Tag: mitch mcconnell

McConnell Had It Right: Government Should Not Pursue Universal Coverage

I’m a bit late to this party, but Senate Minority Leader Mitch McConnell (R) was of course right to tell Fox News’ Chris Wallace last weekend that the federal government should not pursue universal coverage:

Wallace: In your replacement [for ObamaCare], how would you provide universal coverage?

McConnell: Well, first let me say the single best thing we can do for the American health care system is to get rid of ObamaCare…

Wallace: But if I may sir, you talk about “repeal and replace.” How would you provide universal coverage?

McConnell: …We need to go step by step to replace it with more modest reforms…that would deal with the principal issue, which is cost…

Wallace: …What specifically are you going to do to provide universal coverage to the 30 million people who are uninsured?

McConnell: That is not the issue. The question is, how can you go step by step to improve the American health care system…

Wallace: …If you repeal ObamaCare, how would you protect those people with pre-existing conditions?

McConnell: …That’s the kind of thing that ought to be dealt with at the state level…

Naturally, the Church of Universal Coverage caught the vapors. But Time’s Mark Halperin says McConnell’s stance, while embarrassing, is “not a politically dangerous place to be”:

McConnell would have seemed less evasive and could have stopped Wallace in his tracks had he said, “We will not pursue universal coverage because that causes more people–not fewer–to fall through the cracks in our health care sector.”

Budget Plans: Gang of Six and Senator Coburn

The “Gang of Six” senators has released an outline of budget reforms that would supposedly reduce deficits by $3.7 trillion over 10 years. Revenues would rise by at least $1 trillion, while spending would be theoretically trimmed by various procedural mechanisms. The plan promises to “strengthen the safety net,” “maintain investments,” and “maintain the basic structure” of Medicare and Medicaid, which doesn’t sound very reform-minded to me.

The Gang of Six plan is a grander version of Sen. Mitch McConnell’s recent debt-limit proposal, which was aimed at putting off any spending cuts. The Gang outline has a few specific cuts, but the document mainly consists of promises to restrain spending and raise taxes in the future.

I’m surprised that Sen. Tom Coburn supports the Gang plan because his office has just released a massive study chock-full of specific spending-cut ideas. The Gang plan is all about avoiding specifics, while Coburn’s plan has 621 pages of details.

Coburn’s “Back in Black” plan would reduce deficits by $9 trillion over the next decade. The plan includes some tax increases, but the core of the document is a line-by-line analysis of every department’s budget, with lists of programs to cut and terminate. The plan includes a wealth of useful information that will aid policymakers interested in cutting spending for years to come.

So congratulations to Roland, Joelle, and the whole Coburn team for their late nights spent pouring through the budget, and for their great job documenting their findings with more than 3,000 endnotes.

Every Senate and House office should perform a similar exercise of proposing specific cuts. The government faces a debt crisis, yet only Coburn, Sen. Rand Paul, and perhaps a few others in Congress have put any effort into identifying unneeded programs.

Look on the official websites of most members of Congress and you will see discussions in support of spending on education, seniors, energy, research, highways and many other activities. When members are in front of TV cameras, they sound like they take the debt crisis seriously, but most congressional websites reveal a different mindset where federal spending is always wonderful and helpful to society.

Coburn’s staff tells me that about a dozen staffers chipped in on its Back in Black effort in recent months. If other House and Senate offices went through such an exercise, it would help members clarify their positions about the role of government and help them think about spending trade-offs.

My summer homework assignment for every congressional office is to go through a Coburn/Paul-style budget downsizing exercise. That could lead to more serious spending debates and more concrete proposals than the generally meaningless bullets points issued by the Gang of Six.

‘Cut, Cap and Balance,’ the Debt Ceiling and Federal Spending

Cato Institute scholars Daniel J. Mitchell and Chris Edwards evaluate the plans offered by Republicans for lowering federal spending using a so-called “Cut, Cap and Balance” proposal that would make small cuts to federal spending in the short run, cap federal spending, and balance the federal budget using a tax-limited balanced budget amendment to the Constitution.

McConnell’s Cave-In and Boehner’s Opportunity

Senate Minority Leader Mitch McConnell has offered the president a way to raise the debt ceiling by $2.5 trillion without having to cut spending. The WaPo reports that “McConnell’s strategy makes no provision for spending cuts to be enacted.”

This appears to be an epic cave-in and completely at odds with McConnell’s own pronouncements in recent months that major budget reforms must be tied to any debt-limit increase.

House Republicans should obviously reject McConnell’s surrender, and they should do what they should have done months ago. They should put together a package of $2 trillion in real spending cuts taken straight from the Obama fiscal commission report and pass it through the House tied to a debt-limit increase of $2 trillion. Then they shouldn’t budge unless the White House and/or the Senate produce their own $2 trillion packages of real spending cuts, which could be the basis of negotiating a final spending-cut deal.

For those who say that House tea party members won’t vote for a debt increase, I’d say that $2 trillion in spending cuts looks a lot better than the alternative of having Democrats and liberal Republicans doing an end-run around them with McConnell’s no-cut plan.

For those who say that House members are scared of voting for specific spending cuts, I’d say that they’ve already done it by passing the Paul Ryan budget plan. I’d also say that you can’t claim to be the party of spending cuts without voting for spending cuts.

Obama’s Fiscal Commission handed Republicans ready-made spending cuts on a silver platter—Republicans will never get better political cover for insisting on spending cuts than now.

Dirty Deal Done Not So Dirt Cheap

Sen. Max Baucus (D-MT), chairman of the Senate Finance Committee,  Rep. Dave Camp (R-MI)*, chairman of the House Ways and Means Committee, and the White House have just announced that they have made a deal to extend Trade Adjustment Assistance (TAA, the program that extends extra unemployment and health care benefits to workers who lose their jobs because of globalization) until 2013, as part of a broader deal that would see passage of the three outstanding preferential trade agreements with Korea, Colombia, and Panama. The extension of TAA would be included in the legislation to implement the US-Korea Free Trade Agreement, “improved” (i.e., made less liberalizing) by the administration in December.

Interestingly and alarmingly, because implementing the FTAs (which will lower tariff revenue) and paying for the billion-dollar-plus TAA extension “requires” offsets, the draft language specifies in Sec. 601 that revenue should be raised by increasing customs user fees.  This solution was first aired publicly last week, and my friend, trade lawyer (and former Cato-ite) Scott Lincicome pointed out then that raising customs user fees is probably against WTO rules (not to mention counterproductive to the goal of liberalizing trade):

“[C]ustoms fees” are simply hidden taxes on import consumers.  A quick review of the US Customs website on “customs users fees” makes this clear.  They’re paid (mainly) by commercial transporters bringing goods (imports) into the United States, thus raising the costs of importation.  And those higher costs, of course, are eventually passed on to American consumers through higher import prices.

Thus, pursuant to the bi-partisan deal outlined above, the FTAs’ great import liberalization benefits will be immediately and tangibly undermined by new taxes on those very same imports (and others)!

…[I]t would [also] probably violate GATT Article VIII, which governs WTO Members’ imposition of “Fees and Formalities connected with Importation and Exportation” (in other words, customs fees).  The key provision of Article VIII reads:

1.(a) All fees and charges of whatever character (other than import and export duties and other than taxes within the purview of Article III) imposed by contracting parties on or in connection with importation or exportation shall be limited in amount to the approximate cost of services rendered and shall not represent an indirect protection to domestic products or a taxation of imports or exports for fiscal purposes.

WTO panels have interpreted this provision narrowly, and an old GATT panel has actually looked into the US system of customs users fees.  In these cases, the panels have ruled that Article VIII’s requirement that a customs fee be “limited in amount to the approximate cost of services rendered” is actually a “dual requirement,” because the charge in question must first involve a “service” rendered, and then the level of the charge must not exceed the approximate cost of that “service.”  They’ve also found that the term “services rendered” means “services rendered to the individual importer in question,” and that the fees cannot be imposed to raise revenue (i.e., for “fiscal purposes”).[emphasis in original]

Raising customs user fees for fiscal purposes may even go against U.S. law (subparagraph 9B of 19 U.S.C. chapter 1 ss58c).

It’s unclear how far this draft will advance at the “mock mark-up,” scheduled for Thursday afternoon in the Senate Finance Committee, as the ranking member of that committee, Sen. Orrin Hatch (R-UT), is one of the leading critics of trade adjustment assistance.  Senator Hatch has already sent out a press release opposing the inclusion of the TAA renewal in the Korea FTA implementing bill:

This highly-partisan decision to include TAA in the South Korean FTA implementing bill risks support for this critical job-creating trade pact in the name of a welfare program of questionable benefit at a time when our nation is broke. This is a clear breach of Trade Promotion Authority and threatens the ability of American exporters and job creators who stand to benefit from the largest bilateral trade agreement in more than a decade.  TAA should move through the Congress on its own merit and should stand up to rigorous Senate debate. President Obama should send up our pending trade agreements with Colombia, Panama, and Korea and allow for a clean vote.

Senate Minority Leader Mitch McConnell (R-KY) is also apparently critical of the decision to include the TAA renewal in the Korea legislation, preferring instead to consider it only in exchange for something new, i.e.,  a deal on fast track (or trade promotion) authority for further trade deals. As the American Enterprise Institute’s Phil Levy points out, “It is problematic to “buy” the [existing] FTAs with an expanded version of TAA, since those were already “purchased” as part of a May 10, 2007 deal.” [link added] The Republican House leadership is also keen to separate TAA from the FTA implementing bills, in contrast to the opinion and efforts of their colleague Representative Camp.  So the fight is far from over.

If you are interested in hearing more about the trade deals, and how TAA renewal fits in with their passage, Senator Hatch will be speaking at an event at the American Enterprise Institute on Thursday (just hours before the mock mark-up is scheduled to begin). Howard Rosen of the Peterson Institute for International Economics and yours truly will be debating the merits of TAA after Senator Hatch has spoken. More information on the event, including access to the streaming video, here.

*UPDATE: Contrary to what I suggested in my orginal post, Chairman Camp did not in fact join an announcement with the White House and Chairman Baucus about the trade deal Tuesday. He did issue a statement Tuesday evening indicating that although he finds it “regrettable that the White House has insisted on Trade Adjustment Assistance in return for passage of these job-creating agreements,” he has “been willing to work with the White House to find a bipartisan path forward on TAA in order to secure passage of the trade agreements.” So it appears he has agreed to the deal broadly, even if he was not formally part of the announcement, and is still reviewing the details. Chairman Camp’s full statement is available here.

Stopping the ‘Culture of Spending’

Sen. Mitch McConnell’s quick reversal on the subject of earmarks was a surprise, but that quick, largely symbolic win against profligate spending certainly won’t translate into a more permanent movement without sustained effort. Shortly after McConnell made his speech supporting a “moratorium” on earmarks, I spoke with Matt Kibbe of Freedomworks about turning the enthusiasm for smaller government into that enduring force. He said understanding public choice gives lawmakers a better shot at turning popular anger at government into reductions in its size and scope. Freedomworks recently held orientation sessions for freshmen members of Congress. A primer in public choice was on the agenda.

Cato’s Government Failure: A Primer in Public Choice is a good place to start to understand the mechanics of government dealmaking.

A First Test for Republicans

Republicans’ hands have been strengthened by a wave of voter angst about big-spending and business-as-usual in Washington, D.C. But have they landed on their limited-government feet? The first test of that question comes next Tuesday.

That’s when Senate Republicans will likely vote on a proposal to bar themselves from requesting earmarks. Last year, House Republicans adopted that policy for themselves the day after House Democrats limited their earmarking to non-profits and government bodies.

The Senate Republican earmark ban is championed by Tea Party favorite Sen. Jim DeMint (R-S.C.). Its strongest opponent is Minority Leader Mitch McConnell (R-Ky.).

Senator McConnell may have won his race in 2008 thanks to bringing home the bacon, but politics seem to have changed since then. Earmarker extraordinaire Rep. James Oberstar (D-Minn.) was bounced out of his office despite larding his district and state with federal pork.

McConnell’s own state may have changed, too. Witness the election of Rand Paul (without McConnell’s help). Paul supports the earmark ban.

McConnell has framed his opposition to the earmark ban as an argument for preserving Congress’ “discretion”—that is, its authority over the spending of federal dollars. Without earmarks, the administration will decide where the money is spent. But there’s a pretty long list of things McConnell could work for if he wants to defend Congress’ prerogatives, such as:

- Forcing the administration to be transparent about the grants it doles out.

- Limiting  or eliminating the administration’s grant-making and spending discretion.

- Withdrawing all the other massive delegations of authority that Congress has given to the executive branch.

- Reducing spending and cutting taxes so that spending discretion is where it should be: with the taxpayers who earned the money in the first place.

Earmarks are not a huge part of the federal budget, but that does not militate against ending them. Senator Tom Coburn (R-Okla.) calls them a “gateway drug to federal spending addiction,” which is a folksy way of talking about the political science of “log-rolling.” Former member of Congress Joe Scarborough (R-Fla.), who has seen it first-hand, talks in this clip about how House and Senate leaders use earmarks to buy votes on legislation they want to get passed.

If earmarks go away as a tool for wheeling-and-dealing in Congress, members and senators will be less likely to sell out the country as a whole with bloated spending bills and Rube-Goldberg regulatory projects for the benefit of some local interest or campaign contributor.

I’ll be speaking next Monday at a Hill event on earmark transparency. The vote in the Senate Republican Conference is Tuesday. It’s a secret ballot, so any senator who doesn’t trumpet his or her support of the earmark ban almost certainly opposes it and supports the practice of earmarking.