Topic: Government and Politics

On Transparency, Talk Trumps Action

In the heady first days of the administration, President Obama issued a memorandum on transparency and open government that seemed it would set the ship of state on a course for transparency, participation, and collaboration. Many people expected that within the 120-day time-frame stated in the memo, the administration would issue the “Open Government Directive” it called for.

Well, 120 days from January 21 was May 21—and 200 days after that, we are finally going to see that open government plan. An announcement of it will be streamed live on the White House web site at 11:00 am.

It turns out that administrators didn’t fall woefully behind on President Obama’s instructions. His memorandum directed the not-yet-appointed Chief Technology Officer and others “to coordinate the development by appropriate executive departments and agencies, within 120 days, of recommendations for an Open Government Directive …” It was an instruction to coordinate on the writing of a directive, and within 120 days, people were surely coordinating.

Given the exciting campaign mantra of “change,” one could forgive people expecting the administration to set its course for good governance early. How un-change-like it is that nearly a quarter of the way through President Obama’s term (an eighth if he’s reelected), with old habits established and unlikely to be dislodged, we finally get that “open government plan.”

If only this good-government priority had been pursued as steadfastly as President Obama’s big-government priorities.

While coordinating and planning has gone on, President Obama has specifically declined to carry out an open government promise he made on the campaign trail. In fact, more than 100 times since he has been in office, he has declined to post online the bills sent him by Congress for five days of public review before he signs them. I’ll put up a new chart covering all the laws President Obama has signed sans sunlight later today.

Since I last wrote about this favorite topic, I learned of a new development, however. At some point earlier this year, the White House began posting links on Whitehouse.gov to bills that were heading its direction, a half-measure the White House told the New York Times it would take.

I failed to notice the existence of these pages, but I think it is forgivable error. There is no uniform structure to them, and there is no link I can discover on Whitehouse.gov that would bring anyone to them.

Based on my spot-checking, they haven’t been crawled by any search engine, so the only way a person could find them is by searching on Whitehouse.gov for phrases on the yet unseen pages or by searching the House or Senate bill numbers of bills that you know to look for because they have already passed into law.

This doesn’t fulfill the spirit of the Sunlight Before Signing pledge. It doesn’t give the public an opportunity to review final bills and comment before the president signs them. I doubt if a single one of the people who cheered when President Obama made his Sunlight Before Signing pledge has visited one of these pages and commented to the president as he told them they would be able to do.

There are further curiosities: The pages themselves are undated, but their “posted” dates, which appear in search results, are sometimes well beyond the date on which they became law. A Whitehouse.gov search for H.R. 2131, which became Public Law 111-70 on October 9th, shows that it was posted for comment on October 23rd.

Today the White House announces plans for dramatic steps forward on government transparency. But the steps it could have taken starting on day one remain promises unfulfilled. President Obama’s “Sunlight Before Signing” campaign pledge breaks every time he signs a bill without posting its final version at Whitehouse.gov for five days of public review before signing it.

Timber Payments and Logrolling

Since 1908, the U.S. Forest Service has paid 25 percent of its gross receipts to the states for spending on roads and schools in the counties where national forests are located. In the Pacific Northwest, receipts started to decline in the late 1980s due to lower timber sales as a result of efforts to protect the spotted owl. In 1993, Congress responded with additional “spotted owl payments” to the affected states. A 2000 law spread these payments to all national forests, but the bulk continued to go to the Pacific Northwest.

When the law was reauthorized last year, members of Congress used it as an opportunity to grab money for their states. According to the Associated Press:

The federal largesse initially focused on a handful of Western states, with Oregon alone receiving nearly $2 billion. Spending of that magnitude, though, sparked a new timber war – this one among politicians eager to get their hands on some of the logging money. A four-year renewal of the law, passed last year, authorizes an additional $1.6 billion for the program through 2011 and shifts substantial sums to states where the spotted owl never flew. While money initially was based on historic logging levels, now any state with federal forests – even those with no history of logging – is eligible for millions in Forest Service dollars. Doling out all that taxpayer money is based less on logging losses than on the powerful reality of political clout.

Democratic New Mexico Senator Jeff Bingaman bluntly admitted that the money grab was a result of good ole congressional logrolling:

Of much more important note: New Mexico’s two senators served as chairman and ranking Republican on the Senate committee that rewrote the timber payments formula. New Mexico’s increase under the new formula was 692 percent… Bingaman defended the changes. ‘Frankly we had to broaden the program in order to get the support to go ahead and do a reauthorization, and that’s exactly what we did,’ he said in an interview.

And of course, the porkfest was bipartisan:

Senate Minority Leader Mitch McConnell, R-Ky., was an early backer of the law and provided political cover for Republicans to support it… Timber harvests in Kentucky’s Daniel Boone National Forest have been modest in recent decades – ranging from $7,600 to $77,000 annually – but Clay County, Ky., which includes part of the forest, received $338,510 this year from the timber program, a 341 percent increase.

A Cato essay on the U.S. Forest Service notes that a “reform step would be to revive federalism by eliminating federal forest subsidies to the states and turning portions of the national forests over to the states. Other activities could be privatized… Some experts have proposed full privatization of the national forests.”

Such reforms would help to address the chaotic nature of current forest management through the federal political process, as illustrated by the spotted owl saga.

Big Out-of-Control Government Has Had Better Days at the Supreme Court

This morning at the Supreme Court, the federal government argued for the continued existence of the Public Company Accounting Oversight Board (PCAOB, pronounced peek-a-boo) – and by extension the nefarious financial regulatory scheme known as Sarbanes-Oxley.  Cato filed a brief supporting a free market advocacy group and an accounting firm, who sued PCAOB for violating both the Appointments Clause and general constitutional separation-of-powers principles.

Passed with scant deliberation in the wake of the Enron and WorldCom scandals, the Sarbanes-Oxley Act of 2002 established PCAOB to oversee the accounting practices of the nation’s public companies.  As my piece with Cato legal associate Travis Cushman details today, PCAOB enjoys the rare authority to make its own laws, collect taxes, inspect records, prosecute infractions, make judgments, and impose sanctions.

Traditionally, independent agencies that serve such executive functions must be accountable to the president.  PCAOB members, however, may only be removed “for cause” by members of the Securities and Exchange Commission, who in turn may only be removed “for cause” by the president.  I previously blogged about the case, Free Enterprise Fund v. PCAOBhere, here, and here.

As far as how the argument went, I think the forces of limited constitutional government have eked out a 5-4 victory.  Justices Ginsburg, Breyer, and Sotomayor were extremely hostile to the challengers’ argument, while the Chief Justice and Justices Scalia and Alito were supportive.  (Scalia at one point joked that he had no less power than the president – meaning not very much – to influence PCAOB.)  Justice Stevens only spoke up once but seemed to show a leaning towards the government position.  Justice Thomas, while remaining silent, can be expected to support the view of D.C. Circuit Judge Brett Kavanaugh – whose blistering yet scholarly dissent likely prompted the Court to take up the case.

And so the ruling rests, as often happens with the most interesting cases, on the shoulders of Justice Kennedy.  I remain cautiously optimistic that Kennedy will decide to uphold constitutional checks and balances and strike down what has become an unholy new branch of government.

Two curious notes from the argument: 1. Petitioners’ counsel Michael Carvin referenced Cato’s brief in discussing PCAOB’s overreach internationally – seeking to regulate even foreign accounting standards – without oversight from the State Department or the SEC, let alone the president; 2. PCAOB brought its own lawyer to argue alongside the solicitor general, begging the question: if PCAOB is subservient to the SEC and/or the president, why does it need its own counsel to represent its own views?

All the News That’s Fit to Subsidize

Today, Politico Arena asks:

NPR v. Fox News?

My post:

Do I sense a bit of chutzpa in Politico’s report today that NPR executives have asked their top political correspondent, Mara Liasson, to reconsider her appearances on Fox News because of what the executives perceive as the network’s political bias?  The request would be impertinent if NPR itself were beyond reproach, ideologically, but “fair and balanced” it is not.  It’s a playpen for the left, subsidized by the American taxpayer, exceeded in its biases only by Pacifica Radio, another tax subsidized playpen straight out of the late ’60s.

There’s nothing wrong with a news organization tilting left or right, of course:  let the public then decide, as the Fox News numbers show the public is doing.  (And that, plainly, is what’s behind the White House efforts to marginalize the one network that’s had the audacity to criticize it systematically.)  There is something deeply wrong, however, with asking the public to subsidize that tilt.  NPR and its listeners would be screaming, and rightly so, if the taxpayers were subsidizing Fox News.  Is it any different in their case?  And please don’t say that NPR’s news is “news” – we’re all adults here.  There’s a reason conservatives, mostly, and libertarians want to reduce the reach of government.  It’s because so much of life – from news to education, religion, health care, the arts, and so much more – is fraught with values about which reasonable people can have reasonable differences.   For that, there is only one answer: freedom, including freedom, as Jefferson put it, from having to subsidize views one finds abhorrent.

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.