Disguised Health Care Costs: The $1.5 Trillion Fraud
If House Democrats hold a vote on their health-care overhaul this weekend, they might as well vote to abolish the Congressional Budget Office too.
It would be no more audacious (and much more honest) than the way they have gamed the CBO’s rules to hide $1.5 trillion of the cost of their legislation — which has to be the biggest fiscal obfuscation in the history of American politics.
C/P Politico
Department of Bias
The Department of Justice just invalidated a move by the residents of Kinston, North Carolina, to have non-partisan local elections. Rationale?
The Justice Department’s ruling, which affects races for City Council and mayor, went so far as to say partisan elections are needed so that black voters can elect their “candidates of choice” – identified by the department as those who are Democrats and almost exclusively black.
The department ruled that white voters in Kinston will vote for blacks only if they are Democrats and that therefore the city cannot get rid of party affiliations for local elections because that would violate black voters’ right to elect the candidates they want.
This, coming from the same Department of Justice officials that wouldn’t know a civil rights violation if it picked up a club and barred them access to a polling place.
Filed under: Government and Politics; Law and Civil Liberties
Full House to Vote on Lie of a Bill
The Student Aid and Fiscal Responsibility Act (SAFRA) is expected to head to the full House of Representatives for a vote tomorrow, and as it does there is yet another Congressional Budget Office estimate upping its expected cost. The bill that sponsor George Miller (D-CA) shamelessly says will be a taxpayer-money saver continues to be exposed as very much the opposite.
As you might recall, Miller has been touting SAFRA as legislation that would fund all kinds of new or expanded federal programs while allocating $10 billion to deficit reduction. But the CBO has never agreed with that. First, the CBO identified a likely net cost to taxpayers of about $6 billion over ten years, and that was without including any deficit reduction. Then it estimated that SAFRA would cost an additional $33 billion after accounting for lending risk. And now, CBO estimates that the cost of expanding Pell grants could be almost $11 billion greater than originally estimated. If you add all of those things together, the cost of SAFRA has flipped from a promised $10 billion savings to a $50 billion loss.
In fairness, the last estimate comes from a change in the baseline used for Pell outlays, going from March to August 2009. The increased cost estimate could very well reflect a higher-than-usual Pell expense because of the economic downturn, and the additional cost would not materialize if and when things improve. Nonetheless, this just adds to a very clear message about SAFRA: Far from relieving taxpayers, it’s going to deliver yet one more punishing blow.
Deficits, Spending, and Taxes
The White House and the CBO announced this week that:
The nation’s fiscal outlook is even bleaker than the government forecast earlier this year because the recession turned out to be deeper than widely expected, the budget offices of the White House and Congress agreed in separate updates on Tuesday.
The Obama administration’s Office of Management and Budget raised its 10-year tally of deficits expected through 2019 to $9.05 trillion, nearly $2 trillion more than it projected in February. That would represent 5.1 percent of the economy’s estimated gross domestic product for the decade, a higher level than is generally considered healthy.
What is the right response to these deficits?
One view holds that most current expenditure is desirable — indeed, that expenditure should ideally be much higher — so the United States should raise taxes to balance the budget. Taxes are a drag on economic growth, however, and unpopular with many voters, so this view presents politicians with an unhappy tradeoff.
The alternative view holds that a substantial fraction of current expenditure is undesirable and should be eliminated, even if the revenue to pay for it could be manufactured out of thin air. To be concrete:
- Medicare and Medicaid encourage excessive spending on health care.
- The invasions of Iraq and Afghanistan encourage hostility to the U.S. and thereby increase the risk of terrorism.
- Drug prohibition generates crime and corruption.
- Agricultural subsidies distort decisions about which crops to grow, and where.
- And much, much more.
So, under this view, the United States can have its cake and eat it too: improve the economy and reduce the deficit without the need to raise taxes.
This approach is not, of course, politically trivial, since existing expenditure programs have constituencies that will fight their elimination.
But thinking about these two views of the deficits is nevertheless useful: it shows that discussion should really be about which aspects of government are truly beneficial, not just about the deficits per se.
“If You’re Not Having Fun Advocating for Freedom, You’re Doing it Wrong!”
The health care debate has catalyzed a wonderful national clash of cultures centering on freedom versus control. Here’s one example that’s both complex and delightful.
Progressive site TalkingPointsMemo ran a story yesterday about a man named “Chris” who carried a rifle outside an event in Phoenix at which President Obama appeared. “We will forcefully resist people imposing their will on us through the strength of the majority with a vote,” Chris said.
To many TPM readers, this kind of thing is self-evidently shocking and wrong: Carrying a weapon is inherently threatening, Second Amendment notwithstanding. And vowing to resist the properly expressed will of the majority—isn’t that an outrageous denial of our democratic values?
Well, . . . No. Our constitution specifically denies force to democratic outcomes that impinge on freedom of speech and religion, on bearing arms, and on the security of our persons, houses, papers, and effects, to name a few. Our constitution also tightly circumscribed the powers of the federal government. Those restrictions were breached without abiding the supermajority requirements of Article V, alas.
There are many nuances in this clash of cultures, and it’s fascinating to watch the battle for credibility. One ugly issue is preempted rather handily by the fact that Chris is African-American.
Next question, taken up by CNN: Was the interview staged? Hell, yeah! says Chris’ interviewer. And they know each other—big deal.
Finally, they were laughing and having a good time. Isn’t this serious? Yes, it is serious, says Chris’ interviewer, but “If you’re not having fun advocating for freedom, you’re doing it wrong!”
It’s a great line—friendly, in-your-face advocacy that might just succeed in familiarizing more Americans with the idea of living as truly free people.
Today Talking Points Memo is charging that the man who interviewed Chris was a prominent defender of a militia group in the 90s, some members of which were convicted of crimes. I know nothing of the truth or falsity of this charge, and I had never heard of the militia group, the interviewer, or his organization before today.
This struggle over credibility is all part of the battle between freedom and control that is playing itself out right now. It’s an exciting time, and a chance for many more Americans to learn about liberty and the people who live it.
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Filed under: Government and Politics; Law and Civil Liberties; Political Philosophy
Sotomayor Doesn’t Deserve a Supreme Court Seat
Having sat through the entire gavel-to-gavel coverage of last week’s confirmation hearings, I still don’t know if I would vote to confirm Sonia Sotomayor if I were a senator, I really don’t. Deciding how to vote on this is more than a simple matter of deciding whether she is “qualified” to sit on the Supreme Court—which is hard enough given there is no fixed qualification standard.
It also has to include how much deference you want to give the president, in general terms but also taking into account that Sotomayor will likely be confirmed and you want to position yourself politically for the next nominee. And it has to include, of course, how your constituents feel; while it’s cowardly to follow opinion polls blindly, you are accountable to those who sent you to Washington. There are many other considerations, both political and legal.
But I’m not a senator—or even a senator’s aide—so I don’t have to make that decision. As a constitutional lawyer, however, I can say that—even as most of Sotomayor’s opinions are uncontroversial—it is impossible to overlook the short thrift the judge gave to the judicial process in Ricci v. DeStefano and Didden v. Port Chester. I am similarly hard-pressed to accept hearing-seat conversions that contradict over 15 years of speeches and articles: most notably against the idea that judges’ ethnic backgrounds—and even “physiological differences”—should affect their rulings.
Given Sotomayor’s repeated past rejection of the idea that law is or should be objective, stable, or discernible from written text, her inability during her testimony to explain her judicial philosophy—or even state her position on important cases and issues beyond an acceptance of precedent (by which she would no longer be bound in her new role)—leaves me with an abiding concern about the damage she could do to the rule of law in this country. Because of the nominee’s evasion, obfuscation, and doubletalk, I like her less now than I did before the hearings.
And so, on second thought, I do know how I would vote. During John Roberts’s confirmation hearings, Sen. Dick Durbin said that “no one has a right to sit on the Supreme Court” and that the “burden of proof for a Supreme Court justice is on the nominee.” I will follow this very apt “burden of proof” paradigm and respect the logic of Sen. Arlen Specter, the Republican-turned-Democrat former judiciary committee chairman who at President Clinton’s impeachment trial curiously evoked Scottish law to vote “not proven.” Given the impropriety of citing foreign law (another issue on which the nominee failed to explain her “conversion” in hearing testimony), I would vote that the case for confirming Sonia Sotomayor to the Supreme Court is “not proven”—under American law.
Filed under: Government and Politics; Law and Civil Liberties
Broken Promises — to Voters and the New York Times
“[O]nce it is clear that a bill will be coming to the president’s desk, the White House will post the bill online,” White House spokesman Nick Shapiro told New York Times reporter Katherine Seelye for her June 22 story on President Obama’s “Sunlight Before Signing” campaign pledge. “This will give the American people a greater ability to review the bill, often many more than five days before the president signs it into law.”
The story, titled “White House Changes the Terms of a Campaign Pledge About Posting Bills Online,” was about the White House effort to walk back from President Obama’s campaign pledge to post bills he receives for five days before signing them.
When the New York Times published the story, five bills had been presented to the president and were awaiting his signature. Four more were presented to him after the story’s publication. All nine are now law.
And for the life of me, I can’t find where any of them have been posted on Whitehouse.gov. Surely it was clear to the White House that the five bills it had and the four soon to come would reach the president’s desk.
I disagree with arguments for releasing President Obama from his pledge to sign bills only after he has posted them for a full five days after receiving them. It would have the same effects as the 72-hour hold the Sunlight Foundation is seeking from Congress — also a welcome legislative process reform.
And it’s becoming more clear that the five-day promise could be implemented. At this point, only one of 39 bills that the president has signed has been posted for five days in advance. (The DTV Delay Act was actually not held five days after formal presentment, but the White House posted it after the final version had passed Congress.) Twenty-four other bills have been held at the White House five days or more before the President has signed them. They just haven’t been posted.
To repeat, over 60% of the legislation coming out of Congress waits five days for the president’s signature as a matter of course. The only thing preventing implementation of the president’s promise as to these bills is the White House’s inexplicable reluctance to do what it says it will do.
Filed under: Government and Politics; Telecom, Internet & Information Policy
Charles Rangel Keeps a Cool Head
Pat Michaels and I have written an op-ed on the climate change bill due for a vote tomorrow in Congress, and our opinions on its provisions are summarized pretty well there. In short, the bill appears to offer very little in the way of reduced global warming in return for harm to the domestic economy and to international relations.
Yesterday’s New York Times energy and environment section (online) contains an article picking up on the increasingly harmful trade-related parts of the bill. Apparently the House Ways and Means Committee is trying to assert language that would make imposing carbon tariffs more likely than did the original Energy and Commerce Committee bill, bad enough that it was.
So what say you, Rep. Charles Rangel (D-NY), chairman of the House Ways and Means Committee and a powerful voice on trade?
[Rangel] downplayed the significance of his proposals. “I don’t think there will be many changes there,” he said. “There are just provisions in there that deal with trade and the poor. It’s not changes, it’s just vacuum.”
Assuming the quote was not taken out of context, for the leading House voice on trade to be so dismissive of important (if somewhat under-the-radar) provisions is irresponsible to say the least.
You’re for Fair Competition, You Say?
Len Nichols is the top health-policy guy at the New America Foundation. He’s spent the past few months trying to negotiate a compromise between the Left and the far Left over the creation of a new government health insurance program that would compete with private insurers. With John Bertko, Nichols wrote a paper on how to create a level playing field between a government program and private insurance.
Yesterday’s CongressDailyAM, however, had an interesting article that sheds light on Nichols’ sense of fair play. According to the article:
Nichols has floated the idea of writing into law a requirement that certain changes to the system would require a two-thirds vote to pass rather than a simple majority.
Never mind that such a requirement would guarantee that the new program would breed even more stagnation and death than Medicare and Medicaid do.
What Nichols proposes is that a Democratic Congress should be able to create a new Fannie Med by a simple majority vote in each chamber, but if a subsequent (Republican?) Congress wanted to repeal it, they should face a higher bar.
Keep that in mind when you hear talk about a level playing field.
You’ve Just Got to Love the Way the European Union Operates
Daniel Hannan, the British Member of the European Parliament who gained fame with his devastating critique of Gordan Brown, has been equally trenchant in criticizing the excesses of the European Union. On his blog he explains the latest self-serving intricacies of voting in the upcoming election for the European Parliament:
How many MEPs will be elected a week on Thursday? Wait! Come back! I’m going somewhere with this! I realise the issue might not sound intrinsically sexy but, believe me, it demonstrates everything that’s wrong with the Brussels system. Bear with me and you will see how flagrant is the EU’s contempt for the ballot box — and for its own rule book.
Had the European Constitution Lisbon Treaty been ratified, there would have been 754 MEPs in the next Parliament. But under the existing scheme — that provided for by the Nice Treaty — there are meant to be 736. Three countries have rejected the European Constitution in referendums, and it is not legally in force. So how many MEPs will be elected a week on Thursday?
You don’t need me to tell you, do you? The EU’s primary purpose is to look after its own. Eighteen unconstitutional or “phantom” Euro-MPs will be elected anyway (hat-tip, Bruno), and will draw their full salaries and allowances. The only concession to the letter of law is that they won’t be allowed to vote. In other words — in an almost perfect metaphor for the entire Euro-system — they will be paid without having any function. (Incidentally, a couple of BNP trolls keep posting here to asking when I’m going to publish my expenses. I did so ages ago — see here — and all Conservative MEPs have done the same: our Right to Know forms are available online here.)
The number of Euro-MPs in the chamber might seem a recondite issue, but it goes to the heart of how the EU behaves. Other, more important, parts of the European Constitution have also been implemented, without the tedious process of formal ratification: a European foreign policy, the harmonisation of justice and home affairs, justiciability for the Charter of Fundamental Rights. These things would have been regularised by the European Constitution, but have been enacted despite its rejection.
It’s almost as good as unconstitutionally giving Washington, D.C. a congressman!
In fact, the attempt to consolidate continental government without giving the European people much say over the political system they live under is even more bizarre than electing MEPs who might never be able to vote. If implemented, the Lisbon Treaty will reduce the ability of the European people to hold their government accountable, but that’s just the point to the Eurocratic elite actively pushing further centralization of power. About the only barriers left to the implementation of the Lisbon Treaty are the Irish people and Czech President Vaclav Klaus, as I detail in a recent article on American Spectator online.
Filed under: Foreign Policy and National Security; Government and Politics
Bipartisan Support for Choice Grows Every Year
When the Florida Legislature passed its education tax credit program in 2001, only one Democrat supported the measure.
Last year, the legislature expanded the program with votes from one third of statehouse Democrats, half the black caucus and the entire Hispanic caucus.
Last week, nearly half of House Democrats —47 percent—voted to significantly expand the revenue base for the state’s business donation tax credit program. House Republicans voted 100 percent in favor.
And yesterday, nearly a third of Senate Democrats—31 percent—voted to expand the tax credit program. And 92 percent of their Republican colleagues voted for the bill.
In all, 43 percent of state Democratic legislators voted in favor of education tax credits. Governor Crist is expected to sign the bill shortly.
They are not alone.
In 2006, Democratic governors in Arizona, Iowa and Pennsylvania signed new or expanded tax-credit initiatives. That same year, a Democrat-controlled legislature in Rhode Island passed a donation tax credit. A Democratic governor and legislature in Iowa raised their tax credit dollar cap by 50 percent in 2007.
Partisanship on choice is fading away because many politicians have come to realize that school choice saves money and children. The truth is beginning to spread; school choice is the most proven and effective systemic reform available.
The future of education reform is looking bright in the Sunshine State and across the nation.
NAMUDNO v. Holder Update
Editor’s Note: Cato scholar Ilya Shapiro is blogging about the NAMUDNO v. Holder case from the Supreme Court, and will provide dispatches throughout the Court’s session.
As I walk away from the Court, with the sounds of the NAACP rally fading in the distance, I’m no clearer on how this case will be resolved than when I went into the building early this morning.
This uncertainty mostly results from the rather technical issues surrounding the Voting Rights Act’s “bailout” provision, as well as how narrowly the Court will want to construe the municipal utility’s challenge (as-applied, facial, or some other novel formulation).
What is clear is that the “liberal” justices, especially Ginsburg and Breyer, were downright hostile to the idea of curtailing federal supervision of state voting practices, while the “conservative” justices (not including Thomas, who was characteristically silent) found disingenuous assertions that VRA violations were systemic, or any more pervasive in the covered (mostly southern) jurisdictions than in non-covered ones.
Justice Kennedy sided strongly with the latter group, but, again, that may not mean much for the final contours of the Court’s decision.
However the case comes out, it is important to remember that even a complete striking of Section 5 does not leave voters who have been discriminated against without recourse in federal court; Section 2 has and will continue to be used to remedy VRA violations on a case-by-case basis (and without Section 5’s onerous preclearance requirements).
Juan Williams Blasts Obama, Duncan on Vouchers
Yesterday on Fox News’ Special Report, Juan Williams had this to say about Obama’s silence and Duncan’s hostility to the DC voucher program, recently put on the chopping block by Democrats in Congress:
This is an outrage to me. … This is so important that you give young people a chance to have an education in America and especially in a failing public school system like you have in the District of Columbia. This voucher system is a direct threat to the unions. And so I think everybody on Capitol Hill, that’s getting money from the NEA or AFT, they should be called on the table. They should ask them, ‘where do you send your kids to school? And are you willing to say these kids getting the vouchers…and doing better than the rest of the kids, that these kids aren’t deserving of an opportunity to succeed in America?’ You just want to scream. Why Duncan and Obama aren’t in the forefront of education reform is an outrage and an insult to the very base that voted for them.
But we don’t have to ask President Obama where he sends his kids to school, do we? We already know he sends them to the prestigious private Sidwell Friends school also attended by several of the poor DC voucher students. But those voucher students will only remain classmates of Sasha and Malia for another year or so. After that, they’re out… because Barack Obama lacks the courage, the wisdom, or both to get his own party behind this program — a program that his own education department has shown is a success. Better results at a quarter the cost, and the reaction of our unified Democratic government ranges from outright opposition to malign neglect.
Future generations will look back on these politicians and bureaucrats as the Oral Faubuses of the 21st century. Like Faubus, they will ultimately fail.
Like Faubus, their names will live in infamy.
New at Cato
Here are a few highlights from Cato Today, a daily email from the Cato Institute. You can subscribe here.
- Malou Innocent argues that the United States should not increase its troop presence in Pakistan in a new Cato Policy Analysis.
- Doug Bandow discusses Tax Freedom Day in the American Spectator.
- Watch Tucker Carlson discuss whether a president should blame problems on past administrations on Fox News.
- Chris Edwards is finishing his live debate with French economist Thomas Piketty over whether the rich should pay higher tax rates. Readers decide who wins, so don’t miss the chance to cast your vote.
- Join the Cato Institute Wednesday, April 15 to hear James Tooley, author of The Beautiful Tree:A Personal Journey Into How the World’s Poorest People Are Educating Themselves, discuss successful ways to educate the world’s poor.
Week in Review: No End to Spending and Regulation in Sight
Geithner to Propose Unprecedented Restrictions on Financial System
The Washington Post reports, “Treasury Secretary Timothy F. Geithner plans to propose today a sweeping expansion of federal authority over the financial system… The administration also will seek to impose uniform standards on all large financial firms, including banks, an unprecedented step that would place significant limits on the scope and risk of their activities.”
Calling Geithner’s plan another “jihad against the market,” Cato senior fellow Jerry Taylor blasts the administration’s proposal:
What President Obama is selling is the idea that government must be the final arbiter regarding how much risk-taking is appropriate in this allegedly free market economy. It is unclear, however, whether anybody short of God is in the position to intelligently make that call for every single actor in the market.
Cato senior fellow Gerald P. O’Driscoll reveals the real reason behind the proposal:
Federal agencies have long had extensive regulatory powers over commercial banks, but allowed the banking crisis to develop despite those powers. It was a failure of will, not an absence of authority. If the authority is extended over more institutions, there is no reason to believe we will have a different outcome. This power grab is designed to divert attention away from the manifest failure of, first, the Bush Administration, and now the Obama Administration to devise a credible plan to deal with the crisis.
A new paper from Cato scholar Jagadeesh Gokhale explains the roots of the current global financial crisis and critically examines the reasoning behind the U.S. Treasury and Federal Reserve’s actions to prop up the financial sector. Gokhale argues that recovery is likely to be slow with or without the government’s bailout actions.
In the new issue of the Cato Policy Report, Cato chairman emeritus William A. Niskanen explains how President Obama is taking classic steps toward turning this recession into a depression:
Four federal economic policies transformed the Hoover recession into the Great Depression: higher tariffs, stronger unions, higher marginal tax rates, and a lower money supply. President Obama, unfortunately, has endorsed some variant of the first three of these policies, and he will face a critical choice on monetary policy in a year or so.
Obama Defends His Massive Spending Plan
President Obama visited Capitol Hill on Wednesday to lobby Democratic lawmakers on his $3.6 trillion budget proposal. Both the House and Senate are expected to vote on the plan next week.
In a new bulletin, Cato scholar Chris Edwards argues, “Sadly, Obama’s first budget sets a course for more government bloat, more economic distortions, and ultimately lower standards of living for everyone who is not living off of federal hand-outs.”
On Cato’s blog, Edwards discusses Obama’s misguided theory on government spending:
Obama’s budget would drive government health care costs up, not down. But aside from that technicality, the economics of Obama’s theory don’t make any sense.
Obama’s budget calls for a massive influx of government jobs. Writing in National Review, Cato senior fellow Jim Powell explains why government jobs don’t cure depression:
If government jobs were the secret of success, then the Soviet Union wouldn’t have collapsed, because it had nothing but government jobs. Communist China, glutted with government jobs, would have generated more income per capita than Hong Kong where, at least before the Communist takeover, there were hardly any government jobs, but Hong Kong’s per capita income was about 20 times higher than that on the mainland.
Multiplying the number of government jobs did nothing then and does nothing now to revive the private sector that pays all the bills, in large part because of the depressing effect of taxes required to pay for government jobs.
Cato on YouTube
Cato Institute is reaching out to new audiences with our message of individual liberty, free markets and peace. Last year, we launched our first YouTube channel, which has garnered thousands of views and subscriptions. Here are a few highlights:
- Cato scholars offer ways to downsize the federal government
- The Supreme Court takes a massive step backward on private property rights
- Jim Powell explains the adverse effects of the New Deal on C-SPAN
- Juan Carlos Hidalgo discusses drug war violence in Mexico on BBC
Filed under: Cato Publications; Finance, Banking & Monetary Policy; General
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.
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