Topic: Government and Politics

New Senate Agriculture Committee Head Received Farm Subsidies

In his blog post yesterday — appropriately entitled “Congressional Conflict of Interest“ — my colleague Chris Edwards questioned the selection of Sen. Blanche Lincoln (D-Ark.) to head the Senate Agriculture Committee:

Lincoln has been “a tireless advocate for the Arkansas rice industry’ and a ‘champion for agriculture.” You can see what 20 or so other agriculture lobby groups say about Lincoln here. These are very laudatory remarks, but what about the taxpayers? What do taxpayers think about her support for the $20 billion or so in annual giveaways to farmers?

I wonder what taxpayers think about the fact that Senator Lincoln and her family have received hundreds of thousands of dollars in farm subsidies?

From a 2007 USA Today article:

Members of Congress must report sources of income totaling more than $200, but most get payments through partnerships or other entities, so it can be difficult to learn which ones receive the subsidies. Recipients are searchable by name on www.ewg.org, but, for example, payments to Sen. Blanche Lincoln, D-Ark., are listed under her maiden name, Lambert, at a Virginia address near Washington.  Records show Lincoln and her family members collected $715,000 from 1995-2005, the most recent year complete data are available. She said she personally received less than $10,000 a year, and the subsidies ended in 2005 when her land was sold.

Let’s say I force a stranger under threat of imprisonment or violence to part with part of his or her paycheck, and proceed to give that money to a friend.  I would rightly be labeled a thief or worse.  Suppose I not only gave the money to my friend, but kept a cut for me and my family.  That would be even worse.

But when politicians do it we call them “public servants”?

A Consumer’s Look at Health Care

Michael Tanner and Michael Cannon have been doing an excellent job exposing the fallacies and misconceptions of Obama’s proposal to further expand government intervention in the health-care sector.  One of their challenges is explaining to people that many of the problems that currently exist are the fault of government.

For instance, I went for my annual checkup today (though “annual” is a slight exaggeration since I went 35 years without a checkup and this is just my second visit in the past 3.5 years).  As I dealt with a blizzard of paperwork at the doctor’s office, I realized that this was just the beginning of a tedious process. At some point in the next few weeks, I’ll receive incomprehensible statements from my insurance company, followed by similarly indecipherable bills from the doctor. And since I also went down the hall to a different office for my blood test, I suspect I’ll have two statements and two bills — neither of which I’ll have the energy to figure out (though I shouldn’t complain too much since I once went to a local clinic after spraining my ankle playing basketball and somehow had to deal with three separate bills).

I’m guessing that this type of experience is one of the reasons why Americans express some degree of unhappiness with our current system — especially when they wind up having to write a check and suspect that their insurance company is squeezing them in some unknown way.

But how many people realize that this bureaucratic process is the result of government interference? For all intents and purposes, social engineering in the tax code created this mess. Specifically, most of us get some of our compensation in the form of health insurance policies from our employers. And because that type of income is exempt from taxation, this encourages so-called Cadillac health plans.  This seems great, at least on the surface, but now let’s consider the unintended consequences.

We have replaced (or at least augmented) insurance with pre-paid health care. Insurance is supposed to be for unforeseen major expenses, such as a heart attack. But our gold-plated health plans now mean we use insurance for routine medical costs. This means, of course, we have the paperwork issues discussed above, but that’s just a small part of the problem.

Even more problematic, our pre-paid health care system is somewhat akin to going to an all-you-can-eat restaurant. We have an incentive to over-consume since we’ve already paid. Except this analogy is insufficient. When we go to all-you-can-eat restaurants, at least we know we’re paying a certain amount of money for an unlimited amount of food. Many Americans, by contrast, have no idea how much of their compensation is being diverted to purchase health plans.

We need to consider how this messed-up approach causes inefficiency and higher costs. We consumers don’t feel any need to be careful shoppers since we perceive that our health care is being paid by someone else. Should we be surprised, then, that normal market forces don’t seem to be working? (It is worth noting that costs keep falling and quality keeps rising in the few areas — such as laser-eye surgery and cosmetic surgery — that are not covered by insurance.)

Imagine if auto insurance worked this way, or homeowner’s insurance. Would it make sense to file insurance forms to get an oil change? Or to buy a new couch? That sounds crazy. The system would be needlessly bureaucratic, and costs would rise because we would act like we were spending other people’s money.  But that’s what would probably happen if government intervened in the same way it does in the health-care sector.

So what does all of this mean? We have a problem caused by government. (This little rant of mine doesn’t even touch on other problems caused by government, such as Medicare and Medicaid.) People are unhappy because they have to deal with the unintended consequences of government intervention. Clever politicians then say the only way to make people happy is to have even more government. I’d like to try to explain why this makes sense, but I have to fill out some forms.

Ohhhhhh! That ‘NEA’

Imagine my confusion when I saw this article summary in my inbox this morning: “Official Leaves NEA After Suggestions That He Used Agency To Further Obama Agenda.”

Uhhh, I thought to myself, the NEA has given 93% of its $30 million in federal political contributions since 1990 to Democrats, so wouldn’t somebody there get fired for NOT furthering the president’s agenda?

It turns out, there’s some other NEA that does something else. Phew! Apocalypse not on horzion after all.

Congressional Conflict of Interest

lincolnIt looks like farm subsidy reform is unlikely for another few years. Senator Blanche Lincoln has been selected the new head of the Senate Agriculture Committee. Dow Jones notes: “Lincoln is a two-term moderate Democrat who described herself Wednesday as a ‘farmer’s daughter.’”

Lincoln has been “a tireless advocate for the Arkansas rice industry” and a “champion for agriculture.” You can see what 20 or so other agriculture lobby groups say about Lincoln here. These are very laudatory remarks, but what about the taxpayers? What do taxpayers think about her support for the $20 billion or so in annual giveaways to farmers?

I’m guessing that Lincoln will put the interests of subsidy-receiving farmers in her state ahead of the interests of the nation’s taxpayers, given that Arkansas ranks seventh out of the 50 states in terms of farm subsidies received yet has a small population.

This sort of pro-spending bias on committees is common across Congress of course. I’ve argued that one step toward getting the House and Senate to make to more rational and frugal trade-offs on spending would be mandatory random committee assignments every two years. It’s absurd that generally the only people overseeing farm programs are people who are in the bag for farmers. It’s an obvious conflict of interest.

It would be much better if we had one of the senators from, say, Rhode Island chairing the Agriculture Committee, because that state receives less farm subsidies than any other. A Rhode Island senator would be more likely to dispassionately balance the trade-offs of the $20 billion or so of pain imposed by taxes to support farm subsidies with the benefits of farm subsidies (if any).

Nobel Laureate James Heckman Responds to Cato Stimulus Analysis

I received a letter this morning from Prof. James Heckman, in response to my post on the impact of the education stimulus. Prof. Heckman does not take issue with my thesis, which is that the $100 billion in new k-12 spending will likely slow U.S. economic growth. This doesn’t mean that he necessarily agrees, but no doubt he is well aware of the relevant evidence and econometric analysis showing that higher public school spending does not raise student achievement, and hence burdens the economy with higher taxes while failing to boost human capital.

Instead, Prof. Heckman argues that “[t]he question is not whether we should invest in human capital, it is when and where we get the most value for our investment—and whether the facts will guide our decisions.” He adds that “we should not let partisan or ideological biases cloud the facts or obscure the obvious opportunities.”

I agree with all of these points.

Prof. Heckman and I do part ways, however, when it comes to his analysis of who should be investing in what. He writes:

[G]overnment and private investment in effective early childhood development programs for disadvantaged children will increase student achievement, high school graduation rates and grow the U.S. economy…. Investment in zero-to-five early childhood education for disadvantaged children results in a 10% per annum return on investment in better education and health outcomes as well as reduced social costs.

The problem with Dr. Heckman’s prediction that government investment in early childhood education will pay huge dividends is that it is based on an untenable overgeneralization from a few tiny studies. My colleague Adam Schaeffer explains in his recent paper “The Poverty of Preschool Promises”:

Three programs—the High/Scope Perry Preschool Project, the Carolina Abecedarian Project, and the Chicago Child-Parent Centers—provide the foundation for claims of huge preschool benefits and provide most of the weight behind the push for massive expansions in state-run preschool.

Schaeffer notes that the gains seen in these programs dating back to the 1960s and ’70s, which Prof. Heckman has reviewed, are not apparent in large scale government preschool programs such as the ones Prof. Heckman seems to endorse. Schaeffer continues:

Preschool activists consider Georgia and Oklahoma model states because they have long running, fully implemented, universal preschool programs that proponents consider to be high quality…. The real-world evidence demonstrates that, at the same time [these] preschool programs have been massively expanded and their quality… has supposedly improved, the test scores of children in Oklahoma have eroded significantly compared to the national average. And while Georgia’s reading gap narrowed, its math gap stagnated or widened.

In fact, a highly respected economist has cautioned policymakers about overgeneralizing from the tiny preschool programs of two generations ago, stating that:

A much more careful analysis of the effects of scaling up the model programs to the target population, and its effects on costs, has to be undertaken before these estimates [of their impact] can be considered definitive.

Prof. Heckman will recognize that as a quote from his own study, linked above.

If further evidence is required of the need for caution, consider the results of the hundreds of billions in federal spending on compensatory preschool programs dating back to the 1960’s (total federal ed. spending since 1965 is about $1.8 trillion). True, these are not precisely identical to the programs Prof. Heckman might recommend, but they are close enough that, if his policy contention is true, we should have seen some noticeable closing of the academic gap between the children of college graduates and those of high-school dropouts, by the time those children reach the end of high school. As I have previously documented, no such closing has occurred. The chart below, of NAEP reading test scores for 17 year olds, is fairly typical of the subject area results (they are marginally better in math and marginally worse in science).

naep gap by parents ed

Given Prof. Heckman’s obvious interest in raising graduation rates and narrowing other educational outcome gaps, and his belief that we should seek out the best evidence and verify scalability of findings, I am surprised he focuses on the results of a handful of tiny 1960s preschool programs rather than on, say, the nationwide research of his University of Chicago colleague Derek Neal. Neal has found that urban African Americans attending Catholic schools are 26 percentage points more likely to graduate from high school and twice as likely to graduate from college as comparable students in public schools. Similar results have been found by others, as I note in a recent literature review.

Prof. Heckman?

Summing Up Obama’s Health Care Address

Cato health care experts dissected President Obama’s address Wednesday night, providing live commentary throughout the speech.

Overall impressions:

Michael D. Tanner:  Can’t see this as a game-changer. I would give him an ‘A’ on delivery, but at best a ‘C’ on substance.   There were surprisingly few details and very little new.

Patrick Basham:  Strikingly political/partisan rather than statesmanlike speech. Obama chose to pressure Republicans to support his plan rather than attempt to persuade them to do so. He risks a another wave of (effective) opposition from conservative talk radio  & cable TV.

Michael F. Cannon:  Translation: My health plan cannot work if you are free to make your own decisions.

‘We Don’t Put Our First Amendment Rights In the Hands of FEC Bureaucrats’

I (and several colleagues) have blogged before about Citizens United v. Federal Election Commission, the latest campaign finance case, which was argued this morning at the Supreme Court.  The case is about much more than whether a corporation can release a movie about a political candidate during an election campaign.  Indeed, it goes to the very heart of the First Amendment, which was specifically created to protect political speech—the kind most in danger of being censored by politicians looking to limit the appeal of threatening candidates and ideas.

After all, hard-hitting political speech is something the First Amendment’s authors experienced firsthand.  They knew very well what they were doing in choosing free and vigorous debate over government-filtered pablum.  Moreover, persons of modest means often pool their resources to speak through ideological associations like Citizens United.  That speech too should not be silenced because of nebulous concerns about “level playing fields” and speculation over the “appearance of corruption.”  The First Amendment simply does not permit the government to handicap speakers based on their wealth, or ration speech in a quixotic attempt to equalize public debate: Thankfully, we do not live in the world of Kurt Vonnegut’s Harrison Bergeron!

A few surprises came out of today’s hearing, but not regarding the ultimate outcome of this case.  It is now starkly clear that the Court will rule 5-4 to strike down the FEC’s attempt to regulate the Hillary Clinton movie (and advertisements for it). Indeed, Solicitor General Elena Kagan – in her inaugural argument in any court – all but conceded that independent movies are not electioneering communications subject to campaign finance laws.  And she reversed the government’s earlier position that even books could be banned if they expressly supported or opposed a candidate!  (She went on to also reverse the government’s position on two other key points: whether nonprofit corporations (and perhaps small enterprises) could be treated differently than large for-profit business, and what the government’s compelling interest was in prohibiting corporations from using general treasury funds on independent political speech.)

Ted Olson, arguing for Citizens United, quickly recognized that he had his five votes, and so pushed for a broader opinion.  That is, the larger – and more interesting – question is whether the Court will throw out altogether its 16-year-old proscription on corporations and unions spending their general treasury funds on political speech.  Given the vehement opposition to campaign finance laws often expressed by Justices Scalia, Kennedy, and Thomas, all eyes were on Chief Justice Roberts and Justice Alito, in whose jurisprudence some have seen signs of judicial “minimalism.”  The Chief Justice’s hostility to the government’s argument – “we don’t put our First Amendment rights in the hands of FEC bureaucrats” – and Justice Alito’s skepticism about the weight of the two precedents at issue leads me to believe that there’s a strong likelihood we’ll have a decision that sweeps aside yet another cornerstone of the speech-restricting campaign finance regime.

One other thing to note: Justice Sotomayor, participating in her first argument since joining the Court, indicated three things: 1) she has doubts that corporations have the same First Amendment rights as individuals; 2) she believes strongly in stare decisis, even when a constitutional decision might be wrong; and 3) she cares a lot about deferring to the “democratic process.”  While it is still much too early to be making generalizations about how she’ll behave now that she doesn’t answer to a higher Court, these three points suggest that she won’t be a big friend of liberty in the face of government “reform.”

Another (less serious) thing to note: My seat – in the last row of the Supreme Court bar members area – was almost directly in front of Senators John McCain and Russ Feingold (who were seated in the first row of the public gallery).  I didn’t notice this until everyone rose to leave, or I would’ve tried to gauge their reaction to certain parts of the argument.

Finally, you can find the briefs Cato has filed in the case here and here.