Topic: Tax and Budget Policy

The Welfare Kings of Farming

There is an excellent op-ed in today’s LA Times on the special kind of corporate welfare given to farmers. David Boaz and I have both written blog entries (here and here) and done podcasts on the topic (mine on 05/30/06 and David’s on 07/25/06). As the farm bill comes up for extension/review/obliteration (okay, that last one was a bit optimistic), this topic is one to watch.

Hillary’s Rural Renaissance

Further to David Boaz’s post below on the Democratic Leadership Council’s recent spending plans, Senator Hillary Clinton has called for a “rural renaissance” to “restore the promise and prosperity to main streets and rural communities.” The full press release can be viewed here, but these are the main points:

  • A “national broadband strategy” to “coordinate and maximize federal resources” which would newly include a National Rural Broadband Innovation Fund and the creation of a single office run by an “administrator” that would provide a “one-stop shopping clearing house for innovators and businesses that want to expand broadband in rural areas.” Strange, but from where I’m standing, the Internet seems to have evolved pretty well without government interference so far.
  • A “Rural Regional Investment Program, which would provide equity investments to fund innovative opportunities and partnerships in rural areas” that would “provide rural communities with flexible resources to develop comprehensive, collaborative, locally-controlled planning and to foster innovative community and economic development strategies.” Senator Clinton’s proposal also includes more “help” in administering small private loans “pooling private capital and administering that capital through trusted intermediaries” (overseen by the Federal government, presumably). As the seemingly inexhaustible stream of money to ethanol production has shown, investment money to rural areas seems to flow quite nicely when investors see promising (if pork-induced) returns.
  • Speaking of ethanol, Senator Clinton would like to see the creation of a $1 billion Strategic Energy Fund to “support [the] rapid development of renewable energy, including biofuels.”
  • Then there are a host of other measures, including so-called “green” payments, a more reliable safety net that would “help manage risk” and include counter-cyclical payments (the most trade distorting and offensive kind to our trade partners), and more spending on health care and rural education.

The US Government has been lavishing subsidies on farmers since the New Deal in the 1930s, and has spent over $55 billion propping up the agricultural sector since the enactment of the 2002 Farm Bill. Far from giving away even more of taxpayers’ money, surely it is time for the government to stop giving agriculture special treatment and to allow farmers to carry the risks and reap the rewards of their investments, just like every other businessperson in America.

Getting to Government Transparency

There’s technology policy, and there’s how technology affects policy.

That’s why I found my colleague Chris Edwards’ recent Tax & Budget Bulletin so interesting.  He discusses a number of federal databases that bring some transparency to federal spending, including the Federal Assistance Award Data System and the Federal Audit Clearinghouse.  Between them, they reveal quite a bit of information about federal spending and the staggering number and amount of subsidies and grants handed out by the federal government each year.

Edwards also hails a proposal by Senator Tom Coburn (R-OK) to create a comprehensive Internet database of federal contracts, grants, and other payments.  It would be a great leap forward in terms of transparency about spending, like the Thomas system was for the legislative process.

Advocates from across the political spectrum want a government that “works.”  Most believe that their perspective would “win” if the politics and government worked.  Whatever the case, transparency is widely agreed to be good — the more the better.

Thomas was an improvement.  Yet it hasn’t transformed the legislative process the way some might have hoped.  Lawmaking remains murky and confusing to the vast majority of the public.  Even if it was done well, a federal spending database probably wouldn’t transform the politics of government spending either.

Information technology will surely help, but transparency isn’t enough.  The twin problems that must be overcome are rational ignorance and rational inaction.  It’s hard to learn about government, and hard to affect it, so people make better uses of their time.  Operating a lemonade stand would be far more lucrative and enjoyable for most people than campaigning for a tax reduction.  (The piece linked here is a good discussion of rational ignorance.)

There are some efforts to defeat the twin plagues of ignorance and inaction.  GovTrack.us, for example, attacks ignorance with more information presented more accessibly than Thomas.  Wikipedia founder Jimmy Wales recently took after inaction with a wiki devoted to campaigns

My favorite — because I run it — is WashingtonWatch.com.  It displays pending legislation with its price-tag per person, per family, etc. and it gives visitors a chance to air their views.  A little run at ignorance, a little run at inaction.  Given time, it could blossom into transformed government.  In the meantime, the more transparency the better.

On What Planet?

Peter Beinart writes in the New Republic:

The struggle that initially roiled the Clinton administration–between deficit hawks and deficit spenders–is basically over; today, even the most liberal Democrats are fiscal conservatives.

Stephen Slivinski’s new book does demonstrate that today’s Republicans are bigger spenders than LBJ. But as the National Taxpayers Union notes in its latest rating of congressional voting, the average Democrat still votes for far more spending than the average Republican. Democrats offer no plan to avert the impending insolvency of the Social Security system. They have denounced the Republicans’ trillion-dollar expansion of Medicare on the grounds that it isn’t generous enough.

Even the relatively conservative Democrats at the Democratic Leadership Council recently released a plan to spend hundreds of billions more taxpayer dollars on everything from college tuition to housing to socialized health care for children to McGovern-style “demogrants” for every baby, with no plausible offsetting spending cuts.

Political Entrepreneurship

From the Washington Post:

[Kevin] Schieffer is trying to persuade the Federal Railroad Administration to give him a $2.5 billion loan for the project [to build a 1000-mile rail line from Wyoming to Minnesota], among the largest in history.

If it succeeds, it could be a boon to farmers – and Schieffer.

The project would cut transportation costs for coal, corn and ethanol, and would make Schieffer what Fortune magazine calls “America’s first self-made railroad baron since the days of Teddy Roosevelt.”…

“He’s talking about using eminent domain out here and just wiping out 110 or 120 farms and ranches out here,” [rancher Paul] Jensen said.

Schieffer received help from an old friend, someone he admired as a South Dakota basketball legend years ago: Sen. John Thune (R), who defeated Senate Majority Leader Thomas A. Daschle (D) in 2004.

Despite opposition from the White House, Thune helped persuade Congress last year to increase the amount of the program from $3.5 billion to $35 billion. Thune, who received campaign contributions from Schieffer and who earned $220,000 as DM&E’s chief lobbyist in the 18 months before joining the Senate, is promoting the project to lure jobs. The law would allow Schieffer to put down no collateral and to make no payments for up to six years. [Sen. Mark] Dayton and other critics fear that taxpayers would be on the hook if the project were to fail.

He’s no James J. Hill.

FristBlog’s Rx: Focus on the Donut

Senate Majority Leader Bill Frist recently launched a health policy blog. The latest post (by “Sailor”) complains that people are focusing on Medicare Part D’s donut hole rather than the tasty donut itself:

The most amazing criticism is that there is a donut hole. It is amazing that those who argue this is a defect in part D fail to understand there used to never be any donut at all – and they just continue to focus on the hole rather than the enormous benefit (donut) that never previously existed for seniors.

I’m not sure that criticism of the ‘donut hole’ is all that amazing. As Cato adjunct scholar David Hyman explains in an upcoming book (Medicare Meets Mephistopheles), Democrats have made their careers by using Medicare to pass out donuts. What did Frist, Inc., expect Democrats would do once Republicans got in on the donut racket? Quit? Or up the ante?

Is this why Dr. Frist got into politics? To hand out donuts?

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.