Tag: federal spending

Baucus Bill Would Cost More than $2 Trillion

Sen. Max Baucus’s (D-MT) health care overhaul would cost more than $2 trillion.  It would expand the deficit.  But he has carefully and methodically hidden those facts – so well that he has completely hoodwinked nearly all the major media.

The media are reporting that the Baucus bill would reduce the deficit by $81 billion over 10 years.  Wrong.

The Baucus bill assumes that Congress will allow the “sustainable growth rate” cuts in Medicare’s physician payments to occur beginning in 2012.  Yet Congress has routinely and repeatedly blocked those cuts, making Baucus’s assumption preposterous.  The CBO handled the issue delicately, but essentially said, “Sure, provided that the sun rises in the west in 2012, then yes, this bill would reduce the deficit.”

That means Baucus will come up at least $200 billion short on the revenue side, making his bill a budget-buster.

The media are reporting that the Baucus bill would cost just $829 billion over 10 years.  Wrong.

As Donald Marron observes, that number omits as much as $75 billion in new federal spending.  It also omits a $33 billion unfunded mandate on state governments.

But the worst part is that the Congressional Budget Office’s preliminary cost estimate omits the cost of the private sector mandates in the Baucus bill.  In Massachusetts, those costs accounted for 60 percent of the total cost of reform.  That suggests the actual cost of the Baucus bill – $829 billion plus $75 billion plus $33 billion, times 2.5 – is well over $2 trillion.

Yet the CBO score pretends those costs aren’t even there.  It’s like a mystery novel that’s missing the last 50 pages.  And the media aren’t even curious.

In the words of Brad DeLong, why, oh why, can’t we have a better press corps?

Cross-posted at Politico’s Health Care Arena.

Tuesday Links

  • Why Congress should not renew the PATRIOT Act’s “lone wolf” provision.
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Chart of the Day — Federal Ed Spending

The debate over No Child Left Behind re-authorization is upon us.

Except it isn’t.

In his recent speech kicking off the discussion, education secretary Arne Duncan asked not whether the central federal education law should be reauthorized, he merely asked how.

Let’s step back a bit, and examine why we should end federal intervention in (and spending on) our nation’s schools… in one thousand words or less:

Fed Spend Ach Pct Chg (Cato -- Andrew Coulson)

While the flat trend lines for overall achievement at the end of high school mask slight upticks for minority students (black students’ scores, for instance, rose by 3-5 percent of the 500 point NAEP score scale), even those modest gains aren’t attributable to federal spending. Almost that entire gain happened between 1980 and 1988, when federal spending per pupil declined.

And, in the twenty years since, the scores of African American students have drifted downard while federal spending has risen stratospherically.

Funding ACORN

The ACORN scandal provides a good opportunity for citizens concerned about profligacy in Washington to explore some of the tools available to find out where their tax money goes.

A good place to start your research is the Federal Audit Clearinghouse on the Census website. All groups receiving more than $500,000 a year from the government are required to file a report. Just type in “ACORN” as the entity and the system pops up the group’s filings. My assistant John Nelson summarized the federal programs and amounts received by ACORN in recent years:

2003

Housing Counseling Assistance $1,168,388

Community Development Block Grants $388,273

Home Investment Partnership $8,000

Self-Help Homeownership Opportunity $204,082

Fair Housing Initiatives Program $85,000

Total $1,853,743

2004

Housing Counseling Assistance $2,209,009

Community Development Block Grants $221,007

Home Investment Partnership Program $21,092

Self-Help Homeownership Opportunity $127,183

Fair Housing Initiatives Program $105,000

Total $2,683,291

2005

Housing Counseling Assistance $2,605,558

Community Development Block Grants $367,560

Self-Help Homeownership Opportunity $153,082

Fair Housing Initiatives Program $140,917

Total $3,267,117

2006

Housing Counseling Assistance $1,955,074

Self-Help Homeownership Opportunity $59,541

Rural Housing and Economic Development $47,619

Fair Housing Initiatives Program $150,000

Community Development Block Grants $238,809

Total $2,451,043

2007

Housing Counseling Assistance $1,813,011

Self-Help Homeownership Opportunity $46,608

Rural Housing and Economic Development $30,504

Fair Housing Initiatives Program $60,000

Community Development Block Grants $372,950

Total $2,323,073

My colleague, Tad DeHaven, has discussed why these HUD programs that funded ACORN ought to be abolished completely.

Subsidy information is also available from IRS Form 990, which is filed by all non-profit groups and compiled at Guidestar and other websites. I am not an expert on this data, but Velma Anne Ruth of ABS Community Research has done a detailed analysis, which she kindly sent to me. She finds that federal funding for ACORN was about $1.7 million in 2008 and about $2.2 million in 2009.

Finally, a user-friendly website to research recipients of federal grants and contracts is www.usaspending.gov.

ACORN’s share of overall federal subsidies is tiny, but as thousands of similar organizations have become hooked on 1,800 different federal subsidy programs, a powerful lobbying force has been created that propels the $3.6 trillion spending juggernaut. ACORN’s own website touts its lobbying success in helping to pass various big government programs. So cutting off ACORN is a start, but just a small start at the daunting task of cutting back the giant federal spending empire.

20-somethings Will Pay for Big Government

A front-page Washington Post story today notes that the cost of Obama-style health care reform will fall disproportionately on young adults.

Younger workers are typically more healthy than the population at large, and a significant share of them quite rationally choose not to buy health insurance, as my colleague Mike Tanner explains in a recent op-ed. The major health care plans on the table in Washington would force them to buy coverage. As the Post story explains:

Drafting young adults into any health-care reform package is crucial to paying for it. As low-cost additions to insurance pools, young adults would help dilute the expense of covering older, sicker people. Depending on how Congress requires insurers to price their policies, this group could even wind up paying disproportionately hefty premiums—effectively subsidizing coverage for their parents.

I’m beginning to see a pattern. Those same young workers will be forced to pay the bills for soaring Social Security and Medicare expenditures when the Baby Boomers begin retiring en masse a decade from now. And of course, they will be the ones paying off the $9 trillion in additional federal debt expected to be wracked up from the current explosion in federal spending.

I always thought parents were supposed to support their kids, not saddle them with bigger bills and huge debts.

How Many Attended the Tea Parties?

Back in April there was a lot of debate about how many people actually attended the April 15 “tea parties” to oppose President Obama’s tax and spending programs. Pajamas Media, an enthusiastic backer of the protests, offered an estimate upwards of 400,000.

Nate Silver of the FiveThirtyEight blog, a more skeptical observer, diligently compiled what he considered “nonpartisan and credible” estimates – mostly from mainstream media or police sources – and came up with a detailed sum of about 311,000. Not bad for widely dispersed events, most with no big-name speakers or celebrities, not hyped by the major media (though certainly hyped by some of the conservative media).

But I’ve recently stumbled across reports of two tea parties that didn’t make Silver’s list. In a long profile of a councilwoman who supported Obama in Greenwood, South Carolina, the Washington Post reports on her encountering 200 people at a tea party in Greenwood. And the latest compilation of newspaper clippings from the Mackinac Center includes an April 16 article from the Midland (Michigan) Daily News about a tea party there that attracted 500 people. So who knows how many other farflung events didn’t get included in Silver’s comprehensive list?

Andrew Samwick of Dartmouth complained that the tea parties – and maybe even libertarians – weren’t clearly focused on the problem of spending. As I said in a comment there, I think that’s an unfair charge:

Here’s how one major news outlet reported them:

Nationwide ‘tea party’ protests blast spending - CNN.com (http://www.cnn.com/2009/POLITICS/04/15/tea.parties/ )
ABCNews.com said “Anti-Tax ‘Tea Parties’ Protest President Obama’s Tax and Spending Policies.” USA Today wrote, “What started out as a handful of people blogging about their anger over federal spending — the bailouts, the $787 billion stimulus package and Obama’s budget — has grown into scores of so-called tea parties across the country.”

It’s hard to put specific cuts, especially COLAs and the like, on protest signs; but I think it’s fair to say that the tea-party crowds were complaining about excessive spending and “generational theft.”

The GOP Is Not Serious about Cutting Down Spending

A month ago, President Obama issued a list of proposed spending cuts that I dismissed as “unserious” due to the fact that they were trivial when compared to his proposed spending and debt increases.  Today, the House Republican leadership released a list of proposed spending cuts.

I’d love to say I’m impressed, but I can’t.

Both proposals indicate that neither side of the aisle grasps the severity of the country’s ugly fiscal situation, or at least has the guts to do anything concrete about it.

The GOP proposal claims savings of more than $375 billion over five years, the bulk of which ($317 billion) would come from holding non-defense discretionary spending increases to no more than inflation over the next five years.

First, it should be cut – period.  Second, non-defense discretionary spending only amounts to about 17% of all the money the federal government spends in a year, so singling out this pot of money misses the bigger picture.  At least, defense spending, which is almost entirely discretionary, should be included in any cap.  But it has become an article of faith in the Republican Party that reining in defense spending is tantamount to putting a white flag in the Statue of Liberty’s hand.

The second biggest chunk of savings would come from directing $45 billion in repaid TARP funds to deficit reduction instead of allowing the money to be used for further bailing out.  That’s a sound idea as far it goes, but I can’t help but point out that the signatories to the document, House Republican Leader John Boehner and Minority Whip Eric Cantor, voted for the original $700 billion TARP bailout. Proposing to rescind the Treasury’s power to release the remaining funds, about $300 billion I believe, should have been included.

According to the proposal, the rest of the cuts and savings comes out to around $25 billion over five years.  Like the specific cuts in the president’s proposal, they’re all good cuts.  But the president detailed $17 billion in cuts for one year and I generously called it “measly.”  What am I to call the House Republican leadership specifying $5 billion a year in cuts?

Take for example, proposed cuts to the Department of Housing and Urban Development (HUD), which is likely to spend around $65 billion this year.  Having recently spent a couple months analyzing HUD’s past and present, I can state unequivocally that it’s one of the sorriest bureaucracies the world has ever seen.  Yet, the House Republican leadership comes up with only one proposed elimination: a $300,000 a year program that gives “$25,000 stipends for 12 students completing their doctoral dissertation on issues related to housing and urban development.”  The only other proposed cut to HUD would be $1.7 billion over five years to the Community Development Block Grant (CDBG) program.  This notoriously wasteful program is projected to spend over $8 billion this year alone.  Eliminate it!

The spending cuts the country needs must be substantial, serious, and put forward in the spirit of recognizing that the federal government’s role in our lives must be downsized.  Half-measures are not enough, and from the Republican House leadership, wholly insufficient for winning back the support of limited-government voters who have come to associate the GOP with runaway spending and debt.  For a more substantive guide to cutting federal spending, policymakers should start with Cato’s Handbook chapter on the subject.