Topic: Government and Politics

The Same Old K Street

Jeff Birnbaum, who covers lobbying for the Washington Post, which is sort of like covering the Pope for the Vatican Observer, writes about “the other K Street” in a lengthy article. “K Street,” of course, is shorthand–or if you believe Wikipedia, metonym–for the lobbying industry.

According to Birnbaum, “the other K Street” is a building along K Street that has become home to a dozen or so well-funded left-Democratic lobbies–Campaign for America’s Future, Americans United for Change, Progressive Majority, Ballot Initiative Strategy Center, USAction, MoveOn.org Political Action, etc. So that’s very different from the usual corporate lobbyists, right?

Well, let’s see. What K Street is really about is using political influence and the power of government to transfer resources from those who produced them to yourself or your clients. It’s about milking the taxpayers. It’s about using your political connections to impose your own agenda on the unorganized masses.

And by that definition, “the other K Street” fits right in with the corporate K Street. Special interests give them buckets of money, and they manipulate the political process on behalf of partisan, ideological, and interest-driven agendas–just like the corporate and right-wing lobbyists.

Michael Barone reminds us that it was Franklin D. Roosevelt’s aides who originally created “K Street” when they left the White House and went into business for themselves. They happily lobbied the permanent Democratic majority in Washington for the next 60 years or so. Now the taxpayers’ pinata is available to everybody.

Time for Taxpayers to Sing the Blues

Blue corn isn’t subsidized like white and yellow corn, and that’s just not right. Or so say the blue corn growers. Cindy Skrzycki’s “Regulators” column in the Washington Post today is the sort of thing that ought to make you a libertarian. So many lawyers writing so many regulations, with clauses and sub-clauses. And it’s all nonsense.

So here’s the problem:

Under the regulatory system that determines which crops qualify for inclusion in Department of Agriculture support programs, blue corn is an orphan. According to the department rulebook, it isn’t even considered corn because it’s not yellow or white, the only versions of the food that are eligible for federal agricultural loans and crop payments.

This means that farmers who grow blue corn, which is made into the blue-corn tortilla chips that many of us love to dip into a nice salsa, aren’t growing “real” corn, so they don’t qualify for loan or other support programs, according to the government. 

Now you might think this is no big deal since blue corn sells for about twice what white and yellow corn do. But the growers feel hurt and victimized and, you know, invisibilized. They want to be an official government-recognized crop. And, you know, get the loans and subsidies. Like popcorn got in 2003.

But fear not. Rep. Dennis Cardoza (D-Calif.), chairman of the House subcommittee on horticulture and organic agriculture (seriously), is listening. He’s promised the blue-corn growers that he’ll try to address their needs in the current farm bill.

And then taxpayers can subsidize premium organic blue corn, lest this great nation ever run out of blue-corn tortilla chips in a national emergency.

The Real “Reading First” Scandal

Secretary of Education Margaret Spellings will testify before a House Education Committee hearing tomorrow, and the hottest topic for her appearance on the hot-seat will be the federal “Reading First” program. A centerpiece of the No Child Left Behind act, Reading First is a billion-dollar-a-year initiative to improve language instruction in the early grades. The idea behind the program was to encourage districts to adopt scientifically proven teaching methods, but it seems to have netted roughly a million bucks for people on the Dept. of Ed.’s payroll in the process. The Department’s inspector general, John P. Higgins Jr., has made several criminal investigation referrals to the Justice Department as a result.

As government scandals go, this is tepid stuff. A million dollars? Individual states and school districts around the country have often mismanaged or defrauded taxpayers of comparable or larger sums.

The real Reading First scandal is that anyone would imagine that a bureaucratic school system bereft of competitors and immune to market incentives could be made to adopt and consistently implement effective educational practices on a vast scale, let alone sustain them over time or improve upon them.

Anyone familiar with the research on so-called systemic reform is aware that implementation quality matters as much or more than program selection. If teachers are not committed to and well trained in the selected methods, they will not effectively implement them and will not persevere with them over time.

A case in point is the federal ”Follow Through” experiment of the late 1960s and early 1970s, which put a score of different pedagogical methods in head-to-head competition. The number one method, by far, was called Direct Instruction, or Distar. As soon as “Follow Through” officially ended, most of the schools that had been using Distar abandoned it, and their test scores eventually fell back to pre-follow-through levels.

So the real question is, how do you simultaneously achieve all of the following:

  • Encourage the consistent identification and/or development of effective methods
  • Hire, train, and maintain a staff of teachers capable of properly implementing those methods
  • Ensure that, once adopted, effective methods are not displaced by the latest pedagogical fad

The only way to do that is to create powerful incentives that pressure school administrators and teachers to do these things. The only system that consistently creates these incentives is a competitive education marketplace. Until we have a market, dreams of the pervasive use of effective pedagogical methods in American education will remain just that: dreams.

Politicians May Slow Growth - and Help America’s Competitors - with Big Tax Hike on Capital Markets

The Wall Street Journal appropriately savages a putative Senate proposal to dramatically increase the tax on private equity firms. Senators Baucus and Grassley apparently think it is wrong that fund managers get a slice of the capital gains pie if investments rise in value, and they want to tax those gains as if they were income instead of increases in net worth. In a well-designed system that eliminates double taxation of saving and investment, the capital gains tax rate would be zero, so this proposal clearly would be a big step in the wrong direction. But politicians specialize in bad policy. First, they drove a substantial share of IPO business to Hong Kong and London with Sarbanes-Oxley. Now they want to drive private equity firms out of America as well:

This week Senators Max Baucus and Charles Grassley, the chairman and ranking minority member of the Finance Committee, will hold “informal meetings” to ponder a 133% tax hike on private equity firms. There’s no good rationale for this beyond the fact that Congress wants money and private equity funds have lots of it. Private equity firms will raise and deploy a record one-half trillion dollars of investment capital this year – funds that provide start-up and expansion-phase money for firms large and small. …Senator Grassley says he suspects “subterfuge” that allows fund managers to underpay their taxes. The managing partners of equity funds generally receive compensation in two ways. They charge the fund investors a 1% or 2% management fee for finding high-return business opportunities and for orchestrating the portfolio. Those fees are taxed at the personal income tax up to 35%. But fund managers also typically lay claim to a 20% slice of the fund’s future profits. That return is called “carried interest” and is taxed at the long-term capital gain rate of 15%. Congress is considering reclassifying that income as labor compensation and taxing it at the 35% income tax rate. … Far from being a clever tax dodge, carried interest plays a central role in the performance of private equity funds: It establishes an incentive structure which aligns the financial interests of the managers and investors. …The biggest losers from a private equity tax hike may be pension funds, which have become large investors in these funds; their high performance has made millions of Americans wealthier in their retirement.

WAMU Wags Its Finger, Part I

I listen to National Public Radio in the morning.  The frequent left-wing bias can be grating, but that’s nothing compared to the inaccuracies and condescension of those annoying NPR membership drives.

My local NPR station is WAMU, which broadcasts from American University in Washington, DC.  WAMU is holding one of their membership drives this week. In the past, I’ve heard NPR and WAMU personalities lecture listeners that we are “free riders” unless we cut them a check.  The only problem with that argument is that WAMU receives about 7 percent of its revenue from the federal government, which means that every WAMU listener already contributes to the station – albeit involuntarily.  Calling any of WAMU’s listeners “free riders,” therefore, is the sort of inaccuracy of which a journalist should be ashamed.

This came to mind at about 8am today when I heard a WAMU reporter reprove, “It is important for you to become a participatory member.” As if I weren’t already.

I value WAMU.  It’s just so darned informative.  But I’ve decided that I’m not writing them any checks until they forswear all involuntary contributions or Congress weans them off of the same

Until then, I’ll try to blog every inaccurate or condescending ploy that I hear WAMU use to belittle my existing contributions.  I encourage my NPR-listening colleagues to do the same.  If we blog enough of them, maybe we can wrap them up and send them to WAMU as a very special contribution. 

Though I wouldn’t count on getting the tote bag.

Property Tax Revolt: The First Time Was Only a Warning

It looks like a property tax revolt is brewing across the country, perhaps the biggest one since the era of Proposition 13, in the late 1970s. The Christian Science Monitor reports today that “legislative proposals, citizen initiatives, and lawsuits are on the agenda in at least 20 states.”

It’s no surprise why. Rising home values have meant rising assessments in many parts of the country. Rising home values are great if you’re selling; but if you’re not planning to sell your house, the increase can just mean higher taxes. And now, as Dennis Cauchon pointed out in USA Today, house prices are falling in some places but assessments haven’t yet been adjusted.

More importantly, cities and counties gleefully increased spending as the tax revenue rolled in during a decade or so of rising prices. But now that the revenue increases are slowing, local governments don’t want to cut back. Instead, they want to raise rates to keep the good times rolling—for governments if not for taxpayers.

The Wall Street Journal reports that more and more taxpayers are protesting their assessments. That’s one form of rebellion. Another is tax protests and calls for political action, and the Journal reports that those are happening, too, from Florida to Minnesota.

Back in 1978, the college newspaper cartoonist Berke Breathed (later famous for “Bloom County” and “Opus”) drew a brilliant cartoon about Proposition 13. For the benefit of our younger readers, I’ll explain: Proposition 13, which slashed property taxes in California, was spearheaded by Howard Jarvis. And it passed in June 1978, about the time the movie The Omen II came out, with its tagline “The first time was only a warning.” And Breathed was right: Prop 13 was a warning to the political class that taxpayers were fed up. After Proposition 13, the Democratic Congress cut the capital gains tax rate. Massachusetts passed Proposition 2-1/2 in 1980. More than a dozen other states put constitutional limits on taxes in the next few years. Ronald Reagan ran for president on a tax-cutting platform; he defeated incumbent Jimmy Carter, swept in a Republican Senate, and cut the top marginal income tax rate from 70 percent to 50 and then to 28 percent.

From earmarks to entitlements to local assessments, it’s time for taxpayers to give the political class another warning.

Back Door Takeover

In September 2005, U.S. Secretary of Education Margaret Spellings announced the creation of a commission charged with formulating a “comprehensive national strategy” for higher education. The commission was chaired by long-time Bush pal Charles Miller – who’d helped create the Texas predecessor to the No Child Left Behind Act (NCLB) when Bush was governor – and it seemed very likely the commission would recommend federally enforced standardized testing for all colleges and universities. Thankfully, federally mandated testing was not among the recommendations in its final report, an outcome almost certainly attributable to adamant opposition to such lunacy both from within and without academia.

Ah, but in Texas they don’t give up easily!

Unwilling to face what would no doubt be major opposition to publicly trying to force inane, NCLB-esque standardized testing on the Ivy League, Seven Sisters, etc., the Department of Education has chosen a different tactic: it’s tried to sneak it in through the ivory tower’s back door.  Rather than putting testing requirements into legislation that would have to get through Congress, the administration has been quietly trying to rewrite regulations governing accreditation in order to make accreditors force schools to administer standardized tests.

Thankfully, there’s been a lot of resistance among accreditors to this assault on academia, and Education Department negotiators have had to tone down their once explicit demands for testing. As Inside Higher Ed reports:

As the department’s various proposals have evolved over the weeks and months, they have become slightly less intrusive at each turn. Most recently, the department issued draft regulatory language — based, its officials repeated again and again, on a proposal that some of the “non-federal” negotiators had suggested — that would no longer require accrediting agencies to dictate to colleges the levels of performance they must achieve in student learning.

That’s good news, but as IHE continues, it hardly gets schools out of the woods:

But because the government would still require accrediting agencies to judge whether the standards that colleges set for themselves and their success in meeting those goals are sufficient — and because the accreditors would be doing so knowing that the Education Department can (through its process for recognizing accrediting agencies) punish any accreditor who doesn’t set the bar high enough to satisfy department officials — some members of the negotiating panel argued Tuesday that even the less-aggressive changes amount to federal control of accreditation, and ultimately of higher education.

In light of all this, I have a confession to make. When Spellings first announced the creation of her commission, and as the national strategizers conducted their work, I was almost certain we’d see the Bush administration try to assert explicit federal control over higher education, just as it had done in K-12. Well I was wrong. The administration hasn’t tried to do anything explicit in higher education. No, it’s tried to hide what it’s been up to ever since the commission’s final report came out.