Tag: government spending

Congress’s Blank-Check Bills

Luke Rosiak at the Washington Examiner filed a report late last week on a little recognized, but important congressional practice: proposing open-ended spending. In the last Congress, fully 700 bills proposed spending without limits. That’s a lot.

A quick primer: congressional spending is a two-step process. First, there must be an authorization of appropriations. Then Congress appropriates funds, providing actual authority for executive branch agencies to spend.

The committees in Congress are divided by type between authorizing committees and appropriations committees. Authorizers are supposed to do the bulk of the oversight and authorize spending at amounts they determine. Appropriators would then dole out funds specifically. But over the years, the division of labor has shifted and power has collected in the appropriations committees, whose members are often referred to as “cardinals” … like “College of Cardinals.”

Backward incentives explain this. Members of Congress who authorize spending naturally appear to be pro-spending, which has political costs. The costs are at their worst when a specific amount is involved. “Senator So-and-So wants to spend $50 million on what?!” So many authorizing committees shirk their duties by eschewing reauthorization of the agencies in their jurisdiction. And sometimes the trick is authorizing spending of “such sums as may be necessary,” which doesn’t provide as good an angle for political attack.

representatives who wrote the most blank checksThat would make appropriators the only drag on spending, but it doesn’t because of a second perversion in politics. Appropriators get good enough at gathering the political emoluments of spending that they overcome the negatives and become an institutional pro-spending bloc. As Mike Franc of the Heritage Foundation put it in 2011, “appropriators, their professional staff, and legions of lobbyists serve as a mutually reinforcing triad bent on increasing spending today, tomorrow, and forevermore.”

Rosiak notes that the House Republican leadership cautioned against open-ended spending proposals at the beginning of the 113th Congress. Consequently, Republican blank-check bills are more rare. The top open-ended spenders are all Democrats, and they’re all on the party’s left wing.

So what’s to be done?

In 2010, the Senate joined the House in banning earmarks. This came after a few short years of applied transparency in the earmark area, including a contest to gather earmark data conducted by yours truly on WashingtonWatch.com. A group called Taxpayers Against Earmarks (now Ending Spending) applied some direct pressure. And a host of other groups were involved, of course.

The practice of proposing open-ended spending could similarly be curtailed with public oversight and pressure.

So who should do that work?

We’ve already started. Rosiak’s story was produced using the Cato Institute’s Deepbills data.

Slashing the Budget?

I’ve written before about the propensity of journalists to declare modest budget cuts—or reductions in the rate of growth of government spending—in apocalyptic terms such as “slashing” and “draconian.” I was thus amused by this line in a Washington Post editorial today:

Mr. Hogan is slashing those payments by half, which will mean cuts approaching 1 percent to the school budgets of both Montgomery and Prince George’s counties.

The editorial is generally sympathetic to budget cuts proposed by the new governor of Maryland, and of course the “extra funding from Annapolis mainly to cover higher teacher salaries” may actually be subject to larger cuts. Still, when the impact on the county school budget is “approaching 1 percent,” I’d think “slashing” is, well, overkill.

Dividing the Loot in Maryland

Anticipating the inauguration of a rare Republican governor in Maryland, the state’s big Democratic jurisdictions are getting worried about their access to the state treasury:

Montgomery and Prince George’s officials are trying to make sure their counties are not forgotten by Gov.-elect Larry Hogan.

The Anne Arundel County Republican, who will be sworn in Wednesday, has pledged to pay more attention to rural Maryland, which he says was neglected during the administration of outgoing Gov. Martin O’Malley (D). Those rural counties also voted for Hogan by overwhelming margins….

“The uncertainty of the new administration creates more of an impetus . . . for larger jurisdictions to come together,” said Prince George’s County Council Chair Mel Franklin (D-Upper Marlboro), who wants to form a “large-county caucus” to lobby in Annapolis.

They have nothing to worry about, right? Surely a governor wouldn’t direct taxpayer dollars on the basis of political favoritism? As it happens, I’ve been watching Maryland politics for many years, and this story reminded of one that appeared in the Washington Post 20 years ago this week, when Parris Glendening became governor:

In his first major act as Maryland governor, Parris N. Glendening unveiled a no-new-taxes budget today that unabashedly steers the biggest share of spending to the three areas that voted most strongly for him: Montgomery and Prince George’s counties and Baltimore.

Glendening proposed cuts in welfare and other state programs so he can build more schools, fight crime and create jobs, particularly in those three urban areas, the only ones where Glendening (D) won a majority of votes Nov. 8.

I thought that was such a perfect encapsulation of politics at its finest that I’ve quoted it numerous times, including in my forthcoming book The Libertarian Mind. I also like to quote this charming and honest description of politics in a letter written by Lord Bolingbroke, an English Tory leader in the eighteenth century:

I am afraid that we came to Court in the same dispositions as all parties have done; that the principal spring of our actions was to have the government of the state in our hands; that our principal views were the conservation of this power, great employments to ourselves, and great opportunities of rewarding those who had helped to raise us and of hurting those who stood in opposition to us.

I recall reading that Charlie Peters, the legendary editor of the Washington Monthly, used to say that state legislatures are just committees for dividing up the loot, though I can’t find it online. If he didn’t, he should have.

Another “Oops” Moment for Paul Krugman

I’m tempted to feel a certain degree of sympathy for Paul Krugman.

As a leading proponent of the notion that bigger government stimulates growth (a.k.a., Keynesian economics), he’s in the rather difficult position of rationalizing why the economy was stagnant when Obama first took office and the burden of government spending was rising.

And he also has to somehow explain why the economy is now doing better at a time when the fiscal burden of government is declining.

But you have to give him credit for creativity. Writing in the New York Times, he attempts to square the circle.

Let’s start with his explanation for results in the United States.

…in America we haven’t had an official, declared policy of fiscal austerity — but we’ve nonetheless had plenty of austerity in practice, thanks to the federal sequester and sharp cuts by state and local governments.

If you define “austerity” as spending restraint, Krugman is right. Overall government spending has barely increased in recent years.

But then Krugman wants us to believe that there’s been a meaningful change in fiscal policy in the past year or so. Supposedly there’s been less so-called austerity and this explains why the economy is doing better.

The good news is that we…seem to have stopped tightening the screws: Public spending isn’t surging, but at least it has stopped falling. And the economy is doing much better as a result. We are finally starting to see the kind of growth, in employment and G.D.P., that we should have been seeing all along… What held us back was unprecedented public-sector austerity…now that this de facto austerity is easing, the economy is perking up.

But where’s his evidence? Whether you look at OMB data, IMF data, or OECD data, all those sources show that overall government spending has been steadily shrinking as a share of GDP ever since 2009.

The Final Nail in the Keynesian Coffin?

I wrote earlier this year about the “perplexing durability” of Keynesian economics. And I didn’t mince words.

Keynesian economics is a failure. It didn’t work for Hoover and Roosevelt in the 1930s. It didn’t work for Japan in the 1990s. And it didn’t work for Bush or Obama in recent years. No matter where’s it’s been tried, it’s been a flop. So why, whenever there’s a downturn, do politicians resuscitate the idea that bigger government will “stimulate” the economy?

And I specifically challenged Keynesians in 2013 to explain why automatic budget cuts were supposedly a bad idea given that the American economy expanded when the burden of government spending shrank during the Reagan and Clinton years.

I also issued that same challenge one day earlier, asking Keynesians to justify their opposition to sequestration given that Canada’s economy prospered in the 1990s when government spending was curtailed.

It seems that the evidence against Keynesianism is so strong that only a fool, a politician, or a college professor could still cling to the notion that bigger government lead to more growth.

Fortunately, it does appear that there’s a growing consensus against this free-lunch theory.

A Practical (and Semi-Optimistic) Plan to Tame the Federal Leviathan

Like a lot of libertarians and small-government conservatives, I’m prone to pessimism. How can you be cheerful, after all, when you look at what’s been happening in our lifetimes.

New entitlement programs, adopted by politicians from all parties, are further adding to the long-run spending crisis.

The federal budget has become much bigger, luring millions of additional people into government dependency.

The tax code has become even more corrupt and complex, with more than 4,600 changes just between 2001 and 2012 according to a withering report from outgoing Senator Tom Coburn of Oklahoma.

And let’s not forget the essential insight of “public choice” economics, which tells us that politicians care first and foremost about their own interests rather than the national interest. So what’s their incentive to address these problems, particularly if there’s some way to sweep them under the rug and let future generations bear the burden?

And if you think I’m being unduly negative about political incentives and fiscal responsibility, consider the new report from the European Commission, which found that politicians from EU member nations routinely enact budgets based on “rosy scenarios.” As the EU Observer reported:

EU governments are too optimistic about their economic prospects and their ability to control public spending, leading to them continually missing their budget targets, a European Commission paper has argued. …their growth projections are 0.6 percent higher than the final figure, while governments who promise to cut their deficit by 0.2 percent of GDP, typically tend to increase their gap between revenue and spending by the same amount.

Needless to say, American politicians do the same thing with their forecasts. If you don’t believe me, just look at the way the books were cooked to help impose Obamacare.

But set aside everything I just wrote because now I’m going to tell you that we’re making progress and that it’s actually not that difficult to constructively address America’s fiscal problems.

First, let’s look at how we’ve made progress. I just wrote a piece for The Hill. It’s entitled “Republicans are Winning the Fiscal Fight” and it includes lots of data on what’s been happening over the past five years, including the fact that there’s been no growth in the federal budget.

Two Very Depressing Charts for President Obama, Two Very Encouraging Charts for America’s Taxpayers

Let’s look at some fiscal data that must be very depressing for President Obama and other advocates of big government.

Which means, of course, that this information must be very good news for American taxpayers!

Here’s a chart looking at annual federal spending since 2000. You’ll notice that spending skyrocketed from 2000-2009 (a time when libertarians were justifiably glum), but look at how the growth of government came to a screeching halt after 2009.

Here are some specific numbers culled from the OMB data and CBO data. In fiscal year 2009, the federal government spent about $3.52 trillion. In fiscal year 2014 (which ended on September 30), the federal government spent about $3.50 trillion.

In other words, there’s been no growth in nominal government spending over the past five years. It hasn’t received nearly as much attention as it deserves, but there’s been a spending freeze in Washington.

Now let’s look at what happens when government is put on a diet.

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