Topic: Government and Politics

Pandering to the Protectionists

Given the audience, one could have expected a goodly amount of protectionist rhetoric from the Democratic presidential candidates in their debate last night at an AFL-CIO forum. But at times it seemed as though they were battling to see who among them could pander the most.

Dennis Kucinich has never been a promoter of open trade and markets, so it is hardly surprising that he said withdrawing from NAFTA and the WTO would be a “first week in office” priority. Thank goodness he’s not a serious candidate. What is worrisome is the cheers his pledge elicited. Do the members of the AFL-CIO truly believe that if two of our largest trade partners (Canada and Mexico) increased their tariffs on American goods, that would somehow benefit them? Is the WTO seen as such a negative force overall that withdrawing from its forums and its legal protections is perceived as wise?

The other candidates, to their credit, did not match Mr Kucinich’s pledge. But that is to damn them with faint praise, however, as most of them did undertake to “revise” trade agreements, including NAFTA, (presumably by putting in more stringent rules on labor and environmental provisions) and to put more emphasis on enforcement of trade agreements. None of them, not even Senator Clinton, whose husband showed a commendable commitment to trade during his time in office, stood up and defended the benefits of trade.

Senator Obama, given the chance to acknowledge the positive effect of trade on working families – i.e., cheap goods – demurred, making an emotive, if economically illiterate, point about how a cheap T-shirt is useless if one doesn’t have a job. As though the U.S. economy was not demonstrating that consumers can have access to cheaper goods as well as record employment.

Perhaps the next Democratic presidential candidates debate should be held at a consumer- or taxpayer-group forum.

Time for a (Most of) Government Shutdown

President Bush and congressional Democrats are fighting over many of the annual spending bills, leading some to predict a government shutdown when the new fiscal year starts October 1. This prospect horrifies the political class, but Investor’s Business Daily explains why it would be a good idea to close many government departments:

Here’s a suggestion: Many government departments, agencies and offices should be closed for good. …In 1800, the government needed a mere 3,000 employees and $1 million a year to do its job. In those days, lawmakers knew well the meaning of “limited.” Today, federal civilian employees number nearly 2 million. Another 10 million or more are federal contractors or grant recipients. The yearly budget of this runaway train is soaring toward $3 trillion. …Start with the Education Department, created in 1979 by the Carter administration despite the fact there is no constitutional authorization for its existence. In addition to its meddling, the department is spending nearly $70 billion a year in taxpayers’ dollars. By all accounts, public education in this country is worse off than it was when the Education Department opened. It’s hard to make an argument that those 5,000 employees are contributing anything. Next on the block should be the Energy Department, another monster wrought by Jimmy Carter, this one in 1977. There’s no real job this department… Like food, shelter and clothing, energy is a commodity that can and should be traded on an open market. There is no need to make a federal case out of it, particularly one that employees 17,000 people. All Cabinet-level departments — even Defense, which could cut waste — should at least have their budgets drained of excess. On a smaller scale, the National Endowment for the Arts and the National Endowment for the Humanities should go. Funding for the Corporation for Public Broadcasting should be zeroed out.

Does America Need a Training School for Bureaucrats?

Investor’s Business Daily comments on Hillary Clinton’s proposal for a national school to train “public servants.” But does America need a West Point for bureaucrats? The IBD editorial touches on some of the obvious shortcomings of the scheme, but it also is worth noting that such a school sounds frighteningly similar to France’s infamous l’Ecole d’Administration, the elitist institution that produced a long string of statist politicians such as Jacques Chirac:

Sen. Hillary Clinton says she wants to establish a national academy that will train public servants. Why do re-education camps come to mind? … Somehow we doubt there will be many lectures in making government smaller, deregulating business, cutting taxes or increasing individual freedom. Is there a chance that this “new generation” attending the academy will hear a single voice that isn’t hailing the glories of the nanny state? Will students being groomed for public service ever hear the names Hayek, von Mises or Friedman during their studies? … Government at all levels is already overflowing with bureaucrats who suck up taxpayers’ money and produce little, if anything, of economic value. More often, the bureaucracy actually gets in the way of economic progress.

If You’re Not a Farmer, Then Shut Up

I blogged about the arrogance of some members of Congress during last week’s farm debate in the House.

From the Congressional Record, check out this bluster from farm committee member Tim Walz (D-MN) during the floor debate. (Note that he is objecting to reforms proposed by Reps. Ron Kind (D-WI) and Jeff Flake (R-AZ):

I rise in opposition to my good friend from Wisconsin’s piece of legislation. It’s well meaning, but I believe it does not address the needs of my district. The people of the First District of Minnesota, I think, can probably lay claim to one of the richest agricultural pieces of land in the entire world … I had 14 hearings throughout my district with universal acceptance of making sure the safety net is maintained … When I need advice on the farm bill, I go to a couple of good farmers in my district, Kevin Papp, president of the Minnesota Farm Bureau, and Doug Peterson, president of Minnesota’s Farmers Union. I don’t need to go to the ideologues at the Cato Institute or Club for Growth to know what’s good for rural America.

Have you got it? If you are a taxpayer footing the bill for $30 billion or so of farm subsidies each year, then tough beans–just sit down and let Mr. Walz spend your money on his special interest friends.

A few questions to ponder:

Do you think that there was “universal acceptance” of big farm subsidies at his meetings because they were meetings of farmers?

If Mr. Walz’s district is “one of the richest agricultural pieces of land in the entire world” then why the heck does it need subsidies?

State and Local Workers Retain Advantage

The Bureau of Economic Analysis has released its annual data on employee compensation by industry. (See tables 6.2, 6.3, 6.5, and 6.6).

The new data for 2006 show that the nation’s 16 million state and local government workers earned an average $61,727 in total compensation (wages plus benefits). That is 11 percent more than the $55,470 average earned by U.S. private sector workers.

Looking just at wages, state and local workers earned an average $46,937, which is similar to the $45,995 average earned by private sector workers. Thus the primary state and local advantage is the generous fringe benefits.

The figure below shows that the state and local worker advantage has remained fairly constant since at least 1990. Private pay boomed in the late-1990s, but state and local pay has grown faster this decade.

Source: Chris Edwards, Cato Institute, based on Bureau of Economic Analysis data

For those interested in the welfare of teachers, the BEA data shows that teacher compensation has closely tracked the overall state and local average since 1990. The average compensation in state and local education in 2006 was $62,371

State and local workers are not paid as well as federal workers, on average, but they usually receive similar generous fringe benefits including high job security, and lucrative pension and health care plans.

Another Government Shutdown?

In Wednesday’s OpinionJournal.com Political Diary, John Fund writes that House minority whip Roy Blunt told reporters that he believes President Bush will deliver on his threat to veto the budget bills currently working their way through Congress. And with enough Republicans on record agreeing to uphold the veto, Blunt suggests we might end up witnessing a government shutdown later this year.

As you might recall from the mid-1990s, a federal government shutdown does not mean that every federal agency stops whatever it is they are doing. It’s only the non-essential ones that grind to a temporary halt – and, yes, there is an official definition of what constitutes essential government functions: mainly law enforcement and defense. That Congress continues to fund everything else is what keeps policy wonks like me busy.

Maybe Blunt’s statements are the opening gambit in a political game of chicken. There might be little interest in a government shutdown among the Democratic leaders in Congress. So the follow-up to an upheld Bush veto would likely be a compromise stop-gap measure (like a “continuing resolution” that puts the government on auto-pilot for the rest of the fiscal year) that results in much less spending than would otherwise occur in the course of an unimpeded appropriations cycle.

In either case, those of us who prefer divided government might have another example to add to our growing “Great Moments in Gridlock” list.

Is Federal Pay Too High?

Chris Edwards writes below that the gap between federal pay and private-sector pay continues to widen, with federal employees now making more than twice as much as private employees. Meanwhile, a congressional committee is holding hearings on whether federal employees are underpaid or overpaid. Do you think they’ll hear testimony about why federal employees make twice as much as private-sector workers? Or about the fact that federal quit rates are far lower than private-sector quit rates, suggesting that most federal employees are pretty satisfied?