Archives: 06/2010

Does McChrystal Rhyme with MacArthur?

Apparently not. Unlike Douglas MacArthur, Stanley McChrystal has tendered his resignation. President Obama should accept it, and move swiftly to put this unfortunate incident behind him.

This story moved so quickly that I wasn’t able to keep up. In the early morning, we learned that McChrystal had been called to Washington for face-to-face meetings with President Obama (aka The Commander in Chief), and Robert Gates (the SecDef who has built a reputation for sacking generals). McChrystal’s press aide was fired. By early afternoon, others, including those sympathetic to the general, were predicting that he would step down, or that he should be fired if he did not (Eliot Cohen “This is a firing offense”; Peter Feaver “This is clearly a firing offense”).

I won’t repeat what Justin Logan, Malou Innocent, and I said in our statements this morning. It is obvious that Gen. McChrystal showed very poor judgment, and this is not the first time. When his assessment of what was required in Afghanistan (More Forces or “Mission Failure”) was leaked before the president had settled on a strategy, the White House was furious. They felt that he was trying to bully them. Strike one. When he challenged the chain of command with his remarks in London in October, dismissing Vice President’s Biden’s preferred counterterrorism approach as “shortsighted,” Obama summoned him for a private meeting on Air Force One. Strike two. There was more than enough material in the Rolling Stone story to constitute strike three. And four, five, and six.

I urge people to read the story. It might be remembered as the article that put an end to Stanley McChrystal’s storied career. I wonder if the article might serve a broader purpose: undermining the already wavering support for COIN. Look past McChrystal, a man who has given his life to the military, and has much to show for it. Look at the enlisted guys who are just beginning their careers, or the NCOs or junior officers who are in the third or fourth tours (in either Iraq or Afghanistan). They’re growing frustrated. They’re in an impossible situation. They are fighting a war that depends upon strong support here in the United States, and that aims to boost support for a government that no one believes in. And while they understand COIN as preached by McChrystal, they struggle with the rules of engagement that COIN requires.

One soldier shows me the list of new regulations the platoon was given. “Patrol only in areas that you are reasonably certain that you will not have to defend yourselves with lethal force,” the laminated card reads. For a soldier who has traveled halfway around the world to fight, that’s like telling a cop he should only patrol in areas where he knows he won’t have to make arrests. “Does that make any [expletive] sense?” asks Pfc. Jared Pautsch. “We should just drop a [expletive] bomb on this place. You sit and ask yourself: What are we doing here?”

I give up. What are we doing there?

Obama’s Gulf Moratorium Blocked

The New York Times is reporting that U.S. District Judge Martin Feldman this afternoon issued a preliminary injunction blocking enforcement of the Obama administration’s May 28 order imposing a six-month moratorium on all floating offshore drilling projects in more than 500 feet of water and preventing the government from issuing new permits for such activity.

The injunction was sought by numerous businesses affected by the order. And the office of Louisiana Gov. Bobby Jindal filed a brief in support of blocking the moratorium.

A quick review of Judge Feldman’s 22-page opinion indicates that the injunction was granted, under the Administrative Procedures Act, because the plaintiffs “would likely succeed in showing that the [Interior Department’s] decision was arbitrary and capricious. An invalid agency decision to suspend drilling of wells in depths of over 500 feet simply cannot justify the immeasurable effect on the plaintiffs, the local economy, the Gulf region, and the critical present-day aspect of the availability of domestic energy in this country.”

Judge Feldman took particular note of the Interior secretary’s May 27 Report, from which its moratorium order followed: “Much to the government’s discomfort and this Court’s uneasiness, the Summary also states that ‘the recommendations contained in this report have been peer-reviewed by seven experts identified by the National Academy of Engineering.’” As has been widely reported, those “experts” never signed off on any such moratorium.

As the court went on to say, “After reviewing the Secretary’s Report, the Moratorium Memorandum, and the Notice to Lessees, the Court is unable to divine or fathom a relationship between the findings and the immense scope of the moratorium. …[T]he blanket moratorium, with no parameters, seems to assume that because one rig failed and although no one yet fully knows why, all companies and rigs drilling new wells over 500 feet also universally present an imminent danger.”

Needless to say, the Obama administration is filing an immediate appeal. But for now, its sweeping moratorium is on hold.

Topics:

Re. Ezra Klein: Did State and Local Anti-stimulus Nullify Federal Stimulus?

A recent Washington Post column by Ezra Klein dreamed up a new excuse for the conspicuous failure of Obama’s so-called stimulus plan.   Klein argues that the stimulus of federal spending has been offset by the “anti-stimulus” of fiscal austerity by state and local governments.  For proof he quotes Bruce Bartlett, who is fast becoming the favorite go-to guy for liberals seeking conservative allies in their endless quest for more spending and taxes. 

Bartlett says, “When the history of the current crisis is written, much of the blame will be placed on the sharp fiscal contraction of state and local governments.  I think economists will view this as a preventable error equivalent to the Fed’s passive shrinkage of the money supply in the early 1930s.”

A historian himself, Bartlett imagines this to be a question that will have to be pondered by historians in the distant future.   But it is easy to identify each sector’s direct contribution to the overall growth rate of real GDP from a St. Louis Fed publication, “National Economic Trends.” 

State and local government spending was rising during the first three quarters of the recession, and the drop in the fourth quarter of 2008 accounted for just 0.25% of the 5.37% annualized decline in GDP.  In the first quarter of 2009, state and local spending subtracted  just 0.19% from real GDP, but federal spending subtracted more (0.33%) due to cuts in defense spending.  Government obviously made only a minor contribution to the 6.4% drop in overall GDP.
  
In the second quarter of 2009, state and local spending was way up (by 0.48%), as was federal spending (0.85%).  But the private economy did not begin expanding until the third quarter – when government spending stopped diverting so many resources to unproductive uses.
 
The table shows that government spending on goods and services had nothing to do with the recovery (transfer payments don’t contribute to GDP).  

As a matter of simple accounting, the state and local sector has been a very minor negative force −scarcely comparable to the Fed’s inaction in 1930-32

Federal purchases, whether for heavily-subsidized ”green jobs” or shovel-ready pork, have been virtually irrelevant during the last two quarters.

Contributions to Real GDP Growth
……………………..  3rd…… 4th…… 1st qtr

Real GDP              2.2         5.6             3.0%
Private                   1.6         5.8             3.4
Federal                  0.6        0.0            0.1
State & Local     -0.1      -0.3           -0.5

New Report: DC Voucher Program Still a Success

The latest and final scheduled report on the DC voucher program is out.

Conclusion?

Even a tiny, restricted program that’s only been around for six years increases graduation rates, has a positive impact on at least some groups of students, harms no groups of students, and does this for less than a third of what the DC Public Schools spend.

DCPS spends around $28,000 per student. The last report pegged the average voucher at just $6,620. The maximum voucher cost is just $7,500.

Huge sums of money saved, student performance increased, parents happier … why is this program being killed?

Oh, right.

Public Sees Past Facade of “Financial Reform”

A new AP-Gfk poll reveals that about two-thirds of the American public lack confidence that the financial regulation bill, currently being crafted by House and Senate conferees, will actually help avert future financial crises. 

The public is right to be skeptical, as there is nothing in either the House or Senate bill that ends bailouts or ends “too-big-to-fail.”  In fact parts of the bill, such as the expansion of deposit insurance, will actually increase the likelihood of future crises.  (The IMF has an insightful working paper on the negative impacts of deposit insurance). 

Perhaps the failure of Congressional efforts to end financial crises is the result of Washington’s unwillingness to recognize that government itself was the major driver of the recent crisis.  Fortunately the public seems to get that.  Some 70 percent of the poll respondents believe that government shares blame for the crisis.  Here’s to hoping that Congress will at some point listen to the public, and end many of the distortionary policies that caused the crisis.

Where Are the Libertarians?

Jason Sorens, political scientist and founder of the Free State Project, has a series of posts at Pileus trying to estimate  the size of the “liberty constituency” in each state. Using statistical techniques well beyond my high-school algebra, he first calculated the support for Ron Paul’s presidential campaign in each state if conditions were equal. It may not be terribly surprising that by those calculations Ron Paul’s best states – and therefore, putatively, the states with the largest “liberty constituency” – were New Hampshire, Idaho, South Dakota, and Washington. In fifth place, presumably reflecting those dreaded “Beltway libertarians,” was the District of Columbia.

In part 2 Sorens used principal component analysis (PCA) to see whether a libertarian constituency exists as a concept and is distinct from mere liberalism-conservatism. Using eight variables drawn from election results and opinion surveys, he combines four of them to estimate “size of libertarian constituency,” and four others to estimate “size of liberal constituency,” the inverse of which would be the size of the state’s conservative constituency. That gives him this chart:

Sorens points out, “Idaho, Utah, Wyoming, Nebraska, Oklahoma, and Alaska are the most conservative states, while Vermont, Rhode Island, Massachusetts, Hawaii, Connecticut, and New York are the most liberal states. The states with the most libertarians are Montana, Alaska, New Hampshire, and Idaho, with Nevada, Indiana, Georgia, Wyoming, Washington, Oregon, Utah, California, and Colorado following.” The most liberal states don’t seem to have many libertarians. Of the conservative states, Idaho and Alaska have a lot of libertarians, Oklahoma and Nebraska not so much. (I suspect that a more mainstream libertarian-leaning candidate, a small-government, free-trade, skeptical-of-foreign-intervention candidate like Nebraska’s own Chuck Hagel, might have more appeal to the sober burghers of the Cornhusker State than the more provocative candidacies of Ron Paul and the Libertarian Party.)

Thanks to longtime libertarian Bill Westmiller, I can add some historical perspective to this material. In 1980 Libertarian Party presidential candidate Ed Clark got just over 1 percent of the national vote, which gives us more Libertarian voters to analyze than the recent results that Sorens was using. Those results show far more Libertarian voters per capita in Alaska, where the Libertarian Party had a real party organization and where Clark campaigned heavily, than anywhere else. After that came the rugged individualist states of the mountain West – Montana, Wyoming, Oregon, Colorado, Arizona, Idaho, and Nevada.

In 1980 you found the fewest Libertarian voters in the South, notably in Kentucky, where I grew up, and Tennessee, where I went to college. The South doesn’t seem to have improved much in 30 years. Georgia moved up from middle of the pack to one of the larger concentrations of libertarian voters; Sorens attributes that to the influence of bigfoot Atlanta radio host Neal Boortz. And of course the biggest point to remember about this chart – aside from its being a record of votes cast 30 years ago – is that the number of people who will vote for a third-party candidate is far less than the number who would vote for a major-party candidate with the same ideas.

Here’s one question: I think of New Hampshire as one of the most libertarian states, and Sorens’s “Liberty Bloc” calculations seem to confirm that. But in 1980 Clark got only half his national percentage there. What has changed in New Hampshire?

Sorens will go on to discuss whether libertarians “actually influence the overall policy regime of a state,” no doubt drawing on his paper with William Ruger, “Freedom in the 50 States: An Index of Personal and Economic Freedom.” And of course on these topics I recommend my own studies with David Kirby, “The Libertarian Vote” and “The Libertarian Vote in the Age of Obama.”

Obama to Health Insurers: Stop Revealing How Expensive Our “Protections” Are

In the upside-down world of ObamaCare, politicians can force health-insurance companies to spend more yet blame them when premiums increase.

Today, President Obama extolled new “protections” included in the sweeping legislation he signed into law on March 23.

One category of “protections” requires consumers to purchase coverage for more and more expensive medical services (e.g., limitless coverage, requiring insurers to recognize ob-gyns as primary care physicians, coverage for “children” up to age 26).  If consumers valued such “protections,” they would have already bought them – and if they’re not in a position to select their own coverage, Congress should have fixed that problem.  Instead, Congress and President Obama forced consumers to buy them, and they are pushing health insurance premiums higher.

Another category of “protections” are actually just price controls.  Beginning this fall, ObamaCare will force insurers to cover minors with expensive conditions and at the same time charge those families far less than the costs they impose on the insurer.  Beginning in 2014, similar price controls will govern the entire market.  Insurers will respond by avoiding, mistreating, and dumping sick people, because that’s what these price controls reward.  Harvard health economist David Cutler, a sometime-advisor to President Obama, finds that health plans that provide quality care to the sick go out of business in the presence of those price controls.  If you think insurers mistreat the sick now, just wait until ObamaCare takes hold.  Along the way, ObamaCare’s price controls will increase premiums for young and healthy Americans.

Rather than take responsibility for its own law, the Obama administration is scapegoating insurance companies.  According to The New York Times, “The White House is concerned that health insurers will blame the new law for increases in premiums that are intended to maximize profits rather than covering claims.”  We’ve seen this before.  Massachusetts enacted a nearly identical law, which also caused premiums to rise.  State officials responded by imposing premium caps (more price controls!), which will force insurers to ration care.  As Massachusetts’ Deputy Commission for Financial Analysis at the Massachusetts Division of Insurance put it, premium caps will be a “train wreck.”

Meanwhile, “The administration worries that escalating premiums will force more people drop their policies before the law is fully implemented,” writes the Associated Press.  The administration is right to worry.  ObamaCare is already increasing premiums, and in 2014, it will force insurers to cover you at standard rates even if you get sick, which creates an even bigger incentive to drop coverage.

Hmm…there’s gotta be someone the administration can blame for that, too.