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Government Spending

All articles with the "Government Spending" tag.

Published: Sat, 20 Jan 2018 00:00:00 -0500

Last Build Date: Sat, 20 Jan 2018 08:48:07 -0500


Who Wants a Big Gas Tax Hike?

Fri, 19 Jan 2018 17:15:00 -0500

As the Trump administration prepares its plan on how to deliver the $1 trillion infrastructure investment that it keeps promising, some voices are calling for a steep hike in the federal gas tax. On Thursday the Chamber of Commerce unveiled its set of infrastructure policy priorities. It included a whopping 140 percent increase in the federal gas tax, from 18.4 cents per gallon to 43.4 cents per gallon. The Chamber estimates that this will bring in an additional $394 billion in revenue over the next decade. "It's the simplest, fairest, and most effective way to raise the money we need for roads, bridges, and transit," the group's president, Tom Donahue, said in a speech yesterday. "Our leaders need to stop hiding behind the fallacy that this can't be done and just go do it." Long been a priority of American businesses interests, a higher gas tax has also attracted a good deal of center-left support. The New York Times editorial board has endorsed an increase. So have the ranking Democratic members of the House and Senate Committees dealing with infrastructure spending. Donald Trump himself has expressed his openness to the idea. The federal gas tax was last raised in 1993. Proponents claim that failing to increase it has left the roads crumbling and the Highway Trust Fund underfunded. They're wrong, says Baruch Feigenbaum, a transportation policy expert at the Reason Foundation (the nonprofit that publishes this website). The quality of road infrastructure "often has to do more with management and priorities rather than it does with funding," Feigenbaum says. On the state level, he notes, there is little correlation between high gas taxes and high-quality, well-maintained roads. That is most obvious in the state of California, which has both high gas taxes and terrible roads. Bureau of Transportation Statistics data from 2013 found that only about 15 percent of the state's highways were in good condition, as measured by the International Roughness Index; a full 40 percent were in poor condition. Meanwhile, California was levying 48.7 cents in taxes on every gallon of gas sold in the state. Georgia, by comparison, was adding only 28.5 cents in taxes to every gallon of gas in 2013, and yet it was able to keep 54 percent of its roads in good condition. Only 12 percent were in poor condition. Georgia "has very good roads of high quality because that is where they spend their resources," Feigenbaum says. "California has crappy roads because they spend their money somewhere else." California's latest gas tax hike saw hundreds of millions of dollars siphoned off to pay for high-speed rail, local transit, and recreational trails. The federal Highway Trust Fund—where the gas tax is deposited—has a similar problem of spending on local transit and other non-road-related projects, undercutting the argument that it is simply a user fee paid by drivers. Some 15 percent of the federal gas tax is deposited straight into the Highway Trust Fund's Mass Transit Account, which disburses money for local bus, light rail, and other mass transit services. Another $850 million or so of the trust fund is diverted to the Transportation Alternatives Fund, which goes to beautifying streets and building recreational trails. "Do you really want to increase taxes when you have this waste going on?" Feigenbaum asks. On top of this, continual improvements in fuel efficiency and the potential growth in electric vehicles are making the gas tax an increasingly obsolete way to fund and finance new infrastructure improvements. "I like to describe it as a rock star on their farewell tour," he says. "It's getting old, it's not going to be around forever, and we have to come up with a solution." Feigenbaum suggests that Congress make greater use mileage-based user fees, and that it rely more on the private sector for infrastructure improvements. Trump's infrastructure plan will reportedly rely on $200 billion in direct government funding to attract another $800 billion in private capital. That $200 billion will have to come from somewhere. Congress can listen[...]

The Annual Federal Spending Frenzy Is a Terrible Year-End Tradition

Sun, 10 Dec 2017 06:00:00 -0500

What do you do if you wind up with a little extra money in your household budget at the end of the year? Perhaps you pay down your credit card debt or save it for an earlier retirement. Maybe you replace old appliances or go on a much-needed but unplanned vacation. One thing is clear: Because you're spending your own cash, you make sure to get as much out of it as possible. You might expect our tax dollars to be treated the same way. You would be mistaken. The end of the fiscal year—September 30—triggers a spending frenzy in Washington, where the driving order isn't "do something worthwhile" but rather "make sure nothing is left." Because agencies can't carry over any part of their operating budgets into the next fiscal year, politicians and bureaucrats spend to the last dime, knowing that leftover resources will be returned to the Department of the Treasury. They also worry Congress will reward frugal agencies with cuts to their future allotments. As a result, every October, newspapers brim with shocking stories about wasteful and possibly corrupt spending behaviors. Think military vehicles driving in circles to drain the last pennies of their gas allowances, or hundreds of thousands of dollars for booze and party favors. These aren't just anecdotes. Empirical evidence confirms the sharp spike in end-of-year consumption. Jason Fichtner, my colleague at the Mercatus Center, has shown that a remarkably large percentage of federal contract spending occurs near the end of the fiscal calendar. Contracting expenditures represent only 11 percent of the overall budget, but due to their more robust transparency requirements they are the only ones we can easily track. For executive branch departments, Fichtner shows that on average, 16.3 percent of contract expenditures happen in September. This is twice as much as the 8.3 percent of the annual budget you would expect to be spent in a given month if the money were split evenly across the year. The State Department and the Department of Housing and Urban Development are even worse, consistently spending a third of their total contracting budgets in September. This happens regardless of administration, party control of Congress, or type of budget resolution. And it is not new. Back in 1978, the Government Accountability Office sounded the alarm with a report finding that agencies on average spent 21 percent of their budgets in the final two months of the fiscal year. How much money are we talking about? In 2017, federal agencies excluding the Department of Defense spent $11.1 billion in the final week of September. Despite Trump's big promises to find cost savings, the Office of the President alone spent $21.8 million on furniture, electrical hardware, supplies, and flooring—four times as much as Barack Obama spent during the same period a year earlier.'s Adam Andrzejewski provides some juicy examples of what certainly looks like reckless end-of-year spending in Forbes, such as $7.3 million by nonmilitary agencies on guns, ammo, and related equipment (including $306,617 by the Department of Agriculture on wares from Glock Inc. and $1.5 million by the Department of Health and Human Services). The government also apparently had a sudden furniture shortage requiring $83.4 million in expenditures, not counting the $23 million on office supplies and equipment. Some $18.6 million went to public relations, $11.7 million to market research and public opinion, and $5.5 million to communications—just in the last week of September. But does a spike in and of itself mean the funds were wasted? There is substantial evidence suggesting that the rush to spend leads to less efficient acquisition outcomes than at other points in the fiscal year. A well-known 2010 study of federal information technology (I.T.) expenditures, for instance, shows a correlation between lower-quality I.T. projects and end-of-year spending. In the private sector, entrepreneurs brag about managing to achieve their goals at lower costs than planned. That means more money wil[...]

$25,000 Challenge Grant Time! Donate to Reason If You Think Government Is Too Big No Matter Who’s President

Mon, 04 Dec 2017 09:10:00 -0500

There is good news and bad news to report on this, the penultimate day of Reason's annual webathon, in which we plead with you for a long week to give us some of your hard-earned tokens of value in exchange for promises to deliver even more and better libertarian journalism and commentary next year. The good news is that with more than 778 individual donors and $112,000 in beautiful booty, this year's haul has already surpassed every year from 2008-2012 on both counts with room to spare. And thank you for that! The bad news is that we've only got about 39 hours left to get to 2013's final count of $163,000, let alone 2016's $187,000 or the $200,000-plus performances in 2014-2015. To get this final sprint toward the finish line started, an anonymous member of Reason's Board of Trustees has pledged up to $25,000 today, but here's the catch—he/she needs YOU people to cough up that much TODAY in order to write all those pretty numbers on the check. The rest of y'all shell out just $16,000 on this manic Monday, and we're leaving a lot of green on the table. Come correct, and we'll have last year's total in our sights by the end of Monday Night Football. Match the challenge with your own damn check for 25 large, and we've got a whole new ballgame. You know what to do. PLEASE DONATE TO REASON RIGHT THE LIVING HELL NOW. Because who else is out here saying, year after everloving year, "No, screw you, cut spending"? Democratic and Republican politics, particularly in the wake of huge moments like Saturday morning's tax reform vote in the Senate, is a decreasingly persuasive game of whataboutism. Free-spenders rediscover a national debt they safely ignored from 2009-2016, fiscal conservatives remember that deficits don't matter when Republicans are in charge, both sides yell "hypocrite," and the long-term fiscal outlook for the United States continues frog-marching toward the abyss. In times like these the majority of Americans who believe that government is doing too much are starved for journalism that approaches the issue consistently, regardless of which party hold power. That's where Reason comes in. Our present moment, in which Republicans have gleefully waved the white flag on cutting government, while Democrats bide their time to unleash Bernienomics on the country as soon as they have the votes, was predicted in our October 2016 cover story "Debt Denialists," which traced how both major parties have since 2014 totally abandoned even the rhetorical nod toward fiscal sobriety. Whataboutism here doesn't fully capture it—no one's even pretending to care about this stuff anymore. But we have, and always will. Long before the Tea Party located the courage to protest the size and scope of the federal leviathan, Nick Gillespie was declaring that President George W. Bush was a "big-government disaster." We were lonely in opposition to both bailout and stimulus, documenting the failures we predicted in real time, and never forgetting to point out that spending trillions of dollars on wars and death is not good public policy. Not content to be Debbie Downers, we've also penned a bunch of constructive, in-depth suggestions, like how to tackle entitlements, how to realign government expenditures with revenue, and "How to Slash Government Before it Slashes You." That last issue is no small thing. Yes, we care about how debt dampens economic growth, and how old-age entitlements crowd out all other spending (and therefore economic activity), and how countries with bleeding balance sheets are putting themselves in unnecessary danger. But as libertarians are always reminding people, a government that's big enough to be $20 trillion in debt, is also going to be big enough to do some truly heinous and/or monumentally trivial things. I've already written during this webathon about how this plays out in the criminal-justice sphere; here are some other Reason headlines to refer to when your statist friends complain that, man, austerity has cut our government to the bone: "The Government [...]

Ye Shall Know Them by Their Debt

Fri, 01 Dec 2017 12:00:00 -0500

Donald Trump certainly knows how to drive the news cycle. When archivists of the future pore through the headlines from September 2017, they will see not only the real-world calamities of Hurricanes Harvey, Irma, and Maria, but such Trump-driven ephemera as calling the leader of North Korea "Rocket Man," accusing old sparring partner Sen. John McCain (R–Ariz.) of delivering "a tremendous slap in the face to the Republican Party," and sending the entire country into a culture-war tizzy over the once-small number of professional football players who kneel in protest during "The Star-Spangled Banner." Jesus taught us that "ye shall know them by their fruits," but as the Republican-led 115th Congress stumbles from one legislative nonstarter to the next, it's becoming clearer that the president's main fruits are his tweets. It took Barack Obama five years to get to the "pen and phone" executive-action phase of his presidency; it has taken Trump around five months. "It's really caught on. It's really caught on," the president reportedly bragged to GOP lawmakers on Day 5 of his fabricated National Anthem feud with the National Football League. One subject that hasn't received much of the president's attention, even though it dominated Republican politics as recently as four years ago, is the national debt. In fact, the month of September included some of the grimmest milestones in recent memory for those of us who prefer government to pay its own way, rather than incur massive debt overhangs that dampen economic growth and impoverish the future. To wit: On September 6, in the wake of Hurricane Harvey (Irma and Maria had not yet hit), only three members of the House of Representatives—Justin Amash (R–Mich.), Andy Biggs (R–Ariz.), and Thomas Massie (R–Ky.)—voted against spending $8 billion on hurricane victims because the bill did not include offsetting cuts. That compares to the 179 Republicans and one Democrat who voted against a $60 billion aid package after Superstorm Sandy back in January 2013. On September 8, Trump signed into law a deal he forged with Democratic congressional leaders to raise the debt ceiling from $19.84 trillion to $20.16 trillion. On the grim anniversary day of September 11, the nation's debt clock crossed the ominous $20 trillion threshold. Most economists agree that growth becomes dampened after a country's ratio of debt to gross domestic product creeps higher than 90 percent; we've been north of 100 percent for some time now, and the Congressional Budget Office estimates that we are on pace to soon break the all-time record set at the height of World War II. On September 18, the Senate passed the $700 billion National Defense Authorization Act, showering more money on the military than even the pro-buildup president had sought. "It's a grandiose spending plan," Sen. Dick Durbin (D–Ill.) observed to The New York Times. Meanwhile, the Republican Congress has shown zero ability to accomplish the minimal task of passing an annual budget, let alone to enact revisions to an Affordable Care Act that is putting future generations even further in the red. In the middle of this monthus horribilis, I asked Amash, one of the last true fiscal conservatives left, what we can expect for the trajectory of federal spending. His answer should be chilling to anyone who favors limited government: "It's looking as bad as any time I've seen since I've been in Congress," he said. "Overwhelmingly, Congress continues to move in the wrong direction, the federal government continues to move in the wrong direction." It's the age-old story: Republicans' interest in spending cuts is inversely proportional to the amount of power they hold. "I think this tends to happen when one party has full control of government," Amash concurred. "That party starts to go on a spending spree, and stops worrying about the debt and deficits." Trump, who campaigned as a vigorous opponent of Bush-style conservatism, now seems poised to preside over a very [...]

What Charles Manson Teaches Us About Harvey Weinstein, Al Franken, and Tax Reform: Podcast

Mon, 20 Nov 2017 15:15:00 -0500

On this week's Reason Podcast, Nick Gillespie, Katherine Mangu-Ward, Peter Suderman, and Matt Welch discuss everything that's wrong with the Republican tax reform bill, what it would mean for Obamacare, whether the neverending stream of sexual-assault revelations will turn America into a desert wasteland of fierce Beyoncé woman warriors, gubernatorial candidate and Ohio Supreme Court Justice William O'Neill's announcement that "in the last 50 years" he has been "sexually intimate with approximately 50 very attractive females," and whether Harvey Weinstein is the "Charles Manson" of the 21st century.

Some of the stories referenced in this week's show:

Audio production by Ian Keyser.

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Film Subsidies Are Real Losers

Mon, 20 Nov 2017 09:45:00 -0500

Put a question to any two economists and you will get three answers back. That old joke is not very funny, and it is even less accurate. On some topics economic analysts are, if not unanimous, at least largely in accord. Example: sports stadiums. As the St. Louis Fed pointed out earlier this year, 86 percent of economists agree that state and local governments "should eliminate subsidies to professional sports franchises." Study after study has found that giving public money to pro sports teams brings little to no return on the investment—and sometimes actually induces negative effects on the local economy. Another example: film subsidies, which get close scrutiny in a new report by Virginia's legislative watchdog agency. According to the Joint Legislative Audit and Review Commission: Virginia's "film tax exemption has little effect on film location decisions, a negligible benefit to the Virginia economy, and provides a negligible return on the state's investment." The film tax credit provides a return of 20 cents on the dollar; direct grants return 30 cents on the dollar. Yet in five years, the commonwealth has more than doubled its film subsidies, from $5.8 million in 2012 to $14.3 million last year. The idea—as with so many other subsidies—is to lure economic activity. But JLARC points out that this hasn't worked—not for Virginia, and not for the many other states that have engaged in a bidding war over Hollywood during the past couple of decades: "The percentage of nationwide film production employment located in California and New York (67 percent) in 2016 has barely changed since 2001 (69 percent)... Georgia, which offers one of the most generous film tax credits in terms of the rate, ranks third after California and New York, but its share of national film production employment is only four percent (12,500 workers)." The JLARC report adds useful data specific to Virginia. But its overall point hardly breaks new ground. Massachusetts has been fighting over its film subsidy since 2008, when the state issued its first critical review of the program. According to the Massachusetts Department of Revenue, each job ostensibly created by the subsidy costs the state $118,000. "State Film Subsidies: Not Much Bang for Too Many Bucks," was the title of a 2010 study by the liberal Center on Budget and Policy Priorities. The report noted that "subsidies reward companies for production that they might have done anyway." And because most people outside California and New York don't have the requisite skills, "the best jobs go to non-residents." And "subsidies don't pay for themselves. The revenue generated by economic activity induced by film subsidies falls far short of the subsidies' direct costs to the state." Two years later, the conservative Tax Foundation reported similar findings: "Surveying the literature, we found that aside from studies paid for by economic development authorities and the Motion Picture Association of America, an industry trade association, almost every other study has found film tax credits generate less than 30 cents for every $1 of spending." "Film Tax Incentives Are a Giant Waste of Money, New Study Finds," ran a headline in Variety last year. The story reported on a study by the University of Southern California Price School of Public Policy's Michael Thom. He found that tax credits produced zero to minimal employment gains and zero to only short-term gains in wages. Sales tax and lodging tax breaks also accomplished bupkes, and "none of the incentives had a measurable effect on the share of the motion picture business located in each state." To be fair, having a major motion picture filming on location in your hometown brings non-monetary benefits, just like having a pro sports team in your hometown does. Many Richmonders thought it was cool when Daniel Day-Lewis was spotted having lunch in Shockoe Bottom six years ago, dressed in character for the film "[...]

Republicans Officially Give Up Trying to Cut Spending

Fri, 20 Oct 2017 14:54:00 -0400

After the rise of the Tea Party in 2009 as a grassroots expression of revulsion at government bailouts, spending, and Obamacare; after a series of insurgent Tea Party primary victories in 2010 over big-spending incumbents and hand-picked establishmentarians; after Republicans re-took the House that November thanks in part to that new jolt of fiscally conservative energy; after the House majority from 2011-14 successfully used its power of the purse to force debate and at least some temporary agreements on the debt ceiling, long-term entitlements, and year-on-year spending, and then after Republicans re-took the Senate and eventually the White House…after all this activity, when it finally came time for the GOP to stand up and demonstrate its values of fiscal stewardship and limited government, you could count the number of Republicans voting to restrain government spending on exactly one finger: src="" allowfullscreen="allowfullscreen" width="560" height="340" frameborder="0"> Sen. Rand Paul (R-Kentucky), was the only Republican no-vote in yesterday's 51-49 Senate approval of a $4 trillion budget resolution for fiscal year 2018. The resolution, more of a vague blueprint for the next decade, includes $43 billion next year for "Overseas Contingency Operations" (OCOs), a notorious budgeting gimmick that has been responsible for more than $1.7 trillion in off-budget spending this century. Quite unlike the deficit-neutral House budget resolution that passed two weeks ago, the Senate version assumes $1.5 trillion in new debt, and does not make the House's $203 billion in domestic spending cuts (the Senate's final tally is closer to $0). So how did the fire-breathing fiscal conservatives in the House Freedom Caucus react? By agreeing to not even bother going to conference committee to reconcile the two different budgets, so as not to slow the grand prize of tax cuts by even a couple of weeks. Another step toward reducing the tax burden on all Americans and growing our economy. Let's get #TaxReform done. — Mark Meadows (@RepMarkMeadows) October 20, 2017 When given the chance to take seriously government over-spending, and the growth-stunting debt overhang that comes with it, only one Republican is on record yelling "Stop." As Ed Kilgore aptly noted in New York magazine, "all the GOP deficit-hawkery that reigned during the Obama presidency and early in the Trump presidency vanished literally overnight." Not only that, the budget resolution's existing "cap" on defense spending is by all reported accounts a fiction: Several senators noted that the discretionary toplines in the plan — which would limit fiscal 2018 defense spending to $549 billion and nondefense to $516 billion — have little meaning since most Democrats as well as Republicans see those limits as too low. […] GOP and Democratic leaders and the White House have begun to negotiate a deal to raise the defense and nondefense caps, likely for two years, people with knowledge of the talks told CQ. Great job, everyone. Does it get worse? Sure. Check out the kicker to this Chicago Tribune article: Under congressional rules, the nonbinding budget resolution is supposed to lay out a long-term fiscal framework for the government. This year's measure calls for $473 billion in cuts from Medicare over 10 years and more than $1 trillion from Medicaid. All told, Senate Republicans would cut spending by more than $5 trillion over a decade, though they don't attempt to spell out where the cuts would come from. In reality, Republicans aren't serious about implementing the measure's politically toxic proposals to cut Medicare, food and farm programs, housing subsidies, and transportation. In fact, lawmakers on both sides are pressing to break open the measure's tight spending "caps" on the Pentagon and domestic agency operations and pass tens of bi[...]

Deadly California Wildfires Spark Needed Debate About Current Spending

Fri, 20 Oct 2017 00:01:00 -0400

In the days before Facebook and other social media, it was a matter of course to wait a few days after tragedies strike before making political and policy points about the latest event. We always need to show compassion for the suffering—and wait until more of the facts roll in before getting up on that soapbox. At the OC Register, we used to refer to the late editorial writer Alan Bock as "Reverend Bock" because he was so good at offering condolences rather than lectures. But, ultimately, it's the role of opinion writers to provide constructive policy advice after destructive events. We see this following the Las Vegas massacre this month, where gun availability became an understandable topic, and after recent hurricanes, where relief efforts received scrutiny. Now, it's time to think about wildfires. It's hard not to think about them in northern and Southern California. My house is 80 miles from Napa Valley, yet the air is thick with smoke. Thousands of people have been evacuated from their homes. At least 41 people have died and hundreds are missing as 16 fires engulf more than 160,000 acres in a heavily urbanized area. More than 3,500 homes and businesses have been destroyed, including wineries. This is terribly sad. Anything one says about other people's misery comes across as inadequate or trite, but we should have heavy hearts for what our fellow Californians are going through. Wildfires are, of course, a regular occurrence. The fields and woods typically are dry this time of year. It gets windy. Power lines fall. Wildfires spread like, well, wildfire. What should we learn for next time? The debate already is contentious. "Climate change is lengthening the fire season in the West," the San Jose Mercury News argued. "Congress and Western state legislatures should be amping up prevention—just as we strengthen dams to help prevent flooding." The newspaper also pointed to (and downplayed) conservative arguments in favor of more logging, which could "reduce the severity of fires." Those are important discussions, but involve broad topics of climate policy, land-use regulations and federal budgetary priorities. I'm more focused on the concerns on the ground. In particular, there's been talk about the state having too few firefighters and insufficient resources. For instance, news reports suggest that instead of working 24-hours on and then having 24 hours off, firefighters are working nonstop and getting little sleep. We're increasingly dependent on firefighters from other states. Like all budgets, firefighting ones are limited, wherever the wildfire-fighting funds come from. And public-safety budgets are consuming the bulk of municipal spending these days. Most of that has to do with pay and benefit levels. The median total compensation cost for a California firefighter ranges from $145,000 for state agencies to more than $196,000 in cities and counties, according to some estimates. Firefighters can earn $300,000 in overtime. The base salaries may be relatively modest, but overtime, pension obligations (firefighters typically retire at age 50 with 90 percent or more of their final year's pay) and other benefits drive these costs into the stratosphere. Furthermore, California has some of the highest firefighting costs in the nation. That largely has to do with our dry climate and geography, with vast wilderness areas abutting massive population centers. But this shortfall also is because of the salary structure and pension system, with the way governments spend their existing resources. There's a reason that thousands of applicants may line up for a small number of firefighting openings. Those pay packages are hard to fathom considering that a majority of the nation's firefighters do this work on a volunteer basis. This may be a difficult time to discuss the compensation of firefighters. Firefighting isn't one of the more dange[...]

Budget Director Mick Mulvaney: 'We Need to Have New Deficits'

Tue, 03 Oct 2017 14:58:00 -0400

In March 2015, just after a newly sworn in Congress had celebrated the GOP retaking the Senate by passing a budget that blew through the spending discipline of the previous four years, Mick Mulvaney, then a leading fiscal conservative in the House of Representatives, wrote a Wall Street Journal op-ed under the headline: "The Republican Budget Is a Deficit Bust." In it, the House Freedom Caucus member complained that, compared to the hold-the-line days of 2011, "debt and deficits" were now "passé," and stated uncategorically that "There is no honest way to justify not paying for spending, no matter how often my fellow Republicans try." Well, at least he warned us. This weekend, Mulvaney, now director of the Office of Management and Budget, went on Fox News Sunday to defend President Donald Trump's framework for tax reform. Host Chris Wallace pointed out that many analysts believe Trump's plan would blow a bigger hole in the national debt. "Now, back when you were in Congress, you were a deficit hawk," the anchor said. "What happened, sir?" While the real answer seems obvious enough—the GOP's fiscal discipline is forever in inverse proportion to the amount of power it holds—watching Mulvaney swap spending-cuts hardassery for the fairy dust of economic growth is still a marvel to behold: I've been very candid about this. We need to have new deficits because of that. We need to have the growth, Chris. If we simply look at this as being deficit-neutral, you're never going to get the type of tax reform and tax reductions that you need to get to sustain 3 percent economic growth. We really do believe that the tax code is what's holding back the American economy.... Growth really is what's driving all of this, and growth is what our focus is, which is why we're willing to accept increased short-term deficits in exchange for that long-term payoff.... Without 3 percent growth, Chris, you'll never balance the budget at 1.8 percent growth again. And as the budget director—you asked me an opening question, what happened to me? Why am I, why am I now interested in deficits? The only way you balance the budget in this country long-term is through sustained economic growth. And that's what everything we are doing in this administration is aimed at that end goal. Mulvaney does make some good noises in the interview about the administration's vigorous regulatory work, on which he is a key player. But his abject surrender on spending cuts, coming after a month of debt ceiling hikes, $700 billion defense bills, hurricane blank checks, and ominous debt milestones, is emblematic of what his old Freedom Caucus pal Rep. Justin Amash (R-Mich.) means when he says, "It's looking as bad as any time I've seen since I've been in Congress." Tax cuts and regulatory reform in isolation can indeed spur growth. But do you know what dampens the stuff? Debt. That's why observers such as National Review's Kevin Williamson call Mulvaney's baby "An Anti-Growth Tax Cut," remarking: "Republicans want to cut taxes by $1.5 trillion—while the government already is running a deficit—and they propose to offset those cuts with wishful thinking." Mulvaney used to be a leading realist in the face of such Beltway fantasia, but now he's been reduced to being Trump's Freedom Caucus arm-twister on budget gimmickry, Obamacare revamps, and even reviving the long-hated Export-Import Bank. As he wrote in his Wall Street Journal piece just 30 months ago, "Because of the hard decisions that defense hawks and deficit hawks had made together, Republicans were gaining the moral high ground on spending. Last week we lost it, and it will be harder to regain the next time." No kidding. Some related Reason headlines: * "The GOP's New Tax Plan Proves Republicans Never Cared About the Federal Deficit" * "Politicians Will Disappoint You" * "Trump's Half-Baked Bu[...]

Fake Scandal: 'DeVos Uses Private Jet for Work-Related Travel'

Thu, 21 Sep 2017 15:17:00 -0400

Today The Hill published a story about Education Secretary Betsy DeVos and then tweeted it out. Here's the tweet: DeVos uses private jet for work-related travel — The Hill (@thehill) September 21, 2017 I get it; stories about government officials abusing the public funds for travel are hot right now. After all, Treasury Secretary Steven Mnuchin was just caught trying to snag a military jet for his European honeymoon. And Health and Human Services (HHS) Secretary Tom Price is in trouble for chartering five flights last week alone. Rightly so. But wait! Clicking on the Hill story yields some highly relevant info: Education Department Press Secretary Liz Hill told the Associated Press on Thursday that DeVos travels completely on her own dime, accepting no government reimbursement for flights or other expenses. Of course government officials have special needs, but they are too often used to justify status-oriented extravagance. In Mnuchin's case, the request for a government jet was initially claimed as a necessity for a member of the National Security Council. But as The New York Times dryly explained: "Treasury officials withdrew the request after finding an alternative way to communicate about government matters securely." As for Price, an HHS spokesman said "when commercial aircraft cannot reasonably accommodate travel requirements, charter aircraft can be used for official travel." Which sounds sort of OK-ish until you realize one of those flights was from D.C. to Philadelphia. As Politico noted when it broke the story: On one leg of the trip—a sprint from Dulles International Airport to Philadelphia International Airport, a distance of 135 miles—there was a commercial flight that departed at roughly the same time: Price's charter left Dulles at 8:27 a.m., and a United Airlines flight departed for Philadelphia at 8:22 a.m., according to airport records.... In addition, Amtrak ran four trains starting at 7 a.m. that left Washington's Union Station and arrived at Philadelphia's 30th Street Station no later than 9:58 a.m. The least-expensive ticket, on the 7:25 a.m. train, costs $72 when booked in advance. It is just a 125-mile drive from HHS headquarters in downtown Washington to the Mirmont Treatment Center outside of Philadelphia, where Price spoke. Google Maps estimates the drive as about 2½ hours. A one-way trip was estimated by travel planners to be about $30 in gasoline per SUV plus no more than $16 in tolls. DeVos is lucky enough to be a very rich woman. But you needn't be wealthy to be a good steward of taxpayer money—luckily, domestic and international commercial flights are numerous, reliable, and relatively cheap (though not as numerous, reliable, and relatively cheap as they could be—read all about it in the next issue of Reason). Chartered jets from D.C. Philly are absurd, but so is trying to lump DeVos in with Price and Mnuchin. After all, as The Hill reported: During her time in office...DeVos has charged travel expenses to the government just once: $184 to the Department of Education for round-trip Amtrak ticket between D.C. and Philadelphia. [...]

Justin Amash on Government Spending: ‘It's Looking as Bad as Any Time I've Seen Since I've Been in Congress’

Fri, 15 Sep 2017 18:33:00 -0400

It's been a gruesome month for those of us who believe the federal government should spend no more than it takes in. On Sept. 6, only three members of the House of Representatives—Justin Amash (R-Mich.), Andy Biggs (R-Ariz.), and Thomas Massie (R-Kentucky.)—voted against spending billions on hurricane victims without offsetting cuts, quite a turnaround in Republican sentiment from just four years ago. On Sept. 8, President Donald Trump signed into law a deal he made with Democratic congressional leaders to raise the federal debt ceiling from $19.84 trillion to $20.16 trillion. (The debt limit had been the GOP's single most effective bit of leverage in restraining federal expenditures under President Barack Obama from 2011-2014, until Republicans retook the Senate and replaced that tool with a shrug emoji.) Then on Sept. 11, sure as mushrooms follow rain, the nation's debt clock zoomed past the ominous $20 trillion mark. At a time of increasing comity between Trump and the Democratic leadership, all short- and long-term forecasts point to two main conclusions: Much more spending, and much more debt. So yesterday, I asked Amash what his thoughts and worries were about government spending in the near future. "It's looking bad," he replied. "It's looking as bad as any time I've seen since I've been in Congress." More from our interview, which came on Sirius XM Insight's Tell Me Everything with John Fugelsang: I think this tends to happen when one party has full control of government: that party starts to go on a spending spree and stops worrying about the debt and deficits. We're going to have to be vigilant here. There have been a lot of things that have passed over the past few weeks that waste a lot of money, that spend too much. When we spend for things that the American people do want, and many people want this kind of disaster relief funding for example, then we have to make sure that we're paying for it. We have to make sure that we make spending cuts elsewhere to pay for what's going on today. Otherwise we're just taxing the next generation. We're telling the next generation of Americans that they have to pay for the stuff that we want today. That's immoral. Let's stay on top of this, keep pressing members of Congress, and don't forget about it. The Tea Party rose up a few years ago because of spending issues, because the government was getting too big. Now we have Republicans in positions of power and influence, and we have to make sure that we stay true to that message, that we want a limited government, we want spending to be brought down, and we want to get our debt under control. Later in the interview, after going over more positive news such as the Amash-led effort to block some of Attorney General Jeff Sessions' odious moves on civil asset forfeiture, I asked whether we're seeing at least some preliminary indications that Congress, whose abdications he has long criticized, was finally beginning to do its job. Amash's answer: I think they're doing their job in some instances, but overwhelmingly Congress continues to move in the wrong direction, the federal government continues to move in the wrong direction. Little has changed in that respect. I see some signs that on the spending front, which we already talked about, things are getting worse. You'll have some positive signs, a few steps forward, but many steps back. I think it's going to take a lot more from the American people to get things back on track. During a video interview with me in July, the libertarian Republican told me that "Hopefully, over time, [the] two parties start to fall apart." Watch: src="" allowfullscreen="allowfullscreen" width="560" height="340" frameborder="0">[...]

This Column Will Pay For Itself!

Wed, 13 Sep 2017 11:30:00 -0400

The Dutch love their bicycles, if we are to believe what we read in The New York Times. A quarter of all trips are made by bicycle, the paper reports, "and the federal government has been building up the country's bike infrastructure over the last decade." This is very nice, but also: So what? Here's what: "The yearly investment of roughly 500 million euros, or about $600 million, pays for itself, proponents say, by reducing health, social and other costs." Mirabile dictu! A $600 million expenditure that doesn't cost a thing. If only America could import this magical method of financing government initiatives! Apparently it can. According to the Center for Immigration Studies, President Donald Trump's border wall needs to stop as little as 9 percent of illegal immigrants to pay for itself. How? Ostensibly, it will save government expenditures on education, welfare, and things such as "police, fire, highways, parks, and similar services." Hmmmm. It makes sense to say adding unlawful border-crossers could impose higher costs on the public schools. But it's laughable to claim America will have to build more highways because of them. And when is the last time your local government representatives said they had to raise your taxes because the parks are overrun with illegal immigrants? Then there's "similar services" — a phrase that, like "social and other costs," does much work without saying much at all. It's the kind of vague terminology you're supposed to skim over without further thought. You know what else supposedly would pay for itself? An $8 billion government program to provide child care in Canada. And how would it do that? Well, Canada has about 150,000 stay-at-home moms, and if every one entered the workforce, that would boost Canada's GDP about 2 percent, which would generate $8 billion in taxes. Ta-da! Economic growth is not good just for child care. It's a miracle elixir that makes many proposals pay for themselves. When he pitched Trump's tax-cutting proposal, for instance, Treasury Secretary Steven Mnuchin promised that "the plan will pay for itself with growth." Economists chortled. It's the same story for a proposed $73 million baseball stadium for the Pawtucket, R.I., Red Sox. Rhode Island Public Radio reports that "supporters say the stadium would spur additional development in Pawtucket and more than pay for itself over 30 years." The same apparently goes for, yes, a lacrosse stadium in the Ohio village of Obetz (pop. 4,500). The Columbus Dispatch notes that village administrator Rod Davisson expects "the facility will essentially pay for itself by generating its own revenue, attracting business, creating jobs and increasing the community's overall value and appeal." Sure it will. They said the same thing about the new stadium for the Braves in Gwinnett, Georgia: "Commissioners assured residents the stadium would pay for itself and spark economic development nearby," the Atlanta Journal-Constitution noted five years ago. But "the county is still struggling to find money to pay the stadium debt." In an update this January, the paper wrote that the county is refinancing the debt, which it hopes will allow it to end the practice of diverting "hundreds of thousands of dollars in hotel-motel tax money to help cover payments." In fact, just about every new stadium financed with public funds is justified on the grounds that it will pay for itself through spin-off development and, um, social and other benefits. In just about every case, it's bunk. High-cost early childhood education? That will earn you a return of 13 percent a year and therefore "beats the stock market hands-down," according to NPR. Likewise, a study several years ago purported to show that an $847 million "investment" in pre-K in Virginia would pa[...]

$20,000,000,000,000 in Debt and Rising

Tue, 12 Sep 2017 20:30:00 -0400

The deal to raise the debt ceiling bumped what Washington has borrowed to more than $20 trillion.

Democrats and most Republicans got spending they wanted, plus suspension of the debt limit. Trump got the hurricane Harvey relief spending that he wanted.

But this is a bad deal for us taxpayers and everyone's children. Our debt now exceeds the value of everything that America produces in a year. Soon, warns economist Ed Stringham, we'll be like Greece; forced to make sudden cuts because we cannot borrow more to finance our spending addiction.

John Stossel fears the U.S. government will then just print more money. That's what countries like Venezuela and Zimbabwe have done. That didn't work out well.

Let's avoid that fate. Cut spending, now!

Actually, the federal government could avoid a crisis if it just reduced future spending increases to the rate of inflation. But the big spenders won't even do that.

Produced by Maxim Lott. Edited by Naomi Brockwell.

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'The New Center' Is Full of the Same Old Worship of a Powerful Federal Government

Tue, 12 Sep 2017 14:15:00 -0400

Bill Kristol of the conservative Weekly Standard and William Galston of the more liberal Brookings Institution have teamed up to explore what "the center" of politics looks like in an era of President Donald Trump. They've just released the results in a report called "Ideas to Re-Center America." The concept should be familiar by now—some guys on both sides think that what will fix our polarized America is a path right down the "middle" of American politics. Kristol told The Washington Post that the process of writing the report made him discover "there was more being missed by Republican politicians and think tanks than [he] realized." So what does this new middle look like? Well, apparently Joe Average is really, really angry about Chinese theft of intellectual property. Wait, what? "The New Center" cares so much about intellectual property theft and patent reform that it's one of the seven major planks of its platform. Read this policy proposal and ask yourself if it sounds like Main Street populism or if it sounds like the work of some think tanks and lobbyists with a vested interest in certain outcomes: Tariffs are the nuclear option of international trade and can spur a counterproductive trade war. But China and other countries must understand there are real consequences for violating U.S. intellectual property protections. Two measures passed by Congress in the 1970s—Section 301 of the Trade Act of 1974 and the International Emergency Economic Powers Act—provide the president broad latitude to investigate trade practices that are harmful to the U.S. and to impose sanctions. I'm sure there's absolutely no self-interested parties in Washington, D.C., who recommended to Kristol and Galston that they include this bit: In 2011, Congress passed the Budget Control Act—commonly known as the "sequester"— which slashed discretionary spending across the federal government, with little consideration for the effectiveness of affected programs. Economic returns from basic government research are so significant—with a $1 investment in basic government research spurring over $8 in additional industry investment—that Congress should restore and increase basic research funding. Setting sarcasm aside (briefly), the entire report reads like it was written by Beltway professionals, and Kristol acknowledges to the Washington Post that it's where many of these ideas came from. Let's not necessarily talk smack about think tanks. The libertarian Cato Institute was consulted for this report (and of course, Reason Foundation is a think tank that publishes this very blog and pays me). But this is the "No Labels" shtick. It sells technocratic management of citizens' lives as some "moderate" alternative to the left and the right, but it's still big government controlling what people can do and ignoring side effects that lead to corruption. Consider the abuse potential on this recommendation on skills training: In early 2017, there were 6 million job openings even as 6.8 million Americans were looking for work. This is a stark reminder that too many Americans don't currently have the skills employers need. One way to fix this imbalance would be for the federal government to make more of its educational funding (e.g. Perkins loans) conditioned upon students pursuing majors in areas where there are projected future job shortages. Who would be projecting these future job shortages and who will be lobbying for certain recommendations? An instructive warning: The economic stimulus plans pushed by President George W. Bush and supported by President Barack Obama created a land rush in the Southern California desert to develop dozens and dozens of solar energy projects. A small numbe[...]

City Budgets Squandered on Pointless Union Giveaways

Fri, 01 Sep 2017 00:01:00 -0400

Talk to almost any city or school district official in California, and it won't take long before the poor-mouthing begins. Budgets are stretched to the bone. There's barely enough money to pave the roads and pay for textbooks. If only taxpayers would pay more, there might be enough money to improve services or better educate the kids. Yet with every tax hike and bond measure, services never really improve. That's because the problem isn't a lack of money, but the foolish way that officials spend what they've got. And few cities have behaved of late more foolishly than Santa Ana, Calif., whose policies should offer a warning for others. Earlier this month, the Santa Ana City Council voted unanimously to approve the county's first citywide "project labor agreement" for most city-funded construction projects. Councilman Jose Solorio called the vote "historic," which it is, but only in the sense that it's a historically bad move that will hurt Santa Ana residents by assuring they get fewer public services. PLAs are union-drafted construction agreements that essentially mandate the use of unionized contractors on most city projects. Supporters made a big deal of this PLA's hiring preferences for local workers, but that's largely a mirage. Cities cannot require that workers come only from certain ZIP codes, so they set easily evaded "goals" as a means to sell this giveaway to local residents. Unions need only exert their "best efforts" to hire from the local labor pool. The city's own staff report estimates that "this agreement will add an additional 10-20 percent for public work on the construction phase." The report says that may mean an additional $2.7 million to $5.4 million a year. That's real money that could be used for real projects in a city that often has serious budget woes. Santa Ana residents ought to be angry about such "generosity." Yet news reports quote Solorio arguing the city doesn't anticipate any new costs beyond hiring a full-time person to administer the agreement, because the city already pays "prevailing wage." I take umbrage at hiring a new person to administer an unneeded contract rather than serve residents, but that's a side point. The main point is that PLAs do boost costs. Solorio obviously hasn't done his homework on this widely-researched issue. Yes, cities already pay artificially inflated prevailing wages. With a PLA, the wage mandates won't change, but the number of bidders on contracts will drop precipitously. Less competition means higher prices. The contract limits nonunion contractors to those with five or fewer employees. The bigger nonunion contractors already have a workforce they know and trust, but to bid for a city project they'll have to use workers from the union hiring hall. Most firms simply won't bid for these jobs. This is how trade unions use political muscle to shove aside competitors. They also get to micromanage city contracts. City residents aren't going to benefit. PLAs are a bad idea, but they are spreading. The Orange County Register reported last week that the Santa Ana Unified School District is considering entering into a similar "community workforce agreement." Only one other school district in the county (Anaheim Unified School District approved one last month) has one. Santa Ana schools ought to know better. In 1999, voters approved a school bond that promised to build 13 new schools. After it passed, the district voted to sign a PLA. When all was said and done, Santa Ana was only able to build five schools because of insufficient funds. In poor, struggling districts, this is an outrage. The kids suffer to help well-paid union officials. There are all sorts of other problems with these [...]