Trade Helps Explain Texas-Sized Job Growth
As its governor, Rick Perry, weighs a run for the White House, Texas has drawn attention for its healthy job growth. Since the recession ended in June 2009, Texas has accounted for half of the net new jobs added to the U.S. economy, according to the lead story in this morning’s USA Today. That’s quite a record for one lone state.
We’ll leave it to others for now to argue over how much credit Gov. Perry can claim. Some credit surely goes to high oil prices, fueling job growth in a sector important to the Texas economy. Another reason for its relatively strong job growth is a friendly business climate, including no state income tax and relatively light regulations. And for those who scapegoat trade for the nation’s persistently high unemployment rate, consider that Texas is the nation’s number one trading state. As the USA Today story notes:
Overseas shipments by Texas’ strong computer, electronics, petrochemical and other industries rose 21% last year, compared with 15% for the nation, according to the Dallas Federal Reserve Bank. The state also benefits from its proximity to Latin American countries that are big importers of U.S. goods … The surge creates jobs for Texas manufacturers and ports.
As I can attest from recent speaking engagements in San Antonio and Laredo, Texans have embraced their state’s position as the nation’s leading gateway for trade with NAFTA-partner Mexico and the rest of Latin America.
While politicians and union bosses from other states grumble about allegedly unfair trade, the latest trade and job numbers show that the people of Texas are making the most of the opportunities created by our more open economy.
Obama Admin. Repeats Discredited Cost-Shifting Claim in Federal Court
Defending ObamaCare in federal court yesterday, the Obama administration’s acting solicitor general, Neal K. Katyal, peddled the widely discredited claim that the uninsured increase your and my health insurance premiums by $1,000:
“When people self-finance their health care,” Katyal contended, “that raises the cost of health care overall by $43 billion a year, and that raises the average family’s premiums by $1,000 a year. That will price untold numbers of people out of the market.”
That estimate comes from two left-wing groups, Families USA and the Center for American Progress Action Fund.
When President Obama himself made this claim, FactCheck.org reported:
[Obama] said ”the average family pays a thousand dollars in extra premiums to pay for people going to the emergency room who don’t have health insurance.” That’s from a recent report by Families USA, a group that lobbies for expanded government coverage. But another study for the authoritative Kaiser Family Foundation thinks that figure is far too high.
Serendipitously, the same day that Kaytal was repeating this discredited claim in federal court, USA Today reported:
Jack Hadley, senior health services researcher at George Mason University in Fairfax, Va…has found that privately insured individuals don’t end up paying higher premiums to make up for the uninsured because hospitals that serve lower-income families don’t have a lot of patients with insurance. He said the government pays about 75% of those unpaid hospital bills either by direct payment or through a disproportionate payment of Medicaid. (emphasis added)
Filed under: Cato Publications; General; Government and Politics; Health Care
ObamaCare’s Premium Refunds: Bad News for the Sick
USA Today and Politico Pulse report that ObamaCare has prompted BlueCross BlueShield of North Carolina to rebate $156 million to its customers in the individual market. This may seem like good news. It’s actually bad news, particularly for BCBS’s sickest customers.
Pre-ObamaCare, BCBS’s customers – whether healthy or sick – had coverage with an insurer that had already pre-funded their future medical needs. Competition protected them from BCBS skimping on care: if BCBS got a reputation for skimping, it would have a hard time enrolling new customers.
Post-ObamaCare, BCBS no longer needs that pile of cash, so they’re returning it to their customers. That hurts sick enrollees because BCBS is doling it out to all enrollees – not just the sick enrollees whom that money is supposed to serve. This cash-out is actually a transfer from the sick to the healthy.
Also, every BCBS customer who is sick or becomes sick in the future will have less protection against their insurer skimping on care. Competition used to discourage insurers from providing lousy access to care, but under ObamaCare competition will reward skimping. Under ObamaCare’s price controls, insurers that gain a reputation for providing quality coverage to the sick will attract sick people and go out of business. Insurers that gain a reputation for providing lousy access to care will drive away sick people and thrive.
USA Today Abets ObamaCare Supporters’ Misinformation Campaign
An article in today’s The USA Today titled, “With Many Still in Dark, Groups Shed Light on Health Care Law,” aims to correct misinformation about ObamaCare. Ironically, the article is itself a monument to misinformation.
It begins:
True or false: The new health care law will cut Medicare benefits for seniors. It will slash Medicare payments to doctors. It will ration health care.
In three polls conducted last month, large percentages of Americans answered “true” to each statement. All three are false.
In fact, two of the three statements are 100-percent true.
First, ObamaCare will cut payments to the private health insurance companies that provide coverage to the 20 percent of Medicare enrollees who participate in the Medicare Advantage program. That will eliminate many types of coverage for seniors in Medicare Advantage. That should be painfully obvious, but if you require confirmation, visit FactCheck.org. ObamaCare will also ratchet down the price controls that Medicare uses to pay hospitals and many other health care providers. It should likewise be obvious that that will reduce access to services that are ostensibly “guaranteed” to all enrollees. But again, if you need confirmation, check in with Medicare’s chief actuary, who works for President Obama. We can debate whether that’s good or bad. What’s not up for debate: ObamaCare in fact “will cut Medicare benefits for seniors.”
Second, it is also true — ipso facto – that ObamaCare “will ration health care.” To ration is to limit consumption. When ObamaCare reduces coverage for Medicare Advantage enrollees and reduces access to care for all Medicare enrollees, it limits seniors’ consumption of medical care. We can debate whether that’s good or bad. What’s not up for debate: that is rationing.
Finally, yes, it is technically false that ObamaCare “will slash Medicare payments to doctors.” But since current law will slash Medicare payments to doctors if Congress does nothing, and since an earlier version of ObamaCare would have eliminated those cuts, but ObamaCare’s architects dropped that provision so as to make ObamaCare appear deficit-neutral… well, perhaps the public can be forgiven if it confuses “eliminating a provision that would have prevented cuts in Medicare payments to doctors” with “slashing Medicare payments to doctors.”
Libertarian Politics in the Media
Peter Wallsten of the Wall Street Journal writes, “Libertarianism is enjoying a recent renaissance in the Republican Party.” He cites Ron Paul’s winning the presidential straw poll earlier this year at the Conservative Political Action Conference, Rand Paul’s upset victory in the Kentucky senatorial primary, and former governor Gary Johnson’s evident interest in a libertarian-leaning presidential campaign. Johnson tells Wallsten in an interview that he’ll campaign on spending cuts — including military spending, on entitlements reform, and on a rational approach to drug policy.
Meanwhile, on the same day, Rand Paul had a major op-ed in USA Today discussing whether he’s a libertarian. Not quite, he says. But sort of:
In my mind, the word “libertarian” has become an emotionally charged, and often misunderstood, word in our current political climate. But, I would argue very strongly that the vast coalition of Americans — including independents, moderates, Republicans, conservatives and “Tea Party” activists — share many libertarian points of view, as do I.
I choose to use a different phrase to describe my beliefs — I consider myself a constitutional conservative, which I take to mean a conservative who actually believes in smaller government and more individual freedom. The libertarian principles of limited government, self-reliance and respect for the Constitution are embedded within my constitutional conservatism, and in the views of countless Americans from across the political spectrum.
Our Founding Fathers were clearly libertarians, and constructed a Republic with strict limits on government power designed to protect the rights and freedom of the citizens above all else.
And he appeals to the authority of Ronald Reagan:
Liberty is our heritage; it’s the thing constitutional conservatives like myself wish to preserve, which is why Ronald Reagan declared in 1975, “I believe the very heart and soul of conservatism is libertarianism.”
Reagan said that several times, including in a Reason magazine interview and in a 1975 speech at Vanderbilt University that I attended. A lot of libertarians complained that he should stop confusing libertarianism and conservatism. And once he began his presidential campaign that fall, he doesn’t seem to have used the term any more.
You can see in both the Paul op-ed and the Johnson interview that major-party politicians are nervous about being tagged with a label that seems to imply a rigorous and radical platform covering a wide range of issues. But if you can call yourself a conservative without necessarily endorsing everything that William F. Buckley Jr. and the Heritage Foundation — or Jerry Falwell and Mike Huckabee — believe, then a politician should be able to be a moderate libertarian or a libertarian-leaning candidate. I wrote a book outlining the full libertarian perspective. But I’ve also coauthored studies on libertarian voters, in which I assume that you’re a libertarian voter if you favor free enterprise and social tolerance, even if you don’t embrace the full libertarian philosophy. At any rate, it’s good to see major officials, candidates, and newspapers talking about libertarian ideas and their relevance to our current problems.
FAA Says Wasteful Spending ‘All Good’
It’s not uncommon to hear the claim made that the “stimulus” would have had a greater economic impact had the money been focused on infrastructure. But proponents of public “investment” in infrastructure seem to forget that the government allocates capital on the basis of politics rather than economics. Government is naturally inefficient because it is immune to the market signals that guide private actors who stand to lose their own money should an investment not pan out.
A perfect example is federal spending on airport infrastructure. The USA Today’s Thomas Frank has been doing good work looking at how the Federal Aviation Administration distributes funds to the nation’s airports. In his latest piece, Frank analyzed FAA records obtained under the Freedom of Information Act and found that taxpayer money is being put to questionable use:
Airports have spent $3.5 billion in federal money since 1998 on projects the Federal Aviation Administration rated as low priority because they do little to improve the most pressing needs in the nation’s aviation system…The money comes from a program that is supposed to improve aviation safety…But the program also has funded terminals at little-used airports, hangars to store private jets, and parking areas that are free to customers.
For example, Frank reports on Pellston Regional Airport in Michigan, which “used $7.5 million in federal funds to build a terminal with stone fireplaces and cathedral ceilings. The airport averages three departures a day.”
But the FAA sees it differently:
‘They’re all good projects,’ said Catherine Lang, FAA acting associate administrator for airports.
C@L readers who get stuck in congested airports this holiday season may wish to keep that quote in mind.
In a sister piece, Frank quotes Lang as saying that the terminals at these airports are “crumbling, loaded with asbestos and have no other source [of money].” If airport infrastructure in this country is truly crumbling, then why is the FAA expending scarce resources on stone fireplaces?
Frank cites more examples:
- Lake Cumberland Regional Airport in Kentucky got $3.5 million to build a glass-fronted terminal in 2004 that was largely unused until the first passenger flights began this June. The airport now has six flights a week.
- Montgomery Regional Airport in Alabama got $22 million to build a $35 million terminal with a sloping glass facade and a rotunda topped with a domed ceiling that reflects the historical architecture of the state Capitol.
- Halliburton Field Airport in Duncan, Okla., got $700,000 for a terminal with a pilot room and a reception room. The airport, open only to private planes, has 24 landings and takeoffs a day, mostly local pilots in piston-engine planes.
We should be looking to privatize infrastructure as this Cato op-ed states:
First, privatization would reduce the responsibilities of the government so that policymakers could better focus on their core responsibilities, such as national security. Second, there is vast foreign privatization experience that could be drawn upon in pursuing U.S. reforms. Third, privatization would spur economic growth by opening new markets to entrepreneurs.
I suppose the drawback would be that politicians would be denied the fun of spending other people’s money, not to mention the campaign contributions.
McCain: Interests of Defense Contractors May Conflict with US National Interest
USA Today reports that retired military officers join the boards of directors of, or become employees of, defense contractors and take home big bags of money doing so. Not surprising. At the same time, the paper reports, lots of them are being paid by the Pentagon to be “senior mentors” of their former colleagues. Not being government employees, but rather independent contractors, these folks aren’t subject to government ethics rules. To take one example, as chairman of BAE Systems, Gen. Anthony Zinni is clearing almost a million a year, in addition to his $129,000 per year government pension. In addition to all that, the Pentagon pays him about $2,000 per day to “mentor” people at DOD.
As the article points out, information is almost invaluable to the defense contractors in these contexts. The knowledge of what’s going on at DOD is extremely useful for planners at the defense companies, and so while the retired officers are protesting that being paid nearly $2,000 per day by DOD for their work as mentors is “way below the industry average,” it increases their value to, and presumably their compensation from, their military-industrial employers. As one coordinator of the mentors program told the retired officers, “you’re getting paid in two ways–monetarily and informationally.”
This isn’t too surprising a story, but the crowning irony comes as Sen. John McCain calls for an ethics rewrite and offers his view that “the important thing is that [the involved officers] avoid the appearance of conflict.” This is a puzzling remark coming from a man whose top foreign-policy adviser was collecting hundreds of thousands of dollars from the Georgian government to lobby McCain at the same time he was being paid by McCain to advise him on foreign policy.
McCain’s thoughts about conflict of interest in that instance? He was “so proud” of his lobbyist-cum-adviser. Presumably once McCain issued his ridiculous “today we are all Georgians” fatwa it became a patriotic duty to take money from foreign governments to represent their interests. But in the case of the proposed reforms–which would attempt to institute some semblance of transparency in these mentoring deals–one can only wish the senator from Arizona the best.
Obama, International Law, and Free Speech
Stuart Taylor has a very good article this week about the Obama administration, international law, and free speech. This excerpt begins with a quote from Harold Koh, Obama’s top lawyer at the State Department:
“Our exceptional free-speech tradition can cause problems abroad, as, for example, may occur when hate speech is disseminated over the Internet.” The Supreme Court, suggested Koh — then a professor at Yale Law School — “can moderate these conflicts by applying more consistently the transnationalist approach to judicial interpretation” that he espouses.
Translation: Transnational law may sometimes trump the established interpretation of the First Amendment. This is the clear meaning of Koh’s writings, although he implied otherwise during his Senate confirmation hearing.
In my view, Obama should not take even a small step down the road toward bartering away our free-speech rights for the sake of international consensus. “Criticism of religion is the very measure of the guarantee of free speech,” as Jonathan Turley, a professor at George Washington University Law School, wrote in an October 19 USA Today op-ed.
Even European nations with much weaker free-speech traditions than ours were reportedly dismayed by the American cave-in to Islamic nations on “racial and religious stereotyping” and the rest.
Read the whole thing.
The Zazi Case: Spread the Good News!
As has been widely reported, federal authorities believe an Aurora, Colorado man named Najibullah Zazi was preparing to commit acts of terrorism in the United States. Ben Friedman has provided some insight into the charge against him.
I don’t know how the case will come out, of course. I take it for what it is: an alleged terror plot. Terrorism is an acute security challenge because people who look like nincompoops to us might be activated by a capable leader and used as “muscle” in a real attack. If authorities act too early, it looks like there was never a threat. If they act too late, they might fail to prevent an attack.
Putting aside the merits, the press reaction to this case seems different from many past cases. Take this story from yesterday’s Wall Street Journal. Along with reporting the possibility of this being the first Al Qaeda cell in the United States since 9/11, it says:
Hundreds of terrorism-related prosecutions, many for far more serious charges than lying to investigators, have been filed by U.S. authorities since the 9/11 attacks. On numerous occasions, U.S. officials have made startling allegations about terrorism suspects, only to later significantly dial back their rhetoric.
I was interested also by the tone of this USA Today story which focused as much on the U.S. government’s issuance of terror alerts as on their number and validity. “Since the Sept. 11, 2001, attacks, the FBI and DHS have issued hundreds of similar bulletins,” the story said. It’s easy to see a reporter’s skepticism in that sentence, and his signal to readers that they shouldn’t get too agitated.
My sense — and it is only impressionistic — is that the media are starting to get their feet under them. After eight years of parroting official fear-mongering, serious reporters (I say mostly to exclude cable “news”) are prepared to question what officials tell them. That can only be good. The press plays an important role in digesting information and equipping society to address terrorism along many dimensions, including girding against unnecessary fear and overreaction.
Least Surprising Headline of the Day
Stimulus sparks growth in government
–USA Today, front page, old-fashioned paper edition
Government Employment Up or Down?
The New York Times editorialized today about the supposed “brutalizing” effects of state and local government spending cuts. They claim that “most states also have cut their public workforces.”
Yet USA Today reporter Dennis Cauchon takes a look at the actual data, and he finds that state and local governments added 12,000 workers in the latest quarter, while the private sector cut 1.3 million jobs.
Thus, it appears that “brutal” restructuring is going on in the private sector, but not in the government sector. Indeed, Cauchon finds that “a huge influx of federal stimulus money to state and local governments more than offset a sharp drop in tax collections” this quarter. The article shows that state and local government spending rose quickly in the first three quarters of 2008, then dropped for two quarters, but is now rising again quite quickly. That doesn’t sound very brutal to me.
Too often editorial boards and columnists seem to write economics articles based on their preconceived notions about what they think is going on, without looking at any solid data. Cauchon’s columns at USA Today are a refreshing alternative to the sort of impressionist writing on economics we see in the NYT editorial today.
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