Tag: Center for American Progress

Preschool’s Anvil Chorus

Act 2, scene 1 of Verdi’s opera Il Trovatore is marked by a lot Gypsy blacksmiths wailing away on their anvils. Sensibly enough, this has come to be called the “Anvil Chorus.” There is an equally clamorous chorus calling for universal federally-funded preschooling—one that president Obama may join this evening in his State of the Union address. It should be called the Anvil Chorus, too, because if it is successful it will tie an anvil ‘round the neck of early education and American taxpayers.

The trouble with federal-government-funded preschooling is that we have 47 years of experience with it … and it doesn’t work. The federal Head Start pre-K program was created in 1965, and despite decades of concerted efforts to refine and improve it it has virtually no measurable effects that last to the end of the third grade—or even the first. And of the very few and modest effects that have been found at the end of the third grade, some are actually negative. That is what federal government pre-K has accomplished with $200 billion and half a century of effort. Is that a sensible basis for expanding federal government pre-K?

Those large-scale randomized studies of Head Start are not the only indication that federal government spending on pre-K (and K-12) programs is ineffective. We can also look at the performance gap, at the end of high school, between the children of high school dropouts and those of college graduates. This is the key gap—between children in advantaged and disadvantaged families—that federal compensatory education programs set out to close in 1965. Below is a chart I prepared just a few years ago, documenting that gap using the reading section of the best national data set available (the “Long Term Trends” series of the National Assessment of Educational Progress). The results are equally disappointing in math and science (see Figure 20.5, here).

Nor should we be surprised by the failure of federal pre-K-through-12 programs to narrow this gap—they have failed just as badly in their other aim of improving overall student achievement, as the following chart of federal spending and student achievement at the end of high-school reveals.

Overcome by the sound of their own chorus, universal federal pre-K advocates are deaf to this evidence. For the sake of the children they seek, ineffectually, to help, let’s hope they are unable to fasten their anchor around the necks of current and future generations of taxpayers.

Prez to Double Down on pre-Kindergarten Flop?

According to the latest buzz, President Obama may suggest dramatically expanding federal government preschool programs in his State of the Union address next week. That, at any rate, is the recommendation of a new report from an institute closely associated with the admnistration.

There are just two problems with this plan: 1) it’s already been tried; 2) it doesn’t work.

We now have 45 years of experience with, and two top-quality randomized studies of, the national Head Start pre-school program, and the results are disappointing. Head Start was meant to close the gap in student achievement between the children of advantaged and disadvantaged families. But, at the end of high school, the gap in achievement between the children of college graduates and those of high school dropouts has remained essentially unchanged since the program was introduced. We have even more direct evidence from two large national studies of the program commissioned by the very agency that administers it: the Department of Health and Human Services. These studies find no significant benefits to Head Start at the end of the third grade–or even at the end of the first.

So why double-down on a failed program? The most plausible (and charitable) explanation is a bad case of wishful thinking. Many people make the mistake of improperly generalizing from two or three tiny pre-school programs of earlier decades which did show some lasting benefits. Sadly the federal government’s nationwide Head Start program has not replicated those benefits despite generations of unrelenting effort. And there is no reason to imagine that it will suddenly start doing so if expanded even further.

Trying to fix failed federal preschool programs by dumping more money on them is like trying to make up per-unit losses by increasing sales volume. Sadly, that’s about the level of economic acumen demonstrated by recent administrations.

Adler Dresses Down PolitiFact-Georgia over Embarrassing ‘Fact-Check’

At the Volokh Conspiracy, my occasional co-author Jonathan Adler dresses down PolitiFact-Georgia for declaring “falsemy claim that Georgia law prohibits state employees from implementing an ObamaCare Exchange. If you place faith in “fact checkers,” you might not want to read it. My response to PolitiFact-Georgia is here.

Fair and Balanced, Think Tank Edition

The website CapitolWords.org allows you to track the use of words uttered by members of Congress. Our intern wrangler, Michael Hamilton, decided to compare uses of the term “Cato Institute” to the names of other think tanks around town. Here’s what he found:

Cato is mentioned roughly equally by both Republicans and Democrats in Congress. It’s hard to draw conclusions based solely on members’ use of the names of think tanks, but it seems clear that Democrats and Republicans make roughly equal use of Cato research in making appeals to their colleagues and the public.

Note: The Brookings Institution is sometimes misstated as “Brookings Institute,” so both are included.

The CAP-AEI Fannie Mae Food Fight

It’s probably never wise to inject oneself into the middle of a food fight, but since I think both sides actually have something right and something wrong, its been a worthwhile debate to follow.  That is the ongoing debate between Peter Wallison at the American Enterprise Institute and David Min at the Center for American Progress (at least we can all agree we love America) on the role of Fannie Mae (and Freddie Mac) in the financial crisis.  If you can’t guess, Peter says Fannie/Freddie caused the crisis, David says they didn’t.

David makes an interesting point, one I’ve actually argued, in his latest retort.  That is, this wasn’t exclusively a housing crisis/bubble.  Other sectors, like commercial real estate, boomed and then went bust; other countries, with different housing policies, also had bubbles.  True from what I can tell.  I will also add that the U.S. office market actually peaked and fell before the housing market, so we can safely say there wasn’t contagion from housing to other parts of the real estate market. 

But the problem with this argument, at least for David, is that it undercuts the Dodd-Frank Act, which he has regularly defended.  The implicit premise of Dodd-Frank is that predatory mortgage lending caused the crisis, so now we need Elizabeth Warren to save us from evil lenders.  But how does predatory lending explain the office market bubble?  Do we really believe that deals between sophisticated parties, poured over by lawyers, were driven by predatory lending practices?  Do we also believe that other countries were also plagued by bad mortgage brokers?  Again, I think David is right about the problem being beyond housing, but he can’t have it both ways.

What is the common factor driving bubbles in commercial real estate, housing, and foreign real estate markets?  Maybe interest rates.  This was a credit bubble after all.  Especially since the Fed basically sets interest rate policy for the world.  It is hard for me to believe that three years (2002–2004) of a negative real federal funds rate isn’t going to end badly.  This is what I think Peter misses, the critical role of the Federal Reserve in helping blow the bubble.  But Dodd-Frank does nothing to change this. 

Now there are a ton of things I think both still miss.  We could argue all day about what a subprime mortgage is.  I think the definitions used by Wallison (and Pinto) are reasonable.  There is also a degree, a large one, to which David and Peter are just talking past each other.  For instance, there is something special about the U.S. housing market that transfers much of the risk to the taxpayer.  In contrast, the bust in the office market didn’t leave the taxpayer to pick up the tab.  That has to count for something, unless one just doesn’t care about the taxpayer. 

There are a few other issues that make Fannie/Freddie uniquely important in the crisis, but I lack the space to go into them here. Instead, I’ll wrap up by saying that their role in the overnight repurchase (re-po) market is under-appreciated and their ability to essentially neuter the Fed was critical in keeping the bubble going.  What’s for dessert?

CAP Leftists Have Accidental Encounter with the Laffer Curve, Learn Nothing

The big-government advocates at the Center for American Progress recently released a series of charts designed to prove America is a low-tax nation. I wish this was the case.

The United States does have a lower overall tax burden than Europe, which is shown in one of the CAP charts, but that doesn’t exactly demonstrate that taxes are low in America. Unless, of course, you think weighing less than an offensive lineman in the NFL is proof of being skinny.

But the one chart that jumped out at me was the one showing that the United States collects less corporate tax revenue than other developed nations. The CAP document states, with obvious disapproval, that “Corporate income tax revenue in the United States is about 25 percent below the OECD average.”

The obvious implication, at least for the uninformed reader, is that the United States should increase the corporate tax burden.

But here’s some information that CAP didn’t bother to include in the study. The U.S. corporate tax rate is more than 39 percent and the average corporate tax rate in Europe is less than 25 percent.

So let’s ponder these interesting facts. CAP is right that the U.S. collects less tax revenue from corporations, but even they would be forced to admit (though they omit the info from their report) that the U.S. corporate tax rate is much higher. Let’s see…higher tax rate-lower revenue…lower tax rate-higher revenue…this seems vaguely familiar.

Could this possibly be an example of that “crazy” concept of (gasp!) a Laffer Curve? To be sure, it is only in rare cases, when tax rates get very high, that researchers find that high tax rates lose revenue. In most cases, the Laffer Curve simply implies that higher tax rates won’t raise as much money as politicians want.

But have our friends at CAP inadvertently identified one of those cases where a tax cut (i.e., a lower corporate tax rate) would “pay for itself”?

There certainly is strong evidence for this proposition. In a 2007 study, Alex Brill and Kevin Hassett of the American Enterprise Institute found that the revenue-maximizing corporate tax rate is about 25 percent (click chart to enlarge).

Somehow, I suspect this wasn’t their intention, but I want to thank the statists at CAP for reminding us about the self-destructive impact of high tax rates. 

For those who want to learn more about the Laffer Curve, these three videos will make you more knowledgeable than 99 percent of people in Washington (not a big achievement, I realize, but the information is still useful).

 

The Constitutional Case for Marriage Equality

On June 12, 1967, the U.S. Supreme Court struck down bans on interracial marriage in more than a dozen states in the case of Loving v. Virginia. Today, the highest court in the United States may soon take on the issue of marriage equality for gay and lesbian relationships. Attorneys David Boies and Theodore B. Olson are hoping the case of Perry v. Schwarzenegger will further establish marriage as a fundamental right of citizenship. Also featured are John Podesta, President of the Center for American Progress, Cato Institute Chairman Robert A. Levy and Cato Executive Vice President David Boaz.

Watch the full event from which many clips were pulled here and Robert A. Levy’s presentation here.

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