Topic: Tax and Budget Policy

Hillary’s Health Care Initiative Gets off to a Bad Start

Pop quiz.  Finish the following sentence:

No factor does more to hold back America’s economic growth and keep American workers from earning as much as they deserve than _________________.

A. the soaring cost of health care [16.5 percent of GDP]

B. the soaring cost of government [31.4 percent of GDP]

If you understand the “greater than/less than” thing, you picked B.  But if you are Sen. Hillary Rodham Clinton, you picked A.  In fact, that is how Senator Clinton completed the first sentence of the “Affordable Health Care” section of her “American Dream Initiative,” released yesterday. 

Just one sentence into her vision for health care, and I am already disappointed.

The DLC Moves Left?

By teaming up with the Democratic Leadership Council, is Hillary Clinton moving to the center in preparation for a presidential run? Or is the DLC moving left to get closer to the front-runner? Yesterday Senator Clinton released a DLC plan, the “American Dream Initiative,” a laundry list of government transfers and handouts.

The New York Times called the programs “modest” and “relatively small-scale.” Taxpayers might have a different view if they read the Washington Post, which noted that DLC president Bruce Reed estimated the cost of the programs at $500 billion over 10 years – and taxpayers have learned by now that government entitlement programs often cost far more than their advocates estimate in advance. (Remember when Medicaid was projected to cost $1 billion a year? Oops.) And the DLC promises to raise taxes to cover the costs.

There are millions of libertarian-leaning voters disgruntled with the Republicans’ social conservatism, soaring spending, and ill-fated war. And Democrats are doing everything they can to discourage those voters from switching parties.

Working to Cut the Deficit

In an online fundraising letter, President Bush (or someone authorized to sign his name) writes, “Republicans are also working to cut the deficit. The best way to reduce the deficit is to keep pro-growth economic policies in place, and be wise about how we spend your money – which is exactly what Republicans are doing in Washington.”

Just how high would spending be if the Republicans weren’t being wise about how they spend our money?

Political Graffiti

Yesterday, the Senate Appropriations Committee approved a bill that would name a future federal courthouse after Senate Majority Leader Bill Frist.

As National Journal reports:

The panel even named a yet-to-be-built courthouse after Senate Majority Leader Frist, unusual for a sitting member of Congress. That was a compromise forged after Senate Transportation-Treasury Appropriations Subcommittee Chairman Christopher (Kit) Bond, R-Mo., could not spare enough funds within his limited allocation to build the Nashville courthouse that Frist requested, a committee aide said.

So it seems that appropriators are not only shamelessly slapping the names of sitting senators on federal buildings; they are also using the naming rights to encourage additional spending.

It is too early to know if this provision will remain in the final version of the spending bill, but for what it’s worth, the Rules of the House of Representatives state:

It shall not be in order to consider a bill, joint resolution, amendment, or conference report that provides for the designation or redesignation of a public work in honor of an individual then serving as a Member, Delegate, Resident Commissioner, or Senator.

Rules, however, are meant to be broken. And broken again.

The Big Dig

With Boston’s Big Dig highway project in the news, a brief review is in order:

As the project was getting started in 1985, government officials claimed that it would cost $2.6 billion and be completed by 1998. The cost ultimately ballooned to $14.6 billion and new problems continue to arise as the project finally nears completion. (The federal share of the project’s cost was $8.5 billion.) In 2004, hundreds of leaks were found in the project, which added millions of dollars in taxpayer costs. And in recent weeks, parts of new road tunnel ceilings have collapsed. 

Raphael Lewis and Sean Murphy wrote an excellent Boston Globe series a couple of years ago revealing how the Big Dig had been grossly mismanaged. A key problem was that Massachusetts repeatedly bailed out bungling Big Dig contractors instead of demanding accountability. Contractors were essentially rewarded for delays and overruns with added cash and guaranteed profits.

When federal money is involved, state and local profligacy and corruption are usually the result. For background on the general problem of cost overruns on federally funded projects, see my compilation of evidence here.

The Unseen Sighted in Western Maryland

For supporters of limited government, Bastiat’s What Is Seen and What Is Not Seen summarizes our fundamental lament:

When a government official spends on his own behalf one hundred sous more, this implies that a taxpayer spends on his own behalf one hundred sous the less. But the spending of the government official is seen, because it is done; while that of the taxpayer is not seen, because—alas!—he is prevented from doing it.

This difference leads to bigger government because the electorate is lulled into believing that big government offers great benefits to society while limited government and private decisionmaking offer little. If it were not for government, the thinking goes, people could not respond to emergencies, or the poor and unfortunate would have no protection and assistance, or there would be no economic development and community life.

But once in awhile, we can see what usually goes unseen. Credit my hometown of Washington County, Maryland, for a recent example.

Rising tax receipts resulted in a budget surplus for FY 2006, and the county’s commissioners decided to refund some of that surplus to taxpayers. The local newspaper asked readers to write in, describing what they did with the money. Today’s edition included those letters. Among the uses:

  • Pay for home repairs required after recent flooding.
  • Contribute to the medical fund for an area child with a heart defect.
  • Purchase a bicycle, movie tickets, a dinner and show, and the various goods and services of a local festival.

How about that? People will make sensible and altruistic decisions with their money, without the orchestrations of government