Tag: Congress

More Gridlocked Than Ever

Yesterday, the Senate passed a six-year transportation bill that increases spending on highways and transit but only provides three years of funding for that increase. As the Washington Post commented, “only by Washington’s low standards could anyone confuse the Senate’s plan with ‘good government.’”

Meanwhile, House majority leader Kevin McCarthy says the House will ignore the Senate bill in favor of its own five-month extension to the existing transportation law. Since the existing law expires at the end of this week, the two houses are playing a game of chicken to see which one will swerve course first and approve the other house’s bill.

As I noted a couple of weeks ago, the source of the gridlock is Congress’ decision ten years ago to change the Highway Trust Fund from a pay-as-you-go system to one reliant on deficit spending. This led to three factions: one, mostly liberal Democrats, wants to end deficits by raising the gas tax; a second, mostly conservative Republicans, wants to end deficits by reducing spending; and the third, which includes people from both sides of the aisle, wants to keep spending without raising gas taxes.

Strange Bedfellows, Schisms, and Subterfuge: Where Does the Trade Agenda Stand?

The Trans-Pacific Partnership is a still-evolving trade agreement that would reduce tariffs and other barriers to goods and services trade between the United States and 11 other countries. It also would likely include provisions designed to protect certain U.S. industries from the full effects of competition.  A TPP agreement, then, would likely increase our economic freedoms in some realms and reduce them in others.  How these pros and cons would be manifest is unclear at the moment, given the fact that the deal is not done.  But it would a mistake to forego the opportunity to evaluate a completed trade deal that could deliver significant benefits. 

It is broadly understood that the TPP negotiations cannot be concluded without the Congress passing, and the president signing, Trade Promotion Authority legislation.  Without TPA, the president could not be sure that any trade deal brought home reflected the official wishes of Congress, and the likelihood that foreign negotiators would put their best and final offers on the table—knowing that Congress could unravel the deal’s terms—is close to zero.

The Senate passed TPA legislation (along with language reauthorizing the Trade Adjustment Assistance program) on May 22.  The House is likely to take up the bill this week.  At the moment, the president is in lockstep with a large majority of congressional Republicans, who support trade liberalization and see TPA as essential to the process.  But some Republicans (mostly from the conservative wing), who are wary of giving this president any more power, have joined ranks with the vast majority of congressional Democrats in opposition to TPA.  Meanwhile, Democratic presidential frontrunner Hillary Clinton—an architect of the TPP as Secretary of State and a potential heir to the trade agenda—has refused to take a position on TPA.

The spotlight on trade policy has generated much more heat than light.  Misinformation abounds.  Rationalizations masquerade as rationales.

This new Cato Free Trade Bulletin is intended to dispel some of the nonsense that has been circulating and to present a brief, objective assessment of what has transpired and what lies ahead for TPA and TPP.

National School Choice Proposal Heartening, Frightening

According to the American Federation for Children, Sen. Marco Rubio (R-FL) and Rep. Todd Rokita (R-IN) have reintroduced “the Educational Opportunities Act, which would create an individual and corporate tax credit for donations that pay for scholarships for students to attend a private school of their parents’ choice.”

It is encouraging to see growing support for scholarship tax credit school choice programs, which have been found to simultaneously boost achievement for students who switch to private schools, do the same for students who remain in public schools, and save taxpayers millions of dollars every year–a win-win-win scenario. Nevertheless, it is ill advised to pursue such a program (or other school choice programs) at the federal level.

Years ago I summarized those problems when President George W. Bush advocated creating a federal school voucher program. Such programs are not only beyond the mandate accorded to Congress by the Constitution, they bear the risk of suffocating private schools nationwide with a raft of new regulation, defeating their very purpose of increasing the range of educational options available to families with limited means.

In the past few years I have visited Sweden and Chile and studied their federal school chioce programs. Both confirm my earlier worries about national programs. Chile’s entrepreneurial voucher schools grew rapidly at first, but with a recent change of government hostile to the program they have sensed the new climate and stopped expanding.The new government is trying to enact regulations to diminish the scope and freedom of private schooling in Chile.

Meanwhile, something similar is happening in Sweden. Among other things, the government has mandated that all schools hire graduates of government-certified teacher training programs, despite the well known fact that those programs are currently attracting the lowest-achieving college students.

National school choice programs have proven to be a prime case of “staff car legislating.” The legislators who enact them are not always the ones in the official staff cars, making the rules. New lawmakers with different preferences ultimately come to power and can wreak havok on a nation’s entire K-12 education sector.

This problem can be minimized by leaving school choice legislation to the state level, where the Constitution rightfully leaves it. We thus have a “laboratory of federalism”–a variety of different policies across states that make it easier to determine how best to design such programs.

The Congressional Pack Rats

The U.S. Congress hoards real estate like proud pack rats. For example, the Department of Defense has 562,000 facilities that cover 24.7 million acres—an area about the size of Virginia.

The Pentagon has surprisingly indicated that it might be wise to shed some of its real estate. Congress has stonewalled the Pentagon on this. Indeed, Congress has barred the Pentagon from even thinking about the Department of Defense’s excess asset problem.

The congressional—and often bureaucratic—asset-hoarding pathology is a result of perverse economic incentives that accompany public ownership. These incentives encourage bad behavior. The fact that capital carrying charges or rents are not paid for publicly owned assets means that no costs have to be budgeted for holding them. Once assets are under government ownership and control, they are viewed as being free; nothing must be given up for the assets’ use and retention. Furthermore, if a decision is made to dispose of some of those assets, the revenues from their disposal are usually not earmarked for use by the department or agency that initiates the sale. Hence, there are no bureaucratic or budgeted benefits that flow from the liquidation of government property.

I ran into both congressional and bureaucratic stonewalling over 30 years ago when I designed President Reagan’s privatization program. Until capital carrying charges on public assets are budgeted (read: charged), the game will remain rigged in favor of the pack rats.

Congress Quietly Passes Ukraine Bill

While Washington focused yesterday on the prospect of yet another government shutdown, both House and Senate quickly and quietly passed bills which increase sanctions on Russia and authorize the sale of defensive arms to Ukraine.  S.2828 passed mid-afternoon by voice vote, while H.R. 5859 was passed without objection at 10:25pm last night, on a largely empty House floor. Indeed, the House resolution had been introduced only that day, giving members no time to review or debate the merits of a bill which has major foreign policy implications.

The bill requires the imposition of further sanctions on Russia, particularly on Rosboronexport, Russia’s main weapons exporter, as well as increasing licensing requirements for the sale of oil extraction technology to Russia. Any Russian company exporting weapons to Syria is also liable for sanctions. In addition, the bill contained a contingency, requiring the President to sanction Gazprom in the event that it interferes with the delivery of gas supplies to NATO members or to Ukraine, Georgia and Moldova. The bill also takes aim at Russia more broadly, directing the President to hold Russia accountable for its violations of the Intermediate Nuclear Forces (INF) Treaty, and to consider whether it remains in U.S. interests to remain a party to this treaty.

Significantly, the bill authorizes the president to make available defensive weapons, services and training to Ukraine, including anti-tank weapons, crew weapons and ammunition, counter-artillery radar, tactical troop-operated surveillance drones, and command and communications equipment. It  also includes additional aid for Ukraine, earmarked to help Ukraine loosen its reliance on Russian energy, and strengthen civil society. Other funds go to increasing Russian-language broadcasting in Eastern Europe by Voice of America and Radio Free Europe/Radio Liberty, in order to ‘counter Russian propaganda.’

Interpreting Obama’s Immigration Executive Action

President Obama will soon announce an executive action to defer the deportations of somewhere between 1 million and 4.5 million unauthorized immigrants. Those whose deportations are deferred will be eligible for a temporary work permit through a 1987 provision in the Code of Federal Regulations.

Those who support immigration reform note that any executive action by the President will poison the well for reform, making it impossible for Congress to move piecemeal bills to the President’s desk.  Last year, one of the most effective arguments against immigration reform was that President Obama would not enforce the law as written, a prediction that seems to be borne out with this executive action.  The Wall Street Journal editorial board said it the best:

If he does issue an executive order, we hope Republicans don’t fall for his political trap.  He and many Democrats want Republicans to appear to be anti-immigrant.  They want the GOP to dance to the Steve King-Jeff Sessions blow-a-gasket caucus.

To poison the well of reform there actually had to be water in the well to begin with. I’m not convinced there was.  If there was a serious Congressional effort to reform immigration in the immediate future, then the President’s actions here would totally derail it.

What Should Republicans Do?

Having taken both houses of Congress, Republicans are eager to make changes. Here are some guidelines they should follow: 1. Learn from history. At least since the Clinton administration, this country has suffered from a consistent pattern: First, one party takes the White House and Congress. Thrilled with the taste of power, they overreach, provoking a backlash. This allows the other party to soon take control of at least one house of Congress, leading to gridlock for the next several years. Republicans can avoid this scenario. Instead of immediately trying to pass legislation that will please certain of their constituents, Republicans should propose changes that will build strategic alliances with a wide range of groups. That may mean an incremental approach to change, but each increment should be designed to make the next increment more—not less—politically feasible. 2. Focus on fiscal issues. Part of the historic pattern is that Democrats win on social issues while Republicans win on fiscal issues. Whichever party is in power usually shoots itself in the foot by giving the other party ammunition on its winning issues. For example, Democrats’ obsession with government-run health insurance turned a social issue—poor people’s access to health care—into a fiscal issue. Republicans’ obsessions with abortion and gay rights give Democrats tools to bring them down. Since tax and fiscal issues are what Republicans win on, they should stick to those issues. That means no introducing bills to limit third-trimester abortions, no proposals for constitutional amendments to declare that marriage is between a man and a woman, and no efforts to open the Arctic National Wildlife Refuge (ANWR) to oil drilling. Any of those efforts would give fiscal liberals the openings they need to retake at least one house of Congress in 2018 (if not 2016), thus restoring gridlock. 3. Fix incentives, not outcomes. Nearly all of the problems with the federal government are due to poor incentives. It is incentives that determine what agencies do and whether they will be efficient doing it. In the long run, if the incentives are right, everything else will take care of itself (including a reduction in the size of government). Unfortunately, members of Congress almost never think about incentives when they pass legislation—or when they do, they think about them the wrong way, as in “How can I create an incentive to produce the outcome I want?” Instead of worrying about outcomes, Congress should create a level playing field, with a minimal amount of regulation and subsidies.

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