Archives: January, 2011

This Week in Government Failure

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

  • Republican conservatives in the House propose spending cuts.
  • Government health care in 1798.
  • The president’s decision to ignore the need for Social Security reform brings to mind a song from Monty Python and the Holy Grail.
  • Freezing nondefense discretionary spending at the levels specified or implied by Republicans and Democrats is only a start toward needed reforms in the federal budget.
  • The U.S. Postal Service needs to adjust to the times, but congressional meddling makes the task nearly impossible.

Karl Rove’s Big-Government Myth

Karl Rove, the architect of Republican victories in 2000 and 2004 and Democratic victories in 2006 and 2008, denounces President Obama’s “spending binge” and “liberal activism” as described in the State of the Union address. The Wall Street Journal’s tagline on the column is, “On Tuesday, Republicans offered an alternative to the president’s big-government vision.” What Rove omits is that he and President Bush started the spending binge, delivered big government, and indeed came into office with a big-government vision, as Ed Crane pointed out in 1999.

Just take a look at the analysis in Rove’s Wall Street Journal column:

Most of his hour-long speech was a paean to liberal activism, as the president called for redoubling outlays on high-speed rail and “countless” green energy jobs.

Liberal boondogglery indeed. But Rove’s former colleague, White House speechwriter Michael Gerson, wrote on the same day in his Washington Post column:

 In his 2006 State of the Union address, which I helped write, President George W. Bush proposed a 22 percent increase in clean-energy research at the Energy Department, a doubling of basic research in the physical sciences and the training of 70,000 high school teachers to instruct Advanced Placement courses in math and science. I have no idea if these “investments” passed or made much difference. I doubt anyone knows.

Green nonsense is rampant in Washington.

Rove criticizes Obama for

a federal budget that’s increased 25% in two years, raising government’s share of GDP to 25% from roughly 20%.

Obama is a world-class spender. But spending increased 83 percent during Bush’s presidency, from $1.863 trillion to $3.414 trillion. He increased federal spending faster than any president since Lyndon Johnson. And yes, Obama is pushing the government’s share of GDP up; but Bush increased the federal government’s share of GDP by 2.2 percentage points, before the financial crisis, the bailouts, and TARP.

Rove writes:

The challenge is about more than budgets and debt. It is about government’s basic purposes and its role in our lives. If we don’t act soon, the nature of American society will change in deep, lasting ways.

Yes, that is the real problem. I have written critically of Obama’s “sweeping statist agenda.” But the Bush administration gave us stepped-up federal intrusions into our local schools, the biggest expansion of entitlements in 40 years, a proposed constitutional amendment to nationalize marriage law, unconstitutional restrictions on core political speech, intrusion of the federal government into Terri Schiavo’s hospital room, and, in the words of Gene Healy and Timothy Lynch,

a view of federal power that is astonishingly broad, a view that includes a federal government empowered to regulate core political speech — and restrict it greatly when it counts the most: in the days before a federal election;  a president who cannot be restrained, through validly enacted statutes, from pursuing any tactic he believes to be effective in the war on terror;  a president who has the inherent constitutional authority to designate American citizens suspected of terrorist activity as “enemy combatants,” strip them of any constitutional protection, and lock them up without charges for the duration of the war on terror — in other words, perhaps forever; and  a federal government with the power to supervise virtually every aspect of American life, from kindergarten, to marriage, to the grave.

Bush and Rove, too, changed American society in deep and lasting ways.

Rove writes that Paul Ryan, the new Republican chair of the House Budget Committee, “knows that reforming these programs, especially Medicare, is the only path to fiscal sanity and economic growth.” Too bad the Bush administration made the Medicare problem $18 trillion worse.

Rove writes that

the debate about the role and purpose of government has been joined in a way America hasn’t seen in three decades.

Let’s hope so. We at Cato have been trying to have that debate for years, including Ed Crane’s 1999 critique of the Bush-Rove big-government vision and Michael Tanner’s 2007 book, Leviathan on the Right: How Big-Government Conservatism Brought Down the Republican Revolution. And certainly Rove’s comrade-in-arms Gerson has been vigorously arguing against the limited-government libertarian vision that opposes Bush-Obama statism.

Finally, Rove reminds us:

The total debt was $10.6 trillion before [Obama’s] inaugural and $14.2 trillion today.

True. President Obama is increasing deficits and debt even faster than President Bush, under whom the national debt rose by $4.9 trillion. But it takes a lot of chutzpah for the architect of the biggest debt increase ever to criticize the guy who comes along and tops the record.

Surely the Wall Street Journal can find more credible critics of President Obama’s big-government vision than people who ran the “big government disaster” that was the Bush administration.

Egyptian Government Attacks Egypt’s Internet

In response to civil unrest, the Egyptian government appears to have ordered service providers to shut down all international connections to the Internet. According to the blog post at the link just above, Egypt’s four main ISPs have cut off their connections to the outside world. Specifically, their “BGP routes were withdrawn.” The Border Gateway Protocol is what most Internet service providers use to establish routing between one another, so that Internet traffic flows among them.

An attack on BGP is one of few potential sources of global shock cited by an OECD report I noted here the other day. The report almost certainly imagined a technical attack by rogue actors but, assuming current reporting to be true, the source of this attack is a government exercising coercion over Internet service providers within its jursidiction. Nothing I pick up suggests that Egypt’s attack on its own Internet will have spillover effects, but it does suggest some important policy concerns.

The U.S. government has proposed both directly and indirectly to centralize control over U.S. Internet service providers. C|Net’s Declan McCullagh reports that an “Internet kill switch” proposal championed by by Sens. Joseph Lieberman (I-Conn.) and Susan Collins (R-Maine) will be reintroduced in the new Congress very soon. The idea is to give “kill switch” authority to the government for use in responding to some kind of “cyberemergency.”

We see here that a government with “kill switch” power will use it when the “emergency” is a challenge to its authority. When done in good faith, flipping an Internet “kill switch” would be stupid and self-destructive, tantamount to an auto-immune reaction that compounds the damage from a cybersecurity incident. The more likely use of “kill switch” authority would be bad faith, as the Egyptian government illustrates, to suppress speech and assembly rights.

In the person of the Federal Communications Commission, the U.S. government has also proposed to bring Internet service providers under a regulatory umbrella that it could then use for censorship or protest suppression in the future. On the TechLiberationFront blog, Larry Downes has recently completed a five-part analysis of the government’s regulatory plan (1, 2, 3, 4, 5). The intention of its proponents is in no way to give the government this kind of authority, but government power is not always used as intended, and there is plenty of scholarship to show that government agencies use their power to achieve goals that are non-statutory and even unconstitutional.

The D.C. area’s surfeit of recent weather caused the cancellation yesterday of a book event I was to participate in, discussing Evgeny Morozov’s The Net Delusion: The Dark Side of Internet Freedom. I don’t know that he makes the case overwhelmingly, but Morozov argues that governments are ably using the Internet to stifle freedom movements.

Events going on here in the United States right now could position the U.S. government to exercise the kind of authority we might look down our noses at Egypt for practicing. The lesson from the Egypt story—what we know of it so far—is that eternal vigilance is the price of freedom.

Warning Without Color

Jim Harper noted yesterday that the Department of Homeland Security (after lengthy review) has decided to scrap its color-coded alert system. The change is long overdue–the alerts implied, absurdly, that danger was equally distributed across the nation. The fact that the Department never used the blue and green threat levels (general and low risk), which most accurately describe the true danger most Americans face from terrorism, showed the systems’ inherent threat inflation. Eventually, everyone started ignoring the threat level, officials stopped changing it, and system became a charade.

Jim argues that, in place of the colors, the Department should inform “the public fully about threats and risks known to the U.S. government,” treating us like adults with a shared responsibility for protecting ourselves. According to a report from the National Journal’s Chris Storm, DHS agrees, sort of.  Storm links to a DHS document on the new warning policy, which states:

  • DHS will implement a new system that is built on a clear and simple premise: When a threat develops that could impact the public, we will tell you.  We will provide whatever information we can so you know how to protect yourselves, your families, and your communities.
  • The new system reflects the reality that we must always be on alert and be ready.  When we have information about a specific, credible threat, we will issue a formal alert providing as much information as we can.
  • Depending on the nature of the threat, the alert may be limited to a particular audience, like law enforcement, or a segment of the private sector, like shopping malls or hotels.
  • Or, the alert may be issued more broadly to the American people, distributed — through a statement from DHS — by the news media and social media channels.
  • The alerts will be specific to the threat.  They may ask you to take certain actions, or to look for specific suspicious behavior.  And they will have an end date.
  • This new system is built on the common-sense belief that we are all in this together — that we all have a role to play — and it was developed in that same collaborative spirit.

The first bullet point embraces maximum information sharing, but things get hazier after that. In the end, it’s not clear when DHS will warn all of us, warn some of us, or just warn police. Nor do we get much indication about what information warnings will include. Unlike Jim, though, I think that’s fine. Actually, there are a couple reasons why I hope DHS winds up being tighter-lipped.

First, most threat warnings are false alarms. A government that publicized every warning received by intelligence agencies would swamp the public with confusing and frightening information that people would have to learn to ignore. Better to reveal only intelligence that has been vetted.

Second, the theory of providing the public maximum information about danger (often a cover for the CYA imperative to have warned the public if an attack does occur) in practice easily degenerates into vague exhortations to be vigilant, which are almost as bad as the color-coded threat warnings. The difficulty is that the threat information is vague and that authorities worry that revealing too much detail will give away sources. The warning issued to Americans going to Europe last October, is an example, as I discussed here.

Given that such general warnings create false leads, cancelled travel, anxiety, and harassment, they may do more harm than good.  In response to this argument, people point to the vigilant airline passengers who subdued the shoe and underwear bombers or the Times Square vendors who called the cops after Faisal’s Shazhad’s car failed to explode. But, at least since 2001, we hardly need the government to tell us to respond to people lighting their underwear on fire on international flights or cars burnings in Times Square. The theory that increased public vigilance is always a good thing needs testing.

Jeff McKay: A Limp Rag Masquerading as a Terror Warrior

This afternoon I briefly attended a meeting of the Washington Metropolitan Area Transit Authority board to comment on the question whether there should be random bag searches in the D.C. area’s subway system. A variety of other liberty loving D.C.-area residents spoke up against bag searches, noting the weakness of the practice in terms of security, the privacy consequences, and the insult to Metro riders in treating all as suspects. The chairman of the Riders Advisory Council asked that the program be suspended.

Along with restating the security weakness of random bag searches—it simply transfers risk from one station to another, from the subway to busses, or from the Metro system to other infrastructure—I emphasized the strategic consequences of the policy:

Terrorists try to instill fear and drive victim states to over-reaction. They try to knock us off our game. The appropriate response is not to give in to fear-based impulses. Obviously, we can and do secure what can cost-effectively be secured. And where infrastructure can’t be secured specifically, many other layers of security are protecting the society as a whole—aware people, ordinary law enforcement, targeted lawful investigation of terror suspects, and international intelligence and diplomatic efforts.

WMATA can play a part in our security, but in a very different way than by making a great show of desperately searching passengers. Refusing the bag search policy can signal to D.C. area residents and the nation that we are relatively secure, because we are. Al Qaeda is on the run, and the franchises it inspired are generally incompetent.

When America’s capital city abandons bag searching, it will be a small but important signal that terrorism doesn’t knock us off our game. Consistency in this message over time will weaken terrorism and ultimately reduce terror attacks from their already low numbers.

There will never be perfect security, but security measures that cost more than they benefit our security make us worse off, not better off. They make us victims of terrorism’s strategic logic.

Fairfax County Supervisor Jeff McKay disagrees. An alternate member of the WMATA board, he is the picture of the politician  in thrall to terrorism. During the discussion of the Riders Advisory Council report, he stated—as a moral obligation, no less—that he should assume the existence of substantial threats to the Metro system because some authorities claim secret knowledge to that effect.

Whether there are threats or not, this does not respond at all to the point that random bag searches would not address them. Again, they transfer risk from one Metro station to another, from Metro stations to Metro busses, or from the Metro system to other infrastructure in the D.C. area.

We often joke about politicians who say “something must be done; this is something; this must be done,” but when you see it live and in person, it’s really stupid.

McKay seemed to take righteous pride in abdicating his responsibility to understand basic security principles as they pertain to the Metro system. He did note the bind that the board is in. They’re damned if they do bag searches because of the complaints from the community, and they’re damned if they don’t because something bad might happen.

McKay’s choice is to spend the money of District-area governments and undercut the civil liberties of Metro riders so that, in the unlikely event a terror attack occurs, his political career is protected. He can say “I tried to stop it with bag searches.” Never mind that it was an ineffective measure.

McKay thinks he’s doing the right thing, but that doesn’t excuse his being a patsy to the terrorism strategy. He’s a limp rag, abdicating his security responsibility while pretending that he fights terrorism.

New CBO Numbers Re-Confirm that Balancing the Budget Is Simple with Modest Fiscal Restraint

Many of the politicians in Washington, including President Obama during his State of the Union address, piously tell us that there is no way to balance the budget without tax increases. Trying to get rid of red ink without higher taxes, they tell us, would require “savage” and “draconian” budget cuts.

I would like to slash the budget and free up resources for private-sector growth, so that sounds good to me. But what’s the truth?

The Congressional Budget Office has just released its 10-year projections for the budget, so I crunched the numbers to determine what it would take to balance the budget without tax hikes. Much to nobody’s surprise, the politicians are not telling the truth.

The chart below shows that revenues are expected to grow (because of factors such as inflation, more population, and economic expansion) by more than 7 percent each year. Balancing the budget is simple so long as politicians increase spending at a slower rate. If they freeze the budget, we almost balance the budget by 2017. If federal spending is capped so it grows 1 percent each year, the budget is balanced in 2019. And if the crowd in Washington can limit spending growth to about 2 percent each year, red ink almost disappears in just 10 years.

These numbers, incidentally, assume that the 2001 and 2003 tax cuts are made permanent (they are now scheduled to expire in two years). They also assume that the AMT is adjusted for inflation, so the chart shows that we can balance the budget without any increase in the tax burden.

I did these calculations last year, and found the same results. And I also examined how we balanced the budget in the 1990s and found that spending restraint was the key. The combination of a GOP Congress and Bill Clinton in the White House led to a four-year period of government spending growing by an average of just 2.9 percent each year.

We also have international evidence showing that spending restraint - not higher taxes - is the key to balancing the budget. New Zealand got rid of a big budget deficit in the 1990s with a five-year spending freeze. Canada also got rid of red ink that decade with a five-year period where spending grew by an average of only 1 percent per year. And Ireland slashed its deficit in the late 1980s by 10 percentage points of GDP with a four-year spending freeze.

No wonder international bureaucracies such as the International Monetary fund and European Central Bank are producing research showing that spending discipline is the right approach.

This video provides all the details.

The Real Scandal of Farm Subsidies

When the Washington Post published a story in 2007 about how dead farmers had received farm subsidies to the tune of over $1bn, most people were horrified (even “farm subsidy moderate” Rand Paul thought they should go!). Although the article made clear that “most estates are allowed to collect farm payments for up to two years after an owner’s death,” and that the payments weren’t necessarily fraudulent, outrage ensued.

But a follow-up investigation by the USDA has found that all but about $1 million of the payments were completely above board. From the Associated Press:

A 2007 report that the federal government had paid $1.1 billion in subsidies to dead farmers sparked an outcry and has been frequently cited by critics who considered the payments a blatant example of wasteful spending. But a follow-up that found no fraud and determined nearly all the subsidies paid on behalf of dead farmers in recent years were proper has received little attention.

According to the U.S. Department of Agriculture’s Farm Service Agency, just a little over $1 million out of the billions of dollars paid in subsidies in 2009 went to estates or business entities that weren’t entitled to them.

Very little money is going to individuals who have not earned that money. Very little is being paid in error because a farmer has passed away,” FSA Administrator Jonathan Coppess told The Associated Press. [emphasis mine]

Don’t you just love how Mr Coppess uses the word “earned” there?

That’s the real scandal of farm subsidies, readers. Not that they are fraudulent (although that is of course an outrage), but that they are, for the most part, perfectly legal.