Topic: Government and Politics

How Michigan Could Save $3.5 Billion a Year

Michigan is facing a projected $2.8 billion state budget shortfall. As a result, Governor Granholm has cut $212 million from state public school spending – rousing the ire of parents and education officials around the state. But if Michigan merely converted all its conventional public schools to charters, without altering current funding formulas, it would save $3.5 billion.

Here’s how: the average Michigan charter school spends $2,200 less per pupil than the average district school – counting only the state and local dollars. Put another way, Michigan school districts spend 25 percent more state and local dollars per pupil, on average, than charter schools. Sum up the savings to Michigan taxpayers from a mass district-to-charter exodus and it comes to $3.5 billion.

Anyone who wants to check that calculation can download the Msft Excel 2007 spreadsheet file I used to compute it. It contains both the raw data from the relevant NCES Common Core of Data files, and all the calculations. Among other things, it shows total per pupil spending and the pupil teacher ratio for every charter school and every public school district in the state. (Unlike certain climatologists, some of us researchers not only keep our data around, we’re actually happy to share them).

Journalists who have questions about this file are welcome to get in touch. Note that it is also viewable, I believe, with the free OpenOffice spreadsheet program, though I haven’t tested that.

Never a Recession in Washington

For those of you worried about starving bureaucrats, politicians, and consultants clogging the streets of Washington, D.C., don’t be.  Everything is fine here!  In fact, there’s more money than ever to spend.

Reports the Washington Post:

As struggling communities throughout the country wait for more help from the $787 billion stimulus package, one region is already basking in its largess: the government-contractor nexus that is metropolitan Washington.

Reports from stimulus recipients show that a sizable sum has gone to federal contractors in the Washington area who are helping implement the initiative – in effect, they are being paid a hefty slice of the money to help spend the rest of it.

The contractors’ work hardly differs from the basic operations of the federal departments hiring them. The Energy Department is paying Technology & Management Services, a Gaithersburg firm, $6.9 million to review applications for renewable energy loan guarantees. The Department of Homeland Security awarded Deloitte Consulting’s Arlington branch $8.6 million to provide “program management and support” for the stimulus plan’s $1 billion airport security initiative, and gave McKing Consulting, a Fairfax firm, a $1.5 million contract to review applications for fire department construction funding.

Held against the total stimulus package, the contracts represent a relatively small portion of spending. But they help explain why the Washington area is weathering the recession so well.

It’d sure be a tragedy if the people doing so much to wreck the economy and deprive us of our liberty suffered as a result.  But no worries.  Washington is truly recession proof!

State and Local Corruption

There has long been an unhealthy partnership between Wall Street and state and local governments. Governments use Wall Street to sell their bonds and to invest their worker pension plan money. Corruption takes the form of “pay to play” schemes whereby Wall Street firms bribe public officials in order to get a slice of the government’s financial business.

The Wall Street Journal today [$] summarizes alleged corruption surrounding former New York State Comptroller Alen Hevesi:

California money manager Elliott Broidy on Thursday admitted to making nearly $1 million in gifts to benefit four former top officials in the office that oversees New York state’s pension fund, including onetime state comptroller Alan Hevesi.

…New York Attorney General Andrew Cuomo on Thursday said Mr. Broidy acknowledged that he paid at least $75,000 for first-class airfare, luxury hotel suites, a helicopter tour, a car and driver and a security detail on foreign trips. Those trips included a high-ranking official of the comptroller’s office and sometimes the official’s relatives, Mr. Cuomo said. …Mr. Broidy also tried to conceal the money he spent on the trips abroad with Mr. Hevesi and Mr. Hevesi’s relatives, Mr. Cuomo’s office said.

…Mr. Cuomo’s multiyear probe into the $116.5 billion pension fund has focused on whether decisions about how to invest retirees’ money were wrongly influenced by bribes and politics. Until now, charges have largely focused on the role of placement agents, or financial middlemen that help money managers obtain contracts to manage pension investments. But Mr. Cuomo said Mr. Broidy’s payoffs to benefit state officials were less complicated. “This is an old-fashioned case of payoff to state officials,” Mr. Cuomo said. “This case is effectively bribery.”

…Connections between Messrs. Hevesi and Broidy date back to earlier this decade, records show. A prominent political fund-raiser, the Los Angeles-based Mr. Broidy and his family donated $83,400 to Mr. Hevesi’s campaigns since 2002.

Meanwhile, the New York state pension made $250 million in investments with Mr. Broidy’s firm, Markstone Capital Group LLC. The state’s initial $200 million investment in Markstone was approved in 2003. The move made New York state the largest investor in the fledgling Markstone fund, which focuses on Israeli companies.

This sort of stuff is sickening. But fortunately there is an easy solution to these problems: cap state and local government debt at very low levels and eliminate state and local defined-benefit pension plans.

Regarding the first point, state and local debt has exploded over the last decade. The insatiable thirst for spending by politicians has greatly enriched Wall Street. But I’ve argued that governments ought to mainly finance their capital investments on a pay-as-you-go basis – in other words, out of current revenues. We don’t need a giant muni-bond business and all the problems that go with it.

Regarding the second point, state and local governments should ditch their defined-benefit pension plans and instead offer all new hires defined-contribution plans. That would drain the swamp, the vast pools of cash that government pension funds currently control. After all, many state and local governments have shown that they are incapable of running pension plans with any degree of prudence. A recent academic study estimated that state and local pension funds are underfunded (or overpromised) by an astounding $3 trillion.

Have the Greens Failed?

Today’s question at “Politico Arena”:

“Have the greens failed?”

My response:

If the greens have failed, it’s not for lack of trying.  For years now, in everything from pre-school programs to “educational” ads aimed at adults, they’ve been “greenwashing” our brains.  In September the Wall Street Journal reported that the EPA was focusing on children:  ”Partnering with the Parent Teacher Organization, the agency earlier this month launched a cross-country tour of 6,000 schools to teach students about climate change and energy efficiency.”

Yet for all that effort, the public isn’t buying.  As Politico notes this morning:  ”The Pew Research Center found that by last January, global warming ’ranked at the bottom of the public’s list of policy priorities for the president and Congress this year.’”  And “Independent voters and Republicans ranked it last on a list of 20 priorities, while Democrats ranked it 16th.”  Meanwhile, “other polling suggests Americans are growing more skeptical of the science behind climate change, with those who blame human activity for global warming – 36 percent – falling 11 percentage points this year, according to Pew.”  And that was before “Climategate” came to light.

At bottom, the greens face three basic problems. First, by no means is the science of global warming “settled” – if anything, the fraud Climategate surfaced has settled that question. Second, even if global warming were a settled science, the contribution of human activity is anything but certain. And finally, most important, even if the answers to those two questions were clear, the costs – or benefits – of global warming are unknown, but the costs of the proposals promoted by the greens are astronomical.

So how do they respond to all of this? Politico cites Greenpeace executive director Phil Radford: “ ‘Obama’s problem is not his position on the climate issue but, rather, his will,’ says Radford. ’The question is how much the president will lead.’ Americans have ‘overlearned’ the lessons of Kyoto, where President Bill Clinton agreed to a treaty that he never submitted for ratification because it faced near-unanimous rejection in the Senate, Radford said. ’They’re using that as a reason to hide behind Congress instead of to lead Congress.’”

There you have it. It’s all a matter of will – indeed, of belief. The president needs simply to will this through, the people (and Congress) be damned. We, the anointed, know what’s right, what needs to be done. Is it any wonder that the greens are failing, at least where the people can still be heard?

Cato’s Legal Arguments Worry U.S. Government

Last month, Cato (joined by Cato senior fellow Randy Barnett) filed a brief in United States v. Comstock, a case regarding the constitutionality of a law authorizing the federal government to civilly commit anyone in the custody of the Bureau of Prisons whom the attorney general certifies to be “sexually dangerous.” The effect of such an action is to continue the certified person’s confinement after the expiration of his prison term, without proof of a new criminal violation.

As I wrote in a previous blog post, “the use of federal power here is unconstitutional because it is not tied to any of Congress’s limited and enumerated powers.” Moreover, the government’s reliance on the Necessary and Proper Clause (Article I, Section 8), “is misplaced because that clause grants no independent power but merely ‘carries into execution’ the powers enumerated elsewhere in that section.” The commitment of prisoners after their terms end simply cannot fit into one of the enumerated powers.

While we of course hope that the Supreme Court pays attention to our brief, we know that Solicitor General Elana Kagan, at least, is concerned enough about our arguments to spend several pages of the government’s reply brief addressing them (see pages 5-9). 

For more on Comstock, see its case page on SCOTUSwiki, which now has all the briefs and will around the Jan. 12 argument date be populated with argument previews and reviews, as well as links to media coverage.

Today’s White House ‘Jobs Summit’

Today’s Politico Arena asks:

The WH Jobs Summit: “A little less conversation? A little more action? ( please)”

My response:

Today’s White House “jobs summit” reflects little more, doubtless, than growing administration panic over the political implications of the unemployment picture.  With the 2010 election season looming just ahead, and little prospect that unemployment numbers will soon improve, Democrats feel compelled to “do something” – reflecting their general belief that for nearly every problem there’s a government solution.  Thus, this summit is heavily stacked with proponents of government action.  This morning’s Wall Street Journal tells us, for example, that “AFL-CIO President Richard Trumka is proposing a plan that would extend jobless benefits, send billions in relief to the states, open up credit to small businesses, pour more into infrastructure projects, and bring throngs of new workers onto the federal payroll – at a cost of between $400 billion and $500 billion.”  If Obama falls for that, we’ll be in this recession far beyond the 2010 elections.
 
The main reason we’re in this mess, after all, is because government – from the Fed’s easy money to the Community Reinvestment Act and the policies of Freddy and Fannie – encouraged what amounted to a giant Ponzi scheme.  So what is the administration’s response to this irresponsible behavior?  Why, it’s brainchilds like ”cash for clunkers,” which cost taxpayers $24,000 for each car sold.  Comedians can’t make this stuff up.  It takes big-government thinkers.
 
Americans will start to find jobs not when government pays them to sweep streets or caulk their own homes but when small businesses get back on their feet.  Yet that won’t happen as long as the kinds of taxes and national indebtedness that are inherent in such schemes as ObamaCare hang over our heads.  Milton Friedman put it well:  “No one spends someone else’s money as carefully as he spends his own.”  Yet the very definition of Obamanomics is spending other people’s money.  If he’s truly worried about the looming 2010 elections (and beyond), Mr. Obama should look to the editorial page of this morning’s Wall Street Journal, where he’ll read that in both Westchester and Nassau Counties in New York – New York! – Democratic county executives have just been thrown out of office, and the dominant reason is taxes.  Two more on the unemployment rolls.

Apropos of Nothing, Your H. L. Mencken Quote of the Day

From the best for-pleasure book I read (so far!) in 2009, Notes on Democracy:

H. L. Mencken

The Cheerful Visage of H. L. Mencken

The fact is that liberty, in any true sense, is a concept that lies quite beyond the reach of the inferior man’s mind.  He can imagine and even esteem, in his way, certain false forms of liberty–for example, the right to choose between two political mountebanks, and to yell for the more obviously dishonest–but the reality is incomprehensible to him.  And no wonder, for genuine liberty demands of its votaries a quality he lacks completely, and that is courage.  The man who loves it must be willing to fight for it; blood, said Jefferson, is its natural manure.  More, he must be able to endure it–an even more arduous business.  Liberty means self-reliance, it means resolution, it means enterprise, it means the capacity for doing without.  The free man is one who has won a small and precarious territory from the great mob of his inferiors, and is prepared and ready to defend it and make it support him.  All around him are enemies, and where he stands there is no friend.  He can hope for little help from other men of his own kind, for they have battles of their own to fight.  He has made of himself a sort of god in his little world, and he must face the responsibilities of a god, and the dreadful loneliness.  Has Homo boobiens any talent for this magnificent self-reliance?  He has the same talent for it that he has for writing symphonies in the manner of Ludwig van Beethoven, no less and no more.  That is to say, he has no talent whatsoever, nor even any understanding that such a talent exists.  Liberty is unfathomable to him.  He can no more comprehend it than he can comprehend honour.  What he mistakes for it, nine times out of ten, is simply the banal right to empty hallelujahs upon his oppressors.  He is an ox whose last proud, defiant gesture is to lick the butcher behind the ear.