The Politics of Budget-Cutting

helicopterIn Washington, the symbolic almost always trumps the substantive.  Thus, legislators complain, for good reason, about pork and earmarks, which ran about $35 billion at their maximum, and ignore entitlements, which entail some $100 trillion in unfunded liabilities.

So it is with President Obama.  He continues the endless bailouts, which cumulatively now run around $13 trillion.  He proposed a $3.6 trillion budget and will leave us with a $1.4 trillion deficit next year–and nearly $5 trillion in additional debt on top of the massive deficits already projected over the coming decade.  But he asked his Cabinet officers to chop $100 million in administrative expenses.

And he says he doesn’t need a new helicopter.  Fiscal responsibility in action.

Alas, the helicopter, while costing billions, isn’t an easy budget target.

Reports the New York Times:

At a Washington conference on fiscal responsibility in February, President Obama tried to set the tone by saying he did not need the new costly presidential helicopters that had been ordered by the Bush administration.

“The helicopter I have now seems perfectly adequate to me,” he said to laughter. On a more serious note, he added, “I think it is an example of the procurement process gone amok. And we’re going to have to fix it.”

But the president is learning that in the world of defense contracting, frugality can be expensive. Some lawmakers and military experts warn that his effort to avoid wasting billions of dollars could end up doing just that.

The administration’s plan to halt the $13 billion helicopter program, announced this month, will leave the government with little to show for the $3.2 billion it has spent since the Bush administration set out to create a futuristic craft that could fend off terrorist attacks and resist the electromagnetic effects of a nuclear blast.

Critics say the Pentagon would also spend at least $200 million in termination fees and perhaps hundreds of millions to extend the life of today’s aging fleet. As a result, several influential lawmakers and defense analysts are now calling for a compromise that would salvage a simpler version of the helicopter that is already being tested.

They say it could be a more palatable alternative in tough economic times than seeking new bids for a more advanced craft, which has proved difficult to develop.

No wonder Washington is known as a place where everything about government is permanent.  Once you start spending money on a program, it becomes extremely hard to stop.  Part of that is the political dynamic of interest groups, the problem so well dissected by the Public Choice economists.  And part of it is legal and procedural.  Contracts are let, cancellation fees are due.  It’s bad to waste money on a gold-plated helicopter.  It seems even worse to waste money developing a gold-plated helicopter, and then getting nothing at all by canceling it.

There is, however, an amazingly simple solution, of which Congress and the president apparently are not aware.

Don’t spend the money in the first place.  Eschew new programs.  Say no to special interests.  Let taxpayers keep more of their own money.

This approach would seem to make sense at any time.  But especially today, with the federal government facing a deficit approaching $2 trillion in 2009.

Didn’t Nancy Reagan lecture us to “just say no”?  We should invite her back for a return tour of Washington, only she should talk about federal spending this time.

Blogging from the Supreme Court - NAMUDNO v. Holder

I write this from the Bar Members’ line waiting to be let into the Supreme Court courtroom for the final argument of the term.

Today the Court hears Northwest Austin Municipal Utility District No.1 (“NAMUDNO”) v. Holder. This is a challenge to the controversial Section 5 of the Voting Rights Act, which requires, among other things, any change in election administration in certain states and counties to be “precleared” by the Department of Justice in Washington. This is, of course, a remnant of the Jim Crow era, and southern states’ massive resistance to attempts to enforce the 15th Amendment.

In 1965, Congress included Section 5 – which would otherwise be an unconstitutional infringement on peoples’ right to run their own elections locally – as a temporary remedy to an emergency situation. The section has been amended and extended several times (e.g., to add linguistic minorities, Pacific Islanders, etc.), most recently in 2006. But in this last renewal, Congress, despite introducing more than 15,000 pages into the record, failed to even allege the existence of the type of systemic voting discrimination as existed in the 1960s – because, of course, it doesn’t exist any more, and other parts of the VRA exist to cover specific discriminatory incidents.

Accordingly, a small utility district in Austin, Texas, contests Section 5’s continuing validity (if it cannot escape the section’s clutches via a confusing and little-used “bailout” provision). Specifically, NAMUDNO wants to change the location of its polling station to a public garage (from a less convenient location) – a move that obviously lacks discriminatory intent, and showcases the minutiae that the DOJ now has to micromanage.

Cato legal scholars support NAMUDNO’s challenge because, barring the widespread systemic unconstitutional actions of the Civil Rights Era, Section 5 violates our most basic principles of self-government and federalism, and is emblematic of governmental overreach.

New at Cato

Here are a few highlights from Cato Today, a daily email from the Cato Institute.

  • Dan Ikenson and Scott Lincicome argue in a new study that restoring the pro-trade consensus must be a top priority for the Obama administration.
  • In the DC Examiner, Gene Healy discusses Obama’s first 100 days and argues that he’s massively expanded the power of government in a short period of time.
  • In the Asia Times Online, David Isenberg discusses private security contractors in the war in Iraq.
  • Watch Patrick J. Michaels discuss energy on CNBC.
  • In Tuesday’s Cato Daily Podcast, Peter Van Doren discusses the interaction between Congress and regulators on the issue of food safety.

The Global Economy Is Not Immune to Swine Flu

World governments should be careful not to play politics with the Mexican swine flu outbreak. The health consequences should of course be rigorously addressed—but without adding economic consequences, which is what several countries appear poised to do.

Public health scares have a history of seeping into trade policy without anything resembling sufficient consideration of the evidence. Governments in Russia and East Asia are already banning pork exports from Mexico, even though there is zero evidence that they pose a health hazard. It hearkens back to unfounded bans of U.S. beef in recent years by the European Union and South Korea.

If the U.S. government jumps on board, U.S. exports could be targeted for retaliatory trade actions. One quarter of U.S. pork production is exported, as well as billions of dollars of our soybeans used as feed by foreign hog farmers.

Exploiting this crisis could turn what is so far a manageable health problem into an unnecessary trade and diplomatic conflict. Obviously the global economy does not need the extra strain.


How Serious Is U.S. Ed. Productivity Collapse

A commenter at Joanne Jacobs’ edu-blog wonders “how serious this ‘collapse’ is.” I offered the following response:

How serious of a collapse is it? Total k-12 expenditures in this country were about $630 billion two years ago (see Table 25, Digest of Ed Statistics 2008). The efficiency of our education system is less than half what it was in 1971 (i.e., we spend more than twice as much to get the same results — see Table 181, same source).

So if we’d managed to ensure that education productivity just stagnated, we’d be saving over $300 billion EVERY YEAR. If we’d actually seen productivity improvements in education such as we’ve seen in other fields, we’d be saving at least that much money and enjoying higher student achievement at the same time.

My guess is that most people would consider saving $3 trillion per decade and more fully realizing children’s intellectual potential are both very important.

Another commenter observes that spending has of necessity increased due to the combination of rising salaries and a failure to deploy new technologies to lower costs. This is true to a point, but the total employee/student ratio in public schools has also grown dramatically over the same period. A few years ago I calculated that taxpayers would save more than $100 billion annually if the public schools just went back to the employee/student ratio of 1970. And the savings are still massive even if you account for a roughly 10% increase in teachers for expanded special education services.

Ultimately, though, you have to ask WHY public schools have failed to use technology to lower costs as virtually every other field has successfully done. The answer is that doing so is difficult and so won’t happen without the freedom and powerful systemtic incentives to MAKE it happen. The only system of freedoms and incentives that makes productivity growth the norm is the free enterprise system.

Who’s Blogging about Cato

Bloggers from all over are discussing Cato’s research and commentary. Here are a couple we found:

  • Net Right Nation editor Adam Bitely has linked to Cato commentary and analysis regularly over the past few months.
  • At the Show-Me Institute Blog, Sarah Brodsky wrote about charter schools, citing a Neal McCluskey’s post about the drawbacks of charter school education programs.

Let us know if you’re blogging about Cato by emailing cmoody [at]


You Just Can’t Say That

Let’s get one thing straight: As I’ve noted on numerous occasions, you can’t look just at National Assessment of Educational Progress (NAEP) results – especially only between two years – and attribute gains or losses to specific laws or programs. There are simply too many variables at play in education – federal laws, state laws, school choice, child nutrition, teacher quality, parents’ attitudes, the weather – to confidently assert that any one is responsible for changing scores. Indeed, it is possible that nothing government has done has had any effect, and every trend just reflects changing attitudes toward education among students themselves.

And yet, some reporters identify something akin to a god variable anyway, as the Associated Press did in its coverage of the new NAEP long-term-trends report:

The biggest gains came from low-achieving students. That is probably not an accident — the federal No Child Left Behind law and similar state laws have focused on improving the performance of minority and poor children, who struggle the most.

Now, there are a lot of problems with this statement, including that several of the lowest-achieving percentiles by age and subject saw no statistically significant changes in scores between 2004 and 2008; many groups had periods of faster gains before NCLB (though we don’t even have clear before and after-NCLB data points); and NAEP offers no income-based score breakdowns, only the proxy of parents’ education – and that just for 13 and 17-year-olds in mathematics. But the biggest problem is that, all of these factual problems aside, there is no way to ascribe score changes to specific laws or government policies. The data just aren’t there.

Fortunately, most of the coverage of the NAEP report has been pretty reasonable, including from the Washington Post and New York Times. But the AP reaches a lot of people, and that means many Americans are going to get “news” about the latest NAEP findings that is little more than unsupportable conjecture.