Topic: Government and Politics

Jeff Flake vs. the Spending Robots

Rep. Jeff Flake of Arizona is one of the very few fiscal policy heroes in Congress. Last night, he was doing what he does best – offering amendments to cut funding from a wasteful appropriations bill moving through the House.

Flake tried to strike spending earmarks slipped into the bill by both Republicans and Democrats. Watching the action on C-SPAN, I was struck by what a bunch of robots the big spenders defending the bill were. They said things like “this project is very important,” “it will help people,” and “it has a rate of return of 30-to-1 for every tax dollar spent.”

Flake pointed out the simple logical flaws in the spenders’ arguments. If an earmarked project is so important, why doesn’t it get funding through the normal competitive process? If a project has such a high return, wouldn’t private investors swoop in to earn the big profits? The “high return” claim is a commonly used gambit by big-spending politicians. Economist Martin Sullivan calls it the “liberal Laffer curve.”

Anyway, the spending robots listened politely to Flake, then they focused back in on their staff-prepared bullet points and continued with their self-interested drivel about how the nation’s fate rested on federal aid for the Elvis museum back in their hometown, or whatever their particular project was.

Flake presented some interesting statistics on the earmarks in the agriculture appropriations bill being considered last night. As shown in the chart below, two-thirds of the earmarks go to a small, exclusive club within the House of those on the appropriations committee, committee chairs, and party leadership. He characterized the appropriations process as a “spoils system,” which is evocative of government corruption of the past, such as Tammany Hall.

But unlike the original Tammany Hall, today’s spoils system is not party-based. Instead, it’s run by an elite and bipartisan group of spending robots within Congress, who pose as representatives of the people when they travel outside the beltway. As Flake implied, it’s odd that the great majority of members and their constituents, who get the short end of the stick from the spoils system, don’t revolt.

Spend Money to Save Money?

You know all those promises that spending more taxpayers’ money on some program will actually result in taxpayer savings – eventually? Check out this story in Sunday’s Parade magazine:

Ten years ago, Congress created a new system of government credit cards for federal employees booking work-related travel. The cards were meant to curb waste and abuse. But since their introduction, charges have doubled—from $4.39 billion in 1999 to $8.28 billion last year.

Among the expenses flagged in a new report from the Congressional Research Service: $3700 for laser eye surgery, $4100 for a first-class trip to Hawaii, and $100 million in unclaimed refunds for airline tickets that were purchased but never used.

Of course, the doubled spending is not all waste, at least not in the narrow sense. In the past nine Bush-Obama years, total federal spending doubled from about $1.8 trillion to $3.6 trillion. But certainly it doesn’t look like the promised efficiencies have been realized.

Rhode Island Studies Marijuana Decriminalization

Criminalization of marijuana use never did make sense.  Surely the results of the Drug War–billions of dollars wasted, tens of millions of regular users, millions of people arrested–have made it even more obvious that prohibition is a failure.  And now,with the U.S. suffering through a nasty recession, it is even more foolish to waste resources in a vain attempt to stop recreational drug use.

Before heading home for the July 4th weekend the Rhode Island Senate set up a committee to study the idea of decriminalization.  Reports the Providence Journal:

Weeks after legalizing the sale of marijuana to sick people, lawmakers have voted to explore how much Rhode Island might collect in revenue if it were to make all sales of marijuana legal and impose a “sin tax” of $35 per ounce.

During the General Assembly’s aborted rush to adjournment Friday, the Senate approved a resolution — introduced earlier the same day — to create a nine-member special commission to study a swath of issues surrounding marijuana. Among them: “The experience of individuals and families sentenced for violating marijuana laws … The experience of states and European countries, such as California, Massachusetts and the Netherlands, which have decriminalized the sale and use of marijuana.”

Drug prohibition has failed.  Rhode Island legislators have an opportunity to help the nation change direction in the way it deals with drug abuse.

The Politicians and the Founders

Both President Obama and Sen. John McCain cited the Founders in their weekly radio addresses today, as they made the case for government actions that would have appalled those Founders. Obama invoked “the indomitable spirit of the first American citizens who made [independence] day possible” in arguing for a federal takeover of education, energy, and health care.

He might have trouble explaining how his policies reflect the spirit of the men who left us such words as these:

He has erected a multitude of New Offices, and sent hither swarms of Officers to harrass our people, and eat out their substance.

If we can prevent the government from wasting the labors of the people, under the pretence of taking care of them, they must be happy.

Were we directed from Washington when to sow and when to reap, we should soon want bread.

A wise and frugal Government, which shall restrain men from injuring one another, shall leave them otherwise free to regulate their own pursuits of industry and improvement, and shall not take from the mouth of labor the bread it has earned. This is the sum of good government.

Meanwhile, McCain called for the American government to more vigorously support the protesters in Iran. What would the Founders say to him?

The great rule of conduct for us in regard to foreign nations is in extending our commercial relations, to have with them as little political connection as possible….Harmony, liberal intercourse with all nations, are recommended by policy, humanity, and interest.

Peace, commerce, and honest friendship with all nations, entangling alliances with none.

[America] has abstained from interference in the concerns of others, even when conflict has been for principles to which she clings, as to the last vital drop that visits the heart. …Wherever the standard of freedom and Independence has been or shall be unfurled, there will her heart, her benedictions and her prayers be. But she goes not abroad, in search of monsters to destroy. She is the well-wisher to the freedom and independence of all. She is the champion and vindicator only of her own.

Maybe each week there should be three national radio broadcasts: one from the incumbent president, one from the other big-government party, and one reflecting the views of the Founders.

The Failure of Do-Nothing Policies

A news story from today in a slightly alternate universe:

Jobless Rate at 26-Year High

Employers kept slashing jobs at a furious pace in June as the unemployment rate edged ever closer to double-digit levels, undermining signs of progress in the economy, and making clear that the job market remains in terrible shape.

The number of jobs on employers’ payrolls fell by 467,000, the Labor Department said. That is many more jobs than were shed in May and far worse than the 350,000 job losses that economists were forecasting.

Job losses peaked in January and had declined every month until June. The steep losses show that even as there are signs that total economic activity may level off or begin growing later this year, the nation’s employers are still pulling back.

White House press secretary Robert Gibbs said, “President Obama proposed a $787 billion stimulus program to get this country moving again. He tried to save the jobs at GM and Chrysler. But the do-nothing Republicans filibustered and blocked that progressive legislation, and these are the results.”

House Speaker Nancy Pelosi said at a press conference, “We begged President Bush to save Fannie Mae, Merrill Lynch, Bank of America, AIG, the rest of Wall Street, the banks, and the automobile industry. We begged him to spend $700 billion of taxpayers’ money to bail out America’s great companies. We begged him to ignore the deficit and spend more money we don’t have. But did he listen? No, he just sat there wearing his Adam Smith tie and refused to spend even a single trillion to save jobs. And now unemployment is at 9.5 percent. I hope he’s happy.”

Democrats on Capitol Hill agreed that the “do-nothing” response to the financial crisis had led to rising unemployment and a sluggish economy. If the Bush and Obama administrations had been willing to invest in American companies, run the deficit up to $1.8 trillion, and talk about all sorts of new taxes, regulations, and spending programs, then certainly the economy would be recovering by now, they said.

Congress Just Raised Our Credit Card Fees

Technically, it was the companies which raised their fees.  But they did so to anticipate new legislative restrictions on fees taking effect.  Congress wanted to cut costs for consumers, but ended up costing them instead.

Reports the Washington Post:

Credit card companies are raising interest rates and fees seven months before new rules go into effect that will limit their ability to do so, much to the irritation of Congress and consumer advocates.

Chase, for instance, will raise the minimum payment required of some of its customers from 2 percent to 5 percent of the statement balance starting in August. Chase and Discover have increased the maximum fee charged for transferring a balance to the card to 5 percent of the amount, up from 3 and 4 percent, respectively. Bank of America last month raised the transaction fee for balance transfers and cash advances from 3 to 4 percent. Card issuers including Bank of America and Citi also continue to cut limits and hike up rates, which they have been doing with more frequency since January.

“This is a common practice and will continue to be common, because issuers can do these things for really no reason until February,” said John Ulzheimer, president of consumer education for, which tracks the industry. “It’s what I call the Credit Card Trifecta – lower limits, higher rates, higher minimum payments.”

It’s not just the top card issuers making changes. Atlanta-based InfiBank, for example, will raise the minimum annual percentage rate it charges nearly all of its customers in September “in order to more effectively manage the profitability of our credit card account portfolio in a very challenging economic environment,” said spokesman Kevin C. Langin.

The flurry of activity, which the banks say is necessary to shore up their revenue losses, has irked members of Congress, who passed a new credit card law, which was signed by President Obama in May. The law, among other things, would prevent card companies from raising rates on existing balances unless the borrower was at least 60 days late and would require the original rate to be restored if payments are received on time for six months. The law would also require banks to get customers’ permission before allowing them to go over their limits, for which they would have to pay a fee.

One hates to think of what additional “help” Congress plans on providing for us in the future.