Archives: 03/2013

Sequestration Is a Small Victory for Budget Hawks

The budget battles in Washington, D.C., are far from over. President Obama’s attempt to break the stalemate by reaching across the aisle and dining with GOP members two days in a row seems more about show than substance. 

The apparent lack of urgency to undo the cuts underscores what we knew all along: the world did not end under sequestration. Most of the cuts will be phased in over the next few months. The defense cuts amount to just 6.5 percent of total spending on national security (Pentagon base budget plus war costs). This is a pittance, and spending will still dwarf what we spent before 9/11. Those who claim that the cuts will undermine American security should explain how we managed to win the Cold War while spending much less, on average. (To learn more about proposals that would maintain a highly capable, but less costly, military, attend our event on March 14th.) 

There is still the possibility that most of this year’s cuts, or the caps on planned spending over the next decade, may not materialize. Congress could reverse the cuts in the future as part of a grand bargain. Or they could simply punt without one. Meanwhile, legislation is moving along that would allow the Pentagon and other agencies to implement the cuts with greater discretion across department programs. This is a good thing, potentially. Smarter cuts are desirable, but we should be on the lookout to ensure that Congress doesn’t simply legislate away any cuts, dumb or otherwise. 

Nonetheless, the fact that military spending actually declined is a small victory. But how will future battles play out? Are the neocons and their supporters in retreat? In a piece running today at Foreign Policy, I offer a cautionary note. Just because the fiscal hawks won this time doesn’t mean that they’ll win the next one, or the one after that: 

The defense contractors and special interests still have enormous firepower in Washington, and they’ve turned their attention to the “continuing resolution” that will fund the government for the remainder of the year. Meanwhile, the neoconservatives are single-minded and relentless. Their tenacity paid off in their bid to launch a war in Iraq and depose Saddam Hussein, but failed to stop Chuck Hagel’s nomination and eventual confirmation as secretary of defense.

The budget fight matters even more. A $470 billion military is more than sufficient to fight the wars the United States truly needs to fight, but not the wars that the neocons want to fight. The next phase in the fight over the Pentagon’s budget should focus less on how much the United States spends on defense, but rather why it spends so much. If we are going to give our military less than it expected to have three or four years ago, we need to think about asking it to do less.

Read the full article here.

‘Undergrads Required to Lobby for Obama Policy’—-Cont’d

As I noted in this space the other day, GWU law professor John Banzhaf on Monday sent out a press release boasting of having assigned undergrads to lobby for New York City-style soda bans or, alternatively, other ventures in “obesity policy.” Reactions include Katharine Mangu-Ward at Reason (“I’m gonna guess there aren’t a lot of libertarians in his class”), George Leef at Phi Beta Cons, and UCLA law professor Stephen Bainbridge:

I wonder what people would say if I made my students write letters to their congressman supporting Senator Shelby’s Dodd-Frank corrections bills? Actually, I don’t wonder. They’d say I was abusing my power. And they’d be right. Only someone blinded by their own self-righteous arrogance would fail to see the gross impropriety here.

Now Banzhaf has sent out another press release, which aside from tossing an inaccurate brickbat or two at my motivations for writing about him, takes care to specify—as his Monday press release did not—that students in the class are free to propose lobbying for at least some ideas that might count as deregulatory. The two examples he gives are as follows: “students could also ask legislators to reduce limits on the sale of items from food trucks [or] cut back on unnecessary food-related regulations.”

Whether liberty-minded students could actually get course credit for lobbying against food-related positions that Banzhaf favors—as distinct from seeking out some subtopic in the field where their views and his happen to coincide—remains unclear. If they are free to lobby against policies identified with the Obama administration and NYC’s Mayor Michael Bloomberg, then that makes utter nonsense of the headline bannered over the press release Banzhaf sent out on March 4: “Undergrads Required to Lobby for Obama Policy.” So which is it? 

[cross-posted, with some adaptation, from Overlawyered]

Challenge for Keynesian Anti-Sequester Hysterics, Part II: Why Did America’s Economy Boom When Reagan and Clinton Cut Spending?

Triggered by an appearance on Canadian TV, I asked yesterday why we should believe anti-sequester Keynesians. They want us to think that a very modest reduction in the growth of government spending will hurt the economy, yet Canada enjoyed rapid growth in the mid-1990s during a period of substantial budget restraint. I make a similar point in this debate with Robert Reich, noting that  the burden of government spending was reduced as a share of economic output during the relatively prosperous Reagan years and Clinton years:

Being a magnanimous person, I even told Robert he should take credit for the Clinton years since he was labor secretary. Amazingly, he didn’t take me up on my offer.

Crimes Against the State

William Wan writes in the Washington Post that in China

Citizens have been punished for crimes as trivial as writing an unflattering blog post about a local official.
Trivial indeed. Worse than trivial. Not crimes at all. Just normal speech in a free society.  But of course China isn’t a free society. Despite its moves toward markets and profits, China remains a one-party state still characterized by state ownership of the commanding heights of the economy. And that party is the Communist party, a party born to eradicate capitalism, a party that as it came to power in 1949 spoke of “the extinction of classes, state power and parties,” of “a socialist and communist society,” of the nationalization of private enterprise and the socialization of agriculture, of a “great and splendid socialist state” in Russia, and especially of “a powerful state apparatus” in the hands of a “people’s democratic dictatorship.” That’s a vision that doesn’t fit very well with “unflattering blog post[s] about a local official.” The problem is endemic to socialism. Robert Heilbroner, a distinguished American intellectual who called himself a socialist (though the New York Times declined to be so rude in its obituary), was admirably candid in explaining the place of dissent in a socialist society in a 1978 article in, well, Dissent:
Socialism … must depend for its economic direction on some form of planning, and for its culture on some form of commitment to the idea of a morally conscious collectivity… If tradition cannot, and the market system should not, underpin the socialist order, we are left with some form of command as the necessary means for securing its continuance and adaptation. Indeed, that is what planning means… The factories and stores and farms and shops of a socialist socioeconomic formation must be coordinated … and this coordination must entail obedience to a central plan… The rights of individuals to their Millian liberties [are] directly opposed to the basic social commitment to a deliberately embraced collective moral goal… Under socialism, every dissenting voice raises a threat similar to that raised under a democracy by those who preach antidemocracy.
That is, even an unflattering blog post about a local official threatens “the basic social commitment to a deliberately embraced collective moral goal” under the direction of “a powerful state apparatus” in the hands of a “people’s democratic dictatorship.” So we deplore China’s use of labor camps “as an expedient way to silence critics,” in the words of the Post, but we shouldn’t be surprised by it. Indeed, a front-page article in today’s Post on Hugo Chavez’s legacy refers to
the tenets of what Chavez called 21st-century socialism—intervening in the economy, putting state institutions under the executive’s control and corralling opponents and the press.
Sounds a lot like 20th-century socialism.

Challenge for Keynesian Anti-Sequester Hysterics, Part I: Why Did Canada’s Economy Boom When the Burden of Spending Was Sharply Reduced?

In this appearance on Canadian TV, I  debunk anti-sequester hysteria, pointing out that “automatic budget cuts” merely restrain government so that it grows $2.4 trillion over the next 10 years rather than $2.5 trillion.

I also point out that we shouldn’t worry about government employees getting a slight haircut since federal bureaucrats are overcompensated. Moreover, I warn that some agencies may deliberately try to inconvenience people in an attempt to extort more tax revenue.

But I think the most important point in the interview was the discussion of what happened in Canada in the 1990s.

This example is important because the Obama White House is making the Keynesian argument that a smaller burden of government spending somehow will translate into less growth and fewer jobs.

Nobody should believe them, of course, since they used this same discredited theory to justify the so-called stimulus and all their predictions were wildly wrong.

But the failed 2009 stimulus showed the bad things that happen when government spending rises, and maybe the big spenders want us to think the relationship doesn’t hold when government gets put on a diet?

Well, here’s some data from the International Monetary Fund showing that the Canadian economy enjoyed very strong growth when policymakers imposed a near-freeze on government outlays between 1992 and 1997. 

 

For more information on this remarkable period of fiscal restraint, as well as evidence of what happened in other nations that curtailed government spending, here’s a video with lots of additional information.

By the way, we also have a more recent example of successful budget reductions. Estonia and the other Baltic nations ignored Keynesian snake-oil when the financial crisis hit and instead imposed genuine spending cuts.

The result? Growth has recovered and these nations are doing much better than the European countries that decided that big tax hikes and/or Keynesian spending binges were the right approach.

Paul Krugman, not surprisingly, got this wrong.

Unlike Policymakers, Consumers Use Logic to Avoid Horsemeat

A scandal has recently erupted in Europe after it was discovered that horsemeat was being sold to consumers in processed foods claiming to be 100% beef. This is, of course, already blatantly illegal, but that hasn’t stopped regulators from trying to figure out how to increase their oversight of Europe’s already highly regulated food market.

Unfortunately, some policymakers have used this scandal to push for increased trade barriers within the European Union. Their preferred barrier is the increased use of mandatory country of origin labels. This policy ignores the fact that horsemeat can be passed off as beef in any country and that doing so is illegal in all of them.

Nevertheless, this call for labels reveals a justified concern that complex supply chains obscure relevant information from consumers. But, consumers don’t need protectionist mandates to solve their problems; a little common sense will do just fine. The Scottish Farmer, an advocacy group for Scottish agriculture, reports that 92% of local butcher shops in Scotland have reported increased patronage since the horsemeat scandal broke.

If complex supply chains are perceived as unreliable, consumers will forego the price benefits of frozen packaged food and choose to buy meat from a simpler and more transparent source. Such rational consumer behavior will likely do more to improve the quality of international supply chains than any tweak in complex regulatory oversight.

Mr. Paul Goes to Washington

C-SPAN footage of Rand Paul's filibusterAs Sen. Rand Paul acknowledged early on in his epic 13-hour speech Wednesday (highlights here), his decision to mount an old-fashioned, talk-till-you-drop filibuster of John Brennan’s confirmation as CIA director didn’t really have much to do with Brennan personally. But neither was it really, at a fundamental level, about the narrow question of whether the president can “drop a Hellfire missile on your cafe experience” as you sit sipping a latte on American soil. If any citizens were realistically worried about that prospect, Attorney General Eric Holder has (somewhat belatedly) answered that question in the negative, prompting Paul to declare victory on that front.

But as Wired’s Spencer Ackerman observes, the spectre of Predators over Starbucks actually served to spotlight the “extraordinary breadth of the legal claims that undergird the boundless, 11-plus-year ‘war on terrorism‘ “—and to frame a much broader and more wide-ranging critique of that “perpetual war,” in which Paul charged that Congress has abdicated its responsibilities to an unaccountable executive branch. In Paul’s view, “we shouldn’t be asking [the president] for drone memos”—documents laying out the legal basis for the CIA’s targeted killing program, which the administration has finally, grudgingly deigned to provide to Congress, though not the American public—”we should be giving him drone memos.” As if to highlight the erosion of statutory checks on the president’s counterterror authority, Sen. Lindsey Graham declared that, after all, the Authorization for the Use of Military Force passed after 9/11 made no exception for actions “in the United States”—even though Congress had specifically rejected a request to include that phrase in the authorization.

The broadly positive reaction to Paul’s filibuster suggests, to me at least, that many Americans now fall outside the bipartisan Washington consensus that there’s little need for serious congressional scrutiny or debate when it comes to the War on Terror, and are relieved to hear that dissatisfaction echoed on the Senate floor. No longer as terrorized or shell-shocked as we were a decade ago, perhaps we’re becoming less willing to accept assertions that the public has no business knowing how and when the president may authorize secret killings in countries where we are not formally at war. If we want to get really radical, we may eventually begin to suggest there are proper constraints—if not constitutional, then at least moral—even on the killing of human beings who had the poor taste to be born in another country. We might question whether Americans are being well served when Congress spends less time debating the reauthorization of the Patriot Act or the FISA Amendments Act than Senator Paul did (literally) standing on principle Wednesday night.

Is it absurd to fear, as some of Paul’s colleagues charged, that the president will begin launching drone strikes on American soil? Probably. But the point is precisely that we live under an administration so unwilling to acknowledge meaningful limits on what they may do in the name of national security that it was an exercise in tooth-pulling just to get a public disavowal of an absurd scenario that the government’s anemic targeted killing “standards,” taken to their logical extreme, would not appear to foreclose. The crucial message we should take from Paul’s marathon oration, then, may be this: If it’s absurd to pose the question that inspired his filibuster, surely it’s far more absurd that we’ve arrived, after a decade of complacency about government secrecy and unfettered executive discretion in the sphere of counterterrorism, at a point where the question would need to be posed.