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Government Spending

All articles with the "Government Spending" tag.

Published: Thu, 23 Mar 2017 00:00:00 -0400

Last Build Date: Thu, 23 Mar 2017 05:50:02 -0400


Apparently Tax and Spending Cuts are Either Too Small or Too Big, but Never Just Right

Wed, 22 Mar 2017 12:05:00 -0400

Donald Trump, the ultimate outsider and former liberal Democrat, and Ed Gillespie, the ultimate insider and GOP veteran, are about as different as two people in the same party could be. But when it comes to taxing and spending, opponents are giving them the same old business. Last week Trump unveiled his budget outline, which jacks up military spending—though not nearly as much as critics allege: His Pentagon proposal is only 3 percent bigger than what Barack Obama sought. To offset his defense hike, Trump has proposed cuts in other domestic programs, from the Appalachian Regional Commission to the Weatherization Assistance Program. The screams of liberal protest still echo through the hills. Some progressives have been horrified to learn the administration might eliminate agencies they had never heard of in the first place. And many have pointed out that the budgets for those and other agencies are, in relation to aggregate federal spending, minuscule. The combined budgets of the National Endowments for the Arts and Humanities, complained one critic in Slate, "total under $300 million, which is less than 0.01 percent of the total federal budget." The Washington Post took this tack as well. When White House Budget Director Mick Mulvaney said the administration did not want to ask a coal miner or a single mom to pay for programs on the chopping block, the paper's fact-checker retorted with "A Coal Miner's Plight: Paying for Public Broadcasting Is Less Than a Dollar of His Taxes." You get the point: Cuts to small agencies make no real difference—so don't cut them. So does this mean Trump's critics favor big cuts that will make a difference? Perish the thought! "Trump's Budget Is Pure Cruel Conservatism," says Rolling Stone, because it would have "devastating effects" on social programs. The left-wing website Common Dreams calls it "morally obscene" for the same reason. "Cuts to education, labor, agriculture and many other departments of double digits," says a piece in U.S. News, amount to a budget that "has no soul." Bottom line? Small budget cuts are bad—and big ones are absolutely heinous. Government must always continue to grow in every direction. The same response greeted Ed Gillespie's tax proposal. The Republican candidate for governor of Virginia has rolled out a plan that would shave Virginia's tax brackets by 10 percent each, and eliminate three punitive business taxes. (Chief among those: the BPOL tax, which applies to gross revenue rather than net profit. Even Gov. Terry McAuliffe (D) was willing to get rid of that one.) Democrats are not impressed. "The Gillespie campaign's proposal would give the top 1 percent almost $3,200 a year," the Democratic Party complained in an email blast, "while a family of four with an income of $50,000 would get just $246 and a minimum wage worker with two kids just $42." Now, it's certainly true that tax cuts often benefit people who pay lots of taxes. It's pretty hard to avoid that dynamic. And it's doubly hard in Virginia, where the top tax rate of 5.75 percent applies to anyone making more than $17,000. The state badly needs to bring its brackets in line with economic reality. Gillespie should have made his tax plan more progressive by proposing a tax rate of zero percent for anyone making less than $20,000, and progressively higher rates for everyone else. But would Democrats have been any happier? Probably not. Consider the freak-out that greeted Gov. George Allen (R) when he proposed a $2.1 billion tax cut in 1995. Democratic House Majority Leader Richard Cranwell warned that Allen wanted to "take police officers off the street." Others called his proposal "mean-spirited" because "people will fall through the cracks." Don Beyer, the lieutenant governor, suggested Allen's tax cuts were "cruel" and "reckless." Back then Virginia's biennial budget was around $35 billion, or $54 billion in today's dollars. Today the budget is, at $107 billion, nearly twice as big in real terms. And Gillespie's tax cut, less than half of Allen's in real terms, is quite modest: It would tri[...]

Hacking Away at the Budget Is the Humane Thing To Do

Wed, 22 Mar 2017 00:01:00 -0400

"Devastating!" shouts Chuck Schumer. Even Republicans are unhappy. Big spending "conservative" congressman Hal Rogers calls President Donald Trump's proposed budget cuts "draconian, careless and counterproductive." But Trump's cuts are good! Why do politicians always assume that government spending helps people? It always has unintended consequences. Foreign aid is attached to idealistic notions like ending global poverty and making friends abroad. Politicians also thought that by rewarding countries that behave well, America could steer the whole world toward responsible practices like holding elections and allowing companies (especially U.S. companies) to operate without interference. The young nation of Israel could be propped up with money for its military defense and infrastructure projects. But today, the U.S. sends money to friends and foes alike, and it's hard to know what those countries do with it. Israel gets billions of dollars—but we give even more money to Israel's enemies. Money we give to impoverished nations seldom reaches the poor people we want to help. The funds routinely go to the kleptocrat governments that made those countries such horrible places to live in the first place. Our gifts prop up authoritarians, making it easier for them to avoid free market reforms. We're just as dumb about spending at home. The Department of Education doesn't teach any kids. It imposes standards on local schools that make it harder for them to experiment. It hires bureaucrats who do endless studies—instead of letting competition show us what teaching methods get the best results. The Department of Education also promotes government-subsidized student loans that trick students into thinking that no matter which school they pick, no matter their major, they will graduate with useful, marketable skills. Many go deeply into debt just when they should be getting a start in life. The Department of Agriculture tips American elections. Presidential candidates promise farm subsidies to try to win the early Iowa primary. Politicians say the subsidies will rescue struggling small farms, but they rarely do. Most of the money goes to big, well-connected agribusiness. They shouldn't get subsidies any more than other businesses should. The so-called "war on poverty" has now cost almost $22 trillion, about three times what we've spent on all America's wars. Yet poverty endures, even as markets and technology should have eliminated most of it. Before the war on poverty began, Americans were steadily lifting themselves out of poverty. The well-intended handouts increased dependence and stopped that natural progress. They perpetuated poverty. Obviously, some federal programs do help people. When you spend trillions of dollars, some of it will be put to good use. But that doesn't mean the Economic Development Administration, "Essential" Air Service, Community Services block grants or even Meals on Wheels deserve a penny more of your taxes. "There is no magic money tree in Washington," the Cato Institute's Chris Edwards reminds us. At, he lists many more programs that ought to be cut. Even when programs do good things, he says correctly, "It is more efficient for the states to fund their own activities—school and antipoverty programs—because doing so eliminates the expensive federal middleman." Having our money back means being able to pay for things we choose as individuals—including helping out the poor more effectively than the government. Finally, even areas where Trump wants to boost spending, like the military, should be cut. We spend more on defense than the next seven nations combined—China, Saudi Arabia, Russia, the United Kingdom, India, France and Japan. Are we less likely to be attacked because of it? Less hated? No. Often, our expensive "defense" puts us in harm's way. Trump and Paul Ryan do deserve credit for demanding that spending increases be offset with cuts elsewhere. But it's a tragedy that they didn't use this moment to try to cut more, and to cut the b[...]

Trump Budget Cuts: Real or ‘Reality’ Show?

Mon, 20 Mar 2017 16:00:00 -0400

Donald Trump ran for office promising to crush the Islamic State, end the influx of illegal immigration from Mexico, and stop the flight of American manufacturing jobs to China. Now that he's in office, he seems to be focusing on different set of targets: Public television's "Big Bird," poor old people who benefit from "Meals on Wheels," and history graduate students and scholars of the Founding Fathers who get grants from the National Endowment for Humanities (NEH). Some reports even had the Trump administration slashing funding for the Coast Guard. What's going on here? The Trump "budget cuts"—they deserve quotation marks, because no money has yet actually been cut—are best understood in the context of Trump's home city, New York. There, for decades, the mayor would propose draconian "cuts" to popular institutions like museums and libraries. The museums and libraries would dutifully rally their constituencies to fight against the proposed "cuts." And the City Council would intervene to restore the funding, winning the gratitude of those that had been targeted. This was widely and correctly understood as a kind of theater. No funding was genuinely in jeopardy, other than the personal funds of the taxpayers who wound up eventually footing the bill for the government spending. The mayor got to pose as fiscally prudent. The City Council got to claim credit for protecting the museums and libraries, which had never really been in danger. A 2010 New York Times article described it as "something of an annual budget ritual: Public libraries, always among the first city services to be threatened with substantial cuts in financing, are forced to face the abyss, only to be saved in the end, in whole or significant part." A 1998 article from the Queens Courier, a local newspaper in Trump's original home borough, quoted a City Council member, Archie Spigner, who said, "Cutting libraries and culture is a ritualistic maneuver between the Mayor and the Council. In my 25 years on the Council it has always been that way, whether it was a Democratic or Republican mayor. The Mayor proposes the reduction and the Council makes restitution. It's the reality of politics and I don't think the Mayor's serious." For Trump, it's a win-win maneuver. He lets small-government conservatives, many of whom never quite trusted him in the first place, believe that he made a good-faith effort to cut federal spending. And he lets the Republican Congress, which is up for re-election before he is, claim credit with centrist swing voters for sparing popular programs from Trump's budget axe. On the substance of it, there is a strong case for cutting or eliminating many of the targeted programs. The Corporation for Public Broadcasting warns about the risk to Sesame Street, but that program in 2015 made a five-season deal with HBO. HBO is a for-profit network that is part of Time Warner, whose deal to be acquired by AT&T awaits Trump administration antitrust review. The NEH trotted out, in its own defense, the president of Harvard, Drew Faust. Harvard has a $35.7 billion endowment. The NEH's total annual appropriation in 2015 was $146 million. Faust herself earned $1.2 million in compensation from Harvard in the most recently disclosed year, along with an additional $250,000 for her service on the board of Staples, an office supply retailer. She and her fellow star historians can probably survive okay without taxpayer help from NEH grants. This question—is it ritualistic theater, a kind of performance art, or is it real?—is one worth keeping in mind for all of Trump's initiatives, not just his budget. Is, say, the effort to repeal ObamaCare real? Or is it, like the budget cuts, an elaborate show? It's easy to be fooled. Some people thought Trump's entire presidential campaign was an elaborate act designed to fail. Then, he won the election. Even "failed" efforts can be successful in a way by changing the parameters of the political discussion. But caution and skepticism are nonetheless in order, both [...]

Trump Preserves the Export-Import Bank

Thu, 16 Mar 2017 15:15:00 -0400

(image) When early drafts of the Trump budget started to circulate after the inauguration, the Export-Import Bank—one of Washington's most notorious corporate-welfare programs—was among the agencies destined for the chopping block. Now the actual budget is out, and the bank has been spared the ax. The Washington Examiner's Tim Carney reports that this "follows many reports from congressional fans of Ex-Im that Trump had been persuaded to love the agency, which primarily subsidizes Boeing sales." (Barack Obama underwent a similar transformation, denouncing the bank as "little more than a fund for corporate welfare" while he was running for president but fighting to preserve it once in office.)

The budget plan does have some good news for foes of corporate handouts. Carney points out that the Overseas Private Investment Corporation (which "subsidizes U.S. companies that want to set up business overseas, such as a Ritz Carlton in Turkey or a Wendy's in the Republic of Georgia") is still slated to go, as is the U.S. Trade and Development Agency. The Community Development Block Grant Program, also marked for death, has a long history of funding officials' business cronies, as my colleague Scott Shackford noted earlier today. Poke through the proposals for the departments of energy, commerce, and agriculture, and you'll find some more subsidies being cut.

But the biggest hub of crony capitalism in Washington is the military-industrial complex. And that, alas, is set to expand: Trump wants to give the Pentagon a $52.3 billion spending spike. I'm glad for any small victories against the corporate state, but in the grand scheme of things they're getting swamped.

Another Taxpayer-Funded Cleantech Company Goes Bankrupt

Wed, 15 Mar 2017 13:40:00 -0400

Named the 2016 North American Company of the Year by the San Francisco-based Global Cleantech Group just seven weeks ago, Pennsylvania battery maker Aquion Energy filed for Chapter 11 bankruptcy last week. The company makes a novel sodium-ion battery. Aquion joins the long list of failed cleantech companies that were backed by government grants and loans. Most notoriously solar-cell manufacturer Solyndra went belly up in 2011 after receiving more than $500 million in federal loan guarantees from the U.S. Department of Energy. Back in 2010, I visited the vast Ener1 lithium-ion battery factory outside of Indianapolis. As I reported, the Department of Energy had awarded a $118.5 million matching grant to Ener1 to build the plant. In addition, Ener1 was given a state incentive package of $21.3 million and a Hancock County package valued at $48.6 million. In January, 2011 then-Vice President Joe Biden visited the Ener1 plant where he declared: "It's not the government doing this. It's the free-enterprise system. We're providing seed money, one-time deposit, man, so we can spur additional investment." A year after his visit Ener1 declared bankruptcy and later emerged a privately owned company. Similaly DOE-backed Beacon Power and A123 Systems also went bankrupt. The Pittsburgh Post-Gazette reports that Aquion Energy had received a $5.2 million grant from the U.S. Department of Energy, plus $8.6 million in grants and another $8 million in loans from Pennsylvania's Department of Community and Economic Development (DCED). In return, Aquion promised the state it would create 341 new jobs on top of the 70 people it already employed. The company has evidently now laid off 80 percent of its 150 employees. The DCED is vowing to get the money it handed out to Aquion back. "Revenue recovered by DCED from companies that fail to live up to previous commitments will be reinvested to further promote economic growth in the Commonwealth," declared DCED communications director David Misner. (Here's an idea: How about just returning it to Pennsylvania's taxpayers?) Government "investment" in novel battery manufacturers has so far failed. The outcome of the biggest investment of all is now pending: Tesla's Gigafactory outside of Reno, Nevada. In order to persuade Tesla to build the factory in Nevada, the state government has given the company a package of tax breaks worth $1.3 billion including tax credits worth $195 million which Tesla could sell for cash. Naturally, Tesla CEO Elon Musk defends his company's reliance on government largesse. Perhaps the Tesla battery plant gamble will pay off, but the precedents are not promising. One other plea: All states should agree to level the competitive playing field by collectively refusing to hand out tax breaks to rent-seeking companies.[...]

Federal Infrastructure Spending Is a Bad Deal

Thu, 09 Feb 2017 06:00:00 -0500

In his first address as president-elect, Donald Trump repeated his campaign promise to invest in America's infrastructure. "We are going to fix our inner cities and rebuild our highways, bridges, tunnels, airports, schools, hospitals," he said. "We're going to rebuild our infrastructure, which will become, by the way, second to none. And we will put millions of our people to work as we rebuild it." His plan is for the federal government to entice private investors with $137 billion in tax credits. The idea is that this will unleash up to $1 trillion worth of infrastructure investment over 10 years, spur economic growth, and create countless American jobs. Politicians' love affair with infrastructure spending isn't new. Hillary Clinton, Bernie Sanders, Barack Obama, George W. Bush, and many before them have paid their respects to the idea. Economists have long recognized that roads, bridges, airports, and canals are the conduits through which goods are exchanged, and as such, infrastructure can play a productive role in economic growth. But not all infrastructure spending is equal. Ample literature shows, in fact, that it's a particularly bad vehicle for stimulus and does not, in practice, boost short-term jobs or economic growth. To work that way, government spending would have to be used quickly to put the unemployed to work on shovel-ready projects. But as Obama discovered in 2009 when he tried to spend $47 billion from the American Recovery and Reinvestment Act on infrastructure, there aren't that many shovel-ready projects lying around. And since job seekers rarely have the skills needed to start building a bridge or highway right away, employers are forced to poach workers from their existing jobs. Publicly funded infrastructure projects often aren't good investments in the long term, either. Most spending orchestrated by the federal government suffers from terrible incentives that lead to malinvestment—resources wasted in inefficient ways and on low-priority efforts. Projects get approved for political reasons and are either totally unnecessary or harmed by cost overruns and corruption. For example, we know that infrastructure investment produces the highest returns when it supports already-expanding cities and regions. Yet politicians' tendency is to spend in declining areas, where dollars can't help as many people, such as Detroit and Cleveland. Government statistics show that our infrastructure isn't actually crumbling. While conditions vary from state to state, the most recent data on highway quality (from 2012) classify 80 percent of urban highways as either good or acceptable. For rural highways, the figure is almost 97 percent. Meanwhile, the quality of bridges has improved as well. In 2004, 5.7 percent of bridges were classed as structurally deficient, meaning that the bridge isn't unsafe but that it could suffer from a reduction in its load-carrying activities. By 2014 that number had declined to 4.2 percent. Still, our infrastructure could use some work. Recently, in a debate at the Aspen Ideas Festival with former National Economic Council Director Lawrence Summers, the economist Robert Barro noted that he was "glad that Larry and I can agree that fixing potholes is the most productive activity in government." Unfortunately, the political process is biased against dull but valuable projects, such as basic road maintenance, and biased in favor of flashy or grandiose projects, such as high-speed rail, the Big Dig, and the Bridge to Nowhere. The process also systematically overestimates the benefits and underestimates the price of infrastructure projects. On the bright side, Trump wants to address the "mountain of red tape" that slows down construction projects. His plan would link spending to reforms that "streamline permitting and approvals, improve the project delivery system, and cut wasteful spending on boondoggles." He shouldn't stop there. A new report by Michael [...]

Trump’s Sanctuary City Funding Threat Protects Police Money

Wed, 25 Jan 2017 16:50:00 -0500

(image) Today President Donald Trump made good on his threat to go after "sanctuary cities" (cities that decline to investigate the immigration statuses of people within their jurisdiction) by going after their federal funds. He signed an executive order today attempting to implement a policy denying federal grants for any of these 200 estimated sanctuary cities if they refuse to assist the federal government in investigating immigration statuses.

One problem that was brought up in November after Trump's election: Law enforcement agencies and unions didn't support this mechanism of intimidating cities. It wasn't that they cared so much about the civil liberties. They were not going to support anything that prevented any sort of gravy train from rolling into their police stations. Law enforcement agencies are prime recipients of federal grants.

Trump, having run on a hard core law-and-order, stop-and-frisk, civil-rights-are-for-wusses campaign, was not interested in angering these guys. So his executive order today explicitly exempts grants "deemed necessary for law enforcement purposes."

Trump is also calling for the administration to publicize, on a weekly basis, a list of crimes committed by aliens "and any jurisdiction that ignored or otherwise failed to honor any detainers with respect to such aliens." One assumes these must be aliens the federal government detain or arrest after sanctuary city interactions. Otherwise there's a bit of a logic flaw in trying to highlight criminals who are illegal immigrants operating in cities that refuse to check their immigration status and report that information to the feds.

In any event, this executive action seems designed to maintain the loyalty of law enforcement agencies to Trump. Read the sanctuary cities section of the order below, check the full executive orders being signed today here, and check out this defense of sanctuary cities as a tool to encourage immigrants to cooperate with law enforcement to solve crime and keep communities safer:


Will Donald Trump Cut Public Broadcasting Loose, Or Will He Decide He's the Man to Make It Great Again?

Mon, 23 Jan 2017 17:25:00 -0500

The press is aflutter with talk that the Corporation for Public Broadcasting may be headed for the chopping block. More specifically, The Hill informs us that Trump staffers have been "discussing" the "privatization" of the CPB. In other words, we don't actually know what's happening. "Discussing" means the administration hasn't settled on a plan; "privatization" could take many forms. Nor do we know how any particular proposal will play out politically. Usually I roll my eyes during these debates, knowing that for all the apocalyptic rhetoric they inspire they have invariably ended with the CPB still in the budget. Occasionally it gets a funding cut, but even those tend to be erased within a few years. But as you may have noticed, our new president is unpredictable. Given all the allegedly impossible things that have happened lately, you can't just assume past will be prologue, even if the forces that have kept the CPB alive in the past are still at work. That said: The forces that have kept the CPB alive in the past are quite definitely still at work. Back in 2011, when congressional Republicans were threatening to cut off NPR's money because it had fired Juan Williams, I offered a brief tour through the history of the We're Going To Defund Public Broadcasting show. The Williams spat, I wrote, was a more exciting hook for the drama than the one Richard Nixon used in 1971, when presidential pique at the Eastern liberals who dominated PBS spurred him to propose a "return to localism" that would have kneecapped the crowd in charge of the system. On the other hand, it doesn't have the cloak-and-dagger spirit that the State Department flunky Otto Reich brought to the play in 1985, right after Ronald Reagan's reelection, when he met with NPR staffers in a smoky little room and warned them that the White House thought they were "Moscow on the Potomac." Nor is it as colorful as the 1993 spectacle starring Bob Dole and David Horowitz, who attacked the radical Pacifica network rather than NPR, providing an opportunity to quote a much weirder series of statements than anything in the Juan Williams kerfuffle. ("We didn't have Satan before the white man. So the white man is Satan himself.") And the exclusive focus on NPR this time around means the stakes don't feel as high as they did in 1994, when Speaker-elect Gingrich started musing that he might "zero out" the entire public broadcasting budget. A decade later, a House subcommittee heightened the dramatic tension by voting to eliminate federal support for the Corporation for Public Broadcasting (CPB) altogether. That element of danger was a suspenseful touch. While there are Republicans who honestly think the government shouldn't be in the business of subsidizing public broadcasters, there are more Republicans—or, at least, more powerful Republicans—who just think the government should be subsidizing a slightly different group of public broadcasters. As I wrote in 2011, "The system was still standing after Nixon made his threats, but all save one of the programs he found objectionable went off the air. After the Gingrich-era battle ended, the Republican pundits Fred Barnes, Peggy Noonan, and Ben Wattenberg all landed gigs at PBS—and following an initial cut, the CPB's budget crept back upward. The funding fight under George W. Bush took place against the backdrop of a conservative CPB chief crusading for a more right-friendly PBS and NPR." (*) These exercises may not cut public broadcasters loose, but they do whip them into line. Needless to say, it would be completely in character for Trump to try a trick like that. (Sample scenario: He ruminates about funding cuts, PBS adds a MAGA voice or two to its lineup, and then the president declares public television a great American institution.) On the other hand, it would also be in character for Trump to endorse a privatization plan as a[...]

The Problem With Block Grants

Mon, 23 Jan 2017 16:00:00 -0500

Obscured amid the controversy over crowd size and the women's march that followed was the substantive policy at the heart of President Trump's inaugural address. That came in the language about "we are transferring power from Washington, D.C., and giving it back to you, the people," and is being followed up with a reported congressional initiative to turn Medicaid, the federal healthcare program for the poor, into "block grants to the states." States already exercise substantial discretion over Medicaid. Even the name of the program varies from state to state—Medi-Cal in California, DenaliCare in Alaska, MassHealth in Massachusetts, TennCare in Tennessee. The states already put some money into funding the programs. And it may be that the proposed changes are an improvement over the current system. Local control puts decisionmakers closer to end-users, shortening the distance that information needs to travel, and making it easier to adjust programs to local circumstances. There's a back-story here. Republicans have loved the idea of "block grants to the states" since at least the 1990s, when the Newt Gingrich-led Congress reformed the welfare program known as Aid to Families With Dependent Children. Before that (and some would say, even to this day), the question of which decisions got made in Washington, and which in state capitals, had become unfortunately clouded by racism, as the Southern states refused to comply with their obligations under the Constitution. But amid the present push to devolve power to state and local governments, it's worth remembering that there are some drawbacks, too. First of all, "block grant to the states" still often gives the politicians in Washington and their lobbyist hangers-on ample opportunity to play a role in directing the cash flow. There are almost always conditions imposed on how the money can be used, and there's almost always a formula involved in how the money is allocated. Both the conditions and the formula allow room for an awful lot of Washington-based mischief making and influence peddling. At the state level, meanwhile, the "block grant" provides an opportunity for government spending unconnected to the act of revenue-raising. It's practically free money, so the state and local officials want to spend—they use words like "capture"—as much of it as possible. Even worse, while state and local laws usually mandate balanced budgets, the federal government can rack up plenty of debt, so the block-grant mechanism is a way for state and local politicians to circumvent their own budget constraints. The overall effect is to encourage government spending that wouldn't otherwise happen. One way to understand this is to do a thought experiment. The next time some Republican politician starts talking about turning a federal program into "block grants to the states," ask: What would happen if instead of turning it into "block grants to the states," the politicians just flat-out eliminated the program, and cut taxes and borrowing by the amount that had been spent? Perhaps some state or local governments would restart the program at the state or local level, or provide the service on their own, with some new revenue stream. Perhaps some other state or local governments would choose not to provide the service. Perhaps the for-profit or nonprofit private sector would provide solutions to whatever need had been met by the federal government program. If the service or program were important enough, perhaps individuals or businesses would choose to move to a state, city, or town where the service was being provided. One might object that there are some rights or services so basic that one's ability to access them shouldn't depend on where one lives—they should be guaranteed to all Americans. The "rights" part of that is what some of our Constitution is about. And the id[...]

Trump Brings Back Ban on Funds for Groups That Promote Abortion, While Congress Reconsiders Global Anti-Prostitution Pledge

Mon, 23 Jan 2017 15:00:00 -0500

On his first Monday in office, Donald Trump signed executive orders instituting a hiring freeze for all federal government positions outside the military and reinstating a ban on international aid going to nonprofits that provide abortions or promote information on them, regardless of what other services they offer. The contentious abortion rule represents a back and forth that's been taking place under Republican and Democratic administrations since the 1980s. Known as the "Mexico City Policy," it was instituted under President Ronald Reagan, reversed by Bill Clinton, restored by George W. Bush, and again reversed by Barack Obama. Not to be confused with the 1973 Helms Amendment, which bans groups from using U.S. government funds directly for abortion services abroad, the Mexico City Policy targets broader conduct, requiring that "as a condition of their receipt of federal funds," groups must agree to "neither perform nor actively promote abortion as a method of family planning in other nations." A diverse group of more than 100 public health, women's issues, and civil liberties organizations have already issued a statement opposing the return of the Mexico City Policy, which they refer to as "the global gag rule." "The global gag rule ... interferes with the doctor-patient relationship by restricting medical information healthcare providers may offer, limits free speech by prohibiting local citizens from participating in public policy debates, and impedes women's access to family planning by cutting off funding for many of the most experienced health care providers who chose to prioritize quality reproductive-health services and counseling over funding that restricts care and censors information," it says. Groups endorsing the statement include the American Civil Liberties Union, the American Congress of Obstetricians and Gynecologists, Amnesty International USA, the National Organization for Women, the Alliance to End Slavery & Trafficking, the Unitarian Universalist Women's Federation, the International Medical Corps, New York University's Global Justice Clinic,and Human Rights Campaign. The Mexico City Policy is one of several federal aid conditions that have been contingent on controversial social issues. Since 2003, the U.S. has banned groups that get grants to fight HIV/AIDs and/or human trafficking from supporting the decriminalization of prostitution. Referred to as the anti-prostitution pledge, the policy was proposed for anti-HIV groups as part of Bush's "Emergency Plan for AIDs Relief," passed by Congress in May 2003 as the "United States Leadership against HIV/AIDS, Tuberculosis, and Malaria Act." It stipulated that no grant money could be used "to promote or advocate the legalization or practice of prostitution or sex trafficking" nor to "provide assistance to any group or organization that does not have a policy explicitly opposing prostitution and sex trafficking." The anti-prostitution pledge was also part of the bipartisan 2003 reauthorization of the Trafficking Victims Protection Act (TVPA), which stated that no federal money "may be used to promote, support, or advocate the legalization or practice of prostitution" and no funds "may be used to implement any program" by an organization that "has not stated in either a grant application, a grant agreement, or both, that it does not promote, support, or advocate the legalization or practice of prostitution." Many public-health and human-rights groups opposed these policies on the grounds that decriminalizing prostitution is often supported as a means to stop the spread of sexually-transmitted infections and sex trafficking by force, fraud, or coercion. The pledge was initially applied only to foreign nonprofits, but in 2005 the Bush administration began applying it to U.S. groups, too. In 2013, the U.S. Supreme [...]

Even the Feds are Warning that California's Bullet Train Is a Disaster in the Making

Sun, 15 Jan 2017 13:30:00 -0500

Just days after California Gov. Jerry Brown warned that the state was slipping back into deficit spending ($1.6 billion by next summer), the Los Angeles Times got its hands on a confidential internal report from the Federal Railroad Administration that points the fingers right back at the governor when it comes to wasteful spending. Even the feds believe the state is drastically understating the costs of it's massive high-speed rail project, approved by voters years ago but with only a small portion of the project funded. Just the first leg of the $70 billion project could cost billions more than budgeted, $10 billion instead of $6.4 billion. And the project is already way behind schedule. The report predicts the first stretch of track (in the center of the state) won't be completed until 2024, seven years behind schedule. The California High-Speed Rail Authority (CHSRA) has responded by complaining that this risk analysis contains merely "hypotheticals" (though the CHRSA's chief executive called them "estimates and projections" in the Times story, which is slightly different). On Facebook CHSRA dismissed the story as "misleading" and instead invited readers to look at two government reports that praise the government spending money on infrastructure. One of them, they say, calls the train project one of the "top proposed infrastructure projects of major economic significance." Hilariously, the report they want us to read instead says right in the beginning that "all project costs and benefits are based on assumptions and methodologies established by the authors." Meaning that any praise of the benefits of building the train are also based on estimates and projections (as they have been all along—remarkably foolish projections of demand and ridership). Beyond that, the CHRSA's message is simply yelling "JOBS!" as loudly as possible, pointing out that all this spending is putting people to work and noting as some sort of evidence that Fresno unemployment dropped from 18 percent in 2011 to 9 percent in 2016. That's not a terribly compelling argument because the unemployment rate has dropped in similar numbers all across California, even in areas that aren't building a massive government boondoggle. Why should we believe those folks wouldn't be working on something else if they weren't working on this stupid train? It's a truly frustrating issue, because we see very little evidence that this train can pay for itself after its built and will require subsidies in order to keep operating (despite their insistence otherwise). So the actual consequence of creating all these jobs is that all these people are spending billions of tax dollars to build something that is going to continue to cost money after the construction is done. Using the "Broken Windows" economic fallacy metaphor, it's like the government hiring the people to break the windows and then offering a subsidy for the cost to reglaze them. What would this money be doing in California if it weren't tied up in this train? Reason editors current and former, Matt Welch and Virginia Postrel, took note in June how the people involved in this train project and in the media knew full well what a boondoggle it was and promoted it anyway. The Reason Foundation has been warning for years that this was going to happen. And irony of ironies, Californians seem to hate that Donald Trump was elected president, but Trump loves exactly these kinds of terrible infrastructure boondoggles and is on the record complaining about the fact that China has high-speed rail and we don't. God help us all, but Trump could be the president Brown and the state's powerful labor interests need to keep the dollars rolling in for this mess. At some point we may be grateful Trump is so thin-skinned if he shuts down federal spending r[...]

Runaway Deficits Forever

Thu, 12 Jan 2017 00:01:00 -0500

Upon becoming House speaker in 1995, Newt Gingrich decided it was crucial to adopt a plan to eliminate the federal deficit. In a meeting of House Republicans, Budget Committee Chairman John Kasich balked: "Where is it in stone that we have to balance the budget in seven years?" Gingrich had a quick answer: "Let's put it to a vote. Who wants to put it in stone?" Everyone but Kasich voted yes. The Republicans had made a commitment they would have to keep. Contrast that show of determination with the vote last week by Senate Republicans for a budget resolution that projects an increase in the public debt of $9 trillion over the next decade. The supporters said that for arcane reasons involving budget rules and the repeal of Obamacare, the resolution is needed. But in practice, they insisted, they don't intend to allow such a flood of red ink. Maybe not. But the fiscal responsibility upheld by Gingrich and company—which led to a balanced budget not in 2002 but in 1999—is not visible on either side of the aisle today. Between 2009 and 2015, the deficit shrank from $1.4 trillion to $438 billion—but last year, it rose, and the Congressional Budget Office expects it to balloon to $1 trillion by 2024. Nor is the incoming president likely to accept serious budget discipline as President Bill Clinton did. On the contrary, Donald Trump will probably cause a lot of congressional Republicans to stop worrying and learn to love the deficit. House Republicans have a plan to balance the budget by 2026, but the details are lacking. Not only that but they will have to contend with the next president. The Tax Policy Center in Washington reported in October that his proposals would add $7.2 trillion to the government debt over the next decade—comparable to what has been piled up in the past eight years. There are other alarming signs. Trump's border wall with Mexico will cost $8 billion by his calculation and double or triple that by other estimates. He claims Mexico will pay for it. But he and Congress aren't prepared to wait for him to get the money. They plan to start construction now and send Mexico the bill. This is the equivalent of taking out a loan that you plan to pay off with the lottery ticket you just bought. In the best (and least plausible) case, we'll have to wait awhile for the Mexican treasury to cut the check—"a year or a year and a half," Trump blithely estimated at his news conference Wednesday. In the worst case—which happens to be the one President Enrique Pena Nieto has embraced—we won't get a single peso and American taxpayers will eat the expense. Scrapping the Affordable Care Act, it turns out, would be a fiscal loser overall because of the taxes it imposed and the Medicare savings it implemented. The bipartisan Committee for a Responsible Federal Budget recently reported that a full repeal would add between $150 billion and $350 billion to the debt over the next 10 years. Under a fiscally responsible approach, the CRFB advised, "savings from repealing parts of the ACA must be large enough to not only finance repeal of any of ACA's offsets, but also to pay for whatever 'replace' legislation is put forward. This is not an easy task, and it will likely require policymakers to retain or replace the majority of ACA's health and revenue offsets." But Congress and the president-elect appear to have every intention of torching the ACA now and fighting the budget fire later. Reducing taxes while pledging to cut spending eventually is a familiar tactic, and it functions reliably to enlarge budget problems rather than solve them. The ongoing retirement of the baby-boom generation puts great pressure on the budget, as it has to cover more and more retirement checks and Medicare bills. Another looming strain is the inte[...]

Challenge Grant Time in the Reason Webathon! Because We Still Treat Presidential Politics as if (Bad) Ideas Matter

Wed, 30 Nov 2016 07:40:00 -0500

We are here on the second day of Reason's annual Webathon, in which we ask you, the people who fight in the comments over which staffer to fire first, to nonetheless throw some tax-deductible money our way so that we can bring you even more in journalism and commentary defending and extending Free Minds and Free Markets. Please donate right the Fletch now to get us closer to our $250,000 goal! As of around 7:30 this morning, 151 of you generous human-bots had gifted us around $23,000, or 9.2% of the goal at the halfway point of the first quarter of the Webathon. Now, while we treasure each and every dollar and Bitcoin and Bubble-world Sandersback, we're basically still at our own 10-yard line (and even then with a generous spot!), at a time when we really should be around, oh, the 13. WE NEED A TOUCHDOWN, IS WHAT I AM SAYING….Oh wait, what are those footsteps I hear coming from the runway leading from the locker room, clanking closer and closer, a modern-day Tom Jarrett here to inhabit our mortal bodies and finally lead my Youngblood-era L.A. Rams to the Super Bowl? Why it's a $25,000 CHALLENGE GRANT! That's right, ladies and gents and less classifiable creatures, the beloved Reason donor (and Trustee) Kerry Welsh (no relation) and his even lovelier wife, Helen Welsh, have announced a $25,000 challenge grant here to kick off Day Two. What does such magick mean for us non-math majors? That the next $25,000 in donations, IF AND WHEN IT COMES, will be literally doubled. It's like a government-spending multiplier, only not totally fake! So why double your giving pleasure? Today, in singing for my supper, I'm going to jump head-first into a hornet's nest of a coverage category: politics (ducks away from flying shoe). Like all zero-sum scrums, politics is intrinsically divisive, including/especially amongst quarrelsome libertarians. And like all taxation-based entities, government is inherently confiscatory and brutish. This is why Reason magazine has spent 48-plus years on this earth trying to roll back the influence of both factors in our lives, while celebrating the wonders conjured far from their grasp. As Katherine Mangu-Ward put it in her very first (and very great!) column as editor in chief, it's "Trump vs. Clinton vs. Everything Good." We cover politics for two main reasons, and from two main angles: 1) As an act of defense against policies that that harm human liberty and flourishing, and 2) as an attempt to smuggle into the very diverting (particularly this year!) yet largely calorie-free National Conversation about politics some ideas that help us out with Task #1. Because even if any given political competition isn't necessarily determined by the quality of policy proposals, the discussion generated by campaigns does end up translating into government action—maybe in the future, with different politicians, in far-flung jurisdictions. The collective exertion of power always affects the lives of individual humans, and, well, you know which side we're on. Here's how such a 1-2 approach works in practice. Remember when Hillary Clinton was having her heels nipped repeatedly by the unlikely longshot Bernie Sanders, whom some libertarians were going a bit wobbly for (which our work directly helped talk them out of)? At the zenith of the Democratic competition our mag published a special package on the cantankerous Vermont democratic socialist that delved into his past and his popularity, concluding in sadness more than anger that what was animating his would-be revolution and sending shivers down Clinton's pantsuit wasn't the promising civil liberties/foreign policy part of his issue-set, but rather his genuinely terrible economic policies. Look around you at any blue state or big, progressive c[...]

Drain the Swamp!

Wed, 30 Nov 2016 00:30:00 -0500

President-elect Trump says he's uniquely qualified to "drain the swamp" in Washington, D.C. He can do it, he said at one debate, because as a businessman, he understands American cronyism. "With Hillary Clinton, I said, 'Be at my wedding,' and she came to my wedding. You know why? She had no choice because I gave." He said that's why he gives money to politicians from both parties. "When they call, I give. And when I need something from them two years later, three years later, I call them. They are there for me!" That's crony capitalism. Ideally, laws are applied equally; no one gets a special break because he gives money. But today's complex government allows the politically connected to corrupt... most everything. Even parts of the government swamp designed to protect consumers, like Dodd-Frank banking rules, get corrupted. Banks watch little changes in rules far more closely than you ever will. Then they exploit them. Bank lobbyists make money off complex laws like Dodd-Frank. They fight tooth and nail to keep them, not abolish them. Congress recently almost got rid of one obvious example of crony capitalism, the Export-Import Bank. To encourage exports of American products, bureaucrats give loans to Boeing and other big companies. Some principled Republicans tried to eliminate this corporate welfare, but Ex-Im loans were voted back in during the final hours of budget negotiations. Government programs almost never die. Businesses in cozy relationships with government don't die either. Jeff Deist, president of the free-market Mises Institute, says when the housing bubble burst, banks should have been allowed to fail and put through "the bankruptcy and liquidation process." Investors would have lost big, but that's OK, says Deist. "That's the difference between free-market capitalism and state capitalism. With state capitalism, there are upsides for the parties involved—but no downsides." In the swamp, no one but taxpayers pays for their mistakes. Politicians routinely promise to change this culture, but once they get to D.C., they lose interest, says Trump. "They go to Washington, something happens—they become weak... I promise this is not going to happen to me." I want to believe him. But even if he were an utterly principled man—and I await evidence of that—it's tough to constantly say "no" to people. When you're in Congress, people ask you for money all day. "I need a grant for my charity—we do so much good!" "My business needs a subsidy/protective tariff—we employ so many people—in your state!" So it goes, week after week. Few people bother to go to Washington to ask for spending cuts. Even though America is heading toward bankruptcy, 90 percent of congressional testimony comes from people who want more stuff. Politicians' cronies get more stuff. Solyndra got half a billion dollars from President Obama. The company went bankrupt, which shouldn't be a surprise. Government has no way of knowing which ideas will succeed. But it's well worth it for companies to invest in lobbyists and fixers who dive into the swamp to extract subsidies. For taxpayers? Not so much. While the benefits to lobbyists are concentrated, taxpayer costs are diffuse. Solyndra cost each of us a couple bucks. Will you go to Washington to pester your congressman about that? Probably not. I want to believe Trump when he says he'll "drain the swamp." But it's easier to believe Thomas Jefferson who, with greater eloquence, said, "It's the natural progress of things for government to gain ground, and liberty to yield." Draining the swamp would mean not just taking freebies away from corporations—or needy citizens—but eliminating complex handouts like Obamacare. Candidate Trump said he w[...]

Trump's Infrastructure Illusions

Thu, 17 Nov 2016 00:01:00 -0500

"We've got shovel-ready projects all across the country. And governors and mayors are pleading to fund it. The minute we can get those investments to the state level, jobs are going to be created." — President-elect Barack Obama, December 2008 "There's no such thing as shovel-ready projects." — President Obama, September 2010 Boosting federal investment in infrastructure has never had so many enthusiasts. During the presidential campaign, it was the rare chorus that Donald Trump, Hillary Clinton and Bernie Sanders could all join in singing. House Democratic leader Nancy Pelosi says she's eager to work with Trump on it. Her GOP counterpart, Kevin McCarthy, expects Republicans to cooperate with their president. Both the AFL-CIO and the U.S. Chamber of Commerce are in favor. And why not? Not only will we get more modern facilities, we are told, but the gusher of money will invigorate the economy and create lots of blue-collar jobs. But such investments don't always work out the way they're supposed to. Pouring funds into highways, bridges, airports, dams and other projects is easy. Spending money wisely is hard. What beckons on the horizon, as Obama discovered after getting his $840 billion stimulus in 2009, often turns out to be a mirage. There are several reasons for deep skepticism about this whole proposed endeavor. One is that the federal government has a lousy record of investing for the maximum payoff. Harvard economist Edward Glaeser has noted that the transportation funding in Obama's package "was twice as generous, on a per-capita basis, to the ten least dense states than it was to the ten densest states, even though higher-density areas need more expensive infrastructure." Remember that "bridge to nowhere" that Alaska Gov. Sarah Palin bragged about stopping? It was part of a federal highway bill. When Washington lavishes money on transportation, it typically puts politics above economic merit. There are doubtless many infrastructure fixes that could be done with more spending. But why should the federal government assume responsibility for them? The majority serve mostly local needs and can be financed by the beneficiaries. Mayors and governors are less accountable when such projects are financed by taxpayers who live elsewhere. People in Los Angeles, Houston and Pittsburgh know better than anyone else what the local priorities are. If taxpayers in those places aren't willing to shore up the bridges or resurface the roads they use every day, it's a signal the money shouldn't be spent. In the 1960s, notes economist Lee Ohanian of the Hoover Institution, capital outlays made up 20 percent of California's state budget. Today they're 3 percent. Nor will infrastructure spending yield a harvest of new jobs. A study by the Congressional Budget Office calculated that the 2009 stimulus, of which infrastructure was only a part, created no more than 200,000 jobs by 2014—out of the 9 million the economy added during that period. Andrew Garin, a Ph.D. candidate in economics at Harvard, studied the results of the 2009 package and detected "little to no county-level impact of highway spending on local employment outcomes reported by employers. There appears to be no effect on local highway-construction, employment, overall construction employment, or total private-sector employment." The prospect of a blue-collar boom is a feat of imagination. Out-of-work coal miners and autoworkers don't necessarily have the skills contractors need to expand airports or replace bridges. The unemployment rate for construction workers is just 5.7 percent, which means a lot of those hired for public projects would be taken away from private ones. What about the cla[...]