Topic: Government and Politics

Stop Hiding the Stimulus Bill

Here’s Paul Blumenthal of the Sunlight Foundation on the closed process being used to ram through the deficit-spending/economic stimulus bill:

[I]t is not just Republicans who are being denied access to the bill. Reporters, bloggers, and the general public are being denied an opportunity to review one of the most important pieces of legislation sent through Congress in a long time. Anyone who wants should express that, whatever the partisan reasons for denying access to the bill, the American people deserve a right to review this legislation. Slamming it through without letting anyone see, save for 7 or 8 congressmen and some staff, is not fair to the public or the legislative process.

This is a dangerous practice that the Democrats ran against in 2006 and now, in the majority, are unfortunately using to block their opposition’s attacks. The majority Democrats should maintain their previous position on running the most open and honest government by allowing the public to review this legislation. Anything less is unacceptable.

Nadya Suleman’s Octuplets & the Perils of Public Charity

The AP reports that you and I will be paying the cost of rearing Nadya Suleman’s newborn octuplets –  as well as her other six children – through various state and federal welfare programs:

Even before the 33-year-old single, unemployed mother gave birth to octuplets last month, she had been caring for her six other children with the help of $490 a month in food stamps, plus Social Security disability payments for three of the youngsters. The public aid will almost certainly be increased with the new additions to her family.

Also, the hospital where the octuplets are expected to spend seven to 12 weeks has requested reimbursement from Medi-Cal, the state’s Medicaid program, for care of the premature babies, according to the Los Angeles Times…

In California, a low-income family can receive Social Security payments of up to $793 a month for each disabled child. Three children would amount to $2,379.

The Suleman octuplets’ medical costs have not been disclosed, but in 2006, the average cost for a premature baby’s hospital stay in California was $164,273, according to the U.S. Department of Health and Human Services. Eight times that is more than $1.3 million, and the average cost for just one cesarean birth in 2006 was $22,762 in California.

A reasonable person might ask, “So what?  Poor kids need help.  Would you rather let them die?”  That certainly does not seem to be the answer.  Yet there are perils inherent in having government come to the rescue. 

One challenge confronting both public and private charity is known as the Samaritan’s dilemma: any effort to help the needy inevitably discourages self-help.  People at the margins don’t work as hard, or even take deliberate advantage of others’ altruism, which increases the number of people “in need.”  That appears to have happened in Suleman’s case:

Word of the public assistance has stoked the furor over Suleman’s decision to have so many children by having embryos implanted in her womb…

Suleman received disability payments for an on-the-job back injury during a riot at a state mental hospital, collecting more than $165,000 over nearly a decade before the benefits were discontinued last year.

Some of the disability money was spent on in vitro fertilizations, which was used for all 14 of her children, Suleman said. She said she also worked double shifts at the mental hospital and saved up for the treatments. She estimated that all her treatments cost $100,000.

The First Peril of Public Charity is that government does a relatively poor job of discouraging such opportunistic behavior.  Food stamps, Social Security disability payments, and Medicaid benefits are entitlement programs.  So long as Suleman meets the statutory eligibility criteria, she is legally entitled to benefits no matter how much she may be milking the system.  It is extremely difficult to tailor government eligibility rules (whether statutory or regulatory) to prevent all the possible forms of abuse.   And even if some government bureaucrat tries to cut off welfare recipients who are abusing the system, those recipients can sue the government and there are legions of lawyers who will help.  Private charity is much better at discouraging opportunistic behavior by tailoring assistance to the truly needy.  Did Suleman and her children truly need all the public assistance they had been receiving?  Would she have been able to afford in-vitro fertilization had she not been on public assistance?  If the availability of additional charity were less certain, would she have tried to get pregnant again?  Maybe, but probably not.

The Second Peril of Public Charity is that taxpayers and politicians respond to the First Peril of Public Charity by insisting that government take away people’s rights.  Much of the crusade against smokers’ and restaurateurs’ rights is justified by the need to limit government spending on medical care for smoking-related illness.  Ditto the crusade to limit your right to eat fatty foods. 

Suleman’s case has led taxpayers to recommend some startling policy responses:

On the Internet, bloggers rained insults on Suleman, calling her an “idiot,” criticizing her decision to have more children when she couldn’t afford the ones she had, and suggesting she be sterilized.

“It’s my opinion that a woman’s right to reproduce should be limited to a number which the parents can pay for,” Charles Murray [not the American Enterprise Institute scholar] wrote in a letter to the Los Angeles Daily News. “Why should my wife and I, as taxpayers, pay child support for 14 Suleman kids?”…

“From the outside you can tell that this woman was playing the system,” host Bryan Suits said on the “Kennedy and Suits” show on KFI-AM. “You’re damn right the state should step in and seize the kids and adopt them out.”

Emphasis added.

Those responses are a predictable consequence of government charity.  They reflect the same selfish rationale that the Church of Universal Coverage uses to argue for eliminating your right to choose health insurance. 

If somebody is abusing generosity, the appropriate response is not to take away their rights but to take away the generosity. (Some curtailment of parental rights can be justified if the children are in danger. But we don’t yet know if Suleman is going to get a reality-TV deal out of this.) Private charity can do that. Government is ill-equipped to do so, and so our rights come under attack.

The irony is that the Left’s adamant support for government charity is eroding smokers’ rights, property rights, dietary rights, medical rights, and now even the Left’s cherished reproductive rights – making the Left less and less liberal by the day.

A Simple Way to Enrich Everyone, Instantly

Hey Slate! I can commit the broken window fallacy too. Can I write a business column? Pretty please?

The economy of the Washington, D.C., area has boomed in recent decades not so much because the federal government has expanded its payrolls massively but because private government contractors have been thriving. As the Bureau of Labor Statistics notes, in January, “the large areas with the lowest jobless rates in December were Oklahoma City, Okla., and Washington-Arlington-Alexandria, D.C.-Va.-Md.-W.Va.” – a capital city, and the capital city.

I have a modest proposal, then.

Washington, DC is only one city, but what we really want is to enrich the whole country. I therefore propose that we increase all federal taxes by a factor of sixty, so that federal spending, which now only enriches the 5 million in the DC area, will be enough to enrich all 300 million Americans.

We can spend it on a proportionate number of “private” government contractors if it helps. That’s fine with me – you know how we free-marketers love anything calling itself “private.” All that matters is that we keep borrowing, taxing, and inflating ourselves into the wealth that Washington so obviously has. That, you see, is the power of private enterprise.

$800 Billion Is a Lot of (Other People’s) Money

Even though Keynesian theory does not make sense, President Obama wants a so-called stimulus that will increase the burden of government spending by about $800 billion (including the additional interest on government debt, more than $1 trillion). This is not pocket change. In this short video, Michelle Muccio of the Acton Institute explains how this amount of money would be enough to abolish the payroll tax for the rest of the year.

Why don’t politicians choose tax relief? As John Kerry stated, people can’t be trusted to spend their own money.

Government-Funded Comparative-Effectiveness Research: a Fool’s Errand

An article in the San Francisco Chronicle by Victoria Colliver explains:

  1. Why the Left and insurers want the government to fund comparative-effectiveness research (CER),
  2. Why conservatives and the health care industry oppose government-funded CER,
  3. Why the opponents of CER will prevail,
  4. That the Left is going to keep pursuing this fool’s errand anyway, rather than better ways to generate CER, and
  5. Why I want to knock all their heads together.

All that in a rather short article.  Here are the best parts:

“The intent is to use that information to ration care. Why else would you come up with the research to help people choose what provides a lot of value for the money and what doesn’t?” said Michael Cannon, director of health policy studies at the Cato Institute, a libertarian think tank…

“It is perfectly legitimate for Congress to ration care in government programs,” said Cannon, who believes any government effort to conduct comparative-effectiveness studies will quashed by industry. “That’s exactly why you don’t want government paying for medical care.”

Obama, Transparency and Stimulus

On the campaign trail, Barack Obama promised that bills coming to his desk from Congress would sit for five days so the public could read, analyze and comment on them before he signed them into law. In yesterday’s Cato Daily Podcast, Jim Harper, Cato’s director of information policy studies, discussed Obama’s record on fulfilling that promise.

Of course, Obama’s guarantee to let a bill sit for five days did not include emergency legislation. As for the stimulus bill, should it be considered “emergency legislation?” Harper says no.

A five day difference from the time it goes into effect is very small, especially in regard to the fact that most of the people who are expecting to change their behavior in light of the passage of the bill will be able to do that during the five day pendency of it…it should sit for five days before it gets signed, according to the promise that President Obama made during his campaign.

Will Stimulus Become a $3 Trillion Nightmare?

A huge threat from the $800 billion stimulus plan in front of Congress this week is that much of the spending may morph into a permanent expansion of government. If the bill is signed into law, lobbyists will immediately start pressing for the long-term extension of all the new spending on health care, transportation, education and other items.

Let’s look at the Senate bill to illustrate the fiscal impact of such a nightmare scenario. The CBO finds that the Senate bill would increase outlays by $546 billion and cut taxes $292 billion over fiscal years 2009-2019.

Figure 1 shows CBO’s assumed pattern of spending under the bill. Since we are already part way through 2009, outlays peak in 2010 at $206 billion and taper off after that. Note that 41 percent of total spending occurs after 2010 because federal and state agencies have limits on how fast they can spend the huge pile of cash. (Thus 41 percent of spending in the bill is certainly not short-term “stimulus” even if you believe in Keynesian theory).

What if special interest groups successfully lobby to extend all the new benefits and subsidies? One possibility would be that the 2010 funding level of $206 billion is extended permanently, as shown in Figure 2. Rather than the stimulus bill costing $546 billion through 2019, it would trigger spending totaling $2.2 trillion over the period.

In sum, here are the budget effects through 2019 of the stimulus nightmare scenario:

- Temporary tax cuts in the Senate bill: $292 billion

- Spending continued permanently at the 2010 level: $2.2 trillion

- Rough guess at the additional federal interest costs: $500 billion

- Total increase in federal debt under nightmare scenario: $3 trillion

Extending the (mainly useless) tax cuts in the stimulus package would make deficits even larger. And, of course, all this increase in debt would come on top of the debt piling up from financial industry bailouts and regular budget spending. It’s madness.