Tag: obama

Obama’s Hospital Admission

My latest, at National Review Online:

Buried deep within President Obama’s $3.77 trillion budget is a tiny little proposal to increase Medicaid spending by $360 million. In a budget as large as this one, $360 million is scarcely worth mentioning. It amounts to less than one-hundredth of one percent of total outlays. But this 0.01 percent is worth mentioning, because it proves the president’s health-care law will not work…

With this proposal, President Obama has admitted that:

1. The PPACA is not likely to reduce uncompensated care in 2014…

2. The PPACA won’t reduce the deficit…

3. Hospitals can stop crying poverty…

4. States don’t need to expand Medicaid to protect hospitals.

The Washington Post reports that rescission of the DSH cuts “could make it a bit easier for states not to expand the Medicaid program. If they know the additional dollars are coming in, there’s a bit less worry about turning down the Medicaid expansion funds.” At the same time, the president has undercut expansion supporters by admitting that expanding Medicaid will not reduce uncompensated care.

The president’s budget shows that the brave state legislators who have been fighting the Medicaid expansion in states like Ohio and Florida were right all along — and it makes expansion supporters, like Governors Rick Scott (R., Fla.) and John Kasich (R., Ohio), look rather silly.

This relatively small spending item is a big admission that the president’s health-care law simply won’t work, and it should provide encouragement to state officials who are still resisting the massive increase in deficit spending, government bureaucracy, and health-care costs the PPACA embodies.

Read the whole thing.

Bad Stuff in Obama Ed Budget

Details are still emerging about the Obama Administration’s 2014 education budget proposal, but from the overview there seems to be a lot of bad stuff. Here are the hi – or low – lights, and links to some important context:

  • Increase Department of Education spending to $71.2 billion, up 4.6 percent from 2012 enacted level: This is neither constitutional nor effective.
  • “Invests” in preschool: Head Start, Early Head Start, and state programs either are shown to fail, or have little to no good evidence supporting them.
  • $12.5 billion in mandatory funds to “prevent additional teacher layoffs and hire teachers”: We’ve been getting fat on staff – including teachers – for decades, and it hasn’t helped.
  • $1.3 billion for 21st Century Community Learning Centers: Federal studies have found these have negative effects.
  • Race to the Top for higher education: So far, RTTT has been big on promises, small on outcomes, and huge on coercion to adopt national curriculum standards.
  • $260 million to scale up higher education innovation: MOOCS and other innovations have been developing pretty well without federal “help.”
  • Maintain “strong” Pell Grant program: Pell is part of the tuition hyperinflation problem, not the solution.

There will no doubt be more-detailed analyses of specific education proposals to come. Stay tuned!

And the King of the Fiscal Squeeze Is…Bill Clinton?

When Congressman Paul Ryan takes the stage at CPAC Friday morning, he will, of course, tout his new budget as a solution to America’s spending problem. The 2014 Ryan plan does aim to balance the budget in 10 years. That said, it would leave government spending, as a percent of GDP, at a hefty 19% – as my colleague, Daniel J. Mitchell, points out in his recent blog.  

Proposals like the Ryan budget are all well and good, but they are ultimately just that – proposals. If Congressman Ryan really wants to get serious about cutting spending, he should look to the one U.S. President who has squeezed the federal budget, and squeezed hard.

So, who can Congressman Ryan look to for inspiration on how to actually cut spending? None other than President Bill Clinton.

How can this be? To even say such a thing verges on CPAC blasphemy. Well, as usual, the data don’t lie. Let’s see how Clinton stacks up against Presidents Barack Obama and George W. Bush. As the accompanying chart shows, Clinton was the king of the fiscal squeeze.

Yes, Bill Clinton cut government’s share of GDP by a whopping 3.9 percentage points over his eight years in office. But, what about President Ronald Reagan? Surely the great champion of small government took a bite out of spending during his two terms, right? Well, yes, he did. But let’s put Reagan and Clinton head to head – a little fiscal discipline show-down, if you will (see the accompanying chart).

And the winner is….Bill Clinton. While Reagan did lop off four-tenths of a percentage point of government spending, as a percent of GDP, it simply does not match up to the Clinton fiscal squeeze. When President Clinton took office in 1993, government expenditures accounted for 22.1% of GDP. At the end of his second term, President Clinton’s big squeeze left the size of government, as a percent of GDP, at 18.2%. Since 1952, no other president has even come close.

Some might argue that Clinton was the beneficiary of the so-called “peace dividend,” whereby the post-Cold-War military drawdown led to a reduction in defense expenditures. The problem with this explanation is that the majority of Clinton’s cuts came from non-defense expenditures (see the accompanying table).

Admittedly, Clinton did benefit from the peace dividend, but the defense drawdown simply doesn’t match up to the cuts in non-defense expenditures that we saw under Clinton. Of course, it should be noted that the driving force behind many of these non-defense cuts came from the other side of the aisle, under the leadership of Speaker Gingrich.

The jury is still out on whether Ryan (or Boehner) will prove to be a Gingrich – or Obama, a Clinton. But, at the end of the day, the presidential scoreboard is clear – Clinton is the king of the fiscal squeeze.

So, when Congressman Ryan rallies the troops at CPAC with a call for cutting government spending, perhaps the crowd ought to accompany a standing ovation for the Congressman with a chant of “Bring Back Bill!”

You can follow Prof. Hanke on Twitter at: @Steve_Hanke

Obama’s Trade Policy Should Be Judged on Its Accomplishments, Not Its Promise

There has been more buzz about the prospects for trade liberalization this year than at any time since the first term of the second president Bush. It appears that some may be mistaking the chatter for actual accomplishment.

For example, trade policy made the front page of Saturday’s Washington Post in a story that is much less about the substantive issues, or the obstacle-strewn path to meaningful liberalization, or the political leadership that will be required to surmount those obstacles than it is a paean to President Obama’s alleged metamorphosis into a champion of free trade.

But before anyone awards the president the Nobel Trade Prize for a job yet done, consider this: in four-plus years, this administration has concluded zero trade agreements, while launching 13 WTO cases against various trade partners. For 50 months, enforcement and domestic protectionism—not liberalization—have dominated the trade agenda.

Yet, the absence of evidence that this administration can deliver meaningful new trade agreements doesn’t seem to curb the enthusiasm of Bruce Stokes, a long-time trade policy observer, whose comment serves as the emphatic final sentence of the Washington Post tribute: “They appear to have moved from a risk-averse first term to creating a legacy in international economic and trade policy.” A legacy? Really? Shouldn’t the bar be raised just a smidge before we coronate President Obama this generation’s Cordell Hull?

For starters, wouldn’t the president have delegated someone capable and experienced to take ownership of the trade agenda if he were really committed to leaving a trade policy legacy? U.S. trade representative Ron Kirk announced more than one year ago that he would be leaving his post early in a second Obama administration. Yet there is nobody vetted and ready to take the reins of trade policy. Kirk’s official resignation came at the end of last month—though he has been hanging around to help out on account of … “sequestration.”

The most prominent name floated for U.S. Trade Representative has been the OMB’s Jeff Zients, the person most closely associated with President Obama’s proposal to subsume the USTR under the enforcement-centric Commerce Department—again, not exactly the substance of trade legacy-building. Members from both parties in Congress have demanded a better candidate if the president expects his trade agenda to be taken seriously.

Accomplishments, not rhetorical intentions, should serve as the basis for our judgments. Anyone can announce initiatives. President Obama is quite proficient at reciting litanies of initiatives. But it remains to be seen how he handles the situation when the deals require his confronting allied interests and dismantling their protectionist perches. In fairness, the administration’s trade negotiators have been working hard toward a Trans-Pacific Partnership agreement with 10 Pacific-rim nations. But let’s see where this goes before we start writing history. There’s still a lot of ham left on that bone.

The administration has verbally committed to completing the TPP negotiations by the end of this year and the just-announced Transatlantic Trade and Investment Partnership negotiations with Europe by the end of next year—both virtual impossibilities given where things stand in those negotiations and between the White House and Congress. So we already have a credibility problem.

Preschool’s Anvil Chorus

Act 2, scene 1 of Verdi’s opera Il Trovatore is marked by a lot Gypsy blacksmiths wailing away on their anvils. Sensibly enough, this has come to be called the “Anvil Chorus.” There is an equally clamorous chorus calling for universal federally-funded preschooling—one that president Obama may join this evening in his State of the Union address. It should be called the Anvil Chorus, too, because if it is successful it will tie an anvil ‘round the neck of early education and American taxpayers.

The trouble with federal-government-funded preschooling is that we have 47 years of experience with it … and it doesn’t work. The federal Head Start pre-K program was created in 1965, and despite decades of concerted efforts to refine and improve it it has virtually no measurable effects that last to the end of the third grade—or even the first. And of the very few and modest effects that have been found at the end of the third grade, some are actually negative. That is what federal government pre-K has accomplished with $200 billion and half a century of effort. Is that a sensible basis for expanding federal government pre-K?

Those large-scale randomized studies of Head Start are not the only indication that federal government spending on pre-K (and K-12) programs is ineffective. We can also look at the performance gap, at the end of high school, between the children of high school dropouts and those of college graduates. This is the key gap—between children in advantaged and disadvantaged families—that federal compensatory education programs set out to close in 1965. Below is a chart I prepared just a few years ago, documenting that gap using the reading section of the best national data set available (the “Long Term Trends” series of the National Assessment of Educational Progress). The results are equally disappointing in math and science (see Figure 20.5, here).

Nor should we be surprised by the failure of federal pre-K-through-12 programs to narrow this gap—they have failed just as badly in their other aim of improving overall student achievement, as the following chart of federal spending and student achievement at the end of high-school reveals.

Overcome by the sound of their own chorus, universal federal pre-K advocates are deaf to this evidence. For the sake of the children they seek, ineffectually, to help, let’s hope they are unable to fasten their anchor around the necks of current and future generations of taxpayers.

The ‘New Normal’ of High Unemployment

I almost feel sorry for the Obama administration’s spin doctors. Every month, they probably wait for the unemployment numbers from the Bureau of Labor Statistics with the same level of excitement that people on death row wait for their execution date.

This has been going on for a while, and today’s new data provide another good example.

As the chart below indicates, the White House promised that the unemployment rate today would be almost 5 percent if we enacted the so-called stimulus back in 2009. Instead, the new numbers show that the jobless rate is 7.9 percent, almost 3.0 percentage points higher.

Obama Unemployment

I enjoy using this chart to indict Obamanomics, in part because it’s a two-fer. I get to criticize the administration’s economic record, and I simultaneously get to take a jab at Keynesian spending schemes.

What’s not to love?

That being said, I don’t think the above chart is completely persuasive. The White House argues, with some justification, that these data simply show that they underestimated the initial severity of the recession. There’s some truth to that, and I’ll be the first to admit that it wouldn’t be fair to blame Obama for a bleak trendline that existed when he took office (but I will blame him for continuing George W. Bush’s policies of excessive spending and costly intervention).

That’s why I think the data from the Minneapolis Federal Reserve are more damning. They show all the recessions and recoveries in the post-World War II era, which presumably provides a more neutral benchmark with which to judge the Obama record.

Obama’s Stark Vision of the World

Charles Krauthammer zeroes in on the stark worldview expressed in President Obama’s inaugural address:

Obama is the apostle of the ever-expanding state. His speech was an ode to the collectivity. But by that he means only government, not the myriad of voluntary associations — religious, cultural, charitable, artistic, advocacy, ad infinitum — that are the glory of the American system.

For Obama, nothing lies between citizen and state. It is a desert, within which the isolated citizen finds protection only in the shadow of Leviathan. Put another way, this speech is the perfect homily for the marriage of Julia — the Obama campaign’s atomized citizen, coddled from cradle to grave — and the state.

“Nothing lies between citizen and state.” Exactly. That’s why Obama can say things like

No single person can train all the math and science teachers we’ll need to equip our children for the future. Or build the roads and networks and research labs that will bring new jobs and businesses to our shores.

Well, of course not. No one thinks a single person could. It takes many people, working together. But even Krauthammer misses the point that it takes businesses, coordinated by prices and markets. Krauthammer correctly chides Obama for thinking that collective action means only the state and not voluntary associations. But most of our needs are met, most of our progress is generated, by neither the state nor charities.

We are fed, clothed, sheltered, informed, and entertained by individuals, working together with other individuals, mostly in corporations, with their activities coordinated by the market process. As I’ve said before, libertarians “consider cooperation so essential to human flourishing that we don’t just want to talk about it; we want to create social institutions that make it possible. That is what property rights, limited government, and the rule of law are all about.”

What kind of a bleak worldview is it that can look at the bounty provided by business enterprises and charitable associations and see a barren wasteland enlightened only by the activities of the federal government? President Obama’s worldview, apparently. And Hillary Clinton’s.

My further thoughts on Obama’s collectivist speech in this 10-minute audio podcast.