Tag: budget proposal

I’ll Take “Whatever Evidence I Like” for Hundreds of Billions, Alex

Right before the President’s 2012 budget proposal was released, I wrote a bit about what I was hearing the administration would call for with Pell Grants. Notably, ending year-round Pell on the grounds that the cost was too high and “there was little evidence that students earn their degrees any faster.” I found this argument a bit odd because eligibility to get more than one Pell award annually started in just the 2009-2010 academic year – way too recently to have any conclusive evidence on its effect one way or the other.  I was also surprised because, well, evidence of success has never been important in decisions to keep or kill programs.

Take the embattled – and near dead – Washington, DC voucher program. There is currently a concerted effort to revive the program, but the Obama administration and most congressional Democrats evinced no qualms about killing it despite its well-documented success with graduation rates and parental satisfaction. Documented, in fact, using “gold-standard,” longitudinal, random-assignment research methods. That documentation is why Cato Center for Educational Freedom director Andrew Coulson last week testified to the House education committee that “there is one federal education program that has been proven to both improve educational outcomes and dramatically lower costs. That is the Washington, DC Opportunity Scholarships Program.”

Sadly, the administration – and, to be honest, pols of all stripes – are as happy to ignore the evidence of success in programs they dislike as the very common evidence of failure in programs they support.

Take the 21st Century Community Learning Centers program, which funds after-school activities intended to keep kids off the streets and provide them with social and educational enrichment.  A series of studies – the last published in 2005 – found that not only didn’t the program appear to provide many positive results, it might have had overall negative effects:

Conclusions: This study finds that elementary students who were randomly assigned to attend the 21st Century Community Learning Centers after-school program were more likely to feel safe after school, no more likely to have higher academic achievement, no less likely to be in self-care, more likely to engage in some negative behaviors, and experience mixed effects on developmental outcomes relative to students who were not randomly assigned to attend the centers.

 
In light of its (at-best) impotence, did the program go away? Of course not! In FY 2010 it was appropriated $1.17 billion, and the Obama administration has asked for $1.27 billion for FY 2012. And this despite not just poor performance, but a pesky $14 trillion national debt.

This is small potatoes, though, compared to some other programs. Take Head Start: Run by the Department of Health and Human Services, Head Start is supposed to give poor kids an early boost in life. In reality, however, it has proven itself to be largely worthless, with benefits disappearing after just a few years. It’s a finding that was repeated in a federal evaluation released in 2010, which reported that “the advantages children gained during their Head Start and age 4 years yielded only a few statistically significant differences in outcomes at the end of 1st grade for the sample as a whole.”

Despite this fecklessness, the administration wants to increase funding for Head Start from $7.23 billion in FY 2010 to $8.10 billion in FY 2012.

Clearly, “evidence” doesn’t drive budgeting decisions – it’s just a term that’s invoked when it’s politically expedient to do so. But maybe one more bit of evidence is in order to illustrate this. Compare increases in overall federal spending on K-12 education to the academic performance of 17-year-olds, our schools’ “final products”:

In light of this, if federal policymakers really cared about evidence, would they still be spending money on education at all? The evidence on that, unfortunately, is almost indisputable.

Administration Playing Both Sides on Fannie Mae

On Friday the Obama Administration released its report on “reforming America’s Housing Finance Market.”  The report claimed that the Administration would work toward “winding down Fannie Mae and Freddie Mac on a responsible timeline.” 

While the report was silent on what a responsible timeline would be (surprise, no details); I assumed, perhaps naively, that a reasonable timeline would be 5 to 6 years.  So you can imagine my surprise while reading the Administration’s budget proposal (see Table S-12 of the summary tables), released Monday, that the Administration is projecting that the government will be receiving, between 2012 and 2021, $89 billion in dividend payments from Fannie Mae and Freddie Mac.  In 2021 alone the White House projects $8 billion in dividend payments.  But here’s the rub, for Fannie Mae and Freddie Mac to be paying dividends in 2021 requires that they still be around.

So would the Administration please be straight with us for just a minute: are you or are you not proposing that Fannie Mae and Freddie Mac disappear; and if so, when?

Another odd thing from the budget, again Table s-12 lists the net equity position of Fannie and Freddie as negative.  Well that’s obviously true, but it also raises the question of why they are still in conservatorship, as the law requires them to be taken into receivership once they’ve reached negative equity.  Then perhaps OMB and Treasury have different definitions of net equity.

New Era of Big Government

The George W. Bush administration ushered in a new era of big government. The Obama administration has built on Bush’s profligacy, and the president’s new fiscal 2012 budget proposal would further cement the trend.

Spending as a percentage of GDP has increased dramatically since the surplus years of the late 1990s. As the chart shows, the president’s budget once again seeks a permanently high level of federal spending as a share of the economy:

While the numbers drop from their stimulus- and recession-induced highs, it is not because the president has suddenly decided that he desires a less active government. Rather, optimistic economic assumptions largely account for the slight retrenchment.

Tax increases and optimistic economic assumptions explain the projected rise in revenue as a share of the economy. While the president would like us to believe he’s found religion on spending cuts, he’s actually relying on a rosy economic forecast and sucking more money out of the private sector to reduce annual deficits.

Taking more money from the productive private economy to maintain destructively high levels of federal spending is not a recipe for economic growth. Therefore, this budget proposal is as dangerous as it is disingenuous. Fortunately, it’s also dead on arrival in the Republican-controlled House.

A Bone Is Nice. Actually, No.

After House Republicans’ weak first attempt at offering cuts to gargantuan federal spending – a proposal that included nary a flick at education-related outlays – and the Obama administration’s hinting that it would leave education totally untouched, there is a tiny bit of good news: Both the GOP and the administration are apparently willing to trim funding putatively intended to help educate people. But these are just tiny bones they’re throwing to people who know that the federal government likely does zero net good when it comes to actually educating people, and that there is no acceptable excuse not to make big cuts to federal “education” programs.

House Republicans, for their part, scheduled lots of education programs for shaves in their second attempt at making a reasonable budget proposal. All told, though, the cuts would amount to only about $4.9 billion out of a total Department of Education budget of about $63 billion. For those keeping track at home, that’s just a 7.7 percent cut.

Now, maybe that would be reasonable if ED-administered programs worked, but as we at Cato’s Center for Educational Freedom have laid out repeatedly, they do not. Overall, they pour money into already cash-bloated K-12 and higher education systems; insulate public elementary and secondary schools from ever having to compete for and earn their money; and fuel rampant college tuition inflation by constantly increasing aid that lets schools raise their prices with impunity. Perhaps the most telling sign that the House GOP is not serious about really cutting Washington down to size, though, is that the laughable Exchanges with Historic Whaling and Trading Partners program is not on their chopping block. If you won’t pick off this ridiculous, almost-on-the-ground-it’s-hanging-so-low fruit, you simply aren’t really trying.

For the Obama administration, while the details of their proposed cuts aren’t yet out, early Fox News reporting says the administration will propose cutting Pell-Grant spending by $100 billion over ten years. That’s a bit surprising, because President Obama has made getting as many people to graduate college as possible – regardless, sadly, of whether that means there’s actually greater learning – a key education goal. Moreover, constantly growing Pell has long been a way for federal politicians to demonstrate that they ”care” about educating all Americans. So, maybe, one cheer for the administration.

Unfortunately, as is often the case when it comes to budgeting, this might be a trick. An unnamed administration official reportedly told Fox that the administration will propose keeping the maximum Pell at $5,550 a year and would realize savings by ending year-round Pell eligibility. With year-round Pell, a student could get two grants in a calendar year for taking a regular academic-year load as well as summer school. According to the Fox News story, the ”official said the costs” of year-round Pell ”exceeded expectations and there was little evidence that students earn their degrees any faster.”

So why’s this potentially a trick? The budget experts could no doubt give you lots of reasons, but knowing education policy I can safely say one thing: It is far too early to say whether or not the year-round Pell would help students earn their degrees any faster. Why? Because year-round Pell was only instituted in 2008, much too recently to have any useful empirical data about its effect on graduation rates. It also seems likely that this will produce no savings regardless because students will still take Pell grants for the same number of total credit hours.

Of course, the main problem with Pell is that it enables schools to ratchet up their tuition rates, capturing all the aid and not making students any better off. Even bigger than this, though, is that almost certainly because spending on education plays so well politically, the administration is ignoring the same screaming reality as the House GOP: Federal spending on education does little if any educational good! Add to that the unconstitutionality of federal involvement and there is simply no acceptable argument – including a desire to “win the future” – for not eliminating federal spending done in the name of “education.”  Indeed, if we want to win the future, ending bankrupting spending we know does zero good is absolutely imperative.

‘Mountain of Debt’

The White House Office of Management and Budget homepage currently features the following quote from the president:

President Obama says he wants to “invest in our people without leaving them a mountain of debt.”

That’s a curious statement because the Congressional Budget Office’s analysis of the president’s current budget proposal projects that publicly held debt as a share of the economy would reach levels last seen at the end of the Second World War.

When the CBO’s numbers are plugged into a bar chart, the projected Obama debt levels (red bars) look like…the upward slope of a mountain (!):

To be fair, Obama’s predecessors – particularly the previous Bush administration – share in the responsibility for the mountainous rise in federal debt. However, that’s all the more reason for the Obama administration to work toward a peak instead of a steeper incline.

Conrad’s Budget Proposal

Senate Budget Committee chairman Kent Conrad has released his budget plan for the next five years. The following are some thoughts on the proposal:

  • Conrad proposes total federal spending for FY2011 equal to 25 percent of GDP, which would match the current fiscal year’s post-war record.
  • Conrad says his proposal will cut spending as a share of the economy by 11 percent. This sounds okay until you realize that out-year spending would still be substantially above the norm at 22 percent of GDP.
  • Conrad says his plan will cut the deficit as a share of the economy by 70 percent. But he’s starting from a Mount Everest-sized deficit of $1.4 trillion this year. Besides, his projected deficits for the next five years would add another $3.9 trillion to the debt.
  • Conrad gets to his lower future deficits through tax increases. In addition to marginal tax rate increases on singles earning over $200,000 ($250,000 for couples), the alternative minimum tax would increase starting in 2012, and estate taxes in 2011. Conrad says “lawmakers will have to find revenues elsewhere in the budget” to provide AMT and estate tax relief in future years. Assuming Congress doesn’t suddenly find the gumption to offset the tax relief with spending cuts, more debt or tax increases elsewhere will be its solution.
  • Conrad includes Obama’s proposal to freeze non-security discretionary funding for three years. Unfortunately, this segment of spending only amounts to 13 percent of the budget. As Chris Edwards has pointed out, actual spending will be higher as previously authorized stimulus spending sloshes forward.
  • Conrad supports throwing more taxpayer money down the drain for failed federal experiments like education and Head Start.
  • Conrad’s proposal includes a $2 billion reconciliation instruction, which could be a vehicle for getting more big government with 50 Senate votes. Last year’s budget resolution also contained a $2 billion reconciliation instruction that was used to facilitate passage of the gargantuan health care bill.
  • With regard to the nation’s long-term fiscal woes, Conrad punts the ball to the president’s National Commission on Fiscal Responsibility and Reform. But this commission might be just a stalking horse for huge tax increases, which aren’t “responsible” and isn’t “reform.”

In sum, there’s not much difference between Conrad’s proposal and the President’s. Both would continue the massive spending, deficits, and debt that are bankrupting the country.

Obama’s Education Proposal Still a Bottomless Bag

This morning the Obama Administration officially released its proposal for reauthorizing the Elementary and Secondary Education Act (aka, No Child Left Behind). The proposal is a mixed bag, and still one with a gaping hole in the bottom.

Among some generally positive things, the proposal would eliminate NCLB’s ridiculous annual-yearly-progress and “proficiency” requirements, which have driven states to constantly change standards and tests to avoid having to help students achieve real proficiency.  It would also end many of the myriad, wasteful categorical programs that infest the ESEA, though it’s a pipedream to think members of Congress will actually give up all of their pet, vote-buying programs.

On the negative side of the register, the proposed reauthorization would force all states to either sign onto national mathematics and language-arts standards, or get a state college to certify their standards as “college and career ready.”  It would also set a goal of all students being college and career ready by 2020. But setting a single, national standard makes no logical sense because all kids have different needs and abilities; no one curriculum will ever optimally serve but a tiny minority of students.

Also, on the (VERY) negative side of the register, Obama’s budget proposal would increase ESEA spending by $3 billion from last year – for a total of $28.1 billion – to pay for all of the ESEA reauthorization’s promises of incentives and rewards. That’s $3 billion more that the utterly irresponsible spenders in Washington simply do not have, and that would do nothing to improve outcomes.

Even if this proposal were loaded with nothing but smart, tough ideas, it would ultimately fail for the same reason that top-down control of government schools has failed for decades. Teachers, administrators, and education bureaucrats make their livelihoods from public schooling, and hence spend more time and money on education lobbying and politicking than anyone else. That makes them by far the most powerful forces in public schooling, and what they want for themselves is what we’d all want in their place if we could get it: lots of money and no accountability to anyone.

As long as such asymmetrical power distribution is the case – and it’s inherent to “democratic” control of education – no proposal, no matter how initially tough, is likely to make any long-term improvements. As the matrix below lays out, no matter what combination of standards and accountability you have, politics will eventually lead to poor outcomes. It’s a major reason that the history of government schooling is strewn with “get-tough” laws that ultimately spend lots of money but produce no meaningful improvements, and it’s a powerful argument for the feds complying with the Constitution and getting out of education.

When all is said and done, you can throw all the great things you want into the federal education bag, but as long as politicians are making the decisions you’ll always come up empty.