Washington Post

In Africa, Institutions Matter More than Infrastructure

Washington Post article recently highlighted the impressive but uneven progress that Africa has made in its struggle against poverty. The article looked at questions pertaining to material wellbeing, including “the number of times that an average family had to go without basic necessities.” On that measure, Cape Verde saw the most rapid improvement. And so the article asks, “What did Cape Verde do right?” 

Cape Verde’s superior infrastructure, the Washington Post explains, is partly responsible for that country’s economic progress. Surely that cannot be the full answer. The United States did not have an interstate road network till the Eisenhower Administration – decades after the United States became the richest and most powerful country in the world. Similarly, Germany was the most powerful and richest country in Europe a long time before constructing its famous autobahns. 
  
In fact, it is Cape Verde’s policies and institutions that we should look to as reasons for that country’s superior performance relative to, say, Liberia, where poverty increased the most – according to the Washington Post. According to the Center for Systemic Peace, Cape Verde is a democracy. Liberia, in contrast, is far behind.

Fact Checking a Fact Checker: About Rand Paul and Reagan

Washington Post fact checker Glenn Kessler gives Senator Rand Paul Three Pinocchios for making the following claim on TV:

Ronald Reagan … said we’re going to dramatically cut tax rates. And guess what? More revenue came in, but tens of millions of jobs were created.

Before examining whether or not “more revenue came in,” consider just how dramatic the Reagan-era tax changes really were.  Under the first bill in 1981, all personal tax rates were eventually reduced by 23%.  But it is often forgotten that these rate reductions in were foolishly delayed until 1984.  By then, however, the 49% tax bracket was down to 38%, the 24% rate to 18% and the 14% rate to 11%.  

When the 1986 Tax Reform took effect in 1988, higher marginal tax rates fell further to 28-33% for those previously in tax brackets of 38-50%.  The corporate tax was cut from 46% to 34%.  After being reduced to 20% from 1982-86, however, the top capital gains tax was raised to 28% in 1987 before being rolled-back to 20% in 1997 and 15% in 2003.

Mr. Kessler mainly takes issue with Senator Paul’s comment that “more revenue came in” after the highest marginal tax rates on income or capital gains were reduced (I’ll deal with jobs issue in a separate blog).

WaPo Blogger Wrong About School Choice… Again

Once again, the Washington Post’s education blogger, Valerie Strauss, failed to do her due diligence before posting a hit piece on school choice. A year ago, she falsely claimed that scholarship tax credit programs benefit corporate donors and wealthy recipients. In fact, donors break even at most and the best evidence suggests that low-income families are the primary beneficiaries even in the few programs that are not means-tested. Unfortunately, Strauss has still failed to issue a correction.

Full Facts Needed on the Common Core

Today the Washington Post has a story, also featured in their DC-area radio ads, about how some states are looking to change the name of the Common Core, but not the substance, because the brand has gotten too toxic. That the Post has so prominently run such a story shows just how noxious the fumes surrounding the Common Core curriculum standards have become, and it’s great that the paper is shining a light on dubious efforts to quell opposition. But within the story itself are several examples illustrating why, even as disgust over the Core grows, the average person doesn’t know how truly foul much about the Core is.

The Post certainly makes clear how some states are trying to cover the Core’s stench with perfume rather than attack its rot. Basically, states such as Arizona and Iowa are just changing the Core’s name. Speaking to the Council of Chief State School Officers, one of the two professional organizations that created the Core, likely Republican presidential candidate Mike Huckabee captured the tactic in one, succinct sentence: “Rebrand it, refocus it, but don’t retreat.”

That doesn’t sound like addressing people’s serious concerns. It sounds like, well, deception—alas, nothing new in the Common Core sales job.

Unfortunately, the Post’s story is itself guilty of Core-tilted inaccuracy, though whether knowingly or unknowingly is impossible to tell. And the Post is hardly alone among media outlets in these failings.

There’s no more crucial an example of this than the piece’s description of the Obama administration’s role in getting states to adopt the Core. Twice the article says the administration gave its “endorsement” to the Core, as if the President simply blurbed the back cover of the standards or was filmed hauling lumber in his Ford Common Core 150.

But the administration didn’t just say “Man, this Core is great!” No, it told states that if they wanted to compete for part of the $4.35-billion Race to the Top—a chunk of the “Stimulus”—they had to promise to adopt the Core. And if they wanted waivers from the almost universally disliked No Child Left Behind Act, they would have only one option other than the Core to show that their standards were “college and career ready.”

There’s a reason most states promised to adopt the Common Core before the final standards were even published: They had to for a shot at federal money!

Damning Trade with Faint Praise

A Washington Post editorial today pushes back against the argument that a Trans-Pacific Partnership agreement would exacerbate income inequality. Amen, I suppose. But in making its case, the editorial burns the village to save it by conceding as fact certain destructive myths that undergird broad skepticism about trade and unify its opponents.

“All else being equal,” the editorial reads, “firms move where labor is cheapest.”  Presumably, by “all else being equal,” the editorial board means: if the quality of the factors of production were the same; if skill sets were identical; if workers were endowed with the same capital; if all production locations had equal access to ports and rail; if the proximity of large markets and other nodes in the supply chain were the same; if institutions supporting the rule of law were comparably rigorous or lax; if the risks of asset expropriation were the same; if regulations and taxes were identical; and so on, the final determinant in the production location decision would be the cost of labor. Fair enough. That untestable premise may be correct.

But back in reality, none of those conditions is equal. And what do we see? We see investment flowing (sometimes in the form of “firms mov[ing],” but more often in the form of firms supplementing domestic activities) to rich countries, not poor. In this recent study, I reported statistics from the Bureau of Economic Analysis revealing that:

Nearly three quarters of the $5.2 trillion stock of U.S.-owned direct investment abroad is concentrated in Europe, Canada, Japan, Australia, and Singapore. Contrary to persistent rumors, only 1.3 percent of the value of U.S.-outward FDI [foreign direct investment] was in China at the end of 2011.

New Hampshire Court’s School Choice Decision Was Flawed and Unprecedented

Last week, a New Hampshire trial court declared that the state’s nascent scholarship tax credit (STC) program could not fund students attending religious schools. The Granite State’s STC program grants tax credits to corporations worth 85 percent of their contributions to nonprofit scholarship organizations that aid low- and middle-income students attending the schools of their choice.

Writing on the Washington Post’s Answer Sheet blog, Professor Kevin Welner of the University of Colorado at Boulder mocked supporters of the program who criticized the decision. Welner argues that school choice advocates should have expected this decision, declaring that it was “unsurprising” that the court should find the program (partially) unconstitutional. But what Welner calls unsurprising is actually unprecedented.

Only toward the bottom of his post does Welner reveal that the only high courts to address the issue thus far—the U.S. Supreme Court and the Arizona supreme court—have ruled STC programs constitutional in their entirety. Indeed, though all but two of the remaining ten states with STC programs have similar “Blaine Amendment” provisions in their state constitutions, opponents haven’t even bothered to challenge their constitutionality. Additionally, other state courts have ruled on the question of whether tax credits constitute “public money” in a manner consistent with the previous STC cases, demonstrating that the courts’ rulings were not the aberrations that Welner imagines them to be.

If school choice supporters had a reason not to be surprised, it was because the ACLU and Americans United for Separation of Church and State shrewdly went judge shopping. That’s why they brought their lawsuit in Strafford County instead of Merrimack County, where the state capital is located. Their strategy seemed to pay off, as the judge’s decision relies heavily on the dissenting opinions in the U.S. Supreme Court and Arizona supreme court decisions, and misapplies the limited precedent from New Hampshire. Nevertheless, the final decision rests with the New Hampshire supreme court. As I detail below, logic and precedent suggest that they should overturn the lower court’s decision.

California Officials Deliberately Mislead Public on Obamacare Rate Shock

Ever since Obamacare became law, I have been counseling states not to establish the law’s health insurance “exchanges,” in part because:

to create an Exchange is to create a taxpayer-funded lobbying group dedicated to fighting repeal. An Exchange’s employees would owe their power and their paychecks to this law. Naturally, they would aid the fight to preserve the law.

California was the first state both to reject my advice and to prove my point.

Officials operating California’s exchange–which the marketing gurus dubbed “Covered California“–recently and deliberately misled the entire nation about the cost of health insurance under Obamacare.

They claimed that health plans offered through Covered California in 2014 will cost the same or less than health insurance costs today. “The rates submitted to Covered California for the 2014 individual market,” they wrote, “ranged from two percent above to 29 percent below the 2013 average premium for small employer plans in California’s most populous regions.”

See? No rate shock. California’s top Obamacare bureaucrat, Peter Lee, declared his agency had hit “a home run for consumers.” Awesome!

Unfortunately, anyone who knows anything about health insurance or Obamacare knew instantly that this claim was bogus, for three reasons.

  1. Obamacare or no Obamacare, health insurance premiums rise from year to year, and almost always by more than 2 percent. So right off the bat, the fact that Covered California claimed that premiums would generally fall means they’re hiding something. 
  2. Obamacare’s requirement that insurers cover all “essential health benefits” will force most people who purchase coverage on the “individual” market (read: directly from health insurance companies) to purchase more coverage than they purchase today. This will increase premiums for most everyone in that market.
  3. Obamacare’s community-rating price controls (also known as its “pre-existing conditions” provisions) will increase premiums for some consumers (i.e., the healthy) and reduce premiums for others (i.e., the sick). So it is misleading for Covered California to focus on averages because averages can hide some pretty drastic premium increases and decreases.

WaPo Blogger Still Won’t Let Facts Get In Her Way

There she goes again.

Just a few weeks ago, Valerie Strauss of the Washington Post falsely accused scholarship tax credit programs of being “welfare for the rich,” an absurd claim that was easily debunked. Now Strauss is making similarly absurd claims about voucher programs in response to the Indiana Supreme Court’s unanimous decision upholding their constitutionality:

The notion is that families deserve to have a “choice” of schools for their children. The reality is that the amount of money provided in each voucher isn’t enough to cover tuition at a great many private schools, especially the elite ones that get most of the media’s attention, such as Sidwell Friends, which the Obama daughters attend.

The implication is that since school choice programs do not provide enough funding to make all choices affordable for low-income families, they don’t really provide “choice” at all. Moreover, Strauss seems to be arguing that if we can’t afford to send every child to the same school as the children of the president of the United States, then we shouldn’t do anything to expand educational options for low-income families. One wonders if Strauss also opposes food stamps because recipients can’t afford filet mignon every night.

While hiding behind weasel words that are technically correct—a “great many private schools” are too expensive for most low-income families even with vouchers—Strauss ignores the “great many private schools” that school choice programs do make affordable for low-income families. Take, for example, this story from yesterday’s New York Times:

Some parents of modest means are surprised to discover that the education savings accounts put private school within reach. When Nydia Salazar first dreamed of attending St. Mary’s Catholic High School in Phoenix, for example, her mother, Maria Salazar, a medical receptionist, figured there was no way she could afford it. The family had always struggled financially, and Nydia, 14, had always attended public school.

But then Ms. Salazar, 37, a single mother who holds two side jobs to make ends meet, heard of a scholarship fund that would allow her to use public dollars to pay the tuition.

She is now trying to coax other parents into signing up for similar scholarships. “When I tell them about private school, they say I’m crazy,” she said. “They think that’s only for rich people.”

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