Topic: Government and Politics

Live Blog of the 2014 State of the Union

President Obama on Tuesday laid out his plans for the upcoming year in his fifth annual State of the Union (SOTU) address. And, after a year dominated by budget battles, the NSA spying scandal, and the meltdown of Obamacare, the libertarian message is more relevant than ever.

Cato scholars live-blogged their reactions to what the president said—and what he left out.

Below is a video compilation of their response, followed by the transcript of the liveblog.
 

The State of the Union Is…Irrelevant

Kevin Williamson has your red-meat, small-r republican rant on the State of the Union over at NR. He’s right that the once-modest Annual Message has become as bloated and ridiculous as the presidency itself.   

Like Williamson, I used to fume and fume about our latter-day Speech from the Throne, but lately I’m no longer sure it’s worth the bother. For the speech to be worth getting worked up about, somebody would have to be listening. But as I point out in the Washington Examiner today, the polling and poli sci evidence suggest that POTUS is basically howling into the void: 

“There is overwhelming evidence that presidents, even ‘great communicators,’ rarely move the public in their direction,” writes George C. Edwards III, a presidential scholar at Texas A&M University. “Going public does not work.” In a 2013 analysis of SOTU polling, Gallup found that “most presidents have shown an average decrease in approval of one or more points between the last poll conducted before the State of the Union and the first one conducted afterward.”

(For more on that point, see Table 2.2 from Edwards’s book On Deaf Ears: The Limits of the Bully Pulpit or this review of the evidence by Ezra Klein) 

Nor does the president usually fare any better trying to use the SOTU to bend Congress to his will. As this Associated Press analysis puts it, the speech is “high volume, low yield” in terms of generating legislative action.  Contra TR, the bully pulpit isn’t so “bully.” 

None of that is to deny that the modern president has powers vastly greater than he was ever intended to have—or than one man should ever have. The danger isn’t his “power to persuade”: it’s what he can get away with under the “living Constitution” version of Article II: waging war worldwide, reshaping the law through “royal dispensations,”  taking care that his secret laws are faithfully executed. What he does matters; what he says in this stage-managed spectacle is the least of our worries. 

Many of us at Cato will watch and read the speech tonight because it’s sort of our job. If the spirit moves you, follow along on Twitter, hashtag #CatoSOTU. Otherwise, it seems to me that the late Justice Rehnquist had the right attitude

When asked why [he planned to skip the SOTU], he explained that it conflicted with a watercolor class at the YMCA. An incredulous law clerk said, “You can’t miss the State of Union Address for a watercolor class.” Rehnquist responded that he had spent $25 to enroll in the class, and he was going to get every benefit out of it.

 

A Primer on State of the Union Economics

Until recently, President Obama’s December 4 “Remarks on Economic Mobility” were thought to preview his State of the Union address by defining “dangerous and growing inequality and lack of upward mobility” as “the defining challenge of our time.”  

That downbeat and divisive theme polled badly. As a result, the President is expected to recast the same story as “ladders to economic opportunity” (which is just another way of describing upward mobility). Obama’s passionately misinformed perceptions about rising inequality and falling mobility, however, are surely unchanged.

In his December 4 address, the President could find no official statistics to support his overblown claims about “growing inequality.” The Census Bureau and Congressional Budget Office report that the top 20 percent earns about half of all income. The CBO finds the top 20 percent received an average of 47.6 percent of all after-tax income since 1983, and roughly the same percentage (48.1) in 2010 and 2011. Yet the President insisted on claiming, “The top 10 percent [not the top 20 percent] no longer takes in one-third of our income – it now takes half.”

Unless the President thinks all affluent people are thieves, the top 10 percent never “take” any fraction of “our” income. On the contrary, they earn 100 percent of their own income.

Eschewing all official data, President Obama relied instead on estimates of pretax, pre-transfer income (which are clearly irrelevant to issues concerning taxes or transfers) from Thomas Piketty and Emmanuel Saez. Among many other problems with these figures, documented in my recent paper, growth in top incomes is exaggerated by including a rising share of business income formerly reported on corporate returns, and also by counting realized capital gains as income (in fact, selling assets does not make anyone richer). Lower incomes, by contrast, are grossly understated by completely excluding the huge and rising share of income from government transfer payments, now approaching $3 trillion a year.

“The combined trends of increased inequality and decreasing mobility,” said President Obama, “pose a fundamental threat to the American Dream, our way of life, and what we stand for.” As the title of his talk suggested, Obama was primarily focusing on decreasing mobility (since repackaged as decreasing opportunity), not increasing inequality per se. As he put it, “the problem is that alongside increased inequality, we’ve seen diminished levels of upward mobility in recent years.”

Two major studies by U.S. Berkeley’s Emmanuel Saez, Harvard’s Raj Chetty and others, find the President entirely wrong about diminished mobility. Their newest paper shows that, “children entering the labor market today have the same chances of moving up in the income distribution relative to their parents as children born in the 1970s.” Moreover, a narrowing “gap in college attendance between children from the lowest- and highest- income families… suggests that mobility in the U.S. may be improving.” The authors conclude that, “if one defines mobility based on relative positions in the income distribution – e.g., a child’s prospects of rising from the bottom to the top quintile – then intergenerational mobility has remained unchanged in recent decades. If instead one defines mobility based on the probability that a child from a low-income family (e.g., the bottom 20%) reaches a fixed upper income threshold (e.g., $100,000), then mobility has increased…” As for the President’s rhetorical effort to link top income shares with declining mobility, the authors find “little or no correlation between mobility and… top 1% income shares – both across countries and across areas within the U.S.” The biggest actual barrier to upward mobility, in fact, turns out to be single parenthood.

President Obama’s revealing December 4 lecture relied on irrelevant pretax, pre-transfer estimates to assert that the top 10 percent have been “taking” half of “our” income, and he used no evidence whatsoever to assert that upward mobility has been declining.

The defining challenge of our time may be to discover ways to stop politicians from using made-up numbers to excuse destructive and demoralizing economic policies.

Nightmare on K Street: Lobbying Revenue Drops a Bit

The Hill, a newspaper covering Capitol Hill, published this scary headline this week:

What’s the nightmare? Lobbying revenues are down! How much? Well, The Hill doesn’t say. But the Washington Post reports:

The District’s 10 largest lobbying firms reported a collective 1 percent drop in lobbying revenue in 2013 compared with 2012, slipping to $226.3 million from $228.9 million.

Oh, the horror.

To be sure, the Post also notes that the revenue of the top 10 firms dropped 10 percent last year. So that’s a real cut. Still, these drops come after total lobbying expenditures doubled in a decade, peaking in those heady days of 2009 and 2010 when federal dollars were being handed out with wild abandon.

Why the slowdown since then? The Hill’s Kevin Bogardus and Megan Wilson note that “most lobby shops couldn’t escape the downward pull of a historically unproductive Congress.” Ah yes, that “least productive Congress” we keep hearing about. Well, this is what you get from an unproductive Congress: a tiny drop in expenditures on lobbying. Keep on being unproductive—of laws, regulations, taxes, grants, subsidies, loans, and bailouts—and maybe lobbying will keep on declining.

Meet the Kronies!

If you want to get something done (or, just as often, not done) in Washington, you might just need … the Kronies.

Take, for example, Kaptain Korn:

Kaptain Korn is a mutant hero who can change shape at will. One minute he’s coating your corn flakes; another minute he’s bootleg liquor in your gas tank. Though he’s powerless without G-force, subsidies and mandates give Kaptain Korn the muscle he needs to push puny third world back down into the dust. Kaptain Korn ensures jokes stay corny, rears stay flabby and engines run less efficiently.

If you want to help defeat the Kronies, you might want to take a look at Cato’s DownsizingGovernment.org. Learn more from our video series on how to downsize specific departments (all videos will play below):

The Voting Rights Amendment Act Is a Bad Idea

One of the responses to the Supreme Court’s eminently sensible ruling last year that deactivated part of the Voting Rights Act was to call for a new, updated law to subject particularly bad actors to enhanced federal oversight. We now see the product of that motivation, introduced by the motley bipartisan crew of Reps. Jim Sensenbrenner (R-WI) and Jim Clyburn (D-SC) and Sen. Pat Leahy (D-VT). As I write in my new Forbes.com column:

Last week, a group of lawmakers introduced the Voting Rights Amendment Act of 2014. The timing was no coincidence: The bill was announced on Martin Luther King’s birthday, right before the holiday designated to commemorate the civil rights giant (for which Congress took the week off). This is the long-expected legislation responding to the Supreme Court’s decision in Shelby County v. Holder last June that disabled one part of the Voting Rights Act. But it’s both unnecessary to protect the right to vote and goes far beyond the provision it replaces to rework the machinery of American democracy on racial lines.

Based on the reaction of certain elected officials to Shelby County you could be forgiven for thinking that a congressional fix is badly needed to prevent racial minorities from being disenfranchised. But all the Supreme Court did was strike down the “coverage formula” used to apply Section 5 of the Voting Rights Act, which required certain jurisdictions to “preclear” with the federal government any changes in election regulations—even those as small as moving a polling station from a schoolhouse to a firehouse. The Court found the formula to be unconstitutional because it was based on 40-year-old data, such that the states and localities subject to preclearance no longer corresponded to the incidence of racial discrimination in voting. Indeed, black voter registration and turnout is consistently higher in the formerly covered jurisdictions than in the rest of the country.

Nevertheless, the proposed legislation draws a new coverage formula, resurrecting Section 5’s requirements for states with five violations of federal voting law over a rolling 15-year period. (That formula would currently apply to four states: Georgia, Louisiana, Mississippi, and Texas.) It also sweeps in sub-state jurisdictions that have had one violation and “persistent, extremely low minority turnout”—which can mean simply an average racial-minority turnout rate lower than that nationwide for either minorities or non-minorities.

All that sounds reasonable—Congress is finally updating its coverage formula—until you realize that this reimposition of Section 5 comes without any proof that other laws are inadequate to address existing problems (which is what the Constitution demands to justify the suspension of the normal federalism in this area). After all, Section 5 was an emergency provision enacted in 1965 to provide temporary federal receivership of morally bankrupt state elections, not to enable a constitutional revolution based on arbitrary statistical triggers.

Read the whole thing, and download this longer piece on why the Shelby County ruling actually vindicates Martin Luther King’s dream.

Appropriate Appropriations? Transparency and Spending Control

Luke Rosiak at the Washington Examiner is not just a journalist who rolls his sleeves up to root out corruption. He’s also a capable computer programmer. Rosiak has produced a new feature on the Examiner web site called “Appropriate Appropriations?” that is worth checking out.

The page lists the many bills in Congress that spend taxpayer money—bills that either authorize appropriations or appropriate your money. You can sort spending bills by size, by date of last activity, and by state—look and see if your member of Congress or senator is a spender.

Rather than complaining about spending in the aggregate—“waste, fraud, and abuse” are horses that have escaped the barn—people who want spending control can now rein it in by contacting their members of Congress and senators to talk about specific spending bills.

The “Appropriate Appropriations?” page is powered by data that we produce at Cato. Cato’s “Deepbills” data is in use a lot of other ways, too. We use it to build informative infoboxes for Wikipedia articles about bills in Congress. The New York Times’ “Inside Congress” web pages use Cato data to show what executive branch agencies are topics of the bills in Congress. (See the “Mentions” section of the page for H.R. 1104, for example.) My own WashingtonWatch.com uses the data to show relationships among agencies, bills, and representatives. You’ll also find Cato data used by GovTrack.us, the largest private government transparency web site, to make searches out of references to existing law in the bills in Congress.

There are many more things that can be done with this data. Luke’s code is available to help others get started.

It’s a long game, trying to undo federal government growth that has been underway for at least 80 years. I started talking about how transparency could undercut rational ignorance and rational inaction more than seven years ago here on the blog. The serious work began with the election of President Obama, who promised transparent government. We’ve written about how the government should publish data to make itself transparent, and we’ve graded the quality of the government’s data publication. Now we’re putting out data that the government should, and it’s bearing fruit.

You can now investigate what Congress is doing in terms of spending and ask yourself: Are these “Appropriate Appropriations?