Archives: 10/2010

A Thousand Cuts

That’s the title of a recent paper from the liberal Center for American Progress, which attempts to demonstrate “what reducing the federal budget deficit through large spending cuts could really look like.”

The authors, Michael Ettlinger and Michael Linden, issue a challenge that I whole-heartedly embrace:

By showing sets of specific spending cuts we hope to deepen the discussion of where deficit reduction is going to come from. The challenge we issue is this: If you think all or most of the deficit problem should be dealt with on the spending side, are you then willing to own the cuts we outline? If not, then it’s time to go public with what your cuts are, with at least the same level of precision we do—no gimmicks, “sunsets,” or other games. No infomercial claims that you’ve got a magic elixir that gets the same results for half the money.

My colleague Chris Edwards anticipated this challenge with his 2005 book Downsizing the Federal Government. The book led to the creation of Cato’s Downsizing Government website, which is going department-by-department to outline specific — and substantial — spending cut recommendations.

The CAP authors lay out specific spending cuts of $255 billion in fiscal year 2015, which is the projected figure necessary to achieve a balanced “primary budget” in that year. (The primary budget is total spending minus outlays for servicing the federal debt). The White House’s most recent projections show “primary” spending of $3.8 trillion in FY2015, so we’re talking about an overall reduction of about 7 percent.

Ettlinger and Linden acknowledge that their proposed spending cuts will invite criticism. For instance, the authors only conjure up $57 billion in spending cuts from “entitlement” programs, which are the chief drivers of our unsustainable fiscal direction. More than 40 percent of the cuts come from defense. While many conservatives will have a problem with defense cuts, it’s definitely something Cato scholars support. In fact, the proposed cuts match up well with defense cuts proposed in a new policy analysis written by my colleagues Ben Friedman and Chris Preble.

Where we part ways with the authors of the paper is the presumption that “most spending cuts are painful, and in some ways, harmful.” There are two sides to the spending coin. As the Downsizing website repeatedly demonstrates, government spending not only inflicts pain on those who are forced to pay for it, but it also has harmful effects on the economy and even those who it purportedly helps.

Ettlinger and Linden also make a claim that is both subjective and obvious: “The truth is that, contrary to popular wisdom, most federal government dollars go to good and popular things.”

Even if one accepts, for the sake of argument, that most federal spending goes to “good things,” there’s still the tiny little question of whether the government should undertake the spending. What about the possibility — we’d say reality — that there are superior private and voluntary alternatives to the federal government assuming responsibility for doing “good things”?

From a moral perspective, it’s important to remember that everything “good” the government does necessarily comes with a “bad” given that government forcibly takes from one to give to another.

The authors claim that federal dollars go to “popular things.” Of course, subsidies are always popular with the recipients. Farm subsidies are popular with farmers, weapons programs are popular with defense contractors, and subsidized student loans are popular with students. As Frederic Bastiat so succinctly put it, “The state is the great fictitious entity by which everyone seeks to live at the expense of everyone else.”

Regardless, Ettlinger and Linden deserve credit for moving the ball in the direction of a serious debate on which government programs can be cut. As they correctly note, the position that all we need is “just a little belt-tightening and reductions in wasteful government spending” is “nonsense.”

Taxpayers Against Earmarks Makes its Debut

Taxpayers Against Earmarks is a new effort to rid the federal legislative process of some of its most acute horse-trading: earmarks. Find it at the cleverly named URL, EndingSpending.com.  

There’s little doubt that many spending earmarks are part of a subtle—or not-so-subtle—quid pro quo in which federal legislators buy votes by directing funds to favored home-state or home-district interests. Taxpayers Against Earmarks has a well-produced web site that invites people to sign up and join the anti-earmark effort.

Earmarked spending is a small part of the overall budget, of course, but earmarking is emblematic of the “favor factory” that Congress has become as the federal budget and federal power have bloated. Federal spending is appropriate in the small number of cases when it provides national public goods that benefit the country as a whole, but refurbishing local museums, funding projects at state universities, and requiring the military to buy from a particular defense contractor do not benefit the general welfare. Taxpayers Against Earmarks is working to begin the process of getting federal spending under control.

Sebelius: Anonymous Political Speech ‘Dangerous’

In all of Washington, is there a greater enemy of free speech than Secretary of Health and Human Services Kathleen Sebelius?

  • Her department is forcing millions of Americans to finance speech that they oppose, by using taxpayer dollars to broadcast (misleading) television ads that promote ObamaCare.
  • She is using the powers granted her under ObamaCare to threaten insurers with bankruptcy if they publicly disagree with her about the law’s cost.
  • Now, she is decrying the growth of anonymous political speech in congressional campaigns.

Would that coerced speech, or government suppression of speech, troubled her as much as anonymous speech.

ObamaCare Prods Yet Another Insurer to Flee the Market

First, a dozen insurers said they would stop writing child-only health insurance policies.  Now, according to the Wall Street Journal:

By forcing the exit of Principal Financial Group — which ran a profitable, $1.6 billion health insurance business — ObamaCare has now left 840,000 Americans to find another source of coverage.

According to The New York Times, other insurers may soon follow:

More insurers are likely to follow Principal’s lead, especially as they try to meet the new rules that require plans to spend at least 80 cents of every dollar they collect in premiums on the welfare of their customers…

“It’s just going to drive the little guys out,” said Robert Laszewski, a health policy consultant in Alexandria, Va. Smaller players like Principal in states like Iowa, Missouri and elsewhere will not be able to compete because they do not have the resources and economies of scale of players like UnitedHealth, which is among the nation’s largest health insurers.

Mr. Laszewski is worried that the ensuing concentration is likely to lead to higher prices because large players will no longer face the competition from the smaller plans. “It’s just the UnitedHealthcare full employment act,” he said.

Let’s remember what President Obama told a joint session of Congress just one year ago:

So let me set the record straight here.  My guiding principle is, and always has been, that consumers do better when there is choice and competition.  That’s how the market works… And without competition, the price of insurance goes up and quality goes down.  And it makes it easier for insurance companies to treat their customers badly – by cherry-picking the healthiest individuals and trying to drop the sickest, by overcharging small businesses who have no leverage, and by jacking up rates.

Everybody got that?

Krauthammer Misreads History

Charles Krauthammer calls same-sex marriage “the most radical redefinition of marriage in human history.” Really? Some might say that ending “till death do us part” was more radical. And maybe ending the requirement that the bride promise to “love, honor, and obey.” And how about the end of polygamy? Polygamy was probably the most common marital system in the broad sweep of human history, but now it is virtually unknown in the Western world; indeed, ahistorical conservatives warn that allowing two people of the same sex to make a vow of marriage could lead to polygamy.

More currently, I would suggest that the truly radical redefinition of marriage is the revolution over the past generation in the idea that people should marry before they cohabit or have children. Barely a generation ago cohabitation simply wasn’t acceptable; now it  is just assumed. Out-of-wedlock pregnancy is celebrated on the cover of People and no one seems to much care. In 2009, for the first time, more 25- to 34-year-olds were unmarried than married. A writer as smart as Krauthammer should be able to see that that gay liberation and gay marriage are a product, not a cause, of the unprecedented redefinition of sex, marriage, and childrearing.

But like socially conservative politicians, Krauthammer is not about to confront his friends, colleagues, and fans by denouncing that radical redefinition of marriage. Sensing discomfort with rapid social changes, he shouts “Look over there!”

Reducing the incidence of unwed motherhood, divorce, fatherlessness, welfare, and crime would be good for society. But it’s not easy to figure out what to do. That’s why social conservatives point to a real problem and then offer phony solutions.