Topic: Government and Politics

End the Postal Service Monopoly

A recent column in The (Baltimore) Sun explains why the government should not have a monopoly on mail delivery. The column focuses on the theoretical case for private competition.

Two political obstacles stand in the way of making private mail a reality. The first problem is that there are hundreds of thousands of Postal Service employees, and they receive exorbitant compensation packages. Needless to say, they are an automatic constituency against reform. The second problem is that the current monopoly subsidizes rural areas at the expense of urban areas. This means politicians from places like Alaska will fight to keep the monopoly in place.

Principled leadership could make a difference in this fight, but that is in short supply in Washington:

Sure, government is growing and putting its nose into all sorts of new things all the time, but there are very few businesses the government runs entirely, as it does with first-class mail delivery. Most of the important stuff Americans buy — food, clothing, and shelter — is produced almost entirely by the private sector. The result? Nearly everyone is fed, clothed and housed. What’s so special about mail delivery that the government must do it?

[C]ompanies such as FedEx and UPS can deliver packages, which could include letters — but they are limited by law to “extremely urgent” letters (such as overnight deliveries) and forced by law to keep their prices much higher than those of the post office. The postal monopoly costs you, me and all of us who have no choice but to be the post office’s customers if we want to send standard letters, and yet the post office still can’t come close to breaking even.

Meanwhile, the inflation-adjusted cost of other things has plummeted. Consider how much a long-distance telephone call costs compared with 10, 20 or 30 years ago. The price of gasoline seems to keep going up, but adjusted for inflation it has mostly gone down over the decades.

Hagel Inches Closer to a Run

Chuck Hagel dropped another veil or two this week in his long tease about running for president. (In Thursday’s Washington Post, Dana Milbank uses both the “Hamlet” and “showing a little leg” metaphors, so I needed something different.) On Sunday’s “Face the Nation” he talked about the need for new leadership and speculated about running on a ticket with New York mayor Michael Bloomberg. Then on Wednesday he somewhat belatedly called for the resignation of Attorney General Alberto Gonzales. And on the same day he gave a speech to the Center for National Policy (a non-partisan think tank run by former Democratic Party officeholders). Milbank reports that he delivered a speech about foreign policy and other problems, complete with lots of speculation about the viability of an independent candidacy in this “perfect storm” of an election year.

If Hagel should run, voters would see a commonsense Midwestern conservative who voted against Bush’s trillion-dollar expansion of Medicare and against his federalization of education, against his friend John McCain’s attempt to outlaw criticism of politicians, and for the Bush tax cuts. Unfortunately, from my perspective, he also voted for the Patriot Act, the Federal Marriage Amendment, and the authorization for war in Iraq. But he’s had second thoughts about some of those. He’s a solid free-trader, though he sometimes votes for a few too many trade subsidies.

But if he hooks up with Bloomberg, who’s on top–the experienced senator with foreign policy credentials or the competent mayor with a billion dollars? They seem to have very different views on lots of issues; Bloomberg is for gun control and all manner of nanny-state provisions, for instance. It’s hard to know if you want Bloomberg and Hagel in the White House until you know who’ll have the Oval Office.

Breasts vs. Government Subsidies

I was catching up on my reading in the International Breastfeeding Journal, and came across a great article by George Kent, a professor at the University of Hawaii.

As a scholarly article, it had no photos. Instead, what made it interesting were the contradictions it revealed in the federal women, infants, children (WIC) subsidy program. This is a $5 billion per year program that subsidizes families with babies, mainly by providing free infant formula.

Kent found that:

  • More than half of the infant formula consumed in the nation is provided free through WIC. That’s an awful lot of formula for a program that is supposed to be just for poor folks.
  • Government promotion of infant formula directly counters the advice of nearly all government and private experts regarding the superior health outcomes of breast milk over formula.
  • A government program is thus inducing mothers to substitute less nutritious formula for more nutritious breast milk. Breastfeeding is much less common among mothers on WIC than other mothers.
  • As I can attest, formula has a remarkably high retail price. Kent notes that formula is very inexpensive to produce, but that the government subsidies through WIC greatly inflate the demand. The losers are non-WIC families and the beneficiaries are an oligopoly of three formula makers.

Kent concludes that “there is no good reason for an agency of the government to distribute large quantities of free infant formula.” WIC subsidies for infant formula should be ended.

I would favor the whole WIC program be terminated. Unfortunately, like many federal aid programs administered by the states, WIC has a vigorous lobby group –National WIC– made up of the thousands of state and local government officials that run the program.

The group’s 2006 legislative agenda is entitled “WIC at RISK! A Healthy, Strong America in Jeopardy!” The document predicts dire consequences if Congress doesn’t go along. Unfortunately, most members buy into such doomsday rhetoric and aren’t regular readers of the International Breastfeeding Journal.

McCain says GOP is Corrupt

Last night in the Republican presidential debate, Sen. John McCain said, in response to Mitt Romney’s criticism of McCain-Feingold:  ”Is there anyone who believes there’s not enough money washing around money in politics, which has corrupted our own party?

His “we have enough money in politics” argument has become a standard defense of McCain-Feingold. The idea here is that while McCain-Feingold may have restricted spending on politics, there is still “enough” money in politics. But McCain characteristically misses the point. In a free society, the question is not whether citizens collectively produce “enough” spending on politics. It is rather whether they are free to spend on politics as they wish. McCain-Feingold abridged political liberties even if Sen. McCain believes we have “enough” political speech left over. 

McCain’s charge that the GOP is corrupt also recalls the debates surrounding McCain-Feingold. The Senator then charged the entire Senate with corruption, but when Sen. McConnell challenged him to name a single corrupt individual, he could not. Now McCain thinks the GOP itself was corrupted by money in politics. That seems like a strange way to appeal for the votes of active Republicans. But Sen. McCain should be required to say exactly how campaign finance corrupted the entire Republican party.  

GOP Debate (Round 2)

A few thoughts on last nights GOP debate: It was a better performance than last time around, but the Republican debate in South Carolina last night showed that there still isn’t a Reagan-Goldwater small-government conservative among the front runners. The candidates tried hard to burnish their conservative credentials, but too often their definition of conservative seemed to come down to talking tough on Iraq and abortion. Among the top-tier of candidates in particular, no one articulated a clear Reaganesque vision of limited government.

A few thoughts on the candidates:

John McCain: He apparently got the decaf coffee this time around. Made some good points on congressional overspending (though the drunken sailor joke is getting a bit stale), but offered unpersuasive defense of McCain-Feingold campaign finance reform bill. And no matter how many times he repeated that if we leave Iraq “the terrorists will follow us home,” it doesn’t make it so.

Mitt Romney: He sure is smooth…but has a little problem with accuracy. He said that he balanced Massachusetts budget without tax increases. The truth is his proposed 2006 budget included some $170 million in increased business taxes. This increase comes on top of previous business tax increases of $140 million during his term, as well as some $500 million in increased fees and other forms or revenue. His support for No Child left Behind cements his credentials as a big-government conservative.

Rudy Giuliani: He had a much better performance this time around. He highlighted his fiscally conservative credentials and made a “libertarian” case for abortion rights. But his superhawk persona risks tipping over into Dr. Strangelove sometimes.

Ron Paul: Still largely alone in carrying the small-government banner, Dr. Paul showed how hard it is to make a complex historical argument in 60 seconds. His point about how US meddling overseas helped precipitate terrorism had substance, but landed with a thud.

Jim Gilmore: Scored points for blaming Republicans in Congress for overspending and for criticism of Romney health plan. Lost points for ducking question on entitlement reform.

Tommy Thompson: Looked like he was suffering from indigestion all night. Struggled to find a government program he would cut, finally coming up with an unspecified CDC “stockpile.” How about the Medicare prescription drug benefit? Oh, that’s right, he supports that one.

Duncan Hunter: Called for Jack Bauer to handle terrorism and sounded like a character on the show. “I’d get SecDef on the phone.” Seems to be going for the Pat Buchanan xenophobia vote, but does anyone care?

Tom Tancredo: Gets points for exposing his opponents flip flops, but failed to make his own case. I don’t agree with his position on immigration, but surely he has a better explanation for it than he gave. Loses points too for his gratuitous slap at Islam.

Mike Huckabee: His sense of humor plays well, but defense of tax hikes didn’t fly. He may win Mr. Congeniality, but didn’t do anything to win the nomination.

Sam Brownback: I’m sorry, was Sam Brownback part of this debate?

Of course the format and the questions didn’t help, but as I warn in my book, Leviathan on the Right, unless Republicans rediscover their limited government roots, they are destined for a repeat of their 2006 defeat. Last night gave a few small hints in that direction, but they still have a long way to go.

Lobbying Reform Reformed

The Politico offers an article about House Democrats and their effort to legislate about lobbying. The Senate passed a lobbying bill in January.

The road to the Senate bill included a struggle over the disclosure of funding for grassroots lobbying. Groups like the National Rifle Association or the National Right to Life Committee sometimes pay firms to communicate with citizens and urge them to contact their members of Congress on issues of concern to the group. The usual “reform groups” wanted the Senate to force disclosure of the sums spent mobilizing public opinion in this way. The Senate left disclosure out of their bill.

The effort to mandate disclosure resumed when the House took up lobbying reform. We held a forum on the topic that can be seen here. It now appears that the mandated disclosure will not appear in House version of the bill though it may be offered as an amendment.

The grassroots lobbying disclosure effort looked a lot like normal politics. The new majorities in Congress were (on the whole) Democratic and liberal, the groups that would be forced to disclosure their political activities were (on the whole) Republican and conservative. The new powers-that-be were apparently looking at ways to harass and perhaps discourage speech they did not like. As I said, normal politics.

Why has mandated disclosure apparently failed? A leader of one of the targeted groups told me that she hoped Speaker Pelosi would include the mandate in the lobbying reform bill. This leader believed the Speaker and her party would end up with a political black eye from the fight. Perhaps Speaker Pelosi agreed in the end.

For now, at least.

Uncle Sam: Electrician

My new Cato policy analysis goes into great detail about how the federal government uses your tax money to subsidize businesses.  In fiscal 2006, the “corporate welfare state” cost $92 billion, all of which funded programs that provide unique benefits to particular companies or industries.

One of these programs is the Rural Utilities Service (RUS).  A relic of the New Deal, the goal of the program was to electrify the countryside.  Now that reading by candlelight in the boonies is a thing of the long forgotten past, the RUS has morphed into a fountain of cash for rural electricity co-ops. 

As a story on the front page of this morning’s Washington Post highlights, it’s always easier to create a program than to kill it:

The key to the longevity of the Agriculture Department’s programs for rural utilities has been the [electricity co-ops’] powerful political voice. More than 30,000 members gave an average of $41 last year to the co-op association for political contributions. Given their geographic scope, the co-ops can mobilize letter-writing campaigns across a vast number of states and congressional districts.

To learn more about the corporate welfare budget generally, tune in to my live interview on Bloomberg Radio’s “On the Economy” today at 6:30 pm Eastern.  A podcast about the corporate welfare state will be featured on the Cato website on Tuesday.