Topic: Government and Politics

Federal Technology Failures

A new GAO report describes failures in the federal government’s information technology (IT) activities. The government spends $80 billion annually on IT. These “investments frequently fail, incur cost overruns and schedule slippages, or contribute little to mission-related outcomes,” concludes GAO.

The new report summarized some of the failures:

  • the Department of Defense’s (DOD) Expeditionary Combat Support System, which was canceled in December 2012, after spending more than a billion dollars and failing to deploy within 5 years of initially obligating funds;
  • the Department of Homeland Security’s Secure Border Initiative Network program, which was ended in January 2011, after the department obligated more than $1 billion to the program, because it did not meet cost-effectiveness and viability standards;
  • the Department of Veterans Affairs’ (VA) Financial and Logistics Integrated Technology Enterprise program, which was intended to be delivered by 2014 at a total estimated cost of $609 million, but was terminated in October 2011 due to challenges in managing the program;
  • the Office of Personnel Management’s Retirement Systems Modernization program, which was canceled in February 2011, after spending approximately $231 million on the agency’s third attempt to automate the processing of federal employee retirement claims;
  • the National Oceanic and Atmospheric Administration, DOD, and the National Aeronautics and Space Administration’s National Polar-orbiting Operational Environmental Satellite System, which was a tri-agency weather satellite program that the White House Office of Science and Technology stopped in February 2010 after the program spent 16 years and almost $5 billion; and
  • the VA Scheduling Replacement Project, which was terminated in September 2009 after spending an estimated $127 million over 9 years.

The GAO attributes the problems to “a lack of disciplined and effective management and inadequate executive-level oversight.” That is certainly true, but I would also point to more fundamental problems with the nature of government bureaucracy, which I discussed in testimony yesterday.

#TakenInByDHS

Are journalists across the nation working to establish a national ID in the United States? Most would object, “Certainly not!”

But in reporting uncritically on the Department of Homeland Security’s claimed deadlines for implementing the U.S. national ID law, many journalists are unwittingly helping impose a system that the federal government may one day use to identify, track, and control every American. Today I’ve started Tweeting about news articles in which this occurs with the hashtag #TakenInByDHS.

Under the terms of the REAL ID Act, which became law more than ten years ago, states were supposed to begin issuing licenses according to federal standards by May of 2008. States that didn’t follow federal mandates would see their residents turned away at airports when the Transportation Security Administration declined their drivers’ licenses and ID cards.

The DHS failed to issue implementing regulations timely, and backed off of the statutory deadline by regulatory fiat. No state was in compliance with REAL ID on deadline, and no state is compliant with REAL ID today. Over the years, the Department of Homeland Security has declared a variety of milestones and deadlines in a fairly impotent effort to bring state driver licensing policy under federal control. Many states have resisted.

The reason for DHS’s impotence is that making good on the threat to prevent Americans from traveling would almost surely backfire. If already unpopular TSA agents began refusing Americans their right to travel, it would be federal bureaucrats and members of Congress getting the blame—not state legislators.

But most state legislators haven’t done this calculation. They are reluctant to create a national ID, and they don’t want to expend taxpayer funds on a program that undercuts their constituents’ privacy. But told of their potential responsibility for bedlam at local airports, they will accede to such things.

Obama’s King v. Burwell Speech Displayed the Very Ideological Fervor that Led Him to Break the Law

In a case called King v. Burwell, the Supreme Court will soon decide whether it agrees with two lower courts that President Obama is breaking the law by subjecting 57 million employers and individuals to illegal taxes, and spending the illegal proceeds to hide the cost of HealthCare.gov coverage from 6.5 million enrollees. Today the president delivered a speech designed to cow the Supreme Court Justices into turning a blind eye to the law. Instead, he offered what for some is the missing piece of the King v. Burwell puzzle. He displayed the very ideological fervor that leads powerful people to break the rules.

“We have an obligation to put ourselves in our neighbor’s shoes, and to see the common humanity in each other,” the president said. Yet the president of the United States has an even more important obligation to “take Care that the Laws be faithfully executed.”  It’s right there in Article II, Section 3 of the U.S. Constitution, which President Obama swore to uphold. King v. Burwell is about his failure to meet that obligation.  

More Bad News for ObamaCare: Enrollees See Little Benefit from Medicaid Expansion

As President Obama gears up to deliver a major address on the supposed successes of the Affordable Care Act, a study by one of the nation’s top health economists is pouring cold water on the ACA’s main engine for expanding health-insurance coverage: its expansion of Medicaid to cover able-bodied, childless adults.

MIT’s Amy Finkelstein has won a slew of awards, including the prestigious John Bates Clark Medal, for her work in health economics. In “The Value of Medicaid: Interpreting Results from the Oregon Health Insurance Experiment,” Finkelstein, Nathaniel Hendren, and Erzo Luttmer, used various econometric methods to quantify the benefits that enrollees receive from Medicaid. They drew from the Oregon Health Insurance Experiment, on which Finkelstein was a lead investigator.

The trio found that Medicaid enrollees receive very little benefit from each dollar spent on Medicaid. The absolute minimum enrollees receive is 15 cents of benefit per dollar spent. The authors’ best guess is that enrollees receive somewhere around 20-40 cents of benefit per dollar spent. The maximum is 90 cents–that is, no matter how the authors sliced the data, Medicaid’s costs exceed the benefits to enrollees. If the government just gave enrollees the money, Medicaid is such a bad deal that enrollees would not buy Medicaid coverage with it.

Medicaid spends, non-enrollees receive about 60 cents of benefit. The authors don’t identify who Medicaid’s real beneficiaries are, but they likely include those who receive Medicaid subsidies (hospitals, insurance companies, pharmaceutical companies, doctors, device manufacturers) and people who would otherwise make charitable contributions to provide medical care to enrollees. In other words, Medicaid’s actual beneficiaries are different from its intended beneficiaries.

That’s something to keep in mind when President Obama says, “There are outcomes we can calculate” like “the number of newly insured families” and that “those numbers add up to success.”

OECD Scheme to Boost Taxes on Business Sector Will Hurt Global Economy and Enable Bigger Government

Citing the work of David Burton and Richard Rahn, I warned last July about the dangerous consequences of allowing governments to create a global tax cartel based on the collection and sharing of sensitive personal financial information.

I was focused on the danger to individuals, but it’s also risky to let governments obtain more data from businesses.

Remarkably, even the World Bank acknowledges the downside of giving more information to governments.

Here are some blurbs from the abstract of a new study looking at what happens when companies divulge more data.

Relying on a data set of more than 70,000 firms in 121 countries, the analysis finds that disclosure can be a double-edged sword. …The findings reveal the dark side of voluntary information disclosure: exposing firms to government expropriation.

And here are some additional details from the full report.

…disclosure has important costs in allowing exposure to government expropriation… We show that accounting information disclosure can be detrimental to firm development… Such disclosure allows corrupt bureaucrats to gain access to firm-level information and use it for endogenous harassment. …once firm information is disclosed, the threat of government expropriation is widespread. Information disclosure thus allows rent-seeking bureaucrats to gain access to the disclosed information and use it to extract bribes. …Our paper offers a vivid illustration that an important hindrance to institutional development—here in the form of adopting information disclosure—is government expropriation. …The results are thus supportive of Acemoglu and Johnson (2005) on the overwhelming importance of constraining government expropriation in facilitating economic development.

Yet this doesn’t seem to bother advocates of bigger government.

King v. Burwell: Obama Pounds the Table to Distract Attention from His Lawbreaking

There is an old lawyers’ adage: “When the facts are on your side, argue the facts. When the law is on your side, argue the law. When neither are on your side, pound the table.” President Obama will deliver a speech today in which he pounds the table with the supposed successes of the Affordable Care Act. The address is part effort to influence the Supreme Court’s upcoming decision in King v. Burwell, part effort to spin a potential loss in that case.

The problem is, those supposed successes are not due to the ACA. They are the product, two federal courts have found, of billions of dollars of illegal taxes, borrowing, and spending imposed by the IRS at the behest of the president’s political appointees.

The president can pound the table all he wants about his theories of what Congress intended, or how, in his opinion, those illegal taxes have benefited America. No speech can change the fact that he signed into law a health care bill that makes it unmistakably clear that those taxes and subsidies are only available “through an Exchange established by the State.” If he didn’t like that part of the bill, he shouldn’t have signed it.

Honest Leftist Admits Desire for Spite-Driven Tax Policy

Every so often, I’ll assert that some statists are so consumed by envy and spite that they favor high tax rates on the “rich” even if the net effect (because of diminished economic output) is less revenue for government.

In other words, they deliberately and openly want to be on the right side (which is definitely the wrong side) of the Laffer Curve.

Just in case you think I’m exaggerating in order to make my opponents look foolish, check out this poll of left-wing voters who strongly favored soak-the-rich tax hikes even if there was no extra tax collected.

But now I have an even better example.

Writing for Vox, Matthew Yglesias openly argues that we should be on the downward-sloping portion of the Laffer Curve. Just in case you think I’m exaggerating, “the case for confiscatory taxation” is part of the title for his article.

Here’s some of what he wrote.

Maybe at least some taxes should be really high. Maybe even really really high. So high as to useless for revenue-raising purposes — but powerful for achieving other ends. We already accept this principle for tobacco taxes. If all we wanted to do was raise revenue, we might want to slightly cut cigarette taxes. …But we don’t do that because we care about public health. We tax tobacco not to make money but to discourage smoking.

The tobacco tax analogy is very appropriate.

Indeed, one of my favorite arguments is to point out that we have high taxes on cigarettes precisely because politicians want to discourage smoking.

As a good libertarian, I then point out that government shouldn’t be trying to control our private lives, but my bigger point is that the economic arguments about taxes and smoking are the same as those involving taxes on work, saving, investment.

Needless to say, I want people to understand that high tax rates are a penalty, and it’s particularly foolish to impose penalties on productive behavior.

But not according to Matt. He specifically argues for ultra-high tax rates as a “deterrence” to high levels of income.

If we take seriously the idea that endlessly growing inequality can have a cancerous effect on our democracy, we should consider it for top incomes as well. …apply the same principle of taxation-as-deterrence to very high levels of income. …Imagine a world in which we…imposed a 90 percent marginal tax rate on salaries above $10 million. This seems unlikely to raise substantial amounts of revenue.

I suppose we should give him credit for admitting that high tax rates won’t generate revenue. Which means he’s more honest than some of his fellow statists who want us to believe confiscatory tax rates will produce more money.

But honesty isn’t the same as wisdom.