Come to Washington and Do Well

What’s the best business to be in these days? Steel? Automobiles? Maybe not any more. Maybe these days it’s software, or finance. Maybe. But judging from this lead story in this morning’s Washington Post

The three most prosperous large counties in the United States are in the Washington suburbs, according to census figures released yesterday, which show that the region has the second-highest income and the least poverty of any major metropolitan area in the country.

Rapidly growing Loudoun County has emerged as the wealthiest jurisdiction in the nation, with its households last year having a median income of more than $98,000. It is followed by Fairfax and Howard counties, with Montgomery County not far behind.

– it would seem that government is the boom industry of the early 21st century. That’s the point Chris Edwards made in a Tax & Budget Bulletin (pdf) three months ago: that compensation of federal employees was almost twice compensation in the private sector. Then three months later, things changed, as things have a way of doing. Chris was forced to admit that the government’s latest figures showed that federal compensation was no longer almost twice private-sector compensation: it was exactly twice as much. “Average compensation for the 1.8 million federal civilian workers in 2005 was $106,579 – exactly twice the average compensation paid in the U.S. private sector: $53,289.”

Mamas, don’t let your babies grow up to be cowboys,

Don’t let ‘em make software and sell people trucks,

Make ‘em be bureaucrats and fed’rals and such.

Scandal in Public Broadcasting

The big scandal in public (or actually government) broadcasting is that the taxpayers are forced to pay hundreds of millions of dollars a year for the propagation of unremittingly liberal views on politics and policy. As I said in my testimony to the Senate last year, I agree with some of the liberal attitudes of NPR and PBS, but I don’t think taxpayers should be forced to subsidize my views or those of anyone else.

The second biggest scandal is that when Republicans get control of the federal government, they don’t relieve the taxpayers of that burden. Maybe it’s because they know the old advice, “Never pick a fight with people who buy ink by the barrel.” Or who have their own nationwide broadcast networks. But it’s unbelievable to me that Republicans appropriate money every year for two networks that could be called ARN, the Anti-Republican Network.

The third biggest scandal is that instead of just privatizing PBS and NPR, Republicans appoint public broadcasting officials who go in like a bull in a china shop and try to force a bunch of liberal journalists to include conservative shows and perspectives. The government shouldn’t be telling journalists how and what to report. Instead, it should just free them to report as they choose, with money from investors and customers rather than taxpayers.

And I guess the fourth biggest scandal is the one making headlines today: that the chairman of the Broadcasting Board of Governors (which oversees the federal government’s international broadcasting), who used to be chairman of the Corporation for Public Broadcasting, is alleged to have improperly used his office. In a State Department report made public by three Democratic members of Congress, Tomlinson is accused of putting a friend on the BBG payroll – something that never happens elsewhere in the federal government – and using office resources to support his personal horse-racing operation, which I suppose goes beyond the March Madness pools conducted in every federal office.

Maybe when conservatives get tired of being hit over the head by tax-funded broadcast networks, and liberals get tired of conservatives trying to meddle in the networks’ reporting, they could both agree to privatize PBS and NPR, freeing them from political intervention and freeing the taxpayers from being coerced to support what Thomas Jefferson called “the propagation of opinions which [they] disbelieve.”

In Defense of Gridlock

Over at National Review’s blog, Ramesh Ponnuru wonders why it seems that divided government – aka, gridlock – tends to lead to slower growth in the federal budget.

I mount a defense of gridlock in my new book, Buck Wild: How Republicans Broke the Bank and Became the Party of Big Government. In chapter 8, to be precise. The numbers that Ramesh cites in his post come from a review of my book by Phil Kerpen on the NR website.

By way of jumping into the discussion Ramesh has started, let me clarify a few things first.

In my book I only analyze the real per capita growth rates of government spending in the years 1965 through 2005. I think this is a more useful timeframe for comparison than Ramesh’s seventy-six-year timeframe simply because the post-Great Society welfare state looks vastly different than what existed before. I was mainly curious to see if the correlation holds up within a timeframe that yields more consistency in terms of the entitlement programs being funded in the federal budget.

The methodology I used was modeled after that of Cato chairman William Niskanen and Cato senior fellow Peter VanDoren in the paper they presented to the Public Choice Society meeting in May of 2004. My data falls into the same realm of statistical significance, too. (Incidentally, their analysis goes back to 1949.)

Now on to the fun.

Divided government – gridlock – is the norm, not the exception, in American politics over the past 40 years. The only completely united government scenarios existed during the presidencies of Lyndon Johnson, Jimmy Carter, and George W. Bush. It is obviously true that Democratic united government is more common than Republican united government.

So why might divided government be more conducive to restrained spending? For starters, defense spending varies widely over the past 40 years, but the correlation between wars and united government is quite consistent. American participation in every war involving more than a few days of ground combat was initiated by a united government. You could argue that this is mere coincidence. Or you could argue that united government creates an environment where there is less resistance from Congress when a president wants to exercise his powers as commander-in-chief. The burden of proof is on those who suggest this is simply happenstance.

A president and Congress could certainly offset defense budget increases with cuts in the non-defense budget. Indeed, you often see this in periods of gridlock. The converse is also true: Decreases in defense spending tend to coincide with increases in non-defense budgets under gridlock.

In the periods of united government, however, those sorts of trade-offs disappear. Instead, united government spawns large increases in across-the-board spending on everything. That’s exactly what we saw during the presidencies of Lyndon Johnson, Jimmy Carter, and George W. Bush.

Why this occurs might best be described by the nature of Washington politics. The one thing you can usually count on in DC is partisanship. When Republicans are the beleaguered minority—or a congressional majority fighting a big-spending White House—they are in their element. Big Government is the clear enemy. But once they find themselves in control of it, they are less willing to rein it in.

We can see this by comparing how a GOP Congress treated the proposed non-defense budgets of Bill Clinton and George W. Bush. Remember that once the president’s budget reaches Capitol Hill every year, Congress either increases or cuts the spending request. During the years of divided government under Clinton, the Republican Congress managed to cut Clinton’s domestic spending requests by an average of $9 billion each year between fiscal 1996 and 2001.

Contrast that with the budget outcomes under President Bush—specifically the years in which Congress was held entirely by Republicans. Between fiscal years 2003 and 2006, Congress passed, and Bush refused to veto, non-defense budgets that were an average of $16 billion more than the president proposed each year.

The rules of partisanship imply that a Big Government scheme proposed by a Republican president is more likely to be accepted by a Republican Congress than if it were proposed by a Democrat. That’s exactly what happened with the Medicare drug benefit. It seems quite likely such a drug benefit would not have passed if it were proposed by, say, President Al Gore or President Hillary Clinton. And if the Medicare expansion did get traction in Congress, Republican leaders would probably have been more interested in slowing it down or tacking on substantial reforms instead of abandoning the reform elements in the hope of speeding its passage as they did in 2003.

All the gridlock combinations that have persisted for longer than two years produce average (real per capita) budget growth rates that are half that of the united government average. This includes Republican presidents facing Democratic congresses – like Reagan, Nixon, and Ford – as well as a Democratic president like Clinton combined with a GOP congressional majority in both houses.

It seems to me the main question now becomes this: Even if someone doesn’t believe we would be better off with gridlock, is it still reasonable to believe – based on the historical evidence – that we’d be worse off?

Middle Class Squeeze?

New Census Bureau numbers released today on income, poverty and health coverage in 2005 are bound to fuel charges that the poor are getting poorer while the middle class continues to be squeezed. See what 25 years of tax cuts for the rich, globalization, and declining union membership have caused? But a look at the numbers inside the report tells a different story.

If we define the middle class as households earning between $35,000 and $75,000 a year, the middle class in America remains a huge demographic group. According to the Census report, Table A-1, the middle class made up 33.3 percent of U.S. households in 2005. That share is indeed somewhat smaller than in 1980, when 38.2 percent of households earned between $35,000 and $75,000 a year in real (inflation-adjusted) 2005 dollars.

Aha, so the middle class really is shrinking if not exactly disappearing, the alarmists might respond. But the Census numbers also show that over the past 25 years, the share of U.S. households earning less than $35,000 a year has also shrunk, from 44.5 percent in 1980 to 38.4 percent in 2005. Meanwhile, the share of households earning more than $75,000 a year has jumped from 17.4 percent to 28.3 percent.

In other words, if the middle class in America has shrunk, it is only because so many formerly middle-class households have moved to the upper-income brackets, while a significant number of households previously in the lower brackets have moved up to the middle class and beyond.

The solid economic growth of the past two decades has indeed lifted all kinds of household boats. By the most basic measure of real household income, a broad swathe of Americans are better off than they were 25 years ago—thanks to growth fueled in good measure by lower marginal tax rates, expanding trade, and a more flexible domestic economy.

PFAW: “Well, We Did Do the Nose…”

Apparently People for the American Way thinks that the “American Way” was best embodied by Salem’s witch trials.

In a bizarre ad hominem breakdown, PFAW posted a hatchet piece on Alliance for School Choice president Clint Bolick yesterday.

It isn’t a news release as such. It contains no news. It’s simply a list of Bolick’s alleged crimes against the state school monopoly.  And I question the timing.

PFAW’s putative indictment seems intended to discredit Bolick in the eyes of the New Jersey media, due to a lawsuit the Alliance has filed on behalf of dissatisfied public school parents in that state. The parents are seeking choice – school vouchers to be precise – and there are few things that PFAW opposes more stridently than parental choice in education.

Fortunately for Bolick and for American children, PFAW’s attempted witch trial is less reminiscent of the real thing than of the Monty Python satire (whence comes the title of this post). Its most glaring error is to confuse the institution of government monopoly schooling with the ideals of public education.

Bolick, like most school choice advocates, is indeed critical of the bureaucratic school system that Americans inherited from the 19th century. But he is critical of it precisely because he is so committed to the ideals of public education. Our current system of schooling has failed to live up to our ideals and expectations for generations, and school choice advocates suggest introducing market forces because they will do a much better job of fulfilling those ideals and expectations.

I point all this out, moreover, as someone who does not support efforts, such as the New Jersey lawsuit in question, to encourage legislation from the bench.

New Uninsured Estimate, Same Old Story

Today, the Census Bureau reported that in 2005 the number of Americans without health insurance inched up yet again.  This annual ritual, repeated every August, gets old after a while. 

The Official Uninsured Estimate – now 46.6 million residents – comes from a survey that is not designed to measure insurance coverage.  The Official Uninsured Estimate includes people who are covered by Medicaid, who lack coverage today but will regain it tomorrow, and who make over $50,000 per year.  The Congressional Budget Office reports [.pdf] that the number of chronically uninsured (who lack coverage for a year or more) is more like 20-30 million – and still many of them are covered by Medicaid.

Part of this ritual is that Medicaid wins plaudits for “picking up the slack” when employment-based coverage falls.  Yet Medicaid encourages employers not to offer coverage, encourages workers to avoid private coverage, and makes private coverage more expensive for both employers and workers.  Medicaid doesn’t just catch people who fall off the economic ladder – it shakes the ladder.

Just about the only useful aspect of The Official Uninsured Estimate is the trend it displays over time.  When compared to the trend in the poverty rate (also released today), a stark contrast emerges.

  • Ten years ago, Congress reformed the welfare system.  It stopped the practice of just throwing more money at the problem of poverty.  What happened?  Poverty fell and remained lower in 2005 than at any point in the 17 years leading up to welfare reform. 
  • But Congress kept throwing more money at health care by expanding government programs (e.g., SCHIP).  The result?  Unlike the poverty rate, The Official Uninsured Estimate continues its steady climb.

Maybe we should stop throwing money at the problem?

Prepare to Be Shocked

ONDCP is a waste of money:

The government’s anti-drug ad campaign has not been proven to deter children from using drugs, and lawmakers should consider reducing funding for the $1.2 billion program, congressional auditors said Friday.

The Government Accountability Office based its recommendation on its review of an independent evaluation of the media campaign by Westat Inc.

The government has spent about $1.2 billion since 1998 on scores of television, print and radio ads designed to discourage drug use among youth. The ads also describe parents as the anti-drug. President Bush requested another $120 million for next year.

Westat found the ads had no “significant favorable effects” in deterring children from trying marijuana or in getting them to stop. Rather, it found that more 12 1/2- to 13-year-olds and girls were trying the drug after seeing the ads, the GAO said.

Apparently, comparing pot-smoking cancer patients to terrorist sympathizers isn’t resonating with the public. Whoda’ thunkit’?

Full report here [.pdf].