Tag: budget

Whose Brother’s Keeper? Obama Administration Denies School Choice

The Obama administration’s proposed budget for 2015 would continue unsustainable spending growth at more than twice the rate of inflation and hike taxes by more than $1 trillion. It also includes $69 billion in education spending, much of it on programs that are unconstitutional, proven to be ineffective, or both.

And yet, in one area where the federal government has the constitutional authority to fund and manage education policy—the District of Columbia school system—the Obama administration’s budget cuts all funding to the Opportunity Scholarship Program (OSP), which has proven to be much more effective than the government-run school monopoly.

The administration’s proposal is particularly puzzling in the wake of the president’s announcement last week that he is launching a $200 million charitable initiative called My Brother’s Keeper to help young, male minorities. As Dr. Patrick Wolf of the University of Arkansas points out today at the Choice Words blog, there is solid evidence that school choice programs tremendously aid exactly that population:

Three evaluations of private-school choice programs have followed enough students for sufficiently long to determine their effects on the rates of high-school graduation, college enrollment, or both. A 2010 evaluation of the District of Columbia Opportunity Scholarship Program that I led for the U.S. Department of Education found that students offered private-school choice by winning a random lottery graduated from high school at the rate of 82 percent, compared with 70 percent for the control group. The impact of actually using an Opportunity Scholarship was to increase the likelihood of graduation by 21 percentage points, from 70 percent to 91 percent. Over 90 percent of the participants in the study were African American, and almost all of the rest were Latino American.

Budget Battles Highlight Importance of Federalism

Despite the fears expressed in news stories, federal worker furloughs do not seem to have caused major economic disruptions. While the National Parks were closed, most government workers that provide useful services to citizens are at the state and local level, not the federal level.

Thus one advantage of our system of federalism is that budget battles at the national level do not shut down most government services that citizens actually use, such as police, fire, and the schools. Indeed, the ongoing political dysfunction at the federal level should be a warning to avoid any further centralization of American government in Washington.

At most, about 800,000 federal workers were furloughed, but that figure is small compared to the 16 million workers in state and local governments. The federal government spends far more than all state/local governments combined, but it has less than one-quarter of the number of workers. When you exclude the uniformed military, there are just one-eighth the number of federal workers as state/local workers. 

Outside of the military, the federal government is mainly just a giant cash transfer machine, vacuuming up taxpayer earnings and redistributing them to individuals, businesses, nonprofit groups, and state/local governments through more than 2,000 subsidy programs.

There are two charts below. The first chart shows that state/local government employment has soared since 1950. The second chart shows that federal civilian employment has been comparatively flat.

State/local bureaucracies have grown partly in order to handle the flood of cash and paperwork from the rising number of federal aid-to-state programs. The partial federal shutdown has threatened to turn off the cash spigot to some of these programs, but my view is that the more federal aid programs that we can terminate, the more that we will unhook local activities from future budget chaos in D.C. 

(Data notes: Federal “civilian” employment includes nonuniformed Pentagon workers, but it excludes postal workers. The data are from NIPA Table 6.5. and measured in full-time equivalents).

 

Philly Schools—Is Money Really the Problem?

House majority leader Eric Cantor is in Philadelphia today to pick up Attorney General Eric Holder’s gauntlet. Holder’s DOJ has filed suit to shut down a Louisiana school voucher program that serves an overwhelmingly African American population, on the grounds that… it’s bad for African Americans. Cantor vows to fight the DOJ if Holder doesn’t drop the suit, and he’s delivering his message at a Philly charter school serving mostly African American kids—one that has about six times as many applicants as it has places.

Apart from its proximity to DC, Philly might seem an odd location for Cantor’s presser, but the city of brotherly love is going through an educational drama of its own. The Philadelphia School District has had budget problems for years. It’s seen horrendous violence, plummeting enrollment, and commensurate staff layoffs and school closures. Most media accounts bewail lack of funding as the key problem. Salon.com recently ran a story with the subhead: “Pennsylvania’s right-wing governor drains public schools of basic funds.” CBSNews laments “the same old problem: not enough money.”

What those and all other Philly school district stories I’ve seen have in common is that they fail to say how much the district actually spends per pupil. Not having attended journalism school, I missed whatever class teaches education reporters to omit the single most important fact in their stories, so allow me try to fill in the blank.

A quick Google search reveals that Philly’s 2013-14 budget is $3.03 billion (p. 50), of which $862 million is for charter schools. The district serves 136,000 students in its regular public schools and another 63,000 in charter schools. So the regular public schools, the ones that are being “systematically murdered” by budget cuts, spend $15,941 per pupil. That’s about $3,000 more than the national average. It’s also $1,600 more than the day tuition at Temple University. The city’s charter schools receive about $2,300 less than the regular public schools.

That’s not to say that the district’s classrooms are fully stocked with supplies or that the city’s best teachers are paid what they’re worth. What it does suggest is that the cause of those problems may have less to do with the amount of funding available than with the way it is allocated. After all, Washington, DC spends around $29,000 per pupildouble what Philly does—and it performs worse in both reading and math by the 8th grade.

Please, Just Build Him a Statue

David Fahrentold reports in the Washington Post:

[P]ork, the habit of using taxpayer money for a legislator’s pet cause…. appears to be stronger even than death.

That’s clear from the story of the Robert C. Byrd Highway, a decades-old road project in West Virginia that had received earmarked funds for years from Sen. Robert C. Byrd (D-W.Va.), the longest-serving senator in history, who died in 2010.

The highway has been maligned as a wasteful road to nowhere. But, now, it has outlived earmarks. It has even outlived Byrd.

This year, with continued support from Sen. John D. Rockefeller IV (D-W.Va.) the highway got $40 million in federal money. It will need about that much every year, state officials say, until it’s finished in 2035.

Obama’s Hospital Admission

My latest, at National Review Online:

Buried deep within President Obama’s $3.77 trillion budget is a tiny little proposal to increase Medicaid spending by $360 million. In a budget as large as this one, $360 million is scarcely worth mentioning. It amounts to less than one-hundredth of one percent of total outlays. But this 0.01 percent is worth mentioning, because it proves the president’s health-care law will not work…

With this proposal, President Obama has admitted that:

1. The PPACA is not likely to reduce uncompensated care in 2014…

2. The PPACA won’t reduce the deficit…

3. Hospitals can stop crying poverty…

4. States don’t need to expand Medicaid to protect hospitals.

The Washington Post reports that rescission of the DSH cuts “could make it a bit easier for states not to expand the Medicaid program. If they know the additional dollars are coming in, there’s a bit less worry about turning down the Medicaid expansion funds.” At the same time, the president has undercut expansion supporters by admitting that expanding Medicaid will not reduce uncompensated care.

The president’s budget shows that the brave state legislators who have been fighting the Medicaid expansion in states like Ohio and Florida were right all along — and it makes expansion supporters, like Governors Rick Scott (R., Fla.) and John Kasich (R., Ohio), look rather silly.

This relatively small spending item is a big admission that the president’s health-care law simply won’t work, and it should provide encouragement to state officials who are still resisting the massive increase in deficit spending, government bureaucracy, and health-care costs the PPACA embodies.

Read the whole thing.

President’s Budget Lacks Seriousness, Vision

The measure of our seriousness in helping children learn is not simply the number of dollars we spend, but rather the care and thought we invest in allocating them, and our openness to changing course when the evidence demands it. The education provisions of the President’s budget, released today, lack both seriousness and vision.

The FY 2014 budget overview emphasizes three educational initiatives: preschool for all, STEM and innovation, and school infrastructure.

As foreshadowed in his State of the Union address, President Obama proposes to federally subsidize statewide preschool programs. This approach seems designed to deal with the mounting evidence that the federal government’s own preschool programs, Head Start and Early Head Start, have essentially no lasting benefits. Though candidate Obama once said he would terminate ineffective programs, his latest budget retains them both, and actually grows Early Head Start. Additionally, the new budget would subsidize PreK programs like those in Oklahoma and Georgia that advocates have long touted as “high quality.” The evidence on those programs is, however, rather mixed. Relative to the national average, Oklahoma has seen modest declines on the 4th grade NAEP tests while Georgia has seen modest gains—and the declines are larger than the gains. A broader review of the evidence by early education expert Russ Whitehurst of Brookings finds the same lackluster results overall. 

Not only are these statewide programs failing to show a pattern of lasting and substantial benefits thus far, the addition of federal subsidies will likely impede efforts to improve them. Federal education dollars at the pre-college level always come with strings attached—strings that accumulate over time. That is likely to exert a homogenizing pressure on state pre-K offerings, eliminating variation and thereby preventing us from learning which approaches are effective and which are not.

On STEM, the President is keen to fund the hiring of 100,000 new Science, Technology, and Math teachers. But America does not have a teacher quantity problem, we have a teacher effectiveness problem. Over the past 40 years, we’ve grown the number of public school employees 11 times faster than enrollment [i.e., we’ve doubled the number of staff to serve only 8.5 percent more students]. This has added $200 billion annually to the cost of American public schooling, and two million of the three million new hires were instructional staff, so it’s not simply a problem of bureaucratic bloat. And yet, despite all those new teachers and teachers’ aides, achievement at the end of high school is largely flat as are real graduation rates.

In other words, our public schools have shown themselves incapable of harnessing the talents of these millions of additional educators. The solution is not to hire yet more teachers into that system, it is to liberalize the education sector, bringing it back within the free enterprise system. Only when schools have both the freedoms and incentives to make the most of their teaching staffs, will we see educators’ talents marshaled effectively.

Finally, President Obama’s proposed new infrastructure spending focuses only on the symptom (crumbling school facilities) and ignores its cause (mismanagement). I’ve analyzed school survey data on the condition of facilities and found that public schools are in a much worse state of repair than private schools, despite the fact that private schools spend far less per pupil, on average. The question is WHY are public schools in a worse state of repair, given that they spend more? According to a federal government report, it’s because districts repeatedly defer necessary routine maintenance. These deferrals increase the cost of maintaining school facilities and accelerate the deterioration of buildings and equipment. In other words, they postpone the ounce of prevention until the pound of cure becomes unavoidable—and they do this because they don’t have to pay for the cure. Once again, bringing schools back within the free enterprise system would provide administrators with the incentives to maintain their facilities so as to avoid the financial hit of costly repairs and replacements—a hit that they can now pass on to taxpayers at no cost to themselves or their careers.

Regrettably, seeing the root causes underlying our educational woes is beyond the vision of the present administration.

Margaret Thatcher and the Battle of the 364 Keynesians

With the death of Margaret Thatcher, and the ensuing profusion of commentary on her legacy, it is worth looking back at an overlooked chapter in the Thatcher story. I am referring to her 1981 showdown with the Keynesian establishment—a showdown that the Iron Lady won handily. Before getting caught up with the phony “austerity vs. fiscal stimulus” debate, the chattering classes should take note of how Mrs. Thatcher debunked the Keynesian “fiscal factoid.”

According to the Oxford English Dictionary, a factoid is “an item of unreliable information that is reported and repeated so often that it becomes accepted as fact.” The standard Keynesian fiscal policy prescription for the maintenance of non-inflationary full employment is a fiscal factoid. The chattering classes can repeat this factoid on cue: to stimulate the economy, expand the government’s deficit (or shrink its surplus); and to rein in an overheated economy, shrink the government’s deficit (or expand its surplus).

Even the economic oracles embrace the fiscal factoid. That, of course, is one reason that the Keynesians’ fiscal mantra has become a factoid. No less than Nobelist Paul Krugman repeats it ad nauseam. Now, the new secretary of the treasury, Jack Lew (who claims no economic expertise), is in Europe peddling the fiscal factoid.

Unfortunately, the grim reaper finally caught up with Margaret Thatcher—but not before she laid waste to 364 wrong-headed British Keynesians.

In 1981, Prime Minister Thatcher made a dash for confidence and growth via a fiscal squeeze. To restart the economy, Mrs. Thatcher instituted a fierce attack on the British fiscal deficit, coupled with an expansionary monetary policy. Her moves were immediately condemned by 364 distinguished economists. In a letter to The Times, they wrote a knee-jerk Keynesian response: “Present policies will deepen the depression, erode the industrial base of our economy and threaten its social and political stability.”

Mrs. Thatcher was quickly vindicated. No sooner had the 364 affixed their signatures to that letter than the economy boomed. Confidence in the British economy was restored, and Mrs. Thatcher was able to introduce a long series of deep, free-market reforms.

As for the 364 economists (who included seventy-six present or past professors, a majority of the Chief Economic Advisors to the Government in the post-WWII period, and the president, as well as nine present or past vice-presidents, and the secretary general of the Royal Economic Society), they were not only wrong, but also came to look ridiculous.

In the United States, the peddlers of the fiscal factoid have never suffered the intellectual humiliation of their British counterparts. In consequence, American Keynesians can continue to peddle snake oil with reckless abandon and continue to influence policy in Washington, D.C., and elsewhere.

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