August 30, 2006 2:56PM

When Generous People Stop Kidding Themselves

Over at Tapped, Ezra Klein is wrestling with my interpretation of the new estimates of poverty and health insurance coverage released yesterday by the Census Bureau. I observed that after the 1996 welfare reforms made federal cash assistance less "generous," poverty went down. In contrast, federal health care spending grew ever more "generous," and the number of uninsured went up. I humbly submitted that perhaps Congress should stop being so "generous" with health care.

Klein thinks that's "crazy," but he misfires on poverty rates:

  1. He suggests that economic growth of the late 1990s and the expansion of the Earned Income Tax Credit were responsible for the post-1996 reductions in poverty. (The EITC does not directly affect the poverty rate, but it does affect the decision to earn other income that does.) Certainly each played a part. But prior economic booms did not have as dramatic an effect on the poverty rate even when the EITC was present, and scholars like June O'Neill have estimated that welfare reform had larger effects than did the economy. Moreover, although the EITC encourages some people to work more, it reduces work overall by encouraging others -- those in the phase-out range -- to work less. That might lift some out of poverty, but it traps them and others on the lower rungs of the economic ladder.

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August 30, 2006 12:43PM

Come to Washington and Do Well

What’s the best business to be in these days? Steel? Automobiles? Maybe not any more. Maybe these days it’s software, or finance. Maybe. But judging from this lead story in this morning’s Washington Post — 

The three most prosperous large counties in the United States are in the Washington suburbs, according to census figures released yesterday, which show that the region has the second‐​highest income and the least poverty of any major metropolitan area in the country.


Rapidly growing Loudoun County has emerged as the wealthiest jurisdiction in the nation, with its households last year having a median income of more than $98,000. It is followed by Fairfax and Howard counties, with Montgomery County not far behind.

– it would seem that government is the boom industry of the early 21st century. That’s the point Chris Edwards made in a Tax & Budget Bulletin (pdf) three months ago: that compensation of federal employees was almost twice compensation in the private sector. Then three months later, things changed, as things have a way of doing. Chris was forced to admit that the government’s latest figures showed that federal compensation was no longer almost twice private‐​sector compensation: it was exactly twice as much. “Average compensation for the 1.8 million federal civilian workers in 2005 was $106,579 — exactly twice the average compensation paid in the U.S. private sector: $53,289.”

Mamas, don’t let your babies grow up to be cowboys,


Don’t let ‘em make software and sell people trucks,


Make ‘em be bureaucrats and fed’rals and such.

August 30, 2006 10:36AM

Scandal in Public Broadcasting

The big scandal in public (or actually government) broadcasting is that the taxpayers are forced to pay hundreds of millions of dollars a year for the propagation of unremittingly liberal views on politics and policy. As I said in my testimony to the Senate last year, I agree with some of the liberal attitudes of NPR and PBS, but I don’t think taxpayers should be forced to subsidize my views or those of anyone else.


The second biggest scandal is that when Republicans get control of the federal government, they don’t relieve the taxpayers of that burden. Maybe it’s because they know the old advice, “Never pick a fight with people who buy ink by the barrel.” Or who have their own nationwide broadcast networks. But it’s unbelievable to me that Republicans appropriate money every year for two networks that could be called ARN, the Anti‐​Republican Network.


The third biggest scandal is that instead of just privatizing PBS and NPR, Republicans appoint public broadcasting officials who go in like a bull in a china shop and try to force a bunch of liberal journalists to include conservative shows and perspectives. The government shouldn’t be telling journalists how and what to report. Instead, it should just free them to report as they choose, with money from investors and customers rather than taxpayers.


And I guess the fourth biggest scandal is the one making headlines today: that the chairman of the Broadcasting Board of Governors (which oversees the federal government’s international broadcasting), who used to be chairman of the Corporation for Public Broadcasting, is alleged to have improperly used his office. In a State Department report made public by three Democratic members of Congress, Tomlinson is accused of putting a friend on the BBG payroll — something that never happens elsewhere in the federal government — and using office resources to support his personal horse‐​racing operation, which I suppose goes beyond the March Madness pools conducted in every federal office.


Maybe when conservatives get tired of being hit over the head by tax‐​funded broadcast networks, and liberals get tired of conservatives trying to meddle in the networks’ reporting, they could both agree to privatize PBS and NPR, freeing them from political intervention and freeing the taxpayers from being coerced to support what Thomas Jefferson called “the propagation of opinions which [they] disbelieve.”

August 30, 2006 10:34AM

In Defense of Gridlock

Over at National Review’s blog, Ramesh Ponnuru wonders why it seems that divided government – aka, gridlock – tends to lead to slower growth in the federal budget.

I mount a defense of gridlock in my new book, Buck Wild: How Republicans Broke the Bank and Became the Party of Big Government. In chapter 8, to be precise. The numbers that Ramesh cites in his post come from a review of my book by Phil Kerpen on the NR website.

By way of jumping into the discussion Ramesh has started, let me clarify a few things first.

In my book I only analyze the real per capita growth rates of government spending in the years 1965 through 2005. I think this is a more useful timeframe for comparison than Ramesh’s seventy-six-year timeframe simply because the post-Great Society welfare state looks vastly different than what existed before. I was mainly curious to see if the correlation holds up within a timeframe that yields more consistency in terms of the entitlement programs being funded in the federal budget.

The methodology I used was modeled after that of Cato chairman William Niskanen and Cato senior fellow Peter VanDoren in the paper they presented to the Public Choice Society meeting in May of 2004. My data falls into the same realm of statistical significance, too. (Incidentally, their analysis goes back to 1949.)

Now on to the fun.

Divided government – gridlock – is the norm, not the exception, in American politics over the past 40 years. The only completely united government scenarios existed during the presidencies of Lyndon Johnson, Jimmy Carter, and George W. Bush. It is obviously true that Democratic united government is more common than Republican united government.

So why might divided government be more conducive to restrained spending? For starters, defense spending varies widely over the past 40 years, but the correlation between wars and united government is quite consistent. American participation in every war involving more than a few days of ground combat was initiated by a united government. You could argue that this is mere coincidence. Or you could argue that united government creates an environment where there is less resistance from Congress when a president wants to exercise his powers as commander-in-chief. The burden of proof is on those who suggest this is simply happenstance.

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August 29, 2006 5:09PM

Middle Class Squeeze?

New Census Bureau numbers released today on income, poverty and health coverage in 2005 are bound to fuel charges that the poor are getting poorer while the middle class continues to be squeezed. See what 25 years of tax cuts for the rich, globalization, and declining union membership have caused? But a look at the numbers inside the report tells a different story.


If we define the middle class as households earning between $35,000 and $75,000 a year, the middle class in America remains a huge demographic group. According to the Census report, Table A‑1, the middle class made up 33.3 percent of U.S. households in 2005. That share is indeed somewhat smaller than in 1980, when 38.2 percent of households earned between $35,000 and $75,000 a year in real (inflation‐​adjusted) 2005 dollars.


Aha, so the middle class really is shrinking if not exactly disappearing, the alarmists might respond. But the Census numbers also show that over the past 25 years, the share of U.S. households earning less than $35,000 a year has also shrunk, from 44.5 percent in 1980 to 38.4 percent in 2005. Meanwhile, the share of households earning more than $75,000 a year has jumped from 17.4 percent to 28.3 percent.


In other words, if the middle class in America has shrunk, it is only because so many formerly middle‐​class households have moved to the upper‐​income brackets, while a significant number of households previously in the lower brackets have moved up to the middle class and beyond.


The solid economic growth of the past two decades has indeed lifted all kinds of household boats. By the most basic measure of real household income, a broad swathe of Americans are better off than they were 25 years ago — thanks to growth fueled in good measure by lower marginal tax rates, expanding trade, and a more flexible domestic economy.

August 29, 2006 4:04PM

PFAW: “Well, We Did Do the Nose…”

Apparently People for the American Way thinks that the “American Way” was best embodied by Salem’s witch trials.


In a bizarre ad hominem breakdown, PFAW posted a hatchet piece on Alliance for School Choice president Clint Bolick yesterday.


It isn’t a news release as such. It contains no news. It’s simply a list of Bolick’s alleged crimes against the state school monopoly. And I question the timing.


PFAW’s putative indictment seems intended to discredit Bolick in the eyes of the New Jersey media, due to a lawsuit the Alliance has filed on behalf of dissatisfied public school parents in that state. The parents are seeking choice — school vouchers to be precise — and there are few things that PFAW opposes more stridently than parental choice in education.


Fortunately for Bolick and for American children, PFAW’s attempted witch trial is less reminiscent of the real thing than of the Monty Python satire (whence comes the title of this post). Its most glaring error is to confuse the institution of government monopoly schooling with the ideals of public education.


Bolick, like most school choice advocates, is indeed critical of the bureaucratic school system that Americans inherited from the 19th century. But he is critical of it precisely because he is so committed to the ideals of public education. Our current system of schooling has failed to live up to our ideals and expectations for generations, and school choice advocates suggest introducing market forces because they will do a much better job of fulfilling those ideals and expectations.


I point all this out, moreover, as someone who does not support efforts, such as the New Jersey lawsuit in question, to encourage legislation from the bench.