Jeb Bush Almost Criticizes His Spendthrift Brother, Again

In New Hampshire yesterday, Jeb Bush found something to disagree with his brother’s presidency—sort of:

“I think that, in Washington during my brother’s time, Republicans spent too much money,” Mr. Bush said Thursday when asked to describe where there was a “big space” between himself and his brother George W. Bush. “I think he could have used the veto power. He didn’t have line-item veto power, but he could have brought budget discipline to Washington, D.C.”

As Peter Suderman noted in Reason, there’s some weaseling in there—it’s “Republicans” who spent too much, not specifically the Republican president. And Jeb quickly went on to say that such criticism “seems kind of quaint right now given the fact that after he left, the budget and deficits and spending went up astronomically.” Suderman notes that George W. Bush in fact

presided over the most significant increase in federal spending since Lyndon B. Johnson was president in the 1960s… Federal spending under Obama has increased at a far slower rate than under President Bush. Obama took Bush’s baseline and built on it, but George W. Bush’s spending increases were a big part of what made Obama’s spending possible.

Jeb had said this before—in fact, during his brother’s presidency. At CPAC in 2007, he said, “If the promise of pork and more programs is the way Republicans think they’ll regain the majority, then they’ve got a problem.” He said then that he was talking about the Republicans in Congress. And I noted then

But who’s he kidding? President Bush sponsored most of those “more programs,” and in six years he hasn’t vetoed a single piece of pork or a bloated entitlement bill or a new spending program. And if Jeb thinks “we lost … because we rejected the conservative philosophy in this country,” he must realize that his brother has set the agenda for Republicans over the past six years almost as firmly as Putin has set Russia’s agenda. If Republicans turned their back on limited-government conservatism, it’s because the White House told them to. Not that congressional leaders were blameless—and on Social Security reform, they did decide to resist Bush’s one good idea—but it was President Bush and his White House staff who inspired, enticed, threatened, bullied, and bully-pulpited Republicans into passing the No Child Left Behind Act, the biggest expansion of entitlements in 40 years, and other big-government schemes.

I also pointed out then, as Peter Suderman does today:

Although Jeb seems to have convinced conservatives that he’s much more committed to spending restraint than W—and he did veto some $2 billion in spending over eight years [as Florida governor]—his real record is much more like his brother’s. According to the Cato Institute’s Fiscal Policy Report Card on America’s Governors (pdf), he presided over “explosive growth in state spending.” Indeed, in the latest report card, only 10 governors had worse ratings on spending restraint, though—again like his brother—Jeb scored much higher on tax cutting. Federal spending is up 50 percent in six years; Florida’s spending was up 52 percent in eight years, and Jeb wasn’t fighting two foreign wars.

Republicans like to promise spending restraint, to deplore past profligacy, and then to deliver more of the same. That’s what George W. did, and it looks like Jeb is starting down the same path.

The Folly of Ex-Im, Export Promotion Agencies, and Export Promotion in General

On May 19, I testified at a hearing titled “Trade Promotion Agencies and U.S. Foreign Policy,” which was held by the House Foreign Affairs Subcommitee on Terrorism, Nonproliferation, and Trade. The subject agencies were the Export-Import Bank (Ex-Im), the Overseas Private Investment Corporation (OPIC), and the U.S. Trade and Development Agency (USTDA). The focus of my remarks, which follow, was on Ex-Im and the myth that exports are the benefits of trade.

Good morning, Chairman Poe, Ranking Member Keating, and members of the subcommittee. I am Dan Ikenson, director of the Herbert A. Stiefel Center for Trade Policy Studies at the Cato Institute. Thank you for the invitation to share my views with you today concerning “Trade Promotion Agencies and U.S. Foreign Policy.” The views I express are my own and should not be construed as representing any official positions of the Cato Institute.

To the extent that today’s hearing will help clarify some of these issues and prompt a serious effort to reform and retire some of the redundant, distortionary, and, frankly, scandal-prone agencies among the panoply of federal offerings, I am pleased to be of assistance.

U.S. trade promotion agencies are in the business of promoting exports, not trade in the more inclusive sense. That is worth noting because despite some of the wrongheaded mercantilist assumptions undergirding U.S. trade policy—that exports are good and imports are bad—the fact is that the real benefits of trade are transmitted through imports, not through exports.

In keeping with the conventional wisdom, in January 2010 President Obama set a national goal of doubling U.S. exports in five years. Prominent in the plan was a larger role for government in promoting exports, including expanded nonmarket lending programs to finance export activity, an increase in the number of the Commerce Department’s foreign outposts to promote U.S. business, and an increase in federal agency-chaperoned marketing trips.

Texas Pastors Are Wrong about School Choice

Today, the Fort Worth Star-Telegram published my op-ed addressing the claims of a group called Pastors for Texas Children. For the last month, the pastors have been flooding the pages of Texas newspapers with op-eds opposing school choice. Although they raise some legitimate concerns about school vouchers, their charges against scholarship tax credits—and school choice laws generally—range from lacking substance to being demonstrably false. 

There wasn’t enough space to address all of their claims in a single op-ed, but fortunately, here at Cato@Liberty we buy megapixels by the barrel (or whatever they come in). 

The claims made by six Fort Worth pastors in this op-ed were typical. I’ll address their major claims point by point:

The Texas Senate recently passed Senate Bill 4, providing tuition tax credits to donors giving scholarships to private schools. These are plainly private school vouchers.

Actually, the scholarships plainly are not vouchers. Voucher programs are government-funded and administered. Tax-credit scholarships are privately funded and administered by nonprofit scholarship organizations. As I wrote in the Star-Telegram, it’s like the difference between government-issued food stamps and nonprofit food banks. Donors to both scholarship organizations and food banks have their tax burden lowered as a result, but in neither case do the donated funds transmogrify into government property.

Our state Legislature has repeatedly rejected private school vouchers because they divert public money to religious schools in violation of the First Amendment of the U.S. Constitution, which prohibits any establishment of religion.

First, the U.S. Supreme Court ruled in Zelman v. Simmons-Harris that school vouchers are constitutional because they serve a secular purpose, are neutral with respect to religion, and the funds are given to parents who can choose among religious or secular options. This is no more offensive to the First Amendment than holding a Bible study in a Section-8 subsidized apartment or using Medicaid at a Catholic hospital with a crucifix in every room and chaplains on the payroll.

Second, as noted previously, tax-credit scholarships are private funds. In ACSTO v. Winn, SCOTUS held that private funds do not become government property until they “come into the tax collector’s hands.”

The Benefit of Free Trade Is Not Exports, It’s Lower Prices on Things We Want

In the news this morning, Sen. Orrin Hatch (R–UT), author of the Trade Promotion Authority bill, makes the usual case for trade agreements and TPA:

We need to get this bill passed. We need to pass it for the American workers who want good, high-paying jobs. We need to pass it for our farmers, ranchers, manufacturers, and entrepreneurs who need access to foreign markets in order to compete. We need to pass it to maintain our standing in the world.

It’s certainly good that the chairman of the Senate Finance Committee supports freer trade. But I fear he’s as confused as most Washingtonians about the actual case for free trade.

This whole “exports and jobs” framework is misguided. Thirty years ago in the Cato Journal, the economist Ronald Krieger explained the difference between the economist’s and the non-economist’s views of trade. The economist believes that “The purpose of economic activity is to enhance the wellbeing of individual consumers and households.” And, therefore, “Imports are the benefit for which exports are the cost.” Imports are the things we want—clothing, televisions, cars, software, ideas—and exports are what we have to trade in order to get them.

And thus, Krieger continues, point by point:

Cheap foreign goods are thus an unambiguous benefit to the importing country.

The objective of foreign trade is therefore to get goods on advantageous terms.

That is why we want free—or at least freer—trade: to remove the impediments that prevent people from finding the best ways to satisfy their wants. Free trade allows us to benefit from the division of labor, specialization, comparative advantage, and economies of scale.

I write about this in The Libertarian Mind (buy it now!):

Air Traffic Control Modernization

The Senate Commerce Committee held a fascinating hearing on Wednesday regarding air traffic control (ATC). The hearing showcased the momentum to proceed with ATC restructuring. Because aviation is crucial to the economy, such a reform would create wide-ranging benefits.

At this point, industry experts are ahead of Congress in thinking about ATC reform. At the hearing, some of the senators seemed short-sighted and parochial. They had not done their homework and they nit-picked instead of considering the big-picture benefits.

However, the witness testimony was powerful and so it hopefully helped sway the skeptics. America’s ATC needs a big upgrade to meet rising passenger demand. Airspace is getting crowded and our antiquated ATC is causing delays and wasting fuel. Other countries have improved performance by separating ATC from their governments. That is the reform that America needs.

The testimonies of former Democratic senator Byron Dorgan (here), Paul Rinaldi of the National Air Traffic Controllers Association (here), and Jeff Smisek of United Airlines (here) were impressive. Kudos to them all for embracing change.

Dorgan heads an ATC reform group, and he clearly had done his homework. If he were still a sitting senator, he might be skeptical of ATC changes, but he now favors restructuring. He argued that separating ATC finances from the federal budget is a crucial step to take. His testimony illustrates that when politicians take the time to learn about policy issues in detail, they are more likely to embrace reform.

Rinaldi is carving out a thoughtful pro-reform position as head of the controller’s union. Unions are often resistant to change. But to Rinaldi and his union’s credit, they have researched international ATC reforms and they seem to be open to major U.S. restructuring.

Three Year Mark for Cato’s Police Misconduct Reporting Project

Cross-posted from PoliceMisconduct.net:

So today marks our three year anniversary here at PoliceMisconduct.net!  One of our prime objectives has been to draw more attention to the problem of police misconduct across the country.  Long time readers must be amazed (as are we!) at the attention this subject has been receiving the past few months.  The President himself has acknowledged the “slow-rolling” crisis has been on-going for many years and also that some “soul searching” is in order.   Yes, it’s long overdue.  Better late than never.

The victims of police misconduct are too often without a voice and the extent of the problem was (is) unknown because few seemed interested enough to study it.  We at Cato thought it important to lend some institutional support to this critical area.  And, increasingly, the media (and others) have found this site to be a valuable resource.  Over the past year, we’ve been cited by the Washington Post, Wall Street Journal, the Economist, ABC News, the Atlantic, and Frontline.  If the first step toward addressing a problem is recognizing that a problem exists, then we’re there.

Of course, there’s much more to do.  Just wanted to mark this occasion and provide our friends with an update on our work.  One easy way you can help us is by spreading the word by taking a moment to blast a note to all your contacts via twitter and Facebook.  Thanks for your consideration and support!

The TPP and GDP: Let’s Wait and See

In discussions of the Trans Pacific Partnership (TPP), there are often very specific figures put out there as the estimated economic gains of this trade deal.  $78 billion of annual income gains for the U.S. is a commony cited number.

It is important to keep in mind, however, that these gains are based on assumptions about what might be in the TPP, not what is actually in the TPP.  That’s because there is no TPP yet.  

The estimates come from this study, and a more detailed previous study, by a group of trade economists.  But if you read the fine print, for example on p. 23 of the second link, they make clear that they are simply estimating the TPP benefits based on the liberalization coverage of past agreements among the same parties.

The extent of the liberalization that will be in the TPP is not clear because that’s what the parties are negotiating about right now: How much to liberalize each sector.  If trade policy were run by free market economists, everyone would liberalize on their own right now.  But trade policy is influenced heavily by special interest groups.  As a result, some import restrictions remain even after a trade negotiation.

Many commentators have come out for or against the TPP already, based on assumptions about what will be in it.  I’m waiting to see the full scope of what’s in the TPP (if the negotiations are ever concluded) before making a decision.  Any liberalization needs to be balanced out against “governance” parts, such as intellectual property protection, where the impact on GDP and welfare more generally are more uncertain.  We can’t really make that calculation until we see the final deal.

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