologists will dismiss as “anecdotal,” but when it comes to government programs, where there is smoke, there is usually fire. And if the anecdotes help undermine support for such unwarranted federal interventions, all the better.
One problem I have with Coburn’s paper is that it concludes with recommendations that amount to rearranging the deck chairs on the Titanic (e.g., consolidate programs, narrow program objectives, and better target funds). Coburn says that these programs need better “program metrics.” However, I was once responsible for program metrics as a budget official in the state of Indiana, and I can attest that politics render such endeavors a fool’s errand.
Coburn’s paper is at its best when he cites James Bovard’s observation that the government doesn’t need to be involved in job training:
As aptly considered by scholar James Bovard, the government has taken on a role more appropriately filled by the private sector. Bovard writes, “The fallacy underlying all job training programs is that the private sector lacks the incentive to train people for jobs. This is like assuming that farmers don‘t have an incentive to buy seed, or that auto manufacturers lack incentive to seek out parts suppliers. Businessmen naturally prefer that all the factors of production – including labor – be readily available. But where there is a shortage of skills and demands for services, there will be an incentive to train.”
The American Society for Training and Develop estimates that “U.S. organizations spent $125.9 billion on employee learning and development in 2009.” In addition, there are untold private options for job seekers: headhunters, counselors, recruiters, temporary work agencies, career fairs, internet resources, charities, and various civic organizations.
As Coburn correctly puts it:
The federal government could best help displaced workers by opening foreign markets to U.S. goods and services and creating an atmosphere that attracts and retains investment and productivity in the U.S. This can be accomplished in part by reducing unnecessary regulatory burdens on small businesses and employers, and ensuring stable and predictable government policies so employers can make short- and long-term investment and management decisions.
Getting Beyond the Anti-Earmark Crusade
As a former adviser to one of Congress’s most ardent foes of earmarking, Sen. Tom Coburn (R-Okla.), I’ve served time on the front-lines of the battle to end the corruptive practice. Yet, I never felt quite comfortable about the mission. At the same time I was assisting the senator in his floor battles against the likes of ex-Sen. Ted Stevens (Porker-AK), some of my other colleagues had been instructed to help Oklahomans get “their fair share” of subsidies from various federal grant programs.
There just isn’t much difference between the activities funded via earmarking and the activities funded by standard bureaucratic processes. The means are different, but the ends are typically the same: federal taxpayers paying for parochial benefits that are properly the domain of state and local governments, or preferably, the private sector. As a federal taxpayer, I’m no better off if the U.S. Dept. of Transportation decides to fund a bridge in Alaska or if Alaska’s congressional delegation instructs the DOT to fund the bridge.
Therefore, earmarking is a symptom of the problem. The problem is the existence of programs that enable the federal government to spend money on parochial activities. I recently made this point in an op-ed on earmarking:
Critics of the Republicans’ earmark ban have a point when they argue that it won’t save a lot of money. While the tawdry and often questionable uses of earmarked money draw a lot of attention, it represents less than half of 1% of total federal spending.
Yes, earmarking greases the skids for bigger spending and more intrusive government. Policymakers are more willing to support a particular piece of legislation if it contains goodies for their district or state. But earmarked money almost always comes from federal programs that are themselves constitutionally and practically dubious.
In the wake of the earmarking ban by Republicans, much of the debate has centered on the propriety of Congress abdicating its “power of the purse” to the executive branch. This argument is largely irrelevant considering that Congress long ago delegated much of its decision-making power to the executive branch. The delegation was necessitated by the explosion in the size and scope of the federal government: there simply aren’t enough hours in the day for Congress to divvy up the gigantic sack of loot.
As an instructive article in the New York Times explains, eliminating earmarks won’t even stop policymakers from using their pull to steer federal funds toward parochial interests. Policymakers will just send letters to federal agencies (“lettermarking”) requesting targeted funding or call agencies (“phonemarking”) with their requests. Agency officials have an incentive to comply because policymakers determine their budgets.
Congressional Republicans have finally figured out that opposing earmarks is good politics, which explains the magic change in heart by earmarking kingpins like incoming House Appropriations Committee chairman Hal Rogers (R-Ky.). But if Republicans are really serious about reining in the size and scope of the federal government, they’ll go after the parochial programs that make earmarking possible. Therefore, tea party types and others concerned with runaway federal spending would be wise to hold Republicans accountable for the federal spending ends rather than the means.
Update: Per a helpful note from my colleague Roger Pilon, I should clarify that the debate over the power of the executive versus that of the legislative branch to spend is constitutionally relevant – and important. Roger does a much better job of making my point in the following blog post:
To be sure, there’s enough mischief at both ends of Pennsylvania Avenue to go around, but it’s the growth of spending, most on matters unauthorized by the Constitution, that is far and away the larger problem. McConnell calls for congressional oversight “to monitor how the money taxpayers send to the administration is actually spent.” Far more important will be hearings to determine whether Congress has constitutional authority to appropriate money on any particular matter in the first place.
Thus, the new Congress needs to see through the false alternative the earmarks debate has engendered. At bottom, it’s not a question of whether Congress or the president shall decide. Rather, after administration input, all but ministerial spending decisions belong to Congress — as constrained by the Constitution. Thus, if the voice of the electorate is to be respected, new and old members alike need to attend first to their oath of office.
A First Test for Republicans
Republicans’ hands have been strengthened by a wave of voter angst about big-spending and business-as-usual in Washington, D.C. But have they landed on their limited-government feet? The first test of that question comes next Tuesday.
That’s when Senate Republicans will likely vote on a proposal to bar themselves from requesting earmarks. Last year, House Republicans adopted that policy for themselves the day after House Democrats limited their earmarking to non-profits and government bodies.
The Senate Republican earmark ban is championed by Tea Party favorite Sen. Jim DeMint (R-S.C.). Its strongest opponent is Minority Leader Mitch McConnell (R-Ky.).
Senator McConnell may have won his race in 2008 thanks to bringing home the bacon, but politics seem to have changed since then. Earmarker extraordinaire Rep. James Oberstar (D-Minn.) was bounced out of his office despite larding his district and state with federal pork.
McConnell’s own state may have changed, too. Witness the election of Rand Paul (without McConnell’s help). Paul supports the earmark ban.
McConnell has framed his opposition to the earmark ban as an argument for preserving Congress’ “discretion”—that is, its authority over the spending of federal dollars. Without earmarks, the administration will decide where the money is spent. But there’s a pretty long list of things McConnell could work for if he wants to defend Congress’ prerogatives, such as:
- Forcing the administration to be transparent about the grants it doles out.
- Limiting or eliminating the administration’s grant-making and spending discretion.
- Withdrawing all the other massive delegations of authority that Congress has given to the executive branch.
- Reducing spending and cutting taxes so that spending discretion is where it should be: with the taxpayers who earned the money in the first place.
Earmarks are not a huge part of the federal budget, but that does not militate against ending them. Senator Tom Coburn (R-Okla.) calls them a “gateway drug to federal spending addiction,” which is a folksy way of talking about the political science of “log-rolling.” Former member of Congress Joe Scarborough (R-Fla.), who has seen it first-hand, talks in this clip about how House and Senate leaders use earmarks to buy votes on legislation they want to get passed.
If earmarks go away as a tool for wheeling-and-dealing in Congress, members and senators will be less likely to sell out the country as a whole with bloated spending bills and Rube-Goldberg regulatory projects for the benefit of some local interest or campaign contributor.
I’ll be speaking next Monday at a Hill event on earmark transparency. The vote in the Senate Republican Conference is Tuesday. It’s a secret ballot, so any senator who doesn’t trumpet his or her support of the earmark ban almost certainly opposes it and supports the practice of earmarking.
Conservative Rift Widening over Military Spending
More and more figures on the right — especially some darlings of the all-important tea party movement — are coming forward to utter a conservative heresy: that the Pentagon budget cow perhaps should not be so sacred after all.
Senator-elect Rand Paul of Kentucky was the latest, declaring on ABC’s “This Week” on Sunday that military spending should not be exempt from the electorate’s clear
desire to reduce the massive federal deficit.
His comments follow similar musings by leading fiscal hawks Sen. Tom Coburn of Oklahoma and Gov. Mitch Daniels of Indiana, a presumptive contender for the GOP nomination in 2012. Others who agree that military spending shouldn’t get a free pass as we search for savings include Sen. Johnny Isakson, Sen. Bob Corker, Sen.-elect Pat Toomey—the list goes on.
Will tea partiers extend their limited government principles to foreign policy? I certainly hope so, although I caution that any move to bring down Pentagon spending must include a change in our foreign policy that currently commits our military to far too many missions abroad. To cut spending without reducing overseas commitments merely places additional strains on the men and women serving in our military, which is no one’s desired outcome.
If tea partiers need the specifics they have been criticized for lacking in their drive for fiscal discipline, they need look no further than the Cato Institute’s DownSizingGovernment.org project. As of today, that web site includes recommendations for over a trillion dollars in targeted cuts to the Pentagon budget over ten years.
Meanwhile, the hawkish elements of the right have been at pains to declare military spending off-limits in any moves toward fiscal austerity. That perspective is best epitomized in a Wall Street Journal op-ed by Ed Feulner of the Heritage Foundation, Arthur Brooks of AEI and Bill Kristol of the Weekly Standard published on Oct. 4—a month before the tea party fueled a GOP landslide. (Ed Crane and I penned a letter responding to that piece.) Thankfully, it looks like neoconservative attempts to forestall a debate over military spending have failed. That debate is already well along.
Halloween: Uncle Sam Style
The Office of Senator Tom Coburn (R-OK) has released an appropriately timed report on federal subsidies that have gone to the deceased. From the introduction:
In the past decade, Washington sent over $1 billion of your tax dollars to dead people. Washington paid for dead people’s prescriptions and wheelchairs, subsidized their farms, helped pay their rent, and even chipped in for their heating and air conditioning bills.
In some cases, these payments quietly gather in a dormant bank account. In many others, however, they land in the pockets of still-living people, who are defrauding the system by collecting benefits meant for a now-deceased relative.
Since 2000, the known cost of these payments to over 250,000 deceased individuals has topped $1 billion, according to a review of government audits and reports by the Government Accountability Office, inspectors general, and Congress itself. This is likely only a small picture of a much larger problem.
As a Cato essay on fraud and abuse in federal programs discusses, these problems are endemic because the federal government is a “vast money transfer machine.” While federal subsidy programs should be cut because they harm the economy and are unfair to taxpayers, Coburn’s findings of pure waste represent one more reason to pursue terminations of federal programs.
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