The White House recently began claiming that the “Recovery Act” had “created or saved” 640,000-plus jobs. This turns out to have been a political mistake, in part because even sympathetic reporters understand that the “jobs saved” measure allows for creative accounting. But the White House also erred by providing (supposed) details about the jobs that were created. This made it very easy for reporters and other curious people to do a bit of fact checking, which has generated a spate of stories showing that the White House’s numbers are wrong, even using make-believe methodology. The Washington Examiner has put together a very useful interactive map which links to many of the news reports debunking the Administration’s fraudulent numbers.
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The New Threats to Free Speech
In a new Policy Analysis, Cato Research Fellow Jason Kuznicki examines the ongoing threats to free speech both at home and around the world, from hate-speech laws in the United Kingdom and Canada and university speech codes in the United States, to the Cairo Declaration on Human Rights in Islam:
The result is not more happiness, but a race to the bottom, in which aggrieved groups compete endlessly with one another for a slice of government power. Philosopher Robert Nozick once observed that utilitarianism is hard-pressed to banish what he termed utility monsters—that is, individuals who take inordinate satisfaction from acts that displease others. Arguing about who hurt whose feelings worse, and about who needs more soothing than whom, seems designed to discover—or create—utility monsters. We must not allow this to happen.
Instead, liberal governments have traditionally relied on a particular bargain, in which freedom of expression is maintained for all, and in which emotional satisfaction is a private pursuit, not a public guarantee. This bargain can extend equally to all people, and it forms the basis for an enduring and diverse society, one in which differences may be aired without fear of reprisal. Although world cultures increasingly mix with one another, and although our powers of expression are greater than ever before, these are not sound reasons to abandon the liberal bargain. Restrictions on free expression do not make societies happier or more tolerant, but instead make them more fractious and censorious.
Monday Links
- Report: New threats to free speech.
- The politics behind the health care overhaul.
- Mass corruption in Afghanistan. Malou Innocent: “Washington has already surged into Afghanistan once this year. The United States should not spend more American blood and more of its ever-diminishing financial resources to prop up Karzai’s ineffectual regime.”
- A government takeover of health care is not pro-choice — for anyone: “Whatever your views on abortion, the fight over abortion in the Obama health plan illustrates perfectly why government should stay out of health care. When the government subsidizes health care, anything you do with that money becomes the voters’ business. And rather than allow for choice between different ways of doing things, the government typically imposes the preferences of the majority — or sometimes, a vocal minority — on everybody.”
- Podcast: “A Proposed Beat Down for Banks”
Related Tags
Dollar Crisis
Over the weekend, Liu Mingkang, a senior Chinese official, blasted the economic policies of the Obama Administration. He identified low interest rates in the U.S. as the cause of “massive speculation” that was inflating asset bubbles around the world. The U.S. dollar is being used in what is known as a carry trade and is borrowed cheaply to finance the purchase of real estate in Asian cities like Hong Kong and Singapore. The easy money policies of the Fed are also fueling a boom in commodity prices.
The ordinary American, if not the political class, recognizes that neither the Fed’s monetary actions nor the trillions in spending have helped them. Unemployment is in double digits. Former senior Bush economic adviser Larry Lindsey is reported to have estimated that Americans’ net worth has dropped $13 trillion since the beginning of the recession in December 2007. Americans suffer while speculators profit.
We are on the cusp of a dollar crisis. President Jimmy Carter faced a similar crisis in his presidency. Carter ousted his own choice for Chairman of the Fed and appointed Paul Volcker to that position. Volcker recognized that the dollar crisis needed to be ended and instituted painful but necessary sound money policies. President Reagan re-appointed Volcker and together they restored American prosperity. Volcker advises President Obama and can explain to the president why he must act now.
The High Cost of European Union Bureaucracy
The clever folks at the Taxpayers Alliance in the United Kingdom have a new video documenting some of the wasteful European Union programs that are imposing a heavy burden on average people.
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How Is Sotomayor Doing?
I was one of those who opposed the nomination of Sonia Sotomayor to the Supreme Court, mainly because the pick was based on race and gender rather than merit and she was disingenuous and obfuscatory at her confirmation hearings. Well, the Court still hasn’t decided any cases argued with Justice Sotomayor on the bench — and the first term isn’t always indicative of the kind of jurist a new justice will be — but we do have some early statistics about her performance.
It turns out that, unlike her next most junior colleague, Justice Alito — who hung back early in his tenure while learning the rhythms of the Court — Justice Sotomayor has not been a shrinking violet in her questioning of advocates. Indeed, according to a National Law Journal tally, during the 13 November arguments that just concluded, she asked 146 questions (or 11.2 per case), which is even ahead of where Chief Justice Roberts was at this point in his career. And, because Sotomayor speaks more often than her more reserved predecessor, Justice Souter, she has made a “hot” bench even hotter.
By another indicator, however, Sotomayor ranks at the bottom of the Supreme Court table: Apparently her questioning has not yet generated a single laugh (as measured by such indications in the argument transcript). Not surprisingly, Justice Scalia leads in that department — as he long has, both in absolute and per-question terms — with the Chief being the only other justice in double figures. Joining Sotomayor with a goose-egg so far this year are Justices Ginsburg and Thomas (who hasn’t asked a question since 2006). If you’re curious about last year’s final standings, see here.
For what it’s worth, all this accords with the sense I’ve gotten from the handful of times I’ve been to the Court for oral argument so far this term. To my mind, Sotomayor is still acting as a Court of Appeals judge — or maybe even a district judge — asking simpler questions about the factual record or procedural history rather than the broader issues the Court tends to grapple with. And therefore I’ll go out on a counterintuitive limb here to predict that, as Sotomayor settles into her new role, her questioning will become less frequent but more substantive.
Federal Assumption of Medicaid Costs
From the standpoint of Americans who prefer less government, one of the worst developments of the 20th century was the federal subsidization of state and local spending. The result has been bigger government at all levels. Medicaid represents the largest portion of federal money to the states. The states administer their own Medicaid programs, but the federal government picks up 50 to 83 percent of the tab depending on a state’s income. The estimated price tag of the federal share for fiscal year 2009 is $260 billion.
One result of the federal government paying for half or more is that it encourages the states to expand enrollment and benefits. It also makes it politically difficult to cut state Medicaid spending because of the accompanying loss of federal dollars.
A 2007 analysis on the exorbitant future costs of Medicaid by Jagadeesh Gokhale illustrates how the program’s price tag has skyrocketed since its creation in 1965 (see chart here). Over the decades, the states expanded their programs whenever the economy was growing and the tax revenues were flowing. When the economy went into recession and the revenue dried up, the states generally didn’t scale-back benefits and sometimes they asked for bailouts from the federal government. The 2009 stimulus package provided an estimated $87 billion in federal Medicaid money for the states.
If the economy remains stagnant over the next few years and state tax revenues fail to rebound, further pressure will mount on the federal government to continue bailing out state Medicaid programs. The nightmare scenario would be for the federal government to assume the full costs of Medicaid under state pressure.
California Gov. Arnold Schwarzenegger’s budget director, Michael Genest, recently raised the idea:
Genest, who is retiring at the end of the year, warned that California’s budget problems will persist even after the state works its way through this recession. He singled out Medi-Cal, the state’s Medicaid health-care program for the poor, as unaffordable for the state. If the program’s costs continue to climb 8 percent a year, the state will have little money left for anything other than schools and debt service by 2040, he said.
The health-care reform proposals now before Congress could further strain state budgets because they would expand Medicaid, Genest said.
Genest said Congress should overhaul Medicaid, now funded jointly by state and federal governments but run by the states. The federal government should cover more of the costs, give states more flexibility or even make a drastic switch and let federal officials take over Medicaid completely, he said.
“If you want to imagine a crisis, as a thought experiment, imagine all 50 states writing a letter to the federal government saying, ‘We’re no longer providing Medicaid.’ That would get Congress’ attention. And that’s about the only real leverage we have,” Genest said.
Current health care legislation in Congress threatens to increase state Medicaid spending. In the House passed bill, the federal government would pick up 100 percent of Medicaid’s expansion until 2015 when it would drop to 91 percent. However, the future is unpredictable and it’s not hard to imagine a future Congress keeping it at 100 percent federal funding.
According to the Congressional Research Service, the House bill also contains a provision that could be intended to create a justification for greater federal assumption of state Medicaid spending:
H.R. 3962 would require GAO to study federal matching payments made to state Medicaid programs to make recommendations on the FMAP formula to Congress. By February 15, 2011, GAO would be required to submit a report based on this study assessing the effect on the federal government, states, providers, and beneficiaries of making the following changes to the FMAP formula: (1) removing the 50% floor or 83% ceiling, or both and (2) revising the current FMAP formula to better reflect state fiscal capacity, state efforts to finance health and long-term care services, and to better adjust for national or regional economic downturns.
See this essay on the need for a return to fiscal federalism.
Update: The Washington Post reports this morning that the House health care reform bill contains an additional $23.5 billion Medicaid bailout for the states. The provision would extend by an additional six months (through 2011) the stimulus legislation’s “temporary” increase in the federal government’s share of total Medicaid spending.