Topic: Government and Politics

Edwards’s 2-to-1 Budget Law

How should government officials decide on whether to fund big projects such as fighter aircraft, highways, bridges, and other types of infrastructure?

First, they should check the Constitution to see whether they are legally allowed to spend on the object in consideration.

Second, they should assume that the item will cost at least twice as much as initial estimates indicate. There should be a 2-to-1 hurdle when the price tag of a project is being considered.

Government purchases of military hardware, highways, energy projects, space equipment, and other items often cost 50% or 100%, or more (see here and here), above what politicians originally promise.

Let’s be conservative and say that a 50% cost overrun is typical, such that we can expect a new $1 billion project to actually cost taxpayers $1.5 billion. But as economists often point out, paying for $1.5 billion in government spending will cost taxpayers much more than $1.5 billion because of the “deadweight losses” or inefficiency costs created by extracting taxes from the private sector with a complex and high-rate system.

How much more? Harvard’s Martin Feldstein thinks deadweight losses might be $1 for each added dollar of taxes. But let’s be conservative and say it’s only 50 cents on the dollar. So government projects impose deadweight losses of 50% on costs that are likely to balloon at least 50%. 

The bottom line is that when America’s taxpayers hear that politicians want to spend, say, $10 billion on a new scheme, they should assume that they will face an ultimate financial hit of $22.5 billion. And that’s conservative!

California’s Burgeoning Nanny State

Los Angeles Times reporter Nancy Vogel has a roundup of nanny-state bills pending in the California legislature:

Enjoy fast food? Like to light up while you watch the waves? Forget to sock away money for your kids’ education?

Some California lawmakers want to change your ways. They’ve planted a crop of proposals this year — “nanny” bills, as they’re called — that would:

•  Restrict the use of artery-clogging trans fat, common in fried and baked foods and linked to heart disease, in restaurants and school cafeterias.

•  Bar smoking at state parks and beaches, and in cars carrying children.

•  Open a savings account, seeded with $500, for every newborn Californian to use at 18 for college, a first home purchase or an investment for retirement.

•  Fine dog and cat owners who don’t spay or neuter their pets by 4 months of age.

•  Require chain restaurants to list calorie, saturated fat and sodium content on menus.

•  Phase out the sale of incandescent light bulbs, which are less energy-efficient than compact fluorescent bulbs.

The debate has commenced in the Capitol: How far should government go?
Vogel notes that all these proposals come from Democrats and that

Republicans, who say the sponsors are trying to parent the whole state, are having none of it.

“Could you imagine the founding fathers dealing with — I don’t know — wearing a helmet when you’re in the buggy?” said the Assembly’s Republican leader, Mike Villines of Clovis.

“We all know you can’t mandate behavior; it just does not work,” he said. “It creates criminals of people for things that are not criminal behavior…. You can’t legislate for stupidity.”

Of course, Republicans are no slouches in the nanny-state department. From New York mayor Michael Bloomberg’s jihad against smoking to Arkansas governor Michael Huckabee’s war on obesity to President Bush’s grab-bag of Clintonesque hand-outs and religious-right prohibitions, Republicans have proved themselves equally adept at hectoring, monitoring, nudging, and punishing recalcitrant citizens.

As I wrote last year at Cato Unbound:

Republicans used to accuse Democrats of setting up a nanny state, one that would regulate every nook and cranny of our lives. They took control of Congress in 1994 by declaring that Democrats had given us “government that is too big, too intrusive, and too easy with the public’s money.” After 10 years in power, however, the Republicans have seen the Democrats’ intrusiveness and raised them.

So from the Republicans we get federal money for churches; and congressional investigations into textbook pricing, the college football bowl system, the firing of Terrell Owens, video games, the television rating system, you name it; and huge new fines for indecency on television; and crackdowns on medical marijuana and steroids and ephedra; and federal intervention in the sad case of Terri Schiavo; and the No Child Left Behind Act; and federal subsidies for marriage; and (for less favored constituencies) a constitutional amendment to override the marriage laws of the 50 states.

As far as California’s Democratic nannying goes, let me just say this: Governor Schwarzenegger, only a girlie-man would be afraid to veto these bills that treat adult Californians like children.

NCLB: The Bad, the Worse, and the Ugly

Want to know how the No Child Left Behind Act has actually affected overall student achievement and the gaps between students of different races and socio-economic backgrounds? Want a guided insider tour of the political sausage factory that produced it and the political calculus that allowed it to pass in the first place? Look no further than the podcasts that are available here.

They’re enough to make H.L. Mencken look like a political optimist.

Just one highlight, uttered by former House majority leader Dick Armey, who voted against national education standards under President Clinton but for the NCLB under President Bush: “My NCLB vote, perhaps more than any other one thing, was the reason I left Congress…. If I couldn’t be myself and vote my conscience, why stay?”

According to Armey, opposition to national education standards under Clinton and support for them under Bush were driven overwhelmingly by political considerations that had nothing to do with the evidence of what works. That’s not surprising, of course, but it’s one thing for pundits to opine about it and quite another to have a key player openly acknowledge it.

There are a lot of other interesting bits throughout the podcasts, including an appearance by Rep. Pete Hoekstra (R-Mich.) pre-announcing legislation that he will formally reveal next week that would give control over federal education spending to the states. Perhaps not an ideal solution (the feds should not be involved in the first place, according to the Constitution), but it would be better than any other serious legislative proposal I’ve seen.

‘Terror Porn’

The Homeland Security budget has become a business-as-usual way for politicians to steer tax dollars to contributors and supporters. But even though the budget is being allocated using traditional pork-barrel methods, the arguments for more homeland security spending are based on exaggerated claims that the money is necessary to thwart terrorism.

Veronique de Rugy, an American Enterprise Institute scholar and Cato adjunct, call these claims ”terror porn.” ABC News’ John Stossel quoted de Rugy as part of a recent report:

[T]he bureaucracy hypes terrorism to justify its pork. “Terror porn” is what economist Veronique de Rugy calls it. Why “porn”? “Because porn sells, [and] terrorism sells even better,” she says. “It’s great for politicians. They can campaign on the fact that they are protecting us. They also can campaign on the fact that they’re bringing more money to their states.”

Lots of small towns do get absurd grants for homeland security. Lake County, Tenn., a rural county with only 8,000 people, got nearly $200,000 in homeland-security money. …”I don’t know that terrorists will come, but I don’t know they won’t come,” Lake County Mayor Macie Roberson told us, smiling.

At least he didn’t do what Columbus, Ohio did: spend it on bulletproof vests for police dogs.

Inordinate fear of terrorism leads to more than just wasteful spending. Stossel also cites a study estimating that 1,000 people have died because they avoided air travel and instead relied on a much riskier mode of travel:

Of course, terrorism is a real threat. But fear kills people, too. A University of Michigan study found that an additional 1,000 Americans died in car accidents in the three months after Sept. 11, because they were afraid to fly. We need to keep risk in perspective.

If Bush Is a Conservative, the Word Has No Meaning

Writing for National Review, Michael Novak of the American Enterprise Institute seems surprised that conservatives like Reagan but disapprove of Bush.

Conservatives have not been happy with George W. Bush. For each brand of conservatism, there is a different critique. Not so with Ronald Reagan, whom conservatives uniformly praise for various reasons. Seventy-nine percent of those in attendance at last week’s Conservative Political Action Conference said they would prefer a candidate who is a Reagan Republican. Three percent would go for a G. W. Bush Republican. One gets the impression that Bush isn’t even considered a conservative.

But maybe Novak is confused because he doesn’t understand conservatism. He assumes conservatives are upset about deficits and debt, when the anger is really because of wasteful government spending. He writes, “Some say that Bush’s budget deficits prove he is not a conservative.”

Novak then lists several Bush “accomplishments,” most of which expand the size and scope of government. Most conservatives, for instance, presumably think that families and private institutions should be responsible for moral teachings, yet Novak claims that Bush’s subsidies for abstinence education are a conservative victory: “He dedicated unprecedented funds to abstinence education through the Department of Health and Human Services.”

“He was the first president to sign a school-choice bill to give parents greater freedom in deciding where their children will be educated.”

Bush’s record on education is particularly disappointing, with record spending increases and more centralization, yet Novak claims Bush is a conservative because of a tiny school choice program (which shouldn’t be operated with federal dollars anyway).

“He has dedicated funding to prepare prisoners for productive lives after they leave prison.”

Novak praises Bush for programs that ostensibly rehabilitate prisoners, but it is unclear why this is a responsibility of the federal government. Nor is there any evidence that Bush’s rehabilitation strategy would work any better than the left’s rehabilitation approach.

“He signed the Deficit Reduction Act of 2005, which will curb Medicare/Medicaid spending by $11 billion over the next five years.”

Bush has increased federal spending more than twice as fast as needed to keep pace with inflation, and entitlements have been growing at three times the rate of inflation. But Novak thinks Bush is a conservative because a so-called Deficit Reduction Act that included $11 billion of savings. Yet this is the same president that added trillions of dollars of new Medicare spending by creating a prescription drug entitlement. Moreover the savings are only savings using the Washington definition – i.e., not increasing spending as fast as previously planned. After the “cuts,” for instance, the Medicaid budget was projected to grow 7.6 percent annually, compared to a projection of 7.8 percent before the legislation was adopted.

One of the many disappointments of the Bush presidency is an increase in regulation, particularly the hugely expensive Sarbanes-Oxley legislation, yet Novak makes a completely unsupported assertion that Bush believes in deregulation:

“He implemented deregulation across all government agencies.”

Perhaps the most amazing assertion in Novak’s article is that the creation of a new entitlement program is conservative. It also is interesting to note that Novak apparently believes that a program is conservative if it has popular approval. That means the looming minimum wage hike also is conservative (though not as conservative as the prescription drug entitlement, since only 70 percent of Americans foolishly think that government can raise the wage level). Moreover, the assertion that the program is “under budget” is rather odd. I wonder if he would be willing to bet (akin to the Ehrlich-Simon wager) whether the program 10 years from now will cost more than projected:

“He signed into law prescription drug assistance for the elderly — the first and only health-care reform in modern history to win a nearly 90-percent approval rating and to come in substantially under budget.”

To be fair, however, Novak was certainly correct when he wrote that “President Bush has defined a new kind of conservatism.” It may have nothing to do with limited government. It may be a complete reversal of Reagan’s policies, but it definitely is new (though Democrats surely can argue that they’ve been peddling these ideas for decades).

Webb on US Foreign Policy in the Middle East

Trolling through a news story about Sen. Jim Webb’s effort to preemptively deny the administration funds for attacking Iran unprovoked, this statement seems like one of the smartest things a congresscritter has said about foreign policy in a long time:

It is important that we clarify, formally, the perimeter of our immediate military interests in the Middle East.

Who would object to that?

Paternalism Runs Out of Gas

I was filling up the minivan on Saturday when a woman at a nearby pump approached me and said, “Can you do me a favor? I don’t know how to pump my own gas.”

My first reaction was puzzlement. She was probably in her 30s, driving an SUV with what looked to be one or two kids inside. How could she be driving a car all these years and still not have figured out how to pump her own gas? Then she said something that instantly made it all clear.

“I’m from New Jersey.”

New Jersey, of course, is just about the only state left that requires that all gas stations within the state be full-service. Defenders of the ban on self-service pumps claim it is safer and more convenient for motorists and that it does not cause higher prices. None of those arguments hold water against the decades of successful experience with self-service pumps across the country. If a gas station attendant could pump your gas more safely and conveniently and at the same price, why do so few stations offer full-service anymore?

On top of its economic inefficiencies, the New Jersey ban on self-service is an insult to the good people of New Jersey. Their own state government is telling the world that its citizens are not smart enough or responsible enough to be trusted to handle a gasoline pump. When it comes to the routine task of filling up our vehicles, the paternalistic government of New Jersey treats its citizens as though they are children.

As I witnessed first-hand over the weekend, that paternalism can leave its citizens overly reliant on the kindness of strangers whenever they venture away from home.