Topic: Government and Politics

Senator Coburn’s Final Report

One the best U.S. senators of recent decades is leaving. No one has spotlighted the ongoing waste in federal spending more than Tom Coburn of Oklahoma. In his farewell address, he advised his colleagues: “Your whole goal is to protect the United States of America, its Constitution and its liberties … it’s not to provide benefits for your state.” As if to underline Coburn’s point, the Washington Post yesterday described how Senator Roger Wicker helped pour $349 million down the drain on an unused NASA facility in his home state of Mississippi.

One of Coburn’s strategies has been to use his expert staff to write investigative reports on federal activities. The huge collection of reports his staff has produced is remarkable. Each one is a big fat indictment of malfunctioning government.

Seeing this stream of high-quality and fun-to-read reports over the years has made wonder what the staffs of the other 99 senators do with their time. Every senator ought to be using his taxpayer-funded staff to try to save taxpayer money. Every senator ought to be digging into the giant $3.6 trillion spending empire that they have collectively created and trying to cut out some of the fat.

Coburn’s final report released last week is another impressive document. Coming in at 320 pages, Tax Decoder digs through the massive federal tax code and highlights hundreds of special deals, carve-outs, and illogical breaks. Tax Decoder’s findings are too voluminous to summarize here, and even seasoned tax wonks will find interesting stuff that they did not know.

Consider the chapter on nonprofit organizations, which spans 42 pages and is buttressed by 462 endnotes. This part of the tax code is a complex mess rife with abuse. Coburn’s staff found that Lady Gaga’s charity raised $2.6 million and handed out just $5,000 one year in benefits, while spending the rest on salaries, promotions, and parties. The Kanye West Foundation spent $572,383 one year, but not a dime on charity.The Cancer Fund for America raised $80 million, but handed out just $890,000 to cancer patients.

While the GAO—an arm of Congress—investigates federal activities, its reports are usually dry and timid. The agency’s role is not to upset its political masters. Similarly, most members of Congress don’t want to upset their colleagues, and so they shy away from criticizing wasteful spending directed to any state, not just their own. It’s easier for them to follow the herd, play the game, grab benefits, and hopefully cruise to safe reelection. Many outside groups and reporters do a great job investigating the government, but senators are in a uniquely powerful and privileged position to lead the charge. 

That’s why Senator Coburn and his staff filled a void with their reports. They uncovered idiocy in the budget, and they informed the public with the juicy details. Many members of Congress say that the government spends too much, but they shy away from specifics. But now that Tom Coburn is going, which members are willing to step up to the plate?   

Congress Sacrifices U.S. Security with New Sanctions Against Russia

In the midst of negotiations to avoid another government shutdown, Congress rammed through new sanctions against Russia as part of the misnamed “Ukraine Freedom Support Act of 2014.”

Congress appears determined to turn an adversary into an enemy and encourage retaliation against more significant American interests. Observed my colleague Emma Ashford: “the provisions in this bill will make it all the more difficult to find a negotiated settlement to the Ukraine crisis, or to find a way to salvage any form of productive U.S.-Russia relationship.”

Last year, the corrupt but elected Viktor Yanukovich was ousted by protests backed by rabid and sometimes violent nationalists. The United States and Europe flaunted their support for the opposition. Indeed, American officials openly discussed who should take power after his ouster.

Russian President Vladimir Putin still was not justified in dismembering Ukraine, but America would have reacted badly had Moscow helped overthrow a Washington-friendly government in Mexico.

Ukraine’s fate is not a serious security interest for the United States. The conflict raises humanitarian concerns, but no different than those elsewhere around the globe.

Kiev’s status matters more to Europe, largely for economic reasons. If the European Union and its members want to confront Russia over Ukraine, they should do so—without Washington’s involvement.

Are the Baltic Republics Serious about Defense?

News stories in the West contend that Russia’s increasingly aggressive behavior is causing the Baltic states and other NATO members in Eastern Europe to become far more serious about national defense.  There is no doubt that tensions in the region are on the rise, including a surge of  incidents involving NATO intercepts of Russian military aircraft operating over the Baltic Sea.  The new congressional approval of military aid to Ukraine may well increase the already alarming level of animosity between NATO and Russia. 

But the notion that the Baltic republics have embarked on serious programs to boost their defense capabilities in light of Moscow’s menacing behavior is vastly overstated.  The military spending of those three countries has merely moved from minuscule to meager.  Although all NATO members pledged after the Alliance’s summit meeting in 2006 to spend a minimum of two percent of gross domestic product (GDP) on defense, few members have actually done so.  Indeed, eight years later, only the United States, Britain, Greece, and Estonia among the 28 member states fulfill that commitment

And Estonia barely met that standard.

All three Baltic governments are going to great lengths to highlight their alleged seriousness about defense, but the actual data fail to support the propaganda.  Amid much fanfare, Estonia plans to boost its military spending from 2.0 percent of GDP to…. wait for it, 2.05 percent!  Lithuania intends to raise its budget next year from 0.89 percent to 1.01 percent.  And Latvian leaders solemnly pledge that their country will spend no less than 1 percent—up from the current 0.91 percent.

Time to Close Thailand’s Camps for Burmese Refugees?

MAE LA REFUGEE CAMP, THAILAND—Trees give way to primitive wooden homes in the rolling hills approaching Mae La refugee camp on Thailand’s border with Burma.  The largest camp in Thailand, Mae La, holds 50,000 refugees. 

Three years ago Burma’s ruling generals yielded authority to a nominally civilian leadership and initiated a series of ceasefires with various ethnic groups.  The resulting peace is real but imperfect. 

Today there are as many as 150,000 refugees in ten Thai camps.  Overcrowded Mae La was established three decades ago when many assumed that their stay would be short.

Residents are barred from even leaving the camps without official permission.  Education is difficult.  People’s lives, futures, and dreams are all confined by fences and armed guards.

Perhaps worse, sustenance is provided and work prohibited.  This has discouraged independence, enterprise, and entrepreneurship. 

With the changes in Burma serious discussions about closing the camps have begun.  In July Thailand’s military junta declared its objective to repatriate all refugees by 2015.

Mae La refugees I talked to wanted to return, but worried about security.  NGOs observe that a national political settlement has yet to be implemented.   

KGB’s Old Lubyanka Headquarters Glowers at New Russia

MOSCOW—Red Square is one of the world’s most iconic locales. Even during the worst of the U.S.S.R. the square was more symbolic than threatening. 

Very different, however, is Lubyanka, just a short walk away. 

In the late 19th century 15 insurance companies congregated on Great Lubyanka Street.  The Rossia agency, one of Russia’s largest, completed its office building in 1900. 

But in 1917 the Bolsheviks seized power.  They took the Rossia building for the new secret police, known as the All-Russian Extraordinary Commission for Combating Counter-Revolution and Sabotage, or Cheka.

The first Cheka head was Felix Dzerzhinsky.  He conducted the infamous “Red Terror,” what he called a “fight to the finish” against the Bolsheviks’ political opponents. 

After his death in 1926 Grand Lubyanka Street was renamed Dzerzhinsky Street.  A great statue of Dzerzhinsky, weighing 15 tons, was erected in a circle in front of the Cheka headquarters. 

After the KGB was dissolved the building went to the Border Guard Service, later absorbed by the Federal Security Service (FSB), responsible for foreign intelligence. Today Lubyanka looks non-threatening, a yellowish color and architectural style less severe than the harshly grandiose Stalinist architecture seen throughout the city.

The KGB faced its greatest challenge in the Gorbachev era.  Demands for reform raced beyond Mikhail Gorbachev’s and the KGB’s control.  In August 1991 KGB head Vladimir Kryuchkov helped plan the coup against Gorbachev. 

After the coup’s collapse a crowd gathered in front of Lubyanka and attempted to pull down the Dzerzhinsky monument.  City officials used a crane to finish the job.

Journalist Yevgenia Albats wrote:  “If either Gorbachev or [Boris] Yeltsin had been bold enough to dismantle the KGB during the autumn of 1991, he would have met little resistance.”  However, these two reformers attempted to fix rather than eliminate the agency.

And the KGB effectively ended up taking over Russia.  Yeltsin named Chekists, or members of the “siloviki” (or power agents), to important government positions, most importantly Vladimir Putin, who headed the FSB and then became prime minister—and Yeltsin’s successor as president when the latter resigned.

Jeb Bush and Lyndon Johnson

Former Florida governor – but Texas native – Jeb Bush told the Wall Street Journal CEO Council:

Republicans need to show they’re not just against things, that they’re for a bunch of things. 

Which reminds me of a quotation from Lyndon B. Johnson that George Will often cites:

We’re in favor of a lot of things and we’re against mighty few.

Let’s hope Bush’s “bunch” is different from Johnson’s “lot.” We can’t afford another such escalation in the size, scope, and power of government.

New Study Finds Minimum Wage Increases Hurt Low-Skilled Workers

A new working paper from the National Bureau of Economic Research finds that significant minimum wage increases can hurt the very people they are intended to help. Authors Jeffrey Clemens and Michael Wither find that significant minimum wage increases can negatively affect employment, average income, and the economic mobility of low-skilled workers. The authors find that significant “minimum wage increases reduced the employment, average income, and income growth of low-skilled workers over short and medium-run time horizons.”  Most troublingly, these low-skilled workers saw “significant declines in economic mobility,” as these workers were 5 percentage points less likely to reach lower middle-class earnings in the medium-term. The authors provide a possible explanation: the minimum wage increases reduced these workers’ “short-run access to opportunities for accumulating experience and developing skills.” Many of the people affected by minimum wage increases are on one of the first rungs of the economic ladder, low on marketable skills and experience. Working in these entry level jobs will eventually allow them to move up the economic ladder. By making it harder for these low-skilled workers to get on the first rung of the ladder, minimum wage increases could actually lower their chances of reaching the middle class.

Most of the debate over a minimum wage increase centers on the effects of an increase on aggregate employment, or the total number of jobs and hours worked that would be lost. A consensus remains elusive, but the Congressional Budget Office recently weighed in, estimating that a three year phase in of a $10.10 federal minimum wage option would reduce total employment by about 500,000 workers by the time it was fully implemented. Taken with the findings of the Clemens and Wither study, not only can minimum wage increases have negative effects for the economy as a whole, they can also harm the economic prospects of  low-skilled workers at the individual level.

Four states approved minimum wage increases through ballot initiatives in the recent midterm, and the Obama administration has proposed a significant increase at the federal level. This study should give them a reason to reconsider.

Recent Cato work on this topic can be found here and here