Tag: federal government

Bailouts Could Hit $24 Trillion?

ABC News reports:

“The total potential federal government support could reach up to $23.7 trillion,” says Neil Barofsky, the special inspector general for the Troubled Asset Relief Program, in a new report obtained Monday by ABC News on the government’s efforts to fix the financial system.

Yes, $23.7 trillion.

“The potential financial commitment the American taxpayers could be responsible for is of a size and scope that isn’t even imaginable,” said Rep. Darrell Issa, R-Calif., ranking member on the House Oversight and Government Reform Committee. “If you spent a million dollars a day going back to the birth of Christ, that wouldn’t even come close to just $1 trillion – $23.7 trillion is a staggering figure.”

Granted, Barofsky is not saying that the government will definitely spend that much money. He is saying that potentially, it could.

At present, the government has about 50 different programs to fight the current recession, including programs to bail out ailing banks and automakers, boost lending and beat back the housing crisis.

We used to complain that George W. Bush had increased spending by ONE TRILLION DOLLARS in seven years. Who could have even imagined new government commitments of $24 trillion in mere months? These promises could make the implosion of Fannie Mae and Freddie Mac look like a lemonade stand closing.

America Suffers When Washington Wins

The Washington Post has a “feel-good” story about how the huge expansion in the federal government has created a relatively strong job market in the D.C. area.

The story mentions that the federal workforce will expand by another 200,000 during the Obama years. Yet at no point does the author bother to mention (or perhaps even understand) that all these new bureaucrats are financed by draining resources from the productive sector of the economy.

A sample:

They came in droves wearing dark suits and carrying résumés yesterday — some lined up for a block in the hot sun waiting for the doors to open — to the only employer in this dismal economy hiring by the thousands: the federal government.
More than 6,000 people jammed into the National Building Museum in Washington to apply for openings at 75 agencies, including the departments of Treasury, Homeland Security, Justice, Veterans Affairs and Energy. 

[I]n the government, added [an applicant from] Silver Spring, “you get stability, you get great benefits and [an opportunity] to move up and progress in your job.” The federal government represents about one-third of the Washington region’s $401 billion economy. Some analysts said they think the ramp-up in federal hiring and spending will help the area emerge from the recession before most other metropolitan regions. From May 2008 to May 2009, the region lost 55,000 jobs. But during that same period, nearly 20,000 jobs were created, mainly in the federal government and federal contracting sector. 

…The Partnership for Public Service, a nonprofit that sponsored the job fair and is surveying federal agencies to determine their staffing needs, estimates that the government will hire about 600,000 people over the next four years, as many as 120,000 of whom would work in the Washington region. The federal workforce, currently at 1.9 million, is expected to grow to about 2.1 million during the Obama administration, according to the Partnership for Public Service. That is comparable to the staffing level during the Johnson administration’s Great Society programs of the 1960s.

Trapped Inside the Mime’s Box

Kevin Carey, policy director at the think tank Education Sector, asserts that when it comes to higher education libertarians are boxed in, unable to find a solution to out-of-control college costs that won’t violate at least one, basic libertarian principle:

This puts libertarians in somewhat of a box. On the one hand, they tend to be hostile toward the tens of billions of public dollars that flow into colleges every year. The more colleges cost, the greater the claim on the average citizen’s hard-earned money and thus reduction in their precious liberty etc., etc.

But the best way to bend down the long-term higher education cost curve and thus reduce government spending is to increase government regulation in the form of mandatory reporting. So it’s a pick your poison situation for the Cato folks — would you rather have Big Brother’s hand in your wallet or his eye on your business? You really can’t avoid both.

Now, I don’t want to seem obnoxious about this. After all, in the same piece that produced this quote, Carey notes that “while my politics are pretty far from Cato’s and I often think they’re wrong, they tend to be wrong in interesting ways.” I thank him for that (I think), though I should note that the impetus for his piece is a paper that comes from the John William Pope Center – the same paper I discuss here – not from Cato. So it might not even be Cato that Carey finds interesting. Regardless, here’s my potentially obnoxious-sounding reply:

Without even discussing the extremely dubious assumption that more regulation will lead to lower college costs, wouldn’t the best, most direct way to “reduce government spending” obviously be to, well, reduce, or even stop, government spending?

Of course it would, and that is the obvious solution for libertarians! It would get Big Brother out of our wallets and kill whatever justification subsidies might give him to gaze into our business. And it wouldn’t just make libertarians feel better – the benefits would accrue to almost everyone. If students and donors, rather than taxpayers, were to cover much more of colleges’ costs, taxpayers would save money, colleges would be unable to charge as much as they currently do, and schools would have to focus much more on their customers and patrons.

So there is no either-more-regulation-or-higher-costs box. Indeed, the only box that libertarians could possibly be trapped in is a mime’s box – a purely illusory one that someone has to really, really want to believe in for it to have any sort of existence at all. 

Having broken free of the invisible, intangible box, let me address one other thing that Carey brought up both in the discussion held at Cato, and his latest commentary:

The problem is that colleges aren’t just going to unilaterally release lots of new information on their own. Nor would it help matters much if they did; for data to matter it has to be standardized in a way that allows for comparison. That’s why companies report one set of quarterly financial results to the SEC, not 50 different sets to each state. Given that higher education is a national market this leads to a similar national solution: The federal government should compel colleges to release much more information about success as a condition of receiving direct or indirect federal aid.

The idea that a market that happens to be national in scope somehow requires federal control is both very common, and very inaccurate, simply equating “national” with “federal” and moving on from there. Even worse, though, is the even more basic assumption that to get something good, or just standardized, government control is required.

Whether it’s McDonald’s or Ruth’s Chris, an item on the menu in Beverly Hills is going to be essentially the same as in New York City. Why? Not because Washington says it must be, but because that keeps the customers coming. Or consider the QWERTY keyboard: It became the national standard by free-market, not government, forces. And how about the Model T, which was driven by Americans from Maine to San Diego? It was standardized not because the federal government said “this is a national car, so we must make it the national standard,” but because one company produced it and it was freely chosen by customers from sea to shining sea. And how do we choose automobiles today? Not by going to some federal report on what a car should be (though perhaps that day is coming) but, often, by consulting such trade mags as Road and Track.

Clearly, we don’t need government to set standards or inform consumers – markets will do those things themselves. But that markets will set their own standards is just part of the story. Sometimes – indeed, almost all of the time – you simply don’t want a single standard: Vegetarians don’t want a great steak. Many people would rather click than type. The English major fascinated by Chaucer doesn’t need a cyclotron. The working mom often doesn’t want the same education as the parentally funded 18-year-old.

And then there is the gigantic – but usually ignored – problem of government failure: Government regulation and standardization is very costly. It can be used to crush the opponents of the politically well-connected rather than advance the common good. It can have crippling unintended consequences. And, as former Dickinson College president, Clinton-era Department of Education assistant secretary, and current George Mason University professor A. Lee Fritschler made clear at the discussion of the Pope Center’s paper, it also simply fails – a lot. Indeed, based on his experience at the Department of Education, Fritschler is adamant that the feds are simply incapable of effectively regulating higher education.

So once again, Carey sees a mime’s box. This time, though, it’s not one he imagines entrapping libertarians, but one he thinks Washington can drop on the ivory tower to make it work right. It’s a different box, but just as illusory.

Congress Abolishes Health Care Scarcity?

Reading the New York Times’s coverage of a Senate committee’s recent vote on health care legislation, I was struck by the following statement from Sen. Dodd:

If you don’t have health insurance, this bill is for you,” said Senator Christopher J. Dodd, Democrat of Connecticut, who presided over more than three weeks of grueling committee sessions. “It stops insurance companies from denying coverage based on pre-existing conditions. It guarantees that you’ll be able to find an insurance plan that works for you, including a public health insurance option if you want it.”

The bill would also help people who have insurance, Mr. Dodd said, because “it eliminates annual and lifetime caps on coverage and ensures that your out-of-pocket costs will never exceed your ability to pay.”

A basic understanding of economics should tell you this can’t be right. The federal government and the insurance industry have limited resources; the demand for health care is potentially unlimited. Therefore, no conceivable legislation can ensure that the demand for health care will never exceed the resources available to pay for it. All legislation can do is to shift who controls the allocation of scarce health care dollars—in this case away from patients and insurance companies and toward the federal government. Reasonable people can disagree about whether that’s an improvement, but it’s disingenuous to pretend that any legislation could “eliminate” caps on coverage or “ensure” that health care wants will never outstrip our ability to pay for them.

Hate Crimes Bill Becomes an Amendment

Unsure about prospects on passing the Local Law Enforcement Hate Crimes Prevention Act as a stand-alone bill, proponents intend to attach it as an amendment to the Department of Defense Authorization bill. As I have said previously, this bill is an affront to federalism and counterproductive hater-aid.

Federal Criminal Law Power Grab

This legislation awards grants to jurisdictions for the purpose of combating hate crimes. It also creates a substantive federal crime of violent acts motivated by the “actual or perceived religion, national origin, gender, sexual orientation, gender identity, or disability of any person.”

This is a federalization of a huge number of intrastate crimes. It is hard to imagine a rape case where the sex of the victim is not an issue. The same goes for robbery - why grab a wallet from someone who can fight back on equal terms when you can pick a victim who is smaller and weaker than you are?

This would be different if this were a tweak to sentencing factors.

If this were a sentence enhancement on crimes motivated by racial animus - a practice sanctioned by the Supreme Court in Wisconsin v. Mitchell - then it would be less objectionable if there were independent federal jurisdiction.

Thing is, the federal government has already done this, with the exception of gender identity, with the Federal Sentencing Guidelines (scroll to page 334 at the link):

If the finder of fact at trial or, in the case of a plea of guilty or nolo contendere, the court at sentencing determines beyond a reasonable doubt that the defendant intentionally selected any victim or any property as the object of the offense of conviction because of the actual or perceived race, color, religion, national origin, ethnicity, gender, disability, or sexual orientation of any person, increase by 3 levels.

The contrast between a sentence enhancement and a substantive crime gives us an honest assessment of what Congress is doing - federalizing intrastate acts of violence.

If Congress were to pass a law prohibiting the use of a firearm or any object that has passed in interstate commerce to commit a violent crime, it would clearly be an unconstitutional abuse of the Commerce Clause.

Minus the hate crime window dressing, that is exactly what this law purports to do.

What this really amounts to is a power grab - giving the federal government power to try or re-try violent crimes that are purely intrastate. Just as the Supreme Court invalidated the Gun Free School Zones Act in United States v. Lopez because it asserted a general federal police power, this law should be resisted as a wholesale usurpation of the states’ police powers.

The act also essentially overrules United States v. Morrison, where the Court overruled a federal civil remedy for intrastate gender-motivated violence. Forget a civil remedy; while we’re re-writing the constitution through the Commerce Clause let’s get a criminal penalty on the books.

Trials as Inquisitions

The hate crime bill will also turn trials into inquisitions. The focus of prosecution could be on whether you ever had a disagreement with someone of another “actual or perceived religion, national origin, gender, sexual orientation, gender identity, or disability.” Worse yet, it can turn to whether you have any close friends in one of these categories, as demonstrated in the Ohio case State v. Wyant. The defendant denied that he was a racist, which led to the following exchange in cross-examination on the nature of the defendant’s relationship with his black neighbor:

Q. And you lived next door … for nine years and you don’t even know her first name?

A. No.

Q. Never had dinner with her?

A. No.

Q. Never gone out and had a beer with her?

A. No… .

Q. You don’t associate with her, do you?

A. I talk with her when I can, whenever I see her out.

Q. All these black people that you have described that are your friends, I want you to give me one person, just one who was really a good friend of yours.

David Neiwert says that this won’t happen because of a constitutional backstop in the legislation. Unfortunately, the House version of the bill explicitly endorses impeaching a defendant in exactly this manner:

In a prosecution for an offense under this section, evidence of expression or associations of the defendant may not be introduced as substantive evidence at trial, unless the evidence specifically relates to that offense. However, nothing in this section affects the rules of evidence governing impeachment of a witness.

Worse yet, the Senate version of the hate crime bill, the one which will likely become law after conference committee, does not contain this provision. Instead, it explicitly says:

Courts may consider relevant evidence of speech, beliefs, or expressive conduct to the extent that such evidence is offered to prove an element of a charged offense or is otherwise admissible under the Federal Rules of Evidence. Nothing in this Act is intended to affect the existing rules of evidence.

Anyone want to bet that an aggressive prosecutor could find that not having a close enough relationship with your neighbor counts as “expressive conduct” for the purposes of prosecution?

Future Push for More Federal Authority Over Intrastate Crimes

The hate crime bill also pushes a snowball down the mountain toward wholesale federalization of intrastate crime. In a few years this snowball will be an avalanche. By making any gender-motivated crime a hate crime, which will necessarily include nearly all rapes, we will define ordinary street crimes as hate crimes.

With a consistent average of 90,000 rapes a year, this expansion of hate crime definition will come back in a few years where those ignorant of the change in terms will wonder why hate crime is now rampant. “Rampant” only because we have made the relevant definition over-inclusive to the point of being meaningless.

And in a few years, we can revisit this issue with a fierce moral urgency to pass more feel-good legislation that upends state police powers in an effort to do something - anything - to confront this perceived crisis. A perception that Congress is creating in this legislation.

Bob Barr on Drug Reform

President Obama’s new drug czar, Gil Kerlikowske, says he wants to banish the idea of a “war on drugs” because the federal government should not be “at war with the people of this country.”

At a Cato policy briefing on Capitol Hill on July 7, former Republican congressman Bob Barr, once a leading drug warrior in the House, explained why carrying out an end to the “war on drugs” will require a bipartisan solution.

“United States”: Singular Noun, or Plural?

Paul Starobin, the author of an informative primer on foreign policy realism, had an interesting piece in the weekend’s Wall Street Journal on the topic of breaking up the United States.

Devolved America is a vision faithful both to certain postindustrial realities as well as to the pluralistic heart of the American political tradition—a tradition that has been betrayed by the creeping centralization of power in Washington over the decades but may yet reassert itself as an animating spirit for the future. Consider this proposition: America of the 21st century, propelled by currents of modernity that tend to favor the little over the big, may trace a long circle back to the original small-government ideas of the American experiment. The present-day American Goliath may turn out to be a freak of a waning age of politics and economics as conducted on a super-sized scale—too large to make any rational sense in an emerging age of personal empowerment that harks back to the era of the yeoman farmer of America’s early days. The society may find blessed new life, as paradoxical as this may sound, in a return to a smaller form.

[…]

Today’s devolutionists, of all stripes, can trace their pedigree to the “anti-federalists” who opposed the compact that came out of Philadelphia as a bad bargain that gave too much power to the center at the expense of the limbs. Some of America’s most vigorous and learned minds were in the anti-federalist camp; their ranks included Virginia’s Patrick Henry, of “give me liberty or give me death” renown. The sainted Jefferson, who was serving as a diplomat in Paris during the convention, is these days claimed by secessionists as a kindred anti-federal spirit, even if he did go on to serve two terms as president.

The anti-federalists lost their battle, but history, in certain respects, has redeemed their vision, for they anticipated how many Americans have come to feel about their nation’s seat of federal power. “This city, and the government of it, must indubitably take their tone from the character of the men, who from the nature of its situation and institution, must collect there,” the anti-federalist pamphleteer known only as the Federal Farmer wrote. “If we expect it will have any sincere attachments to simple and frugal republicanism, to that liberty and mild government, which is dear to the laborious part of a free people, we most assuredly deceive ourselves.”

Bonus points to Starobin for pointing to the same passage from George Kennan that I’ve taken to quoting.  Kennan worried whether “ ‘bigness’ in a body politic is not an evil in itself.”  As a result, he wondered “how it would be if our country, while retaining certain of the rudiments of a federal government, were to be decentralized into something like a dozen constituent republics, absorbing not only the powers of the existing states but a considerable part of those of the present federal establishment.”

The most obvious objection with which Starobin doesn’t deal is that you’d have a hell of a time selling this scheme on Washington, which happens to have–how to put this politely?–the means to ensure it gets what it wants.

A related objection would be the eternal political question “who gets the guns?”  What sort of armed forces would a decentralized United States possess?  Under whose control would they be?  Would we distribute nuclear weapons to each of the States in order to ensure none of them would get too skittish?

People smarter than me have argued that size isn’t an obstacle to republican government in the case of the United States.  Note, though, the first of the four premises on which the pro-size argument rests:

In the first place it is to be remembered that the general government is not to be charged with the whole power of making and administering laws.  Its jurisdiction is limited to certain enumerated objects, which concern all the members of the republic, but which are not to be attained by the separate provisions of any…

If the case for centralism rests on premises like these that are artifacts of a long-since-squandered legacy, we probably ought to reconsider the arguments against centralism.  At the very least, those of us who want a very small government ought to think hard about the viability of a situation in which a small, weak federal government administers a giant, powerful nation.