Archives: January, 2009

Next Wednesday: Jefferson’s Moose

Post Jeffersons MooseReminder: Next Wednesday, February 4th, the Cato Institute will host a book forum on David Post’s new book, In Search of Jefferson’s Moose: Notes on the State of Cyberspace.

Comments will come from Clive Crook, chief Washington commentator of the Financial Times and senior editor of The Atlantic Monthly; and Jeffrey Rosen, professor of law at The George Washington University and legal affairs editor of The New Republic.

It’s a very interesting book, and the commentators are second to none.

The forum is at noon next Wednesday, February 4. Register here.

And here’s Cato alum Adam Thierer’s review of the book.

Stimulus Package = The Dems’ PATRIOT Act

That’s what Steve Horwitz says here.  Like the PATRIOT Act, it’s a preexisting wishlist of initiatives being rammed through in an atmosphere of hysteria. Where the Obama administration has, to its credit, backed away from the language of war and crisis when it comes to international affairs and homeland security, the Obama team seems all too willing to revert to Bush-style fearmongering in the service of greater state involvement in the economy.

Yesterday’s coverage in the New York Times (of all places) suggests that the stimulus package is a Trojan Horse effort designed to make dramatic and likely permanent changes in the federal role in health care and education, among other things:

For Democrats, [the stimulus package] is also a tool for rewriting the social contract with the poor, the uninsured and the unemployed, in ways they have long yearned to do….

Altogether, the economic recovery bill would speed $127 billion over the next two and a half years to individuals and states for health care alone, a fact that has Republicans fuming that the stimulus package is a back door to universal health coverage…. The federal share of Medicaid spending now ranges from 50 percent in higher-income states like New York and Connecticut to more than 73 percent in poor states like Mississippi and West Virginia. Under the House bill, the federal share would be increased by at least 4.9 percentage points in every state, and by much more in states with large increases in unemployment.

Critics and supporters alike said that by its sheer scope, the measure could profoundly change the federal government’s role in education, which has traditionally been the responsibility of state and local government…. In recent years the federal government has contributed 9 percent of the nation’s total spending on public schools, with states and local districts financing the rest. Washington has contributed 19 percent of spending on higher education. The stimulus package would raise those federal proportions significantly. The Department of Education’s discretionary budget for the 2008 fiscal year was about $60 billion. The stimulus bill would raise that to about $135 billion this year, and to about $146 billion in 2010. Other federal agencies would administer about $20 billion in additional education-related spending. “This really marks a new era in federal education spending,” said Edward Kealy, executive director of the Committee for Education Funding, a coalition of 90 education groups.

Does the Trojan-Horse theory sound cynical? Well, as my colleague Will Wilkinson points out, what this country needs, now and ever, is a healthy dose of constructive cynicism:

“There are some who question the scale of our ambitions, who suggest that our system cannot tolerate too many big plans,” President Obama observed in his [inaugural] address. “Their memories are short,” he said, “for they have forgotten what this country has already done, what free men and women can achieve when imagination is joined to common purpose and necessity to courage.”

This is a tediously familiar and dangerous message. Can you recall the scale of our recent ambitions? The United States would invade Iraq, refashion it as a democracy and forever transform the Middle East. Remember when President Bush committed the United States to “the ultimate goal of ending tyranny in our world”? That is ambitious scale.

Not only have some of us forgotten “what this country has already done … when imagination is joined to a common purpose,” it’s as if some of us are trying to erase the memory of our complicity in the last eight years—to forget that in the face of a crisis we did transcend our stale differences and cut the president a blank check that paid for disaster. How can we not question the scale of our leaders’ ambitions? How short would our memories have to be?

So What Is Wrong with “Ideology?”

In its lead editorial today, the New York Times dismisses criticism of the stimulus bill that passed the House last night as “mostly ideological.” Similarly, a McClatchy News story about the economists who signed Cato’s newspaper advertisement opposing the stimulus bill, dismissed signers as “ideologically opposed” to government spending. This is part of a trend we’ve seen since President Obama’s election. Opposition to Obama’s programs is dismissed as “ideological,” whereas the belief by President Obama and Congressional Democrats in ever bigger and more activist government is, in the word’s of EJ Dionne, “anti-ideological.”

After all, President Obama has called for “a new declaration of independence, not just in our nation, but in our own lives — from ideology and small thinking, prejudice and bigotry.”

Apparently then, to believe in free-markets, limited government, and individual liberty is to be “ideological,” on a par with being a small-thinking bigot. On the other hand, to believe that government should run more and more of our lives, that government functions better than markets, and that government should redistribute wealth is…what? 

This country was founded by men who believed in such ideological ideas as “all men are created equal”  and are “endowed by the creater with certain unailenable rights.”  Since when is that a bad thing?

Trade Lessons Unheeded

Leaving aside the many other disastrous implications of the pork-laden “stimulus” bill, here are some thoughts about its impact on international trade. For all practical purposes there is no difference between the Smoot-Hawley tariff bill of 1930 and the “Buy American” provisions in the $819 billion spending bill that passed the House Wednesday.

Smoot-Hawley was the catalyst for a pandemic of tit-for-tat protectionism around the world, which helped deepen and prolong the global depression in the 1930s.  “Buy American” provisions will no doubt inspire similar trade barriers abroad and will have the same effect of reducing global trade—and therefore prospects for economic recovery.  It is not unreasonable to say that U.S. policymakers are on the verge of taking us down that same disastrous path.

The bill that passed the House includes the following language:

None of the funds appropriated or otherwise made available by this Act may be used for a project for the construction, alteration, maintenance, or repair of a public building or public work unless all of the iron and steel used in the project is produced in the United States.

The version currently before the Senate contains the same language, which would seem to indicate that scrapping the provision won’t be necessary to reconcile the two versions in conference.  So, unless the “Buy American” clause is dropped in the final Senate bill or is somehow defused during conference, the U.S. will have fired the first shot in what could evolve into a much wider trade war.

It’s usually better to be circumspect and to issue such dire warnings sparingly, but I see little room for alternative conclusions here.

Barton: Good Cause, Awful Rhetoric

Arguing against a delay of the transition to digital television, Rep. Joe Barton (R-TX) argued that spectrum destined for public safety uses would be held up. Well and good. But he did so this way:

Osama bin Laden isn’t fictional, and he isn’t waiting. That should be reason enough to go full speed ahead with the DTV transition.

People around the world read and discuss what U.S. leaders say about terrorists. By invoking the specter of bin Laden, Barton has given free publicity to a leading terrorist among people who might join him or any group loosely affiliated with Al Qaeda. If they want to be a part of something powerful, Representative Barton has signaled to them what they should do.

The digital television transition should go forward, but exalting terrorists is not the way to argue for that.

Atul Gawande Is Right

Path dependence plays a huge role in shaping nations’ health care sectors.  Path dependence is also why we want health care reform to nudge America toward freer markets.

Government exacerbates path dependence.  Government gives the old order the power to block the new.  The larger the role government plays in health care (or anything else), the harder it is to make incremental changes that would yield greater benefits than existing arrangements. 

That’s why, as Gawande observes, Medicare does a lousy job of improving quality.  (Or containing costs, for that matter.)  Medicare and other government interventions are also why we don’t see enough innovation in the private sector, either.

So if you want tomorrow’s health care sector to have the same problems with cost, quality, and access as today’s, then by all means expand Medicare.  Or create a government-run “exchange” like the Federal Employees Health Benefits Program.  Or expand the Veterans’ Health Administration.  Or expand Medicaid and SCHIP

But if you’d rather a health care sector that constantly makes improvements in cost and quality, you need to let seniors and non-seniors alike control their health care dollars and choose their own health plan.