Topic: Government and Politics

Newsflash: Politician Does Right Thing (Twice)

At Cato, we often point out when politicians do something wrong — and who can blame us given the target-rich environment? But we should also salute the rare politician who does something right (more or less). So let’s give two tips of the hat to New York mayor Michael Bloomberg for choosing not to inflame two recent situations that could easily have been exploited for political gain.

Last July, parts of Queens lost electricity for more than a week because several of the borough’s feeder cables failed, leaving about 100,000 people without power. During and after the blackout, several NY politicos piled on Consolidated Edison, which is a tried-and-true political tradition in New York City. But Bloomberg broke with tradition, publicly refusing to bash the utility. Instead, he worked to lower the political temperature, and he urged others to do the same.

Now, Bloomberg is also declining to bash yesterday’s announced $5.4 billion sale of Stuyvesant Town and Peter Cooper Village, two massive middle-income apartment complexes in Manhattan. Together, the complexes comprise more than 11,000 units in 110 buildings covering some 80 acres of the most lucrative real estate on the planet. The sale is reported to be the largest real estate deal in American history.

As the impending sale became public, many New York politicians and political activists ripped the deal because of fears of “gentrification.” But Bloomberg, to his credit, said simply, “MetLife owns it, and they have a right to sell it.”

Of course, housing affordability is a legitimate public concern. But the much-ballyhooed policy prescriptions — e.g., rent control, affordable housing mandates, “inclusionary zoning” — are window dressing at best and counterproductive at worst.

Fortunately, there is a far-superior policy response that also is market-friendly: government need only remove the restrictions preventing the market from satisfying the demand for affordable housing. This is argued well by Harvard economist Ed Glaeser and Wharton School economist Joe Gyourko in the Fall 2002 issue of Regulation.

If Bloomberg really wants to make my day, he should read Glaeser and Gyourko’s article and allow developers to build as much housing as the New York market demands.

Getting Data Breach in Perspective

Indiana University law professor and cybersecurity/informatics expert Fred Cate wrote sensibly in this weekend’s Washington Post about data security and identity fraud.  “The fact is that few if any [data] breaches lead to identity theft or other consumer injuries.”

When a Department of Veterans Affairs laptop with data on 26.5 million veterans was stolen earlier this year, VA notified all of them and asked Congress for $160.5 million to cover the cost of one year of credit monitoring.  Even if the laptop had not been returned (the data untouched), this reaction would have been overkill.

Washington has a hard time responding to problems dispassionately and proportionately.  If only this failing could be the crisis du jour - even just for a day.

If You Cut the Budget, The Terrorists Win!

Peter Beinart tells readers of this week’s New Republic that the conservative critics of President Bush need to just get over themselves. 

As Beinart writes:

To listen to Bush’s critics, you would think that discretionary, nonsecurity-related spending has exploded on his watch. [Note: Emphasis is mine — you’ll see why this is important in a minute]. But it hasn’t. As the Center on Budget and Policy Priorities has shown, when you take account of inflation and population growth, it grew a mere 2 percent between 2001 and 2006. And, as a percentage of GDP, it actually fell. What has exploded — rising 32 percent after inflation and population growth — is spending on defense, homeland security, and international affairs. And the people most responsible for those increases are conservatives themselves, who demanded an expansive war on terrorism.*

The first half of the claim boils down to this: If you strip away defense, homeland security, entitlement spending and international aid — what Beinart calls “discretionary, nonsecurity-related spending” — you discover that government hasn’t really grown all that much by historical standards. 

The problem? Those categories account for 80 percent of the entire federal budget.

Call it the “Yeah, but” defense. Yeah, the budget has expanded massively, but if you take away the really big categories — and don’t feel compelled to clarify how you’re defining those big categories — then we come off looking really good! (Of course, as I’ve pointed out elsewhere, the GOP really doesn’t come off looking good. Let’s just assume they do for the sake of argument.) 

What’s missing from this don’t-mind-the-man-behind-the-curtain reasoning is an explanation of why stripping away all those categories yields a more useful comparison than simply looking at overall spending in the conventional and broadly-defined categories. Beinart doesn’t provide one. 

Avoiding such an explanation, however, ignores an important part of the argument he’s trying to critique. One of the more substantial complaints about the modern GOP leaders — a complaint shared not just by fiscal conservatives but also by centrist Democrats who also worry that spending has gotten out of hand — is their unwillingness to pursue offsetting spending cuts elsewhere in the federal budget to pay for the military operations in Iraq and Afghanistan, or Hurricane Katrina relief, or the various and sundry government expansions that Bush and congressional leaders have dreamed up. 

The second part of Beinart’s claim that the ”war on terrorism” is driving defense spending is also flawed. Only 16% of the combined defense budgets of the past six years went to the military operations in Iraq and Afghanistan, according to CBO estimates … and that’s assuming you include the Iraq operations as part of the war on terrorism. Why ignore the remaining 84 percent of the Pentagon budget?

The fiscal conservative critique of the GOP is in part a reaction against the presumption that all categories of spending — from unnecessary defense systems to crop subsidies — must rise or else the terrorists will “win.”  Recall, for instance, that the rhetoric around the 2002 farm bill was heavily laden with various references to national security. A “Dear Colleague” letter from Alabama Republican Terry Everett is indicative of the rhetoric used by supporters of that bill. In the letter, Everett claimed the bill would help “strengthen America’s national security” and “keep America strong.”   

Excluding all entitlement programs is also too nice to the GOP — or any party in power, for that matter. Congress has the power to moderate the growth of these programs, but they haven’t used that power more than once in the past six years and then only to very minimal effect. They could have reformed these programs, too, but they didn’t. Nor did they have to expand Medicare.       

I think government should be doing less. I have deep doubts about the war in Iraq. And I’m not a member of the doing-more-with-less school of efficient-government conservatism. But I and other Bush critics would certainly have less solid ground to stand on if overall government spending had remained tame over the past six years. Remember that under Reagan, despite a massive defense buildup, overall real annual federal budget growth was 2.6% — close to half the rate under George W. Bush so far. The rate was so low in the 1980s — lower than any president since Eisenhower — because substantial tradeoffs were being made in the budget then. Tradeoffs are not being made today.

Stripping out all sorts of different spending categories simply lets the GOP off easy. It also puts Beinart in the strange position of parroting the same defense the White House has used to fend off criticism of the president’s record.

A New Republic writer defending a Republican president’s budget record. Left-of-center analysts rallying to the defense of a GOP Congress. What’s next?  Dogs and cats living together?

* - An argument over whether these numbers are solid has already taken place at The American Scene blog run by Ross Douthat and Reihan Salam, who also use the CBPP numbers to rebut criticisms of President Bush. “War on terror” and “homeland security” expenses are both non-traditional budget categories that are not consistently delineated in the official federal data on spending. Any attempt to disaggregate the data must rely on multiple assumptions about how you classify each sort of spending program. In other words, readers need to take the CBPP estimates with more than a few grains of salt. (For more criticism of their estimates, numbers-junkies can read my Cato study from 2005 and my new book.) 

How, Again, Is This a Good Use of My Tax Dollars?

This week, Robert Cresanti, the under secretary of commerce for technology, presented the first-ever “Recognition of Excellence in Innovation” award to ODIN Technologies of Dulles, Virginia.

Why on earth a federal bureaucrat should run around giving awards to local firms is beyond me. Perhaps Technology Under Secretary Cresanti could have taken the day off. Or maybe just retired, if no actual work is pressing for his time. 

Let’s make the “Recognition of Excellence in Innovation” award a really special honor by discontinuing it. (Tell ODIN that nobody could ever reach the standard they’ve set.) 

I mean, really. Mad as hell and not gonna take it any more. Happy Friday.

Record Trade Deficit + Campaign Season = Infuriating Statements

From the LA Times this morning, an article on the trade deficit for August. Both imports and exports were up slightly from the July figures, and the trade deficit itself was $69.9 billion. But it was not so much the trade figures that interested me (after all, the trade deficit has hit record highs repeatedly lately), but this statement from Rep. Marcy Kaptur:

“We are not only shipping jobs overseas, we are shipping billions of dollars overseas,” said Rep. Marcy Kaptur (D-Ohio), a critic of Bush administration policies calling for free-trade pacts. “We are exporting our jobs and our wealth, not our products.”

We are shipping billions of dollars overseas? On net, the United States must, by definition, be a net importer of capital to balance the current account. I won’t belabor that point, though, since my colleague Dan Griswold has covered the topic more than ably here).

Kaptur, currently seeking reelection in Ohio’s 9th district, is one of the least trade-friendly members of Congress, according to last year’s rating of the 108th Congress (available here). Her press release on the trade deficit seems to boast of her being a “leading critic of “free trade” policies” (note the quotation marks around free trade, signifying, I assume, that free trade is a quaint concept).

I understand that it is election time and all, but I find it very frustrating that marketing oneself as someone who will fight against free trade — a poverty fighter, growth promoter and trust-buster all in one — is perceived to be a winning strategy.

The Kyoto Charade

One of the things I keep trying to hammer home to the media is the extent to which legislative promises to meet environmental goal X sometime in the future have almost always been, and likely always will be, meaningless blather

The reason is simple. Voters love promises to accomplish wonderful things, but they don’t love burdensome policies to secure those wonderful things. Because the public’s attention span is quite limited to say the least, loud and vigorous promises to slay environmental dragons will harvest political capital while subsequent failure to actually slay those dragons will go relatively unnoticed and cost politicians little. 

More data confirming that insight (reported in Platt’s, subscription required) came our way yesterday courtesy of Cap Gemini, a global consulting firm. European greenhouse gas emissions rose 0.4 percent in 2005 despite the fact that meeting European obligations under the Kyoto Protocol requires emissions to decline 0.3 percent per annum from 1990 through 2012. According to Cap Gemini, Europe is 300 million metric tons of CO2 away from meeting its treaty obligations, which means that it is ”highly unlikely” (Cap Gemini’s words) that European obligations under Kyoto will be met. 

Examination of the emissions data over time reveals that the Protocol is having no detectable impact on European emission trends. Greenhouse gases come primarily from fossil fuels, which means that unless fossil fuels become very expensive via taxation or regulation, emissions will remain unaffected. European governments, however, lack the stomach to inflate the heck out of fossil fuel prices because the public has no appetite for such a thing. A poll conducted a few months ago (EUObserver.com, subscription required) for the European Commission, for instance, found that 59 percent of those (notoriously Green) Europeans surveyed were not “prepared to pay more for energy produced from renewable sources than for energy produced from other sources.”

Why do environmentalists put up with this political charade? I’ve been asking that of environmental leaders of late, and as best as I can tell, they tolerate this kind of duplicity from their political champions because they fear that the charade is the best they can hope for at present. Better that politicians pretend to be doing something important while actually doing something quite inconsequential than for politicians to tell the Greens to get lost altogether.  

Maybe so, but the environmental lobbyists are probably hurting their own cause in the process. After all, if the public thinks that meaningful and low-cost things are being accomplished to address warming today, they will be less inclined to support far more costly programs to do the same tomorrow.  

Fine with us.     

ONDCP’s Smoke and Mirrors

Bruce Mirken of the Marijuana Policy Project sends along video of Office of National Drug Control Policy (ONDCP) chief John Walters openly boasting about using federal tax dollars to defeat Question 7, a Nevada ballot initiative that would effectively legalize possession of up to one ounce of marijuana for personal use. 

Walter’s mere presence in the state to speak against the initiative seems to violate the Hatch Act,  not to mention his use of federal dollars to organize against it. Unfortunately, the Office of Special Counsel seems to have made a gaping “drug war exception” to the act, despite the fact that what Walters is doing seems to be in direct defiance of the plain language of the law.

Violation or no, Walters’ and ONDCP’s interference in a state election is yet another example of the Bush administration’s utter contempt for federalism. This administration’s definition of the term seems to be, “the states should be able to set their own policy, except when we disagree with them.”

Notice, too, that even if we were to accept that the social maladies Walters says “correlate” with marijuana use (a relationship that has zero scientific value, and thus oughtn’t even enter into policy discussions), most are caused by the drug’s prohibition, not its recreational use.