Topic: Government and Politics

The Real Sprawl Problem: Government

Should we really give another trillion dollars to a government that doesn’t know how big it already is?

Agriculture Secretary Tom Vilsack… learned that his new workplace contains a post office, fitness centers, cafeterias and 6,900 employees. But he remained uncertain about exactly how many employees he supervises nationwide.

“I asked how many employees work at USDA, and nobody really knows,” he said.

Kirsten Gillibrand, a Not-Very-Blue-Dog Democrat

Journalists are calling the newly appointed senator from New York, Kirsten Gillibrand, a “fiscally conservative Blue Dog Democrat.” Even some conservatives like Ed Morrissey have bought the line that she’s a fiscal conservative. It’s hard to find fiscally conservative Democrats. Have we indeed finally found one? Let’s go to the tape.

The National Taxpayers Union rates members of Congress on “all votes that could significantly affect the amounts of federal taxes, spending, debt, or regulatory impact” – 427 House votes in 2007.  In that session of Congress, the only one that Gillibrand served in for which scores have been calculated, Gillibrand voted with the taxpayers 7 percent of the time. That’s right, 7 percent. That makes her just as fiscally conservative as Rep. Barney Frank, Rep. Maxine Waters, and Rep. Henry Waxman. (Though, to be sure, it makes her just slightly more fiscally conservative than Rep. Rahm Emanuel, whom the newspapers have told us is a centrist.)

The ratings from Citizens Against Government Waste, on spending, earmark, and porkbarrel bills, tell the same story: Rep. Gillibrand voted against wasteful spending 8 percent of the time.

And similarly at the Club for Growth ratings: Gillibrand got a rating of 12. On the Club’s ratings, she never once voted in the interests of taxpayers, but she did vote for the U.S.-Peru free trade agreement. She also voted against reinstatement of the Fairness Doctrine. Combined with her 90 percent rating from the ACLU and her A rating from the NRA, maybe she is indeed a free-trader and a civil libertarian.

But the search for a fiscally conservative Democrat goes on.

Mitch McConnell: Do as I Say, Not as I Do

Sen. Minority Leader Mitch McConnell (R-KY) gave a speech today at the National Press Club outlining his vision for the future of the Republican Party. McConnell called for Republicans to “reassert mainstream conservative philosophies.”

Given that his 2008 reelection campaign focused heavily on his ability to secure pork-barrel spending for Kentucky, those philosophies apparently do not include respect for the taxpayer or smaller government. 

Week in Review

Cato Scholars Comment on Obama Inauguration Speech

When Barack Obama stepped to the microphone as President of the United States on Tuesday, he addressed a number of key policy issues, including government spending, terrorism and responsible leadership. After two years of examining candidate Obama’s rhetoric and policy proposals, Cato scholars weigh in on Obama’s first words as president:

John Samples, director of Cato’s Center for Representative Government, offers his take on what he considers the major theme of Obama’s speech: Responsibility. Samples writes:

Obama’s modest demeanor suggests an understanding of his own limitations. If that is true, he may turn out to be more a politician and less a priest, a president content to live within the laws and achieve marginal changes in public policy.

But I wonder. Living in Washington, DC, I have recently had reason to recall Samuel Johnson’s remark about Shakespeare: “In his plays, there are no heroes, only men.” Obama seems to be telling a different story, a tale about charismatic heroes and utopian aspirations. When the talking stops and the doing begins, one question will be answered: Do Americans really want to live out a play where there are no men, only heroes?

In his inaugural address, Obama promised to eliminate government programs that don’t work. Daniel T. Griswold, director of Cato’s Center for Trade Policy Studies, says cutting farm subsidies is a great place to start:

If Senator and candidate Obama could not see the need to end our failed farm policies, it is hard to imagine many if any other programs that will come to an end under his administration.

Director of Information Policy Studies Jim Harper breaks down Obama’s rhetoric on foreign policy and terrorism:

I regret that he raised terrorism again because of the benefit it gives terrorists (knowing that they are in his head). But if it is going to be raised, I can’t think of a better way to do so — no reference to any specific group, just a declaration to anyone considering terrorism: You will lose.

Looking Back at the Bush Legacy

If Barack Obama has anything for which to thank George W. Bush, it’s the massive amount of executive power the Bush administration left for the new president. Citing a recent Washington Post article, Cato executive vice president David Boaz laments Bush’s gift to America’s 44th president.

To see exactly how much Bush has expanded the hand of government into the market, Cato senior fellow Michael D. Tanner lists 14 ways the former president made the market less free. For more on how the conservatives increased the size of government, don’t miss Tanner’s book, Leviathan on the Right: How Big Government Conservatism Brought Down the Republican Revolution.

To add insult to injury, the Washington Post reports that Bush’s post-presidential plans will include starting a “Freedom Institute focused on a broad portfolio of topics, including the expansion of democracy abroad and education reforms of the kind Bush implemented during his presidency, according to organizers.”

George W. Bush is starting a Freedom Institute? In the words of David Boaz, “Coming next: The Clinton Center for Honesty and the Paris Hilton Center for Modesty.”

Obama Continues to Push For Stimulus

President Obama continues to pitch his stimulus plan to the American public. Four days before his inauguration, Obama said, “The way I see it, the first job of my administration is to put people back to work and get our economy working again.” As determined as his administration may be, Cato analysts continue to explain why Keynesian plans like the one Obama is proposing will end up hurting the economy more than helping it.

In November, Cato adjunct scholar Lawrence H. White explained how Americans got themselves into the financial crisis, and he urges that government spending is not a solution to get out of it. “You can’t solve an excessive spending problem by spending more. We are making the crisis worse,” he writes in a new article co-authored with David C. Rose. “We have been down this road before. Most recessions start with the bursting of bubbles that grew large because of excessive money growth. But again and again, we presume a Keynesian cause and a Keynesian cure. Our recent stock market and housing market crashes can prove to be the start of a sound and rapid recovery — if we will have the courage to let it be so.”

While Obama proposes an $850 billion stimulus bill, the federal deficit hovers around an astonishing $2 trillion. Can we afford such a massive spending program of taxpayer money? Obama may answer, “Yes we can,” but David Boaz says, “No we can’t.”

Cato analysts aren’t just writing about why stimulus proposals don’t make sound economic policy; they’re also hitting up the airwaves. Watch Cato senior fellow Daniel J. Mitchell discuss TARP, politicians’ love for spending, and Obama’s economic plan on CNBC.

To receive this report regularly, subscribe to the Cato Weekly Dispatch.

Behold Your Government in Action

The U.S. Senate is a busy place.  Lately it has been spending billions and billions over and above the trillions in unfunded liabilities.  Given all this activity, who would have imagined that the senators could find the time to pass a resolution about the emergency plane landing in the Hudson river in New York?

I’m not a historian or political science expert, but this Senate is clearly determined to be the very best we have ever had.  What a record pace they are setting!

Can We Afford All This Spending? No We Can’t.

President Obama says that “our economy is badly weakened,” partly because of “our collective failure to make hard choices.” And that when government programs don’t work, “programs will end.” Yet he continues to press for a spending program that apparently only begins at $825 billion.

In 1993 a Democratic Congress failed to pass President Clinton’s request for a $16.3 billion stimulus package. A year ago Congress passed a $150 billion stimulus bill proposed by President Bush, a fitting cap to Bush’s massive increase in federal spending.

It had no apparent effect.

And now, in a continuing ratcheting up of spending levels, President Obama and Congress propose to spend the not-very-long-ago unimaginable sum of roughly a trillion dollars. As Chris Edwards wrote recently, we’re already looking at deficits of two trillion dollars in fiscal years 2008 and 2009. If that much deficit spending doesn’t do the Keynesian trick, do we really expect that another trillion dollars will?

Political leaders talk about making the hard choices and laying the groundwork for the future, but their actions demonstrate a different approach. They try to solve problems – or at least to be seen to be solving problems – today without in fact thinking about the long term.

Where will this new spending come from? It could come from raising taxes; but even President Obama seems reluctant to raise taxes during a sharp economic slowdown, indicating that he does know that taxes reduce work, investment, and production. And would anyone propose to raise taxes by $825 billion? Or by the $3 trillion that it would take to cover the already-projected deficits and the current proposed spending? And of course money taxed away from those who earn it is taken out of the economy, only to be reinjected by politicians and planners rather than by consumers and investors. That means, as the Washington Post reported on Tuesday, “It will fall to Obama and his subordinates to decide winners and losers in the banking, financial services, automobile and other major industries, a span of control that dwarfs President Harry S. Truman’s attempt to seize control of steel production.” That’s not good for freedom or for economic growth.

If not taxes, of course we could borrow the money. Assuming a government plunging further in debt to the tune of a trillion dollars a year can still borrow. But again, borrowing just transfers money from private investment to political investment. What we’ll actually probably do is create the money out of thin air on the books of the Federal Reserve. More money injected into the economy surely means inflation, maybe a lot of inflation given the size of the spending already undertaken or now in the works.

Those are the costs. Now what are the benefits? Where will all this money go? I intended to list in this blog item all the programs that make up that $825 billion. But it turns out that even the summary list of the gravy runs 13 pages (and I’m sure the Democrats appreciate our having linked to their advertising flyer three times now). The Wall Street Journal printed a graphic on January 16 (apparently not online) showing the different programs piled up like boxes in a Hillary Clinton Christmas campaign ad: Hundreds of billions of dollars to state government, in a completely useless shuffling of taxpayers’ money. Plus more billions for education, which also means for state and local governments. Money for certain highways, favored kinds of energy projects, politically popular research, specific forms of technology. As the Post said, “Obama and his subordinates [will] decide winners and losers.” And just a bit – maybe not more than, you know, $100 billion – for welfare programs, which are hardly economic stimulus but will no doubt be popular with recipients. You can find the complete bill at http://readthestimulus.org/, where they encourage people to join the effort to comb through the 334 pages and report what’s in there.

Man, if you can’t get some of that boodle, you need a better lobbyist. Because of course, as James Q. Wilson noted in his review of a book on lobbying, that’s what lobbyists do: they get their clients a piece of government programs. And the more programs there are, and the more money is appropriated for them, the more work there is for lobbyists.

Once it’s allocated, how will the money be spent? Can the federal government, even with the assistance of a new Chief Performance Officer, promptly and effectively spend $825 billion? One of Greg Mankiw’s readers worked on the new Department of Homeland Security and reports:

you cannot juice up a government agency’s budget by tens of billions (or in the case of the stimulus package, hundreds of billions) and expect them to be able to process the paperwork to contract it out, much less oversee the projects or even choose them with any kind of hope for success. It’s like trying to feed a Pomeranian a 25 lb turkey. It’s madness. It was years before DHS got the situation under control and between the start and when they finally assembled a sufficiently capable team of lawyers, contracting officials, technical experts and resource managers, most of the money was totally wasted.

Linda Bilmes, coauthor with Joseph Stiglitz of The Three Trillion Dollar War: The True Cost of the Iraq Conflict, analyzes the massive problems in three somewhat smaller government projects – the Iraqi reconstruction effort, Hurricane Katrina reconstruction, and the Big Dig artery construction in Boston – and finds that “in any organization that starts to increase spending very rapidly there are risks of waste, fraud and inefficiency.”

Can we afford all this spending? Can we spend it effectively to create growth? No we can’t.