Topic: Tax and Budget Policy

Going off the Rails on a Crazy Train

A recent report reveals that Amtrak spent a staggering $102.6 million on outside legal counsel between June 2002 and June 2005. The review, requested by the House Transportation and Infrastructure Committee, also finds that Amtrak improperly managed its legal contracts and failed to provide proper oversight (as if simply wasting more than a tenth of a billion dollars wasn’t enough).

Members of the committee are predictably outraged.

Rep. John Mica (R-FL) said, “Amtrak’s management of outside legal services has been found to be in serious disarray, with virtually no attention focused on costs and expenditures.”

Committee Chairman Don Young (R-AK) remarked, “Amtrak is continually showing us it is incapable of effectively spending the $1 billion in federal funding it receives each year.”

But before we label these folks paragons of fiscal responsibility, keep in mind that last year this same committee passed a bill that would recommend a 67 percent increase in federal funding for Amtrak. The bill is highlighted on the committee’s list of its proudest accomplishments, despite the fact that the full House of Representatives never brought it up for a vote.

And they call this a “do-nothing” Congress?

Be Careful What You Wish For…

A couple of people over recent days have asked my opinion on the prospects for reform of agriculture policy should Democrats take over the House and/or the Senate. My usual reply is to lament the depressingly bipartisan nature of support for farm subsidies and trade barriers, and to also point out that the recent farm bill (implemented by a Republican congress) has been one of the most expensive in history: $23 billion last year. In a nutshell, I had thought that the prospects for reform could not be any worse under the Democrats than under Republicans.

It turns out that I may be wrong (yes, it happens occasionally). In a recent press release from Texas A&M University, the ranking member of the House Agriculture Committee (and probable chairman of that committee should the Democrats regain the majority in the House), Colin Peterson (D-MN) seems to support extension of the current farm bill, egregious though it is, but with yet more pork added.

Rep. Peterson would implement permanent crop disaster relief (I have blogged on this idea previously), and was indirectly quoted as calling renewable energy derived from crops ”the most exciting development in agriculture in his lifetime.”

Rep. Peterson does seem to have a point about the scope for the addition of expensive and agriculture-irrelevant rider amendments to ad-hoc disaster relief bills, but describing a permanent disaster relief program as a way to “save taxpayer dollars” is disingenuous, to say the least.

Rep. Peterson seems to have no truck with the idea that agriculture should contribute to deficit reduction, either: “I reject the idea that because we have a $9 trillion deficit, we have to get rid of farm programs. We didn’t cause that problem. In fact, agriculture was the only government initiative that actually spent less than was projected, $13 billion less so far. Besides, if you got rid of all agriculture programs, it wouldn’t make a dent in the deficit. So we need to do what’s right for agriculture, and that’s where I’m coming from.”

On ethanol, which my colleague Jerry Taylor has blogged about here, Rep. Peterson wheeled out the old “foreign oil dependency” issue and put his full support behind investing significant resources (that’s your resources) into more research into bio-fuels, describing the profits that investors are making currently from ethanol as “obscene.”

You said it, sir.

I Hear Voices

I don’t want to tempt fate by declaring that the tide is turning against the costly and interventionist federal agriculture programs, but there have been several critical (in both senses of the word) editorials and investigative series this year on farm subsidies. The voices protesting about farm programs seem to be getting louder.

For a recent example, bravo to the Washington Post, for its editorial on Saturday denouncing the crop insurance boondoggle – yet another agricultural policy fleecing consumers and taxpayers in order to make farming a risk-free enterprise. The editorial follows a series earlier this year from the Post, entitled ’Harvesting Cash’ (you can view that series here).

The insurance program works thus: the government pays 60 percent of the premiums for crop insurance ($2.3 billion last year), and also pays a fee to insurance companies for administering the program (over $800 million). All this for crop failure losses of $752 million (yes, that’s right, the losses cost less than the administrative fees). The insurance does not, however, remove the “need” for disaster payments – over $6 billion worth since 2000, according to the Roanoke Times.

Taxpayers can sleep well at night, however, knowing they are funding “something good, the rural life”, in the words of a farmer quoted by the Post. (I wonder how much money would flow to farmers if the charity was voluntary?)

Kudos also to the Boston Herald, for their Sunday editorial on the subject (view here) and the Roanoke Times (here) for their own version. The latter editorial could be especially influential since Bob Goodlatte is the representative for Roanoke County and Chairman of the House Agriculture Committee.

It is encouraging to note the number and breadth of newspapers covering this subject. The LA Times, the Minneapolis Star-Tribune, the Des Moines Register, the Denver Post, the Chicago Tribune and the Orlando Sentinel have all run editorials on farm programs this year. Let’s hope that the voices are heard, and that voters and their representatives start to demand change.

A Democratic Congress, Scary? Compared to What?

The office of House Majority Whip Roy Blunt (R-MO) has produced a document titled “Pelosi’s House.”  It is a list of 

out-of-the-mainstream bills introduced by Democratic Members [that] deserve particular attention because the principle [sic] advocates are the very individuals who would be in a position to schedule committee markups and move the legislation through the Congress should the Democrats take control. 

The list includes bills that would nationalize health care, create an adult diaper benefit under Medicare, reduce mandatory minimum sentences for crack cocaine, etc.

The list is less scary than its authors seem to think.  Reducing jail time for selling crack cocaine is actually a good idea.  And most of the bills have little support even among Democrats.  A bill that would nationalize health care has only 19 cosponsors, which is less than 10 percent of Democratic House members and less than 5 percent of the full House.

I mean really.  If the Democrats were to take control of the House, probably the worst they could do is add an expensive new prescription drug entitlement to Medicare. 

Oh, wait.  The Republicans already did that.  So the Democrats would have to shoot for something else, like a new adult diaper entitlement.  At least the GOP would go back to opposing such things.  Right?

The Search for a Libertarian Democrat

In his writings about “libertarian Democrats,” Markos “Kos” Moulitsas always cites Montana Gov. Brian Schweitzer as Exhibit A. In the current Cato Unbound symposium, he writes:

Mountain West Democrats are leading the charge. At the vanguard is Montana Governor Brian Schweitzer, who won his governorship the same day George Bush was winning Montana 58 to 38 percent. While the theme of Republican corruption played a big role in Schweitzer’s victory, he also ran on a decidedly libertarian Democrat message.

Hope springs eternal. But alas, in Cato’s “Fiscal Policy Report Card on America’s Governors,” released Thursday, Schweitzer gets an F for his taxing and spending policies. Author Stephen Slivinski writes, “Spending in his first proposed budget exploded.” Plus he reinstated an expiring tax.

We’re still waiting for a libertarian Democrat. Really. We’d love to find one.

Grading the Governors

Today, the Cato Institute released the eighth biennial report card on the nation’s governors.  It provides an index of fiscal restraint for each governor based on multiple objective measures of fiscal performance.  This year there are 23 variables on which the governors are graded – more than the 15 variables of the 2004 report card.  The methodology has been improved this time, too.  You can find a copy of the report here.

The formula for success in the report card is simple: If a governor cuts taxes and spending the most, he will get a high grade. Raise taxes and spending the most, he’ll get a low grade.

Cutting taxes is important, at least, because doing so makes a state more economically competitive.  As I report in the study, between 1990 and 2005 the rates of growth in employment and personal income in the top 10 tax-raising states were lower than the national average. The tax-cutting states, on the other hand, saw economic growth faster than the national average.

Cutting taxes is also important because it reduces the amount of private-sector resources that the government can stake a claim to.  Yet that’s only part of the story.  While this sounds elementary, it’s a key point.  The report card tries to capture how fond a governor is of big government.  There are many governors who cut merely cut taxes and think it’s enough to get them a good grade.  But if they increase spending, they really haven’t cut the size of government.  Thus, the top grades will always go to the governors who keep taxes and spending under control simultaneously.  It’s something you rarely find among most governors, Republican or Democrat.  That’s why there are always so few “A” and “B” grades in the report card.