Archives: July, 2011

‘Gang of Six’ Plan Is Lousy

My colleague Dan Mitchell discussed the good, the bad, and the ugly in the deficit reduction plan released by the bipartisan group of senators known as the “Gang of Six.”  As Dan noted, the plan is more of an outline and a complete assessment isn’t possible until more details emerge. However, the fact that President Obama immediately embraced the plan ought to tell proponents of limited government all they need to know.

Here are some random thoughts on the plan:

  • There’s nothing impressive about the “immediate” $500 billion in deficit reduction. That figure includes revenue increases, so it’s not even $500 billion in spending cuts. And I’m not sure why they say “immediate” when they probably mean that the reductions would occur over the next several fiscal years. The deficit alone for next year will probably be at least $1 trillion.
  • The plan promises about $2.5 trillion in spending reductions over 10 years. As I’ve been pointing out, $2 trillion in spending cuts isn’t a lot when compared to the $46 trillion the government is projected to spend over the next decade. See this Cato video for more.
  • Tax reform is fine; more revenue for the government is not. Transferring more resources from the private sector to the government is a loser for both economic and individual liberty. In addition, the plan’s requirement that tax reform “maintain or improve the progressivity of the tax code” would result in more Americans viewing the federal government’s spending programs as a “free lunch.”
  • My anti-tax credentials are beyond question: I equate taxation with theft. But I don’t like debt-financed spending any more than I like tax-financed spending. Had anti-tax advocates and Republicans put the same amount of effort into restraining spending during the Bush/Republican Congress years as they did in cutting taxes, we might not be facing the prospect of a large tax increase today. Unfortunately, I see little evidence that that lesson has been learned.
  • The plan does almost nothing to rein in the scope of federal government’s activities. It doesn’t seem to matter which party or ideological faction on Capitol Hill releases a plan – conservatives, moderates, and liberals all apparently assume that the federal government should continue doing everything that it currently does. Generally speaking, Democrats want more tax revenue to maintain an expansive government. Republicans talk about smaller government, but only a handful can articulate exactly what programs or functions they’d eliminate. It’s more common to hear Republicans blubber on about “reducing waste, fraud, and abuse” in government programs and “saving” the pillars of the welfare state (Social Security and Medicare) for “future generations.”
  • Our global military presence would make a Roman emperor blush and our Founding Fathers roll over in their graves, but there’s nothing in this plan to suggest that the military-industrial complex faces any threat.

In sum, if you’re hoping that debt reduction will be brought about through a reduction in the federal warfare/welfare state, you’re going to have to wait for a different plan. And the sad truth is that no such plan is going to materialize anytime soon – at least not one that will get through Congress and signed by the president. But look on the bright side – we’re not Greece! Not yet.

Guns in D.C.

Three years after the Supreme Court’s  landmark Heller ruling, which declared Washington, D.C.’s gun control laws unconstitutional, city officials keep fighting.  Under pressure from another lawsuit concerning a de facto ban, the city says that guns may now be purchased at the police station.  No details yet on whether residents will have to change into orange jump suits and wait in the holding cells while the police process the paperwork.

More here.

Budget Plans: Gang of Six and Senator Coburn

The “Gang of Six” senators has released an outline of budget reforms that would supposedly reduce deficits by $3.7 trillion over 10 years. Revenues would rise by at least $1 trillion, while spending would be theoretically trimmed by various procedural mechanisms. The plan promises to “strengthen the safety net,” “maintain investments,” and “maintain the basic structure” of Medicare and Medicaid, which doesn’t sound very reform-minded to me.

The Gang of Six plan is a grander version of Sen. Mitch McConnell’s recent debt-limit proposal, which was aimed at putting off any spending cuts. The Gang outline has a few specific cuts, but the document mainly consists of promises to restrain spending and raise taxes in the future.

I’m surprised that Sen. Tom Coburn supports the Gang plan because his office has just released a massive study chock-full of specific spending-cut ideas. The Gang plan is all about avoiding specifics, while Coburn’s plan has 621 pages of details.

Coburn’s “Back in Black” plan would reduce deficits by $9 trillion over the next decade. The plan includes some tax increases, but the core of the document is a line-by-line analysis of every department’s budget, with lists of programs to cut and terminate. The plan includes a wealth of useful information that will aid policymakers interested in cutting spending for years to come.

So congratulations to Roland, Joelle, and the whole Coburn team for their late nights spent pouring through the budget, and for their great job documenting their findings with more than 3,000 endnotes.

Every Senate and House office should perform a similar exercise of proposing specific cuts. The government faces a debt crisis, yet only Coburn, Sen. Rand Paul, and perhaps a few others in Congress have put any effort into identifying unneeded programs.

Look on the official websites of most members of Congress and you will see discussions in support of spending on education, seniors, energy, research, highways and many other activities. When members are in front of TV cameras, they sound like they take the debt crisis seriously, but most congressional websites reveal a different mindset where federal spending is always wonderful and helpful to society.

Coburn’s staff tells me that about a dozen staffers chipped in on its Back in Black effort in recent months. If other House and Senate offices went through such an exercise, it would help members clarify their positions about the role of government and help them think about spending trade-offs.

My summer homework assignment for every congressional office is to go through a Coburn/Paul-style budget downsizing exercise. That could lead to more serious spending debates and more concrete proposals than the generally meaningless bullets points issued by the Gang of Six.

The Risks of Playground Safety

New York Times science writer (and longtime libertarian favorite) John Tierney had a great piece yesterday under the headline, “Can a Playground Be Too Safe?” As Tierney observes:

The old tall jungle gyms and slides disappeared from most American playgrounds across the country in recent decades because of parental concerns, federal guidelines, new safety standards set by manufacturers and — the most frequently cited factor — fear of lawsuits.

Some researchers argue that the safety benefits of the revamped designs have been oversold; kids can break bones falling from not-so-high slides onto relatively soft surfaces, for example. One researcher outlines what sounds like a teeter-totter version of the Peltzman hypothesis: “If children and parents believe they are in an environment which is safer than it actually is, they will take more risks.”

Moreover, playgrounds with an element of genuine, unmistakable risk can offer children “the benefits of conquering fear and developing a sense of mastery,” thus helping them develop into adults who are venturesome rather than timid. Tierney closes the piece with a perfect pair of quotes from a Bronx 10-year-old and her mother:

“I was scared at first,” she explained. “But my mother said if you don’t try, you’ll never know if you could do it. So I took a chance and kept going. At the top I felt very proud.” As she headed back for another climb, her mother, Orkidia Rojas, looked on from a bench and considered the pros and cons of this unfamiliar equipment.

“It’s fun,” she said. “I’d like to see it in our playground. Why not? It’s kind of dangerous, I know, but if you just think about danger you’re never going to get ahead in life.”

If only the judges and legal academics who’ve made war on principles like “assumption of risk” in liability law were as insightful.

Medicare/Medicaid Fraud Shows Why the Ryan Roadmap Belongs in Debt-Limit Negotiations

Cato’s crack filmmakers have just released this video based on my National Review article, “Entitlement Bandits – How the Ryan Plan Would Curb Medicare and Medicaid Fraud.”

The message is simple.  Medicare and Medicaid don’t just tolerate massive amounts of fraud.  They protect it.  Members of Congress care so little about fraud that they can’t be bothered to measure the problem properly and even block effective anti-fraud efforts.  It’s not because they are evil.  They are simply following the incentives the political system creates.  The result is that the rate of fraud in these programs is hundreds of times larger than in credit cards, for example.

Short of repeal, nothing is going to alter those incentives in a way that would bring such fraud down to the levels tolerated in the private sector.  Nevertheless, Paul Ryan’s budget proposal offers the best hope of reducing fraud in these programs from its current level of $100 billion or more.  Which is why the Ryan plan belongs on the table during the current debt-limit negotiations.

Tim Geithner’s Alternate Reality

When I turned to today’s Wall Street Journal editoral page, I thought it had been replaced by the Onion, for here was Treasury Secretary Tim Geithner offering a version of history that bears little resemblence to the truth.  But then again this is the same guy who claimed he’d never been a bank regulator despite having been President of the NY Federal Reserve (before and during the crisis).

Maybe the most humorous lines:   “The president made two key decisions…second, he asked us to write draft legislation rather than propose broad principles. The president did not want the new rules to end up being written by those who brought us to the edge of catastrophic financial failure.”  Then why in the world was Mr. Geithner included in the writing of the bill.  Did Obama forget Geithner headed the most important regulator of Wall Street both before and during the crisis?  And if your standard is not wanting those who “brought us to the edge of catastrophic financial failure,” then why were Chris Dodd and Barney Frank allowed anywhere near the bill?  Seriously.

Almost as bad was Geithner’s claim that “we have started the process of winding down Fannie Mae and Freddie Mac and reforming the overall mortgage market.”  Really?  How so?  Oh, that’s right: some useless, empty, bereft-of-detail report sent to Congress.  Again, this is the same guy who chose to raise the cap on potential Fannie and Freddie losses, placing the taxpayer at the potential loss of hundreds of billions.

Another fantasy:  “While many misperceive the investment made in banks under the Troubled Asset Relief Program as an unfair and unjust gift to the financial sector, we have already turned a profit on these investments, and we may do so on all the government intervention programs.”  Wake up, Tim: the TARP was a bank bailout, and we are nowhere near recovering the $160 billion so far put into Fannie and Freddie.  We are also losing money on the auto bailouts. 

I could go on, but it’s not necessary.  Why the President continues to support Geithner when almost no one, of any party, takes the guy seriously anymore, is beyond me.  For there to be any hope of real, substantial reform of our financial system, those who “brought us to the edge of catastrophic financial failure” need to go.  And the place to start is with Geithner.

DHS’ Contempt of Congress and Constitution

Homeland Security Newswire reports:

Last week, DHS officials chastised Representative Jason Chaffetz (R – Utah) for disclosing sensitive security information to the press.

In a letter, Joseph Maher, DHS’s deputy counsel, scolded Chaffetz, the chair of the House Subcommittee on National Security, Homeland Defense, and Foreign Operations, for openly discussing “sensitive security information” provided by the Transportation Security Administration(TSA). Maher wrote, “This document was marked as [Sensitive Security Information] and provided clear notice that unauthorized disclosures of the document violated federal law.”

The letter comes in response to Chaffetz’s comments last week that revealed that there have been more than 25,000 security breaches at U.S. airports since November 2001.

Take out your Constitutions, kids. There, in Article I, you’ll see the words that create the Congress and establish its authorities. Now go look for the language that authorizes a sprawling executive branch with agencies like the Department of Homeland Security. Enough searching will suggest to you that the DHS is a subordinate of Congress. It exists by the grace (and/or mistake) of the legislative branch of the government.

You’ll also see the Speech or Debate Clause, which bars Members of Congress from being “questioned in any other Place” for anything they say in Congress. The clause exists to insulate Members of Congress from outside authority trying to influence their deliberations—outside authorities like DHS deputy counsel Joseph Maher.

Did Representative Chaffetz reveal SSI, or “sensitive security information”? So what? In my experience, that’s a designation that DHS officials throw around cheaply and easily. Here, it’s being used more to hide the agency’s failings than to protect the public.

Representative Chaffetz is entirely correct to air publicly the failings of the TSA. The more aware we are of the government’s security fakery, the more sensible will be our estimate of risks to airline security and how to respond to them.