April 12, 2007 9:02AM

Will Growing Government Turn America into a European Welfare State?

If left on auto‐​pilot, government spending is going to consume larger and larger shares of America’s economic output. But many people already know about this entitlement‐​driven crisis. What is less well known is that the tax burden is scheduled to rise significantly as well. In part, this is because the Bush tax cuts are scheduled to disappear at the end of 2010 and the AMT is projected to trap more taxpayers. But the biggest factor is that economic growth leads to “real bracket creep,” meaning more people will face higher tax rates because of rising income levels. Kevin Hassett of the American Enterprise Institute warns that America is at risk of becoming like France if steps are not taken to reduce the tax burden and dramatically curtail the growth of spending:

The U.S. has consistently outgrown its European allies for many years. There is little dispute among economists that the U.S.‘s big advantage is its relatively small government. Federal government outlays take up about 20 percent of U.S. gross domestic product; in France, it’s almost 55 percent. …The latest budgetary maneuverings in the U.S. have virtually guaranteed that a good bit of that advantage will disappear, at least if Democrats remain in power. The current laws, as written, have put the U.S. on the road to France. The primary culprit is our programs for retirees. According to the latest long‐​run outlook of the Congressional Budget Office, government spending may take up fully 50 percent of GDP by 2050. Yet revenue will increase tremendously over the same time period. Revenue relative to GDP, currently a smidgen more than 18 percent, will climb to 23.7 percent by 2050 and extrapolate out to a whopping 27.5 percent by 2075. A spending binge is coming, and a good chunk of the revenue needed to pay for it is coming as well. The bad news for fans of small government is this: Even if spending were reined in enough to keep it equal to revenue, the size of the government will increase by about 50 percent in the coming decades.

April 11, 2007 4:26PM

Book Club Monopoly?

Bertelsmann AG of Germany has agreed to buy out Time Inc.‘s interest in Bookspan, their book‐​club joint venture that includes Book‐​of‐​the‐​Month Club, American Compass, and other clubs. The Wall Street Journal reports that

The deal, announced today, would leave Bertelsmann as the only major operator of book, music and DVD clubs in the U.S.

Uh‐​oh! Sounds like a monopoly. Should we call the FTC? Launch a congressional hearing? No–first because nothing has actually changed; the joint venture was apparently already the only operator of such clubs. The only difference is that Bookspan is now solely owned by Bertelsmann.


But if two sets of book clubs had merged, then we might be hearing the same sorts of calls for antitrust investigation that we heard in regard to the proposed merger of the XM and Sirius satellite radio networks. And the argument would be just as ridiculous. A monopoly book club would not control book consumers; it would still compete with Amazon and Laissez Faire Books and other services for mail‐​order book consumers; and also with actual bookstores for book consumers generally; and with magazines and newspapers for readers; and with movies, television, radio, and iPods for the time and attention of consumers. Just like–as the Journal said a week or so ago–“a combined Sirius‐​XM would have to compete not only with free broadcast radio but also with MP3 players, online radio and even music channels offered by cable providers.”

April 11, 2007 4:14PM

Response to Tom Mann on Campaign Finance Reform

Tom Mann has responded to earlier criticisms by Bob Bauer and me of an op-ed by Norman Ornstein and Anthony Corrado. Bob responds on our behalf here. Bob has done well as usual; I respond here on my own behalf.

Mann argues that the Bipartisan Campaign Reform Act (BCRA) did not devastate the political parties. But I did not argue that it had devastated the parties. Tom concedes my original point: earlier trends suggest the parties have fewer resources in 2006 than they would have had without BCRA. I argued that this shortfall for the parties cost the Democrats 15 to 20 seats in 2006 since they were not able to fully exploit the national shift in public mood. Tom says they had enough money to contest the races. My claim about the effects on the party came from Rahm Emanuel and other party leaders. Here's evidence from the New York Times [$$$] quoted in an earlier post:

Stan Greenberg, the Democratic pollster, …said that Republicans held 14 seats by a single percentage point and that a small investment by [Howard] Dean [head of the Democratic National Committee] could have put Democrats into a commanding position for the rest of the decade…” There was a missed opportunity here,” he said. “I’ve sat down with Republican pollsters to discuss this race: They believe we left 10 to 20 seats on the table.”

[...]

Mr. Emanuel said ... : “More resources brings more seats into play. Full stop.”

Emanuel's statement supports my claim. Tom himself cites the testimony of Terry McAuliffe, a Democratic party leader, in his post on another matter. If McAuliffe counts, so does Emanuel.

Here are some other arguments from Tom Mann (in italics) and my replies:

Read the rest of this post »
April 11, 2007 2:20PM

Duke University Students Are “Innocent”

The North Carolina Attorney General has just announced that the criminal charges against the Duke University lacrosse players have been dropped because the young men are “innocent.”


Much will be said about Michael Nifong, the original prosecutor who is now facing an ethics investigation. However, as I’ve said before, I think it’s a mistake to think that this case was about one rogue prosecutor. The problems are more systemic than many wish to acknowledge.

April 11, 2007 2:01PM

The Hazards of Happiness Research

My new Cato Policy Analysis, “In Pursuit of Happiness Research: Is It Reliable? What Does It Imply for Policy,” was released today. If you’re wondering why we need long papers about the hazards of happiness research, look no further than Bill McKibben’s new essay in Mother Jones:

According to new research emerging from many quarters, … our continued devotion to growth above all is, on balance, making our lives worse, both collectively and individually. Growth no longer makes most people wealthier, but instead generates inequality and insecurity. Growth is bumping up against physical limits so profound—like climate change and peak oil—that trying to keep expanding the economy may be not just impossible but also dangerous. And perhaps most surprisingly, growth no longer makes us happier.

There’s about five kinds of wrong in this one short passage. One of them is generated by the fact that McKibben is apparently ignorant of the most recent work on happiness — much of which directly contradicts his claim that we are not getting happier with growth. You’ll find the up‐​to‐​date scoop in my new paper. (Here’s a bite‐​sized taste.)


If you’re worried about this whole business about measuring happiness and using the results to determine public policy, you’re not alone. Darrin McMahon in the elegant lead essay of this month’s Cato Unbound casts a skeptical eye over the entire enterprise. But in today’s installment, Swarthmore psychologist Barry Schwartz, author of The Paradox of Choice: Why More Is Less comes to the defense of the politics of happiness, and argues (in the McKibben vein), that more wealth can actually make us worse off. Is it true? Tune in to Cato Unbound on Friday when Ruut Veenhoven, Director of the World Database of Happiness, will drop the latest data.


Or, if you’re anxious, you can get plenty of secondhand Veenhoven in my paper.

April 11, 2007 1:43PM

Congress Gets Serious about Ethics

Sure, an hour a year ought to be plenty.

One of the changes that House Democrats pushed through at the start of the new Congress is a requirement that all members and staffers get annual ethics training. And for those of you who are lucky enough to be working this week, you can start your training Wednesday, according to a recent memo from the House ethics committee.


Under House rules, all lawmakers and staff must receive one hour of ethics training a year. And House officers and senior aides, as well as those lucky staffers designated “principal assistants,” will have to get an additional hour of training.


Each office and committee must name an “ethics certification officer” by the end of this month, and that person will make sure the rest of you receive the training.

When you can’t trust people to be responsible, and you’re unwilling or unable to monitor irresponsibility and unethical behavior within your normal systems, you end up creating layers of regulation, red tape, and bureaucracy — like annual training and official “ethics certification officers.” And then you call them “ethics certification officers” instead of actual ethics officers, because the goal is to certify that you’ve completed ethics training, not to actually ensure ethical behavior.

April 11, 2007 12:13PM

I Thought the President Was the “War Czar”

The lead story in today’s Washington Post reported that the White House is trying to find a “high‐​powered czar to oversee the wars in Iraq and Afghanistan with authority to issue directions to the Pentagon, the State Department and other agencies.”


Much of the story focuses on the fact that three retired four‐​star generals have declined the job, and many of the people quoted in the story opine on why it has been so hard to find someone willing to take it.


But the whole premise strikes me as odd. Why is such a new position even necessary?


Veteran reporters Peter Baker and Tom Ricks explain:

The administration’s interest in the idea stems from long‐​standing concern over the coordination of civilian and military efforts in Iraq and Afghanistan by different parts of the U.S. government. The Defense and State departments have long struggled over their roles and responsibilities in Iraq, with the White House often forced to referee.

Isn’t that what the president is supposed to do?


Drilling down further in the story, the responsibilities of the “war czar” are discussed. According to Baker and Ricks:

The highest‐​ranking White House official responsible exclusively for the wars is deputy national security adviser Meghan O’Sullivan, who … does not have power to issue orders to agencies.

But the president does.

The new czar would also have “tasking authority,” or the power to issue directions, over other agencies.

The president can do that.


Last, Baker and Ricks report, the new Czar should have

enough stature and confidence to deal directly with heavyweight administration figures such as Secretary of State Condoleezza Rice and Defense Secretary Robert M. Gates.

Presumably, the president fits the bill there, too. So what am I missing here?


Carlos Pascual, former Coordinator for Reconstruction and Stabilization at State, and now a vice president at the Brookings Institution, a man with whom I have numerous disagreements, seems to have hit the nail on the head: “An individual can’t fix a failed policy…So the key thing is to figure out where the policy is wrong.”