This is Progress?

The news of the incredible shrinking deficit is sure to be added to the list of accomplishments that Republican candidates – eager for any good news they can use to their advantage – will tout on the campaign trail.

Although the deficit is certainly smaller, it’s not because the White House and Congress suddenly have a newfound respect for spending discipline. Federal spending grew in excess of 7 percent this fiscal year. That’s faster than the expected growth in GDP of 6.5 percent. Besides, the federal budget is chomping on 20 percent of GDP. It consumed 18.5 percent of GDP when George W. Bush was inaugurated. And unfunded liabilities of entitlement programs continue to grow. Remind me again how this is progress?

Prediction: For the next few weeks, Republican candidates will be engaged in an attempt to persuade fiscally conservative voters to forget everything that annoyed them about the GOP’s rush to expand government and instead welcome a much larger federal budget simply because it’s closer to being balanced.

It’s more than enough to make you wonder whether the Republicans are really a party of smaller government anymore.

Upcoming Cato Forum on Quality in Medicare

Just announced: the Cato Institute will host a forum on using “pay-for-performance” to improve quality in Medicare, the federal health care program for the elderly and disabled. The forum will feature Harvard’s David Cutler, National Medical Association president Sandra Gadson, Institute of Medicine Pay-for-Performance Advisory Committee co-chair Gail Wilensky, and yours truly. Date/time/location: Thursday, November 2, 4pm, the Cato Instiute. Interested parties can preregister or watch the forum online here.

Voter Fraud and Other Political Facts

The House bill to require photo ID for voting rests on the premise that voter fraud is a significant problem. It turns out that premise is a little shaky. A report prepared for the U.S. Election Assistance Commission has found little evidence of polling-place fraud, according to USA Today.

The Commission on Federal Election Reform (Carter-Baker Commission) found “no evidence of extensive fraud in U.S. elections or of multiple voting,” though it does occur and could affect a close election. To inspire confidence in the system, the Commission recommended using the national ID card created by the REAL ID Act as a voter registration card. Proof of citizenship would be required to get a driver’s license, tightening government control of the citizenry just a little more.

I’ve written here before about “political facts,” things made true by consensus rather than any measurement or observation. The soaring costs of identity fraud and its relationship to data breaches are political facts that have a lot of currency in Washington today.

Another political fact getting a lot of attention and lather is the notion that child pornography has become a $20 billion dollar industry. “Exponential” growth of this problem is being used to justify legally mandated retention of data about our online travels by Internet service providers. Exploitation of children is loathsome, but it turns out the $20 billion figure is bunk.

One wonders how many other problems Congress addresses itself to might be exaggerated or even fictional.

The Global Contest for Talent and Brains

This week’s Economist magazine features a 15-page special report, “The Battle for Brainpower,” on the growing importance of highly skilled workers in the global economy. As high-tech goods and sophisticated services account for growing shares of world output and trade, attracting talented, skilled, and educated workers is becoming more important for U.S. companies wanting to stay competitive in global markets. Although America remains the most attractive market for such talent, our national immigration policies are proving to be a handicap.

While most other countries are easing restrictions on the entry of skilled workers, the U.S. Congress maintains an absurdly low cap on H1-B visas of 65,000 a year. The number is so low compared to demand that the visas are snapped up months before the fiscal year begins.

The Economist warns that America could be losing out in the global contest for talent. Consider the contributions that foreign-born workers have made to America’s high-tech economy. According to the report:

Half the Americans who won Nobel prizes in physics in the past seven years were born abroad. More than half the people with Ph.D.s working in American are immigrants. A quarter of Silicon Valley companies were started by Indians and Chinese. Intel, Sun Microsystems and Google were all founded or co-founded by immigrants. But now India and China are sucking back their expats, and America’s European competitors have woken up to the importance or retaining their talent. To cap it all, the immigration authorities [in the United States] are making life harder for foreigners.

The 109th Congress failed to enact meaningful immigration reform to allow more low-skilled immigrants to enter the Untied States legally. An even bigger failure was its neglect of our need to attract and keep more highly skilled workers from abroad.

Libertarians and Soccer Moms

A few years ago “soccer moms” were all the rage among political consultants. Then it was “NASCAR dads.” But only 4-5 percent of voters really fit the “soccer mom” profile, and only 2 percent were “NASCAR dads.” Tomorrow Cato will release a study showing that there are far more libertarian voters than soccer moms or NASCAR dads. Maybe politicos should pay attention to them.

My former colleague David Kirby, now executive director of America’s Future Foundation, obtained data sets from Gallup, Pew Research Center, and the American National Election Studies. He did some original calculations to find libertarians in those polls, and then he and I wrote up the results. Without scooping our own story, I’ll just say that we found that a substantial percentage of voters are libertarian – not libertarians who can compare and contrast Hayek and Rand, but people whose views on broad issues distinguish them from both liberals and conservatives.

We think our data undermine the whole idea these days that the electorate is polarized, that everybody’s either red or blue, that there’s no more swing vote. Indeed, one of the most interesting things we found is that libertarians are a swing vote. They voted very differently in 2004 from most previous years. How? Check our homepage Thursday.

Economic Reporting

Notes from the Business section of Tuesday’s Washington Post: There’s some evidence in the lead story that both politicians and journalists do learn economics. Writing about the award of the Nobel Prize in economics to Edmund Phelps, reporter Nell Henderson writes:

In a series of papers in the late 1960s and early 1970s, Phelps, 73, challenged the prevailing belief that policymakers could lower the nation’s long-term unemployment rate by accepting higher inflation.

That misguided notion contributed ruinously to Federal Reserve policies of the 1970s, which allowed easy credit to fan inflation to double-digit levels. The result was high inflation and high unemployment, a combination that came to be called stagflation.

Free-market economists often bemoan misguided economic assumptions in newspapers, not to mention bad policies promulgated by politicians, and they despair of getting basic economic concepts understood. But here’s a reporter who understands the failure of Phillips Curve economics in the 1970s, writing about a Federal Reserve that also came to understand that failure.

Inside the section, Vickie Elmer writes that “Some 77 percent of government workers say they’re happy at work, compared with 70 percent of those who work in private enterprise.” She offers some speculation about why that might be, including the fact that government agencies are hiring (but private-sector employment is also growing). What she doesn’t mention is that it could be because federal employees make exactly twice as much money as private-sector workers, as Chris Edwards wrote in the Post recently.

Finally, another story by Steven Mufson is headlined “Suspicion Surrounds Retreat in Gas Prices, Poll Finds.” It may actually be good news that according to the poll, only 30 percent of Americans think that gas prices are falling because the Bush administration is manipulating them in advance of the election. Last week Jerry Taylor praised Mufson’s previous story reviewing and deflating this conspiracy theory. It’s too bad that the idea is still alive.

Defining Justice Down

The National Association of Criminal Defense Lawyers (NACDL) recently bestowed its “Champion of Justice” award to former Attorney General Janet Reno.  (Go here to see the standing ovation).

What’s up with that?  NACDL is sorta like the ACLU–except it specializes in the criminal law area. Could this be the result of a sealed ”deferred prosecution agreement” from the ’90s or something? (For a quick refresher on Ms. Reno’s record, go here, here (viewer discretion advised) and here (viewer discretion advised).

If you happen upon a watering hole frequented by lawyers, you might witness furious arguments between defenders of Reno and defenders of our current Attorney General, Alberto Gonzales.  Buy a round for the house.  Black coffee, of course.  This “red-team-is-bad; blue-team-is-good” stuff has gotta stop.

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