Topic: Tax and Budget Policy

Yet More Government Waste

Sen. Chuck Grassley, chairman of the Finance Committee, is asking Medicare/Medicaid administrator Mark McClellan why two senior Medicare investigators spend up to two months each year “on travel to popular vacation destinations.” Grassley wants to know, “What did American taxpayers and Medicare beneficiaries get for the travels of Rollow and Jencks?”

Good for him. As I suggested in another recent item, it’s better for Grassley and the Finance Committee to be exercising their oversight of federal programs than to run amok through American society, investigating the Red Cross, American University, the Nature Conservancy, and other charities and nonprofits. A top Grassley aide has met 500 times with nonprofit officials as part of his investigations and hearing preparations.

So better to remember that the role of the United States Senate Committee on Finance is not to regulate American society, but to oversee the finances of the federal government. In that light, the investigations into wasteful spending at Medicare and the Legal Services Corporation are to be welcomed.

Still, you have to consider: The budget for Legal Services is about $326 million, and the allegedly wasteful spending probably amounts to a few million dollars. In the case of Medicare, Grassley is complaining about $75,000 in travel expenses. Total spending on Medicare will rise by $52 billion this year, to $382 billion. Medicaid will cost taxpayers another $200 billion in FY2007. The federal deficit is projected to total $1.76 trillion over the coming decade. And the government’s total fiscal imbalance, as calculated by Kent Smetters and Cato’s Jagadeesh Gokhale, is now $63 trillion.

When the Senate Finance Committee investigates $75,000 in suspicious travel at Medicare or doubled meal expenses at Legal Services, it is engaging in sleight of hand. Like a magician who draws your attention to his right hand while he moves things around with his left, the committee is trying to divert our attention from the fact that it is ignoring these massive problems while it gets favorable headlines for penny-ante stunts.

Every Day in Every Way …

Big-ticket items drive most discussions of politics and government, but let’s not forget to lament the small advances that help make big government what it is.

At the outbreak of hostilities in southern Lebanon, my well-traveled colleague Tom Palmer expressed dismay that Americans overseas should expect a lift home courtesy of the U.S. government when they’ve gotten in harm’s way. Alas, by the end of July, Congress passed the Returned Americans Protection Act of 2006, which raised by $5 million the fiscal year 2006 limit on emergency assistance funds provided to U.S. citizens returning from foreign countries. Score one for bigger government — and for less responsible people.

But the bill actually results in reduced spending, saving about three cents (net present value) per U.S. family. How could this be?

A little legislative artifice did the trick. You see, the bill also allowed state food stamp agencies access to the National Directory of New Hires. They can use this database to verify employment and wage information for food stamp recipients using information on every newly hired American worker’s employment, wages, and receipt of unemployment insurance. With access to these data, state food stamp agencies will be able to better verify the income of their beneficiaries and reduce overpayments.

Created “for the children“ — a tool for tracking down deadbeat dads — the National Directory of New Hires is slowly but surely being put to new uses, including now more careful administration of food stamps. For tens or hundreds of reasons that are largely good, systems like the NDNH database will expand until the point is reached where we are all under comprehensive surveillance. 

Lost privacy is a cost of large government. In this case, the government has monetized worker data to economize on food stamp programs, masking the cost of scooping up American travelers caught overextended abroad. 

A little more spending here, a little more surveillance there. Every day in every way …

An Anonymous Affront to Transparency

As the Federal Times reports, a bill designed to promote transparency in the federal government is being held up by a very non-transparent Senate procedure.

An anonymous senator has placed a “hold” on a bill that would create a publicly accessible federal database to track all federal grants and contracts. As Chris Edwards explains, it’s a meritorious piece of legislation. However, this bipartisan bill introduced by Sen. Tom Coburn is indefinitely stalled and might not reach the Senate floor this year.

The House has approved a similar, though slightly watered-down, version of this legislation that would monitor federal grants, but not contracts.

With 29 bipartisan senators co-sponsoring Coburn’s bill and roughly 100 diverse groups supporting it, you would think that this legislation would pass easily.  

Think again.

 

Your Tax Dollars at Work

Speaking of my claim yesterday that “people spend other people’s money far less efficiently than their own,” this just in from the Associated Press:

The federal program that provides legal help to poor Americans turns away half of its applicants for lack of resources. But that hasn’t stopped its executives from lavishing expensive meals, chauffeur-driven cars and foreign trips on themselves.

Agency documents obtained by The Associated Press detail the luxuries that executives of the Legal Services Corp. have given themselves with federal money – from $14 “Death by Chocolate” desserts to $400 chauffeured rides to locations within cab distance of their offices.

The government-funded corporation also has a spacious headquarters in Washington’s tony Georgetown district – with views of the Potomac River and a rent significantly higher than other tenants in the same building.

Chuck Grassley, chairman of the Senate Finance Committee, is upset. Maybe at last he can turn his attention from oversight of private charities and universities to his actual job, oversight of federal spending.

Every Day Brings an Emergency

The U.S. Farm Bill is due to be redrafted in the first half of next year and Cato will be part of what is shaping up to be a lively debate. The recent round of WTO negotiations were one hope for reducing the costly distortions that agricultural subsidies impose, but we all know what happened there. (The WTO news release can be found here if you are not up to speed).

The 2007 Farm Bill, then, provides the next best opportunity for much needed reform. But, considering the noises coming from Congressmen, we reformers have our work cut out. Consider this recent pearl, offered by Sen. Chuck Hagel (R-Neb.):”The fact is we know there is emergency assistance required every year, whether it’s for drought, floods or whatever natural cause…” Webster’s Encyclopedic Unabridged Dictionary of the English Language defines an emergency as “a sudden, urgent, usually unforeseen occurrence or occasion requiring immediate action.” I don’t think something (a different ‘something’ all the time, according to the Senator) that happens with certainty every year fits that definition.

Senator Hagel went on to say…”Why don’t we craft a farm bill that is visionary, relevant, real and deals with the challenges we know agriculture producers deal with?” I am sure the Senator meant the question to be rhetorical, but I agree with the Senator – why don’t we craft a Farm Bill that is visionary, relevant and real. A vision of farmers making a living from markets, relevant to the fact of the significant cost of these programs, and real – as in, real different to the last farm bill (a huge step backwards from the relatively tame 1996 farm bill). As for the challenges, surely farmers, like other small (and not so small) businesses should be able to deal with challenges unassisted by government (read: taxpayer and consumer) support?

I’m an Australian so I know something about drought. I’m also an economist, so I know something about comparative advantage. Maybe if every year is a disaster year in some place, then farmers shouldn’t be farming there….

Another Fiscal Conservative Sighted?

The Associated Press states as fact that Sen. Lincoln “Chafee is a fiscal conservative.” OK, let’s go to the tape.

According to the National Taxpayers Union, Chafee voted to restrain taxes and spending only 33 percent of the time in 2005. He introduced 43 bills to raise spending and only two to cut spending. He voted against Medicaid cuts. He voted not to allow a cap on spending increases. He voted to increase spending on community development block grants, low-income heating assistance, education, and a package of welfare programs.

What is the AP’s definition of a fiscal conservative?

Fiscal Conservatives, Again

The often astute Washington Post columnist Steven Pearlstein writes that Rep. Benjamin Cardin (D-MD), a candidate for the Senate, is “a budget-balancing fiscal conservative.”

Well. According to the National Taxpayers Union, Cardin voted 13 percent of the time to restrain taxes and spending in 2005, making him slightly more spendthrift than the average Democratic House member. He has introduced 42 bills in this Congress to raise spending, and one bill that would cut spending. It’s true that he has supported some IRS and budget process reforms, but he has not supported a Balanced Budget Amendment to the Constitution.

As I wrote last week, the search for a fiscally conservative Democrat continues.

Meanwhile, a headline in the Post reads:

“President Remains Eager to Cut Entitlement Spending”

Honestly, it’s like reporters are Charlie Brown and Bush is Lucy, pulling the football away time after time. Bush promises to control spending, then increases spending by 48 percent. Bush promises to control spending, then passes a multi-trillion-dollar expansion of Medicare. Bush says, “We need to cut entitlement spending,” and he gets a six-column headline in the Post.