Archives: March, 2010

CBO: ObamaCare Would Increase Deficits by $59 Billion

Of course, it depends on what the meaning of “the Obama health plan” is.

If the Obama plan is understood not to include the $208 billion Medicare “doc fix” that the House removed from its bill to pass separately, and if the Obama plan would be sealed in an impenetrable vault within the National Archives, never again to be touched by God or man, then yes, the Congressional Budget Office predicts the Obama plan would reduce federal deficits by $138 billion over the next 10 years and by maybe one-half percent of GDP in the 10 years after that.

If, however, the doc fix is actually part of the Obama plan, and that law would be subject to normal political forces  plus the new political dynamics the law would create, then the CBO predicts the Obama plan would increase federal deficits by $59 billion over the next 10 years and maybe one-quarter percent of GDP in the subsequent decade.

So really, the Obama plan’s impact on the deficit comes down to which one of those scenarios best describes the Obama plan, and which one is a partisan fantasy.

WWJC?

Or, whom would Jesus coerce?  That’s the question that comes to mind when I read the Center for American Progress’ latest attempt to argue that, if Jesus were a member of Congress, He would vote for President Obama’s individual mandate.

I was raised Catholic, and I don’t remember Jesus teaching that we should put people in jail for not buying health insurance.  As I recall, He let the priest and the Levite go their merry ways.

OK, technically all the CAP report claims is that the Obama plan is consistent with Catholic social teaching.

The authors invoke all the right Catholic doctrines: “human dignity, solidarity, special status of the poor … concern for the common good … stewardship.”  Except they omit the Catholic doctrine of subsidiarity, which teaches that problems should be addressed at the most local level possible.

They left out what Pope John Paul II wrote about the welfare state in a 1991 encyclical:

By intervening directly and depriving society of its responsibility, the Social Assistance State leads to a loss of human energies and an inordinate increase of public agencies which are dominated more by bureaucratic ways of thinking than by concern for serving their clients and which are accompanied by an enormous increase in spending.

They sidestep the small matter of whether the legislation would actually force taxpayers to finance abortions, which Catholic doctrine teaches is the taking of innocent human life.

They note that “the Catholic Health Association is the largest provider of nongovernmental health care in the United States,” and the CHA has essentially endorsed the Obama plan.  They do not mention the material fact that the CHA therefore depends on the government for much of its revenue, and is susceptible to retribution if it doesn’t play ball.

But I keep coming back to the absurdity of suggesting that using government coercion to achieve social change is the Christian thing to do. The authors do not channel Christ so much as Richard III:

And thus I clothe my naked villany
With old odd ends stolen forth of holy writ,
And seem a saint when most I play the devil.

Or to put it differently, they cast their lots with Caesar, not Christ.

Precedents in Government Growth

As an opponent of government growth, I’m interested in what we can learn from history to help us reverse the trend going forward. We need to understand the mechanisms of government growth if we are to combat the disease.

In a new Federal Reserve Bank of St. Louis article, Thomas Garrett and coauthors provide a useful overview of explanations for the federal government’s historical growth. They note that while the economic depression of the 1930s helped boost the size of the government, the severe recession of the 1890s did not do so. What was the difference between the 1890s and the 1930s?

The authors identify a number of factors that paved the way for sustained federal growth beginning in the 1930s:

  • Path Dependency. Governments have inertia such that once a program is in place it is difficult to remove. When new programs are added during crises, they take root and aren’t cancelled when the crisis passes. Thus, government programs tend to accumulate over time.
  • Tax Bases. The addition of new tax bases provides the means of government expansion. The best example is the addition of the federal income tax in 1913, which fueled huge government growth in subsequent decades. This can be called “feeding the beast.”
  • Ideology. The rise of populism and progressivism during the late 19th and early 20th century broke down the traditional American resistance to big government. 

I would add an additional cause of growth: legislative precedent. Politicians push the envelope on their allowable powers, and they build on the power grabs of prior policymakers. This is evident, for example, when you look at the steady destruction of federalism over the last century due to the growth in federal aid to the states.

In the 19th century, presidents routinely vetoed legislation that provided subsidies to state and local governments. But subsidy advocates started gaining traction in the 1910s with the enactment of a series of new aid programs. The 1916 Federal Aid Roads Act, for example, was an early “matching” grant, whereby the federal government gave states higher subsidies the more they spent.

What started as a trickle became a flood as federal politicians found that they could use state aid to cater to an array of special interest groups that they previously had no access to, such as teachers. The matching idea was copied in dozens of other aid programs, and it has helped to propel Medicaid spending through the stratosphere.  

The health care bill being pushed through Congress contains a number of dangerous legislative precedents, such as the mandate to purchase health insurance. I’m astounded that members of Congress think it’s OK to use government power to force Americans to buy a certain product, or else face stiff fines. Where did they get such an outrageous idea? Well, from the precedent set by Mitt Romney’s Massachusetts health bill of 2006.

If the current health legislation passes, we can sadly expect politicians to pursue the mandate approach further. Will mandatory broadband be next? That sounds crazy, but with the Treasury empty, politicians are looking for ways other than spending to impose their will on the people.

With the health care mandate, Congress is crossing the Rubicon, breaking another traditional restraint on government and ramping up its war on individual rights.

“What Do You Do, Sir?”

Brandon Dutcher of the Oklahoma Council of Public Affairs recently wrote a commentary for The Oklahoman featuring (in the print edition) a chart I created of percent change in the state’s ACT scores and per pupil revenues over time. (Hint: one line’s pretty flat, the other goes up lots.)

Some folks didn’t like what this chart reveals, and so offered a variety of excuses for it in today’s letters to the editor. I’ve just responded with a letter to the editor of my own, reproduced here:

It is an unfailing characteristic of human nature that, when faced with evidence undermining their accomplishments or beliefs, people look first to excuses in the hope of deflecting the blow. So it’s no surprise to see a letter to the editor discounting Oklahoma’s relatively flat ACT scores despite rising spending on the grounds that the ACT “was never meant” “as a tool for evaluating the success of the common education system.” The only problem with this claim is that it’s absolutely false. According to the official ACT publication ”The Sensitivity of the ACT to Instruction”:

Consistent with [its co-founder’s] intent, the ACT is an educational achievement test that measures the typical content and skills learned from college preparatory curricula. Consequently, the ACT can … provide direct feedback to high school teachers about the effectiveness of their teaching.

Another excuse offered for Oklahoma’s education productivity collapse is that student achievement is limited while “the amount of money that can be potentially spent on education has no limit.” Oklahoma taxpayers will be pleased to learn they have limitless financial resources, but this is no defense of the status quo. If it was foolish to think in 1990 that spending 40% more on a state monopoly school system would substantially improve student learning, then the same is presumably true today. That, it seems to me, was the point of Mr. Dutcher’s op-ed.

To answer that same letter-writer’s question about the initial year of comparison for the chart’s percent change calculations, it is 1990 (as could have been surmised from the fact that the reported changes for 1990 are both zero). 

That’s the end of my letter, but I can’t help adding an observation that would have exceeded the word count. While everybody likes to be right all the time, the strategies for approximating that desired state vary considerably in their effectiveness. The best is the one most famously touted (though not necessarily followed) by John Maynard Keynes: “When the facts change, I change my mind. What do you do, sir?” The sooner we adopt an education system that is actually effective and efficient, the sooner people can stop being wrong defending the current profligate monopoly.

This Week in Government Failure

Over at Downsizing Government, we focused on the following issues this week:

  • Another day, another cost overrun at the Pentagon. This time it’s the Joint Strike Fighter.
  • Office of Personnel Management director John Berry has a hissy fit over Cato shining a light on excessive wages and benefits for government employees at a time when the private sector is bleeding jobs.
  • Nationalizing federal higher education subsidies is still a loser for taxpayers.  The best solution is to get rid of them altogether.
  • Sugar subsidies aren’t so sweet for consumers and manufacturers who use it in their products.
  • The only way to stop ACORN from getting taxpayer money is to kill the programs that fund it.
  • Greece is turning to privatization to help solve its debt problems. The U.S. should do the same.

Weekend Links

The FTC on Steroids: Will the ‘National Nanny’ Take Over the Internet and the New Information Economy?

Writing on the TechLiberationFront blog, Berin Szoka warns of the extensive Internet regulation that could come with huge grants of authority to the Federal Trade Commission in H.R. 4173, the “Wall Street Reform and Consumer Protection Act of 2009.”

Congress is about to reinvent the FTC as the “National Nanny” it was well on its way to becoming back in the 1970s.  Today, the FTC is not merely the general overseer of our economy, but the key regulator of the Internet.  If the Senate passes Rep. Frank’s bill with its so-called “improvements” to the FTC Act, future generations will look back and wonder why, without even taking the time to consider what it was doing, Congress radically transformed Internet governance as an afterthought to financial regulatory overhaul.