Tag: GOP

Ban Spending Earmarks, But Not Tariff Cuts

Republican leaders in Congress announced Monday that they are all on board to ban spending “earmarks” when the newly elected Congress convenes in January. That is all to the good. While not a large share of the federal budget, the designation of tax dollars to fund specific pet projects in member districts has come to symbolize out-of-control spending in Washington.

Those same leaders should clarify that the earmark ban applies only to spending projects—not to the kind of tariff suspensions including in a recent miscellaneous tariff bill.

The U.S. Manufacturing Enhancement Act approved by Congress in July suspended tariffs on hundreds of imported items of special interest to U.S. manufacturers. House Republican leaders made the mistake earlier this year of including such tariff suspensions in an earmark ban they announced in March.

The overly broad definition of an earmark boxed the leadership into opposing a perfectly sensible trade bill. Despite the half-hearted opposition of the GOP leadership, the U.S. Manufacturing Enhancement Act passed overwhelmingly in the House on July 21, by a margin of 378-43, with Republicans supporting it by a 3-1 margin.

Most members of Congress already understood what the Cato Institute pointed out in a September 2010 study recommending reform of future miscellaneous tariff bills—that tariff cuts are not the same as spending earmarks. Here is what I wrote in the study about the difference between tariff cuts and the kind of spending earmarks that has angered voters:

Spending-bill earmarks distribute tax dollars not for any public purpose authorized under the U.S. Constitution, but rather to benefit a certain special interest or a specific city or district. They grant favors to a small group of beneficiaries at the public’s expense. In contrast, a tariff suspension repeals a narrow tax that falls disproportionately and unfairly on a small group of producers. Instead of granting a favor at the public’s expense, a tariff suspension relieves individual producers of a burden that falls on them and nobody else. Unlike a spending earmark, a tariff suspension creates no new claim on public resources. It does not expand the scope or size of government.

Including tariff suspensions in the moratorium is not a matter of curbing the power of lobbyists. There is a world of difference between lobbying for a $500,000 government grant for a project with narrow benefits, and lobbying to remove a $500,000 tax bill that only a handful of enterprises are required to pay. The former seeks an expansion of the government’s power and influence, the latter a reduction. Republicans who rightly complain about the growth of the federal government should be the first to embrace the suspension and repeal of hundreds of nuisance taxes distorting the economy and burdening American producers.

The new Congress may soon consider another miscellaneous tariff bill to further reduce discriminatory tariffs that impose real costs on U.S. companies trying to compete in global markets. Republican leaders should join with their Democratic counterparts in the new Congress to clarify that suspending or repealing unfair tariffs should not be banned but should be vigorously pursued.

Republican Hypocrisy Watch

Last week I urged readers to be on the lookout for Republicans seeking to exclude farm subsidies from any cuts they plan to make to federal spending. And it seems the first example of “smaller government for thee, but not for me” has been provided by incoming congresswoman Vicki Hartzler, who campaigned on a Tea Party-ish platform and defeated long-time congressman Ike Skelton (in Missouri’s 4th congressional district).

Ms. Hartzler calls Margaret Thatcher her role model because she “took principled stands.” (As, indeed, she often did.) Ms. Hartzler also says economic issues – cutting government spending, complete repeal of the health care bill – are her main concern. But read the fine-print in this article from the St. Louis Beacon:

Hartzler says cutting spending is a top personal priority; she wants to roll back non-discretionary funding levels to 2008 levels, before the economic stimulus and TARP programs. …

The congresswoman-elect would exempt some of the federal budget’s high-cost categories – including Social Security, Medicare and the Pentagon budget – from cutbacks. But she would not exempt agricultural subsidies,* another major area of federal spending popular in rural areas such as west-central Missouri’s Fourth District. Among the many farms to receive such subsidies is the 1,700-acre Hartzler farm, which – according to the Environmental Working Group’s “Farm Subsidy Database” – received about $774,000 in federal payments (mainly commodity subsidies for corn, soybeans and wheat) from 1995 through 2009.

“Everything should be on the table,” she says. While she says some agriculture programs represent a “national defense issue” because they help guarantee that “we have a safety net to make sure we have food security in our country,” Hartzler adds: “Should we continue the CRP [Conservation Reserve] program, where you pay farmers to not plant ground and set it aside for awhile? I’m not sure. The time for that may be over.” [emphasis added]

Let’s be clear about what Ms. Hartzler is talking about here. Those “some” agricultural programs she says should be guaranteed on “national defense” grounds (see below) are what we commonly think about as “farm subsidies” – payments to farmers to produce certain commodities, whether those payments are funded by taxpayers or consumersThey encourage overproduction and thus alienate our trade partners, complicate efforts to make global trade freer, harm poor farmers abroad and damage America’s reputation in the process. They cost us billions of dollars a year.

She is, on the other hand, open to cutting farm programs that at least pretend to have environmental benefits. I’m not commenting here on the validity of those sorts of ”public goods” claims, and of course I am not conceding that the federal government should be involved in them. But I think most reasonable  people would agree that they are less economically damaging than traditional farm subsidies.  In other words, in the hierarchy of damage, and therefore in the hierarchy of what should be cut first, I would put farm subsidies ahead of the CRP. And I fail, in any event, to see how anyone calling themselves a fiscal conservative can promote the idea of excluding a priori that which we commonly think of as “farm subsidies.”

[Also, can we please abandon once and for all this nonsense idea that we need farm subsidies to have food security? Appeals to “national defense” are disingenuous and cynical. They are also belied (rather obviously) by the fact that we see abundant supplies of fruit, vegetables and other horticultural goods even though those products attract no subsidies directly. The best way to ensure a food security is to ensure open markets, so food can flow from where it is abundant to where it is scarce. Self-sufficiency is a misguided policy, as the experience of North Korea can attest.]

So, in summary, when Ms. Hartzler says “everything should be on the table”, she basically means “not much, and certainly nothing that might harm powerful special interests that I care about.” I lost count of the number of Republican politicians being interviewed during the campaign and on election night talking about the need for “across-the-board cuts to discretionary spending” as their fiscal plan. Most if not all of them emphasized that so-called mandatory spending (which includes some farm subsidies) would be exempt from their cuts. I’m sorry, but I cannot take seriously the “fiscal conservative” credentials of any politician who adopts such a line.

*It appears, judging from the quote below, that she would indeed exempt farm subsidies from cuts, even if other farm programs would be on the chopping block. I’m going to assume here the reporter was using the term “farm subsidies” in an imprecise manner.

On Election Eve…

With Tuesday’s election widely predicted to bring a near-historic shake-up of the political establishment, here are some things we can say for certain even before the first results are tallied:

  1. This election will be a win for economic conservatives, not social conservatives.  Not surprisingly given the economic climate, economic issues dominated the campaign, with social issues barely registering.  This was particularly helpful for Republicans, since economically conservative, socially moderate suburban voters, who backed Democrats in 2006 and 2008, switched to Republicans this year. There is a lesson here for Republicans in the future.
  2. In the months leading up to the election, we have heard a great deal about the so-called “civil war” in the Republican Party.   As it turns out, there wasn’t one.  Despite some spirited, even bitter, primary fights, Republicans of all stripes were able to unify around a common opposition to the Obama agenda.  But having achieved electoral success, Republicans will now be forced to confront the serious divisions in their party: tea partiers vs. the GOP establishment; economic conservatives vs. social conservatives; budget hawks vs. neoconservatives.  The “civil war” will be back with a vengeance.
  3. Voters will choose Republicans in this election because they aren’t Democrats.  It doesn’t mean that voters have fallen in love with the Republican party.  In fact, polls show that Republicans remain only slightly more popular than used car salesmen—or Democrats.  At best, voters are willing to give Republicans one last chance.  If they don’t deliver, it will be a long, long time before they get another one.
  4. No issue hurt Democrats as much as the health care bill.  It wasn’t just that voters hate the bill—they do—but that it crystallized the average American’s antipathy to a government that was too big, too costly and too out of touch.  Voters will declare that they don’t want government running health care…and come to think of it, they don’t want government running much else either.

GOP: Cut Whaling History Subsidies, Save Nation

House Republican Whip Eric Cantor’s “YouCut” project has released a new video that attempts to visually underscore the impropriety of sticking future taxpayers with a mountain of federal debt.

The video begins with a voice saying “You wouldn’t do this to your child’s piggy bank” followed by visuals of a child’s piggy bank being smashed with a hammer. The voice then says:

But Democrat controlled Washington is leaving a $13 trillion debt for your children and future generations. It’s time Washington got its fiscal house in order. Start changing the culture of spending in Washington by voting on YouCut today.

That’s a wee bit disingenuous considering that Republicans and Democrats alike are responsible for the massive federal debt.

More frustrating is the fact that the GOP leadership rhetoric of grave concern is completely at odds with the party’s tiny proposed reforms. In Cantor’s YouCut commentary he says “America is at a critical crossroads, and the choices we make today will determine the kind of country we leave to our children and grandchildren.”

Now let’s look at this week’s proposed GOP spending cuts. A website banner says “CLICK HERE TO VOTE FOR THIS WEEK’S FIVE CUTS,” but takes the viewer to the YouCut page where they’re offered three spending cut options:

1. Terminate Taxpayer Funding of National Public Radio. The site says this would achieve “Savings of Tens of Millions of Dollars (potentially in excess of a hundred million dollars).” NPR shouldn’t receive taxpayer funding – and not just because it canned Juan Williams. But couldn’t the House GOP leadership have at least offered up the $500 million Corporation for Public Broadcasting that subsidizes NPR for cutting?

2. Terminate Exchanges with Historic Whaling and Trading Partners Program. The site says this would save $87.5 million over ten years.

3. Terminate the Presidential Election Fund. This would achieve a whopping projected savings of $520 million over ten years.

America is at a “critical crossroads” and the GOP leadership is offering to cut whaling history subsidies? Congress is bankrupting the nation and the possible next Speaker of the House – “never a details man” – can’t even specify what he would cut in the budget.

It’s pathetic.

President Obama and Education Politics As Usual

President Obama has seemingly made an entire mountain range out of his Race-to-the-Top reform molehill, while he’s gotten more or less a free pass on all he’s done to enrich the status quo. And now, with big midterm losses looming for his party, he appears to be resorting to one of the easiest political ploys in the book: Claim the GOP will cut funding to education and, in so doing, hurt innocent children and cripple the nation’s economic future. As the President opined in his weekly address:

[I]f Republicans in Congress had their way….We’d have a harder time offering our kids the best education possible. Because they’d have us cut education by 20 percent – cuts that would reduce financial aid for eight million students; cuts that would leave our great and undervalued community colleges without the resources they need to prepare our graduates for the jobs of the future.

Now, it is true that when it comes to our budget, we have real challenges to meet. And if we’re serious about getting our fiscal house in order, we’ll need to make some tough choices. I’m prepared to make those choices. But what I’m not prepared to do is shortchange our children’s education. What I’m not prepared to do is undercut their economic future, your economic future, or the economic future of the United States of America.

Where did the President get the 20 percent number? It most likely stems from the promise in the House Republican’s “Pledge to America” to return federal spending unrelated to defense or senior citizens to pre-stimulus levels. Presumably, that means education spending would be reduced to the level it was at before passage of the stimulus. Considering that the stimulus was supposed to be a one-shot thing, that hardly seems like a draconian move.

That said, the much more important consideration is that based on decades of evidence – not to mention the strictures of the Constitution – federal education spending should not only be reduced, it should be phased out completely. Looking at the evidence since the feds started delving deeply into education in the mid-1960s, it’s clear that we’ve gotten very little for our money. 

Start with K-12 education, where we have results from the National Assessment of Educational Progress, a consistent measure of performance since the early 1970s :

As you can see, Washington has spent steeply increasing amounts of money and not moved the needle at all for the 17-year-olds that constitute the “final products” of our elementary and secondary schools.

How about higher education?

Here the main focus has been providing stduent financial aid to increase college access, and in defense of the feds we have seen big increases in college enrollment since the mid-1960s. Enrollment, however, had been increasing substantially for many decades prior to 1965 or the post-World War II G.I. Bill, suggesting that Washington might have just caught an enrollment wave that was coming in anyway. There is also strong evidence that federal student aid has helped fuel rampant tuition inflation, largely negating the aid’s value. And while we have no consistent, long-term measure of learning outputs, we can at a minimum see that literacy among holders of at least a bachelor’s degree dropped between 1992 and 2003. According to the National Assessment of Adult Literacy, forty percent of people whose highest educational attainment was a bachelor’s degree were proficient prose readers in 1992 . By 2003, only 31 percent were. For Americans with graduate degrees, 51 percent were proficient in 1992. Eleven years later, only 41 percent were.

Unfortunately, for decades federal politicians have expended taxpayer money either in goodhearted – but misguided – efforts to improve education, or more selfishly, to appear to “care about the children” and make political hay. Regardless of the motivation, at this point it must no longer be ignored: Washington ‘s spending on education has gotten us little of demonstrable value.  For President Obama to not even acknowledge the powerful evidence of this, but instead trot out the old canard that less spending is synonymous with worse education,  signals that he’s more than willing to play bankrupting education politics as usual.

GOP’s Pledge to America

The House Republicans’ release of its “Pledge to America” has been met with criticism from across the ideological spectrum. While excoriation from the left was inevitable, those who were hoping that the GOP would set out a detailed agenda for limiting government were also not satisfied.

The 48-page document contains more pictures of Republican members of Congress than it does evidence that the GOP is seriously prepared to cut spending. While the introductory commentary is designed to appeal to the tea party movement, the actual “plan” to return budgetary sanity to Washington is both timid and incomplete.

The following are some thoughts on the pledge’s “plan to stop out of control spending and reduce the size of government”:

  • The document immediately notes that the “lack of a credible plan” to tackle the mounting federal debt causes uncertainty for employers and investors. The problem is the GOP leadership doesn’t have a credible plan to address the debt, or at least this document doesn’t offer one.
  • It disingenuously promises to “cut government spending to pre-stimulus, pre-bailout levels” when in fact it only intends to do so for a small portion of the overall federal budget. The reduction would apply to discretionary, non-security spending, which only accounts for about 15 percent of total federal spending.
  • Not only does the GOP punt on the big-ticket programs like Social Security and Medicare, the document devotes an entire section to maintaining the interventionist foreign policy that is helping to bankrupt the country. The GOP doesn’t appear to understand that the American people are having an increasingly difficult time understanding why the government continues to take bricks out of our own economy in order to build nations around the globe.
  • The document says that the GOP will “root out government waste.” Waste goes with government the way peanut butter goes with jelly. Nancy Pelosi has made the same promise, which demonstrates the vacuous nature of the proposal.
  • The GOP says it will cut the operations budget of Congress. That’s fine, but the legislative branch’s budget is only about $5 billion.
  • Calling for an end to the federal government’s control of Fannie Mae and Freddie Mac is a good idea. But that’s an easy position. They should instead be calling for an end to the government’s entire disastrous role in subsidizing homeownership.
  • The document calls for a freeze in federal non-security hiring. One would have thought the GOP would at least address exorbitant federal civilian employee pay. Freezing (or reducing) federal employment would take care of itself by eliminating agencies and programs, which is something the document doesn’t lay out a plan to do.
  • The GOP proposes to continue holding weekly votes to cut spending via its YouCut initiative. It’s a fine idea, but most of the cuts offered for consideration thus far have been relatively insignificant. For example, one of the cuts being proposed this week would “reduce funding for the wild horse and burro program to previously projected levels.” Not only would this only save $280 million over ten years, the GOP couldn’t even find the nerve to call for its outright abolition.
  • One piece of good news is that the GOP explicitly calls for the repeal of Obamacare.

With the Democrats content to irresponsibly promise more free lunches in the face of an unsustainable fiscal situation, it would have been refreshing for the House Republicans to square with the American people. However, with this document the GOP largely fell back on limited government platitudes.

Protectionist Candidates Firing Blanks So Far

The early returns are in on the Democratic tactic of making trade an issue in the 2010 campaign, and the results are not encouraging for those who want to blame trade agreements for the state of the economy.

In a column this morning for the Wall Street Journal (“Ohio’s Test of Protectionist Rage”), Gerald Seib reports from Ohio that two Republican candidates have been unscathed so far by Democratic attacks on their past support for major trade agreements.

In races for U.S. Senate and governor, Democrats have unleashed hard-hitting ads accusing their GOP opponents of supporting trade deals “that shipped tens of thousands of Ohio jobs overseas.” So far the attacks have failed to draw blood. According to Seib:

Right now, both Republican contenders in those races—Rob Portman for the Senate and John Kasich for governor—are coming under fire for their past support of free trade. The fact that both enjoy big poll leads right now suggests the attacks have had limited effect so far.

A key question in the campaign stretch run, both for Ohio and for policy making in Washington after the election, is whether that remains the case.

Blaming trade for Ohio’s economic woes is wrong on substance, as I noted in 2008 when the issue came up in the state’s Democratic presidential primary. Politically it has proven to be a non-factor. As keen as I am to promote free trade, I’ll admit that it is probably not a big vote-getter on Election Day, but neither is it a vote-loser.

Candidates who support our freedom to trade with the rest of the world should not abandon that sound position under the desperate fire of their opponents.