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Government Spending



All Reason.com articles with the "Government Spending" tag.



Published: Sun, 25 Jun 2017 00:00:00 -0400

Last Build Date: Sun, 25 Jun 2017 13:08:04 -0400

 



The Illusory Savings From Cutting Medicaid

Sun, 25 Jun 2017 00:00:00 -0400

When economists talk in their sleep, they say, "There is no such thing as a free lunch." This axiom is drilled into them from day one of their undergraduate education and never leaves their minds. Any economist who tried to deny it would find herself suddenly choking in pain and unable to speak. What it means is that if the government does something that costs money, some human somewhere will bear the expense. "Free" public schools, "free" parks, and "free" roads all have to be paid for by the citizenry. Collectively, we can't get something for nothing. This useful insight has long been offered as an objection to costly government programs. But it applies as well to measures that extract savings from costly government programs. In their replacement of Obamacare, congressional Republicans promise to achieve greater frugality in Medicaid, which helps low-income Americans, without inflicting more hardship. The melancholy truth: Not gonna happen. Last year, total spending for Medicaid amounted to $533 billion. Nearly two-thirds of the funds come from the federal government, and the rest comes from the states. Some 69 million people are covered by it, up from 54 million in 2012. The expansion was intentional. Under the Affordable Care Act (ACA), Washington signed on to cover 100 percent of the cost of expanded coverage at the outset, with its share falling to 90 percent from 2020 on. The health care plan offered by Senate Republicans, like the one passed by the House, would reverse the trend by giving states a certain amount per Medicaid recipient or a block grant for a fixed amount. Either way, the federal contribution would steadily shrink compared with what it would do under the ACA. Under the House plan, the federal savings would amount to $880 billion over a decade. The Senate bill is supposed to wring out even more. Supporters say Medicaid enrollees would be better off because states would be free to redesign their programs to make them more efficient and responsive to beneficiaries. But remember that fundamental economic proposition. Just as you can't get something for nothing, you generally can't get more for less. The House changes, according to the nonpartisan Congressional Budget Office, would reduce the number of people on Medicaid by 14 million by 2026. Many people who now have coverage would lose it, and many who would have become eligible would be turned away. States could always protect the vulnerable by boosting their contribution to make up for the lost federal funds. But that would mean requiring their taxpayers to foot the bill. Republicans say the changes would be positive because Medicaid coverage is often useless. House Speaker Paul Ryan claims that "more and more doctors just won't take Medicaid." In fact, 69 percent of physicians currently accept new Medicaid patients, and the percentage has been stable for decades. It's lower than for privately insured patients, because Medicaid provides doctors with lower reimbursements, but budget cuts would probably exacerbate that malady. Some recipients would get cut off under the GOP plans, and some would get less coverage. That—surprise!—would leave them worse off, because comprehensive health insurance is a good thing to have. Medicaid coverage, reports the Kaiser Family Foundation, is proven to ensure "earlier detection of health and developmental problems in children, earlier diagnosis of cancer, diabetes, and other chronic conditions in adults, and earlier detection of mental illness in people of all ages." Cutting back Medicaid coverage would save taxpayers some cash, but only by taking it from others. The reduction would raise costs for low-income people and most likely degrade their health. It would also increase the financial load on hospitals, which treat a lot of people who have no coverage. A study by scholars at Northwestern University and Columbia University figured that each new uninsured person costs nearby hospitals an average of $900 a year. Less Medicaid coverage would strain the finances of struggling hospitals, particularly small ones i[...]



California Lawmakers Spend More, Avoid Reform

Fri, 23 Jun 2017 00:30:00 -0400

Legislators in California announced a budget deal last week that spends a record $125 billion in the general fund. But most interesting isn't what's in the deal, but what isn't. There's plenty of new spending, of course, but not so much that it outpaces the rate of inflation. There are controversial "trailer" bills that attempt to change the rules in an ongoing recall election and take away power from elected members of the Board of Equalization, the state's tax board. Missing are any attempts at serious reform of existing government programs or ways to stretch the already hefty tax dollars Californians send to Sacramento. The budget's authors talk quite a lot about funding important priorities, especially the public-education programs that consume an awe-inspiring 43 percent of the general fund. Yet Gov. Jerry Brown (D) and the Democrat-dominated Legislature refuse to confront the main reason such programs typically are so costly and ineffective: public-sector unions. These unions are so powerful that they stifle cost-saving reforms in every conceivable area of government – from the prison system to policing to transportation programs to the public school and college systems. Union work rules don't allow for experimentation and creativity, or even the firing of poorly performing employees. The state is thus left with just one approach: throwing more money at the problem. This is why every year's budget kerfuffle centers on figuring out ways to come up with more money to spend in the exact same ways. The only difference this year is, because of Democratic supermajorities in both houses of the Legislature, the state now plans to spend more than ever. What else would you expect, given that the minority party has no power to thwart such efforts? The investigative news site CALmatters provides perhaps the best example of the disconnect between higher spending and better outcomes, noting in a June 18 report that there's no evidence the tens of billions of dollars the state has pumped into failing schools under its new public education system have done much of anything to help the most disadvantaged students. The investigation found "the biggest districts with the greatest clusters of needy children found limited success with the policy's goal: to close the achievement gap between these students and their more privileged peers. Instead, test scores in most of those districts show the gap is growing." The same is true for myriad programs, but as the single largest chunk of the budget, any failures in the K-14 education system certainly have the deepest financial ramifications. As I reported recently for the California Policy Center, while voters in the Los Angeles Unified School District and elsewhere are supporting candidates who back expanded access to charter schools for poor children, state legislators are backing legislation pushed by the California Teachers' Association that would make it much harder for locals to start such schools. Charters operate with less funding than comparable school districts, yet often (but not always, of course) show remarkable progress in closing the achievement gaps that aren't being closed by truckloads of new state spending. Think of it this way: If a system is failing, there's little chance that giving the same agencies more money to do things in the same way will yield significantly different results. It's obvious, but not to legislators or Gov. Brown. The budget deal also includes a provision that lets the state borrow $6 billion from a short-term investment fund to pay down some of California's growing pension debt. It's another example of the state's money-dumping approach to a massive financial problem. Instead of taking aim at overly generous pension formulas, or myriad pension-spiking and disability abuses, the state is borrowing money at low interest rates from one account and putting the money into another account (that is supposed to earn higher rates) to chisel away at some pension debt. Some would compare this to a homeowner borrowing money from a l[...]



Trump's New Line on NATO: Expensive, But Worth It!

Fri, 09 Jun 2017 20:38:00 -0400

Candidate Donald Trump delighted some and depressed others with a seeming willingness to rethink the necessity of our NATO alliance. He worried out loud about how much it cost us versus how little it cost our allies, most of whom are not living up to their commitment to spend 2 percent of their GDP on their military. He even called NATO straight-up "obsolete" in the post–Cold War, war on terror age.

(image)

Today Trump gratified NATO fans by saying out loud that of course we will always live up to our obligations under its Article 5, the most dangerous part, requiring us to come to the defense of any ally in case of attack (even, say, countries like recent entrant Montenegro, a corrupt nation, home to illegal arms smuggling and dealings and on the edge of many potential conflicts with neighbors).

In keeping with Trump's general fecklessness about spending, he uses NATO—in his eyes that once-obsolete alliance in which our fellow members took advantage of us—as an excuse for more U.S. spending.

As Huffington Post reports today, Trump said at a Rose Garden press conference this morning that our need to go to war in defense of our NATO allies is "one of the reasons that I want people to make sure that we have a very, very strong force by paying the kind of money necessary to have that force."

Our NATO commitments and expenses of billions and over 60,000 troops may reasonably seem less than relevant to actual U.S. security concerns in the age of the war on terror. But when it comes to keeping the military spending ball rolling to crushing debt and beyond, Trump will go along, any earlier rhetoric questioning spending or commitments ignored.




Prison Unions Punish California Taxpayers

Fri, 09 Jun 2017 01:00:00 -0400

If you ever wondered what's wrong with California's state government, then mull over this simple example: While California cuts its prison population and staff, it's increasing the amount of money it spends to operate its massive prison system. In the private sector, a decline in the number of "customers" and workers would mean lower overhead. But in state government—or, at least, this state government—the opposite is true. The higher costs are driven by escalating pay and benefit packages negotiated by unions that represent prison guards and other staff. It's an example of how powerful public-sector unions keep the state from getting spending under control, even when the need for such spending plummets. That example comes from a new report by the Vera Institute for Justice. "Despite a decline in both its prison population and the number of prison staff, California's prison spending rose $560 million between 2010 and 2015, primarily because salary, pension and other employee and retiree benefits continued to increase, also a result of union-negotiated increases," explained the New York-based think tank that promotes criminal-justice reform. California is unusual from a national perspective, per the report. Thirteen states have reduced prison populations since 2010, but they've also cut their prison spending by $1.6 billion. Seven states have increased their populations, but have managed to decrease their prison spending, (by $254 million). Fifteen states have increased their prison populations and also increased their total prison spending by a half-billion dollars. California is in an ignominious group of 10 states that saw declines in the prison population since 2010, but which increased spending by $1.1 billion. Furthermore, California's spending increase accounts for more than half of that number. California has by far the costliest system of incarceration in the nation at more than $75,000 per inmate per year—more than triple the average cost of the 18 states with the least-costly rates. Regardless of one's views on prison-reform issues, it's clear that California gets far less bang for its buck than other states. The savings could go to other parts of the criminal-justice bureaucracy, or to other programs or, heaven forbid, back to taxpayers. Instead, the money goes to maintain a system that isn't changing to reflect new realities. The study focuses on the 2010 to 2015 period, and some major prison-related laws—e.g., 2014's Proposition 47, which reduced many felonies to misdemeanors and resulted in further reductions of prison populations—got started toward the end of the study period. Yet, if anything, these disturbing spending trends only accelerated in the ensuing years. "Gov. Jerry Brown's spending plan for the fiscal year that starts July 1 includes a record $11.4 billion for the corrections department while also predicting that there will be 11,500 fewer inmates in four years because voters in November approved earlier releases for many inmates," wrote Don Thompson for The Associated Press. "Since 2015, California's per-inmate costs have surged nearly $10,000, or about 13 percent." That's a whopping increase in a short period of time, and even more amazing given that state just raised gas taxes because it claims to be out of cash. Some argue that there was no "safety dividend" from the passage of Prop. 47, the AP article explained. That's an unresolved point. After hitting record lows, crime rates in some big California cities have gone up the past couple of years. There is no definitive data-driven answer to the causes yet, but many conservatives blame Proposition 47 and the governor's "realignment" policies, which fulfilled a federal prison overcrowding order by moving many state prisoners to county jails. Of course, early-release decisions and the like should be driven by public safety and civil-liberties issues rather than simply cost concerns. But even if there were no cost savings to the criminal-justice systems [...]



Trump's Medicaid 'Cuts' Actually Increase Federal Spending

Mon, 29 May 2017 12:00:00 -0400

Last week, President Trump proposed massive spending increases for Medicaid. Of course, most of the media didn't report it that way. They reported that the president's proposal "slashes spending." That he wants to cut "at least $610 billion" from Medicaid. That "Trump's Budget Cuts Deeply Into Medicaid." And so on. That might be vaguely true in the Washington sense. It's not at all true in the real-world sense. Here's the difference. If you look at the actual White House budget proposal, you'll note that it includes tables for "baseline" spending and "proposed" spending. Baseline spending is spending that would occur if nothing changes—if Congress doesn't order any new aircraft carriers, and America doesn't start any new wars. If entitlement eligibility rules remain the same, and expected benefits for each recipient neither shrink nor grow. Things like that. Make some minor adjustments for inflation and population growth and, barring some unforeseen windfall or cataclysm, you can project how much a program will cost in future years. The baseline spending curve for Medicaid points upward. In 2017, the program is expected to cost roughly $378 billion. A decade from now, the baseline spending for Medicaid rises to $688 billion—an 82 percent increase in nominal dollars. Trump's proposed spending for Medicaid points upward, too—just not as sharply. Under his budget proposal, Medicaid spending would rise from $378 billion this year to $524 billion in 2027. That's a 38 percent nominal increase. True, inflation will reduce the effective size of either increase to some extent. And population growth could increase demand for Medicaid and other social programs, although population growth in the U.S. is the slowest it's been in nearly a century. Either way, the Medicaid budget is going to grow. But under Trump's proposal, it would grow more slowly. This is how Democrats and the media can scream about supposedly savage "cuts" to the program. The same goes for Medicare. Under the current baseline, Medicare would grow from $593 billion to $1.19 trillion. Under the Trump budget, it would grow to only (!) $1.16 trillion. Or take non-defense discretionary programs. Those are the expenditures for just about everything else the federal government does, from environmental protection to bridge construction. Unlike entitlement programs, whose spending is formula-driven (until Congress changes the formulas, anyway) spending on discretionary programs is set each year by the appropriations process. The growth of entitlement spending has squeezed discretionary spending mercilessly. In 1965, so-called mandatory spending consumed just under 27 percent of the federal budget. Discretionary spending got 65.8 percent, and interest on the debt made up the rest. Today, the spending figures have almost reversed. Mandatory spending makes up almost two-thirds of the federal budget and discretionary spending less than 32 percent. If current trends continue, by 2044 Medicare, Medicaid, Social Security, and interest on the debt will consume 100 percent of federal revenue. Everything else will be financed with debt—and debt will reach 150 percent of GDP. That's roughly where Greece stood five years ago. Discretionary spending falls into two buckets: defense and non-defense. In 1965, defense made up 43 percent of the federal budget. Now it makes up only about 16 percent. Don't let that fool you into thinking defense spending has shrunk, though. In 1980, Pentagon spending stood at $143 billion. Adjusted for inflation, that's $446 billion in today's dollars. Baseline defense spending for next year is $600 billion. Under the current baseline, non-defense discretionary spending is going to grow, too. Over the next decade, it is slated to rise from $624 billion to $739 billion. Under Trump's proposed budget, though, it would shrink to $429 billion. Now that's an actual, honest-to-God budget cut. So far we have been talking about what will happen, or wh[...]



Trump's Transportation Boondoggles

Thu, 25 May 2017 11:15:00 -0400

The Federal Transportation Administration has just approved $658 million to electrify commuter rail lines in Silicon Valley. That money will allow California's long-delayed and wildy over-budget high-speed rail project to pass through the area. This approval came Monday even though the entire California GOP congressional delegation is opposed to the subsidy, and even though Transportation Secretary Elaine Chao said just last week that we don't have the money for it. Baruch Feigenbaum—a transportation analyst at the Reason Foundation, the nonprofit that publishes this website—suspects that the administration buckled because Sen. Diane Feinstien (D–Ca.) pledged to oppose all Department of Transportation nominees if the funds weren't approved. "I think it was a decision that it just was not worth the political risk," he says. "There's no policy reason they would change." That isn't the only dubious transit project getting a thumbs-up from Donald Trump's team. Also in their good graces is the currently stalled Maryland Purple Line, which would add another 16 miles of track to the fire-prone D.C. light rail system. The plans call for a cool $2 billion in public funds, $900 million of which would come from the feds. Congress has already appropriated $325 million for the Purple Line, and the Federal Transportation Administration indicated this week that it will follow through with a full funding agreement. That leaves just one more hurdle: all the federal court rulings saying the project can't go forward until it conducts a more thorough study of the poor safety standards and ridership numbers of the light rail network that it plans to join. As recently as March, the administration was promising to cut or phase out two major transportation grant programs. Now it's approving controversial rail projects that it could easily veto. Trump's recently released 2018 budget blueprint leaves little room for this funding. The document calls for a 13 percent reduction in transportation expenditures, and a senior transportation official has declared that the department wants to "wind down new investments." In principle, Feigenbaum says, this is the kind of transportation budget he can get behind. But what actually gets funded, he cautions, will probably look very different. "Congress," he notes, "is going to be the one with ultimate say." And there are few things legislators love more than bringing transit pork to their districts. That's why almost all the transportation cuts in Trump's "skinny budget" earlier this year were nixed. If Trump can't even say no to a rail project advocated exclusively by the opposition party, at a time when that party is in the minority, there's little reason to think his latest proposal for transportation cuts will survive.[...]



Trump's Half-Baked Budget

Thu, 25 May 2017 00:01:00 -0400

Donald Trump's first budget proposal is a brazen mix of ideology and dishonesty, seasoned with irresponsibility and pulled out of the oven as soon as it was half-baked. Those qualities make it surprisingly similar to the budgets of Barack Obama and George W. Bush—and largely in accord with public desires. Its defects are neither new nor accidental. The plan has been assailed by Democrats and various activist groups for coddling the rich, punishing the poor and shortchanging important functions. Trump proposes to cut outlays for Medicaid, food stamps, Head Start and Social Security disability. Ditto for Environmental Protection Agency enforcement and State Department security. He would close the National Endowment for the Arts (NEA), the National Endowment for the Humanities and the Corporation for Public Broadcasting. This list may give the impression that the president is fiercely determined to tame runaway federal spending. Not so. The portions of the budget that he attacks are those that matter least. As Brian Riedl of the conservative Manhattan Institute points out, Trump has spared Social Security, Medicare and defense, and he can't control interest on the debt. These outlays make up more than half the federal budget, and under his plan, they would balloon over the next decade. "Advocates of all other budget priorities are left to fight viciously over the rapidly—shrinking scraps," writes Riedl. Even if he got everything he requests, overall spending would not fall. It would rise. But many of the proposed cuts stand little chance on Capitol Hill. The problem with cutting small programs is that it can produce a lot of bad publicity without saving much money. Diplomatic security? That would invite "a lot of Benghazis," said Sen. Lindsey Graham (R-South Carolina). Medicaid? Some dozen Senate Republicans have expressed worry about the impact back home. The NEA? Its grants are disbursed to every single congressional district. And what member of Congress wants to be pilloried for endangering Daniel Tiger? A lot of these ideas are familiar because they've been raised before and rejected. Former NEA Chairman Dana Gioia notes that Ronald Reagan's budget director wanted to eliminate funding for the agency, but by the time Reagan left office, its budget was bigger than ever. "Republicans have been trying to strip government subsidies from public broadcasting almost since the inception of the Corporation for Public Broadcasting in 1967," reported Politico in 2010. Yet it's still there, where it is likely to remain. Cutting expenses is thankless work that carries more political risks than rewards, which is why many of these programs will come through intact. Democrats have no powerful attraction to fiscal austerity. Republicans champion it mostly when there is a Democrat in the White House. Touching Social Security and Medicare is even more politically explosive, and the payoffs come mostly in the future. For the member of Congress worried about the next election, bringing down entitlement costs in 2035 is not a priority. Tax cuts hold more allure, because they let lawmakers assume the posture of giving something to voters rather than taking things away. It's possible Trump could work out a tax plan satisfying enough members in both parties to get through Congress. The catch is that it would leave the government spending far more than it takes in, just as it did under Bush and Obama. But that's not a deal breaker. Few of our leaders care to insist that the public pay for all the government it gets. They would rather go on running big deficits and let posterity figure out how to pay the cost, and the American people are OK with that. Putting off hard choices indefinitely is the common theme of the Bush, Obama and Trump budgets. That approach has consequences that are debilitating and inescapable, but mostly in the long run. "We're $20 trillion in debt," lamented Wh[...]



Trump's Budget Plan: The Good, the Bad, and The Ugly

Tue, 23 May 2017 18:00:00 -0400

As Ronald Bailey notes, Donald Trump's first full budget plan is based on what Ronald Reagan's budget director David Stockman denounced as "rosy scenarios." Trump's budget rests upon an assumption of 3 percent annual growth, which is in stark contrast to the 1.4 percent average growth between 2008 and 2016.

As important and despite headlines talking about the massive spending cuts embodied in Trump's plan, his budget increases spending:

(image) When you look at the overall numbers (above), spending increases to $4.1 trillion in 2018 and rises to $5.7 trillion in 2027. So much for reductions. When figured as a percentage of the economy (GDP), we see a slow decline from 20.5 percent next year down to 18.4 percent in 2027, but those figures are screwy because they're based on the phoney-baloney growth projections. The same goes for receipts, whether estimated in dollars or percentages. Only in the fantasyland of government accounting can a budget that projects spending $900 billion more in 2027 than 2018 be described as "Trump seeks to slash $3.6 trillion in austere budget."

(image) If Trump's rosy growth projections are bad and his year-over-year increases in spending are ugly, what's good about his budget? The president is calling for the elimination of no fewer than 66 programs, including four in the Department of Agriculture that will spend nearly a billion dollars, another four in Commerce that cost $633 billion, and almost $5 billion worth in Education. Similarly, he is calling for rolling back food-assistance programs whose ranks swelled during the recession but have stayed high despite low unemployment rates. While many of these sorts of cuts won't be realized at all, it's always worth pushing the idea that government programs shouldn't always become permanent fixtures.

In this sense, Trump's budget encapsulates his promise and peril as president. He is devoid of clearly articulated principles and there are many reasons to expect him to do real damage to the economy and the country. At the same time, he also may well augur the end of the slow car wreck that represents consensus politics in the post-World War II era. The United States is running out of other people's money and we need to start the hard work of figuring out a sustainable level of government that we can both pay for and thrive under. In some of his deregulatory gestures, Trump points in that direction, and he has clearly shown himself willing and able to push hard against the status quo.

If we're lucky, he is the last 20th-century president and will set the table for a much-needed, much-delayed way of doing politics for the 21st century.




Vive La Trump? Definitely Not Yet.

Thu, 11 May 2017 12:01:00 -0400

There is a lot of debate over President Donald Trump's record after his first 100-plus days in office. Defenders of the president point to his successful efforts on deregulation, the successful appointment to the Supreme Court of Neil Gorsuch and his steadfast desire to implement substantial tax reform. Critics point to his insistence on counterproductive immigration and trade policies, an incoherent foreign policy, and his overall lack of policy acumen. One thing is for sure, however: The United States is headed toward French-style economic sclerosis if Washington continues its reckless spending spree. My native France is an economic mess. It might sound wonderful to some that the French are "entitled" to health care, can retire at age 60, have to work for only 35 hours a week and get "free" education. But this spending comes at a cost; 57 percent of the French economy (as measured by the gross domestic product) is spent every year by the government. To pay for it, you need more taxes—and not just high marginal income tax rates and payroll taxes. The French also pay a 20 percent value-added tax, pay a 33.33 percent corporate income tax and have hundreds of other punitive revenue-generating measures. French policymakers have responded to the resulting sluggish economic growth and persistently high unemployment by making the market for labor horrifyingly inflexible and insulating workers from the competitive market forces that generate long-term prosperity. This results in stubbornly high unemployment rates, mounting debt and the exodus of intelligent French brains to other countries with brighter economic prospects. The mood has become so grim that more than 10 million French voters just turned to the National Front party of Marine Le Pen for hope. Although Le Pen lost to centrist Emmanuel Macron, little will change unless major reforms are made to the debilitating French welfare system, which pays people not to work while providing handouts for everything from the rent to subway tickets. It's admittedly hard for me to be optimistic, given how ingrained government dependency is in France. But my bigger concern is that the United States is on the same path—even if there's a substantial reduction in red tape here and Trump is able to implement reforms to a tax code that currently suffocates job producers and disincentivizes working, savings and investment. Although we can still pat ourselves on the back for not having fully embraced France's combination of big government and low growth, any hope for 3 or 4 percent annual economic growth that Trump officials are relying on will fade if federal spending—and its byproduct, debt—isn't curtailed. Unfortunately, there remains scant evidence that the Trump administration is interested in pursuing the measures necessary to bring federal spending and debt under control. Trump never misses a chance to tout his alleged deal-making prowess, but his administration's first budget negotiation just ended with higher spending and Democrats getting most of what they wanted. Then there's the American Health Care Act (already being labeled "Trumpcare"), just passed in the House. Despite what its apologists claim, even if it were to be signed into law as is, it wouldn't get rid of Obamacare. Sure, Trumpcare would cut taxes, but as we've seen in the past, tax cuts don't last long if spending continues to flow unabated. Indeed, if critics are correct, Trumpcare could end up making health care in this country worse. That outcome would most likely translate into more government spending (including potentially massive bailouts), and promised cuts to Medicaid could actually turn into an expansion of a program that is already a budgetary problem at both the federal level and the state level. Oh, did I mention the not-so-small problem of the fact that Social Security and Medicar[...]



Rand Paul: Budget Deal Should Be Renamed ‘The Status Quo Protection Act’

Wed, 03 May 2017 12:01:00 -0400

(image) I was at one of those infamous D.C. cocktail parties the other night when Rep. Thomas Massie (R-Ky.), one of the two most libertarian-leaning members of the House of Representatives, sidled up to me at the bar and croaked, "How ya liking our new trillion-dollar budget deal?!"

The $1.16 trillion agreement hikes current spending levels, largely by vomiting forth $93.5 billion worth of "Overseas Contingency Operations" (OCO)—a disreputable gimmick that current Office of Management and Budget Director Mick Mulvaney has long and correctly railed against. Unlike the budgetary "dark ages" and government-dismembering prophesied by dullard hysterics in the media, this latest last-minute Continuing Resolution very predictably maintains just about every pre-existing spending level and pet project/agency. A House vote is scheduled for this afternoon.

So who's against it? Massie's pal Sen. Rand Paul (R-Ky.), for one. Paul has a piece over at Breitbart.com explaining why:

It not only rejects President Trump's calls for cuts to multiple agencies, but it increases their funding by millions of dollars.

It paves the way for those agencies to engage in more "use it or lose it" September spending.

It leaves our deficit at well over $500 million. […]

Former Joint Chiefs of Staff Chairman Admiral Michael Mullen tried to warn us in 2010 when he called debt "[t]he most significant threat to our national security." History is littered with the ruins of nations who fast-tracked their own decline by becoming overextended. […]

[A]s long as we continue to spend with abandon, pile it on the backs of the taxpayers we claim to serve, and pretend it's all okay, we are ultimately our own worst enemies.

Read my interview with Massie last month basically predicting all this, and my April 2016 column asserting that the GOP's abdication on budgetary/sequestration issues helped sink Rand Paul's presidential bid. Below, Nick Gillespie helps explain why maintaining a "Pentagon slush fund" is no way to run a country.

src="https://www.youtube.com/embed/rsaMROYkYeI" allowfullscreen="allowfullscreen" width="560" height="340" frameborder="0">




Congress Reaches Spending Deal; 'Skinny Budget' Goes Out the Window

Mon, 01 May 2017 10:48:00 -0400

(image) Take Big Bird off the altar; they're not going to sacrifice him after all. (*) Congress has reached a deal to keep the government funded til September and, as usual, the GOP's talk about defunding public radio and TV has turned out to be an empty threat. The Corporation for Public Broadcasting isn't being zeroed out. In fact, the bill will fund it at the same level as last year.

The National Endowment for the Arts? It'll get more this year than last. The National Endowment for the Humanities? Same. The Environmental Protection Agency is getting less money, but not the 31 percent cut proposed in the administration's so-called "skinny budget"; instead it's losing just 1 percent. And no, Planned Parenthood isn't getting defunded.

I highlighted those five items not because they're big parts of the budget—only the EPA really spends that much—but because they're the sorts of red-meat issues that get Republicans and Democrats worked up. If they're basically unchanged, you can be sure that there won't be major reductions in the areas where there's a lot of bipartisan agreement. Sure enough, there will be more money for medical research, for national parks, for NASA, for the DEA, for Homeland Security, and—of course—for the Pentagon. The military won't be getting the $54 billion hike that Trump proposed, but the $25 billion boost that it's getting instead isn't so shabby.

There are a few small victories here and there for limited government. The plan won't fund Trump's border wall (though border security in general is getting a spending spike), and Jeff Sessions may be unhappy to hear that the Department of Justice won't be allowed to use its funds to keep states "from implementing their own laws that authorize the use, distribution, possession, or cultivation of medical marijuana." And yes, some offices will be seeing some cuts under Trump, just as some offices saw some cuts under Obama.

Overall, though, Bloomberg's Sahil Kapur summed it up pretty well:

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If that sounds familiar, it's because it's pretty much what we've been telling you to expect here at Reason. We may live in weird times, but some things are still predictable.

(* Yes, I know: These days Big Bird airs on HBO. He is nonetheless fated to forever be a synecdoche for the CPB.)




Yes, Science, But How About a March for Math?

Fri, 28 Apr 2017 00:01:00 -0400

Tens of thousands of people marched in hundreds of cities last weekend as part of something billed as the March for Science. The event, which coincided with Earth Day, was meant to rebuke the Trump administration's global-warming skepticism and its plan to cut taxpayer funding for the Environmental Protection Agency and other federal agencies that arguably deal with "science." "The job of science is to both understand the Earth, understand the things that we can get out of the Earth, how we're going to interact with it, how we're going to make the Earth a better place," said a representative of the Carnegie Institution of Science in a news report. "So seeing it fall under such hard times or negative impressions of it is just amazing to me." It's a stretch to suggest that the prominence of scientific knowledge in general is falling under "hard times" because of recent proposals to trim the budget of some massive government bureaucracies. Judging by the anti-Trump signs and demands for more funding for various programs that proliferated at the marches, it seems they were more about political science than the kind of hard science that March for Science organizers had touted. Nevertheless, the marchers are onto something, although their concept should be applied instead to a different discipline. "I think we need to have a March for Math. How you gonna be over $19 trillion in debt and still spending?" wrote commentator Julie Borowski. Indeed. Our political leaders, in California especially, are enthralled by climate science and have embraced myriad programs to deal with the issue of man-made global warming. No, most legislators aren't at war with science. They remain at war, however, with basic numbers. Congress continues to spend money even though the federal budget is trillions of dollars in debt. How does that work? We keep hearing—from members of both parties, by the way—that the key is cutting government waste. But there's no appetite for cutting entitlements, or defense spending, and there's no way to cut service on debt. After those items, the federal government already is running a deficit. That's an obvious addition problem. In California, legislators in 1999 passed a law that led to a tidal wave of retroactive 50 percent pension increases for government employees across the state. Its advocates claimed that such a huge giveaway wouldn't cost taxpayers a dime. And that one law, passed with bipartisan support and over the objections of fiscal watchdogs, has laid the groundwork for California's continuing pension problems, which have unfunded liabilities estimated as high as $1 trillion. That math deficiency ought to lead to angry protests in cities across the state, let alone marches. Former Republican Gov. Arnold Schwarzenegger's pension adviser, David Crane, said in testimony before the state Senate in 2010 that the California Public Employees' Retirement System (CalPERS) "has not been requiring adequate contributions when pension promises are made, virtually assuring deficiencies for which only the state is on the hook... Initial contributions are determined by investment return assumptions. For example, in 1999 CalPERS based pension contributions on an 8.25 percent annual investment return, which implicitly forecast that the Dow Jones industrial average would reach roughly 25,000 by 2009 and 28,000,000 by 2099." We see the Legislature and then-Gov. Gray Davis (D) not only were incapable of doing simple math problems, but they embraced fiscal models that had more to do with "magical thinking" than "mathematical reasoning," especially when it comes to multiplication tables. Don't they know that inadequate contributions and overly optimistic rate-of-return predictions multiply the size of the shortfall and have a cas[...]



Forget Reagan: Trump’s Tax Plan Is More Like George W. Bush

Wed, 26 Apr 2017 19:24:00 -0400

In the run-up to today's big White House tax-reform announcement, the question among many analysts was: Would President Donald Trump's ideas look more like Ronald Reagan in 1981 (when he and a bipartisan congressional majority cut rates) or 1986, when they simplified the code? While Treasury Secretary Steven Mnuchin, flanked by National Economic Director Gary Cohn, bragged that the administration's plan was both "the biggest tax cut" and the "largest tax reform" in U.S. history—1981 and 1986 at the same time, only more!—the more apt and less comforting historical precedent might be the guy who Trump never tires of bashing: George W. Bush. The second President Bush pushed through tax cuts in 2001 and 2003, each of which passed with fewer than the 60 Senate votes required by an amendment to the 1974 Congressional Budget Act that demanding a supermajority for any piece of legislation seen as worsening the federal deficit 10-plus years down the road. How did the Bush cuts pass with only 58 and 51 votes, respectively? By including sunset provisions right at that 10-year mark. You can't be accused of affecting the year-11 deficit if you die at age 10! In word and deed, President Trump appears poised to follow down Bush's path of temporary tax reform through budget reconciliation; i.e., passing it on a party-line, simple-majority vote. "I hope [Democrats] don't stand in the way," Mnuchin said at the press conference. "And I hope we see many Democrats who cross the aisle and support this. Having said that, if they don't, we are prepared to look at the reconciliation process." House Speaker Paul Ryan (R-Wisc.) echoed the sentiment: "We want to look at every avenue, but we think reconciliation is the preferred process, we think that's the most logical process to bring tax reform through," Ryan told reporters Wednesday. There are exactly two ways you can sidestep the 60-vote rule. The first is to make sure the tax changes project to being deficit-neutral a decade from now. Given that Trump's campaign tax-reform framework, upon which today's announcement was largely based, had previously produced revenue estimates from conservative outfits showing a decrease of around $3.5 trillion over 10 years, it's damn near impossible to imagine the Congressional Budget Office or the Joint Committee on Taxation (Congress' go-to economic projection shops) torturing those 13-figure numbers out of existence, no matter how "dynamic" their scoring. Worsening those prospects—though arguably making the policy world a better place—the Mnuchin/Cohn duo swatted away one of the main proposed revenue-generators of 2017 tax reform: Paul Ryan's treasured and troublesome "border adjustment tax," a tariff by any other name that the speaker was counting on to offset the revenue hits by $1 trillion. Americans for Tax Reform President Grover Norquist, no fan of either taxes or tariffs, told me last week that he was in favor of the Border Adjustment Tax as the price for getting a $2.5 trillion tax cut. Without it? "There are two options to that," Norquist said. "You could have a smaller tax cut, not get rid of the death tax, not take the individual rates down or the corporate rates down as much. But you have to find a trillion dollars in less tax-cutting. Or you could have a tax that replaced it, some tax somewhere else. I'm not sure there's one that's an improvement." Well, Mnuchin and Cohn did include a big revenue generator in today's press conference, in the form of eliminating the federal tax deductions that Americans can take on their state and local taxes, a change that the Washington Post says "could save more than $1 trillion over 10 years." This idea, which makes intuitive sense, would nonetheless be heavily disruptive to tho[...]



France Election Preview: Terrorism, Socialism, Nationalist Socialism, and the Prospects for Economic Liberalization

Fri, 21 Apr 2017 18:26:00 -0400

The attack on a police bus on the Champs-Elysee in Paris yesterday, which killed two police officers and for which ISIS claimed responsibility, came while France's presidential candidates were participating in their last televised forum, and President Trump said today that he thought the attack would help the National Front's Marine Le Pen. "She's the strongest on borders and she's the strongest on what's been going on in France," Trump told the AP. "Whoever is the toughest on radical Islamic terrorism, and whoever is the toughest at the borders, will do well in the election." After the police attack, Le Pen called for the expulsion of all foreigners on terror watch lists. The suspected gunman in yesterday's attack, Karim Cheufri, is a French national who was questioned in February for allegedly making threats to kill police officers. Meanwhile, the center-right François Fillon, once the frontrunner before a scandal over a no-show job for his wife yielded calls for him to drop out, said "Islamic totalitarianism" ought to be the next president's top priority. François Hollande declared a war on terror after multiple coordinated ISIS-linked terrorist attacks in Paris in November 2015 killed 130 people. The French government followed up with warrantless raids, house arrests, limits on freedom of speech and assembly, and other security measures. The 2015 attacks helped the National Front outperform its polling in the first round of regional elections, but by the second round, a month after the attacks, the bounce appeared to have faded. Voters go to the polls Sunday for the first round and in early May for the second round—four candidates are polling at about 20 percent; Emmanuel Macron, Le Pen, Fillon, and Jean-Luc Mélenchon. And in fact, both Le Pen and Mélenchon, a former Socialist who created his own party and has been called the "French Bernie Sanders," support French withdrawal from the European Union and euro as well as more protectionism, and even closing the border to refugees and banning the veil. "This is a very good example like Hayek used to say, where extremes actually join together," Emmanuel Martin, a French economist involved with libertarian MOOC Ecole de la Liberté, told Reason earlier this week. "Mélenchon-LePen, their program is 90 percent the same." Martin, who also describes himself as a libertarian rocker, even has a song about the tendency for such confluence in what we call the far right and the far left. "Mélenchon is the new Robespierre," Martin explained, referring to the French revolutionary leader associated with the Reign of Terror, "and to some extent he's very much like Bernie Sanders, but I think he's more evil… They both share this total illusion of democratic socialism, which to me is a complete oxymoron, and to any libertarian obviously." While terror attacks in France grab more headlines, the country has long-standing economic problems caused by too many labor regulations, too much centralization, and a lack of accountability in government. President Hollande's tough talk and concomitant actions on the war on terror failed to shore up support in the face of his failure to execute on economic reform. The former economy minister, Emmanuel Macron, who was one of the architects of Hollande's belated turn away from socialism and attempt at some labor deregulation and other economic reforms, now has the highest polling average, at 23.6 percent. "He's trying to gather so many different people, that it's very difficult to find something solid, something really, he's just a basic politician, he's trying to please everyone," Martin explained. "And his speeches are completely hollow, just hot air, really, and sometimes you even laugh when[...]



Publicly-Funded Ballparks Are for Suckers

Mon, 17 Apr 2017 12:00:00 -0400

Talk of a new ballpark for Richmond has all but disappeared in the past few months. Former Mayor Dwight Jones' plans for one imploded, and his successor, Levar Stoney, has trained his focus on the nuts and bolts of local government that Richmond has too long ignored: public safety, sidewalk maintenance, leaf collection. This is a good thing. To see why, look north to Hartford, Conn. A recent story in The Wall Street Journal lays out the unfortunate details. Hartford looks somewhat like Richmond: One third of its 124,000 residents live in poverty, and its unemployment rate is twice the state average. The city also has been wrestling with financial difficulties. Despite that, Hartford has built a new stadium for the AA-level ball club, the Yard Goats, and issued $68.6 million in bonds to do so—even though Dunkin' Donuts paid an undisclosed, but no doubt pretty, sum for the stadium naming rights. Mayor Luke Bronin has said the park by itself cannot recoup the investment. The city hopes ancillary development nearby will do so: There had been talk of a $350 million mixed-use development—shops and apartments and so on. You've heard it all before. But the development has not materialized. Richmond's poverty and unemployment numbers look better than Hartford's. But under Jones the city maxed out its credit card; there's almost no debt capacity left. Jones' vision for a new ballpark also relied heavily on ancillary development, both in Shockoe Bottom, where the park was to have been built, and on the Boulevard, where the old ballfield was to have been torn down to make way for "a gleaming, 60-acre complex of apartments, retail stores, restaurants, entertainment and office buildings," as a Richmond Times-Dispatch news story put it. Yet The Diamond still stands, as it has ever since the Richmond Braves left town in a snit almost a decade ago because they weren't getting a new stadium. The Braves ended up in Gwinnett, Ga., which built them the citadel they wanted. "We anticipate it paying for itself from Day One," said the county manager at the time. Well. As in Hartford, the project ran into cost overruns, and the county had to move $19 million from general-fund revenue to cover the hole. The stadium has been a disaster since its first year, when parking revenue came in at a mere 15 percent of projections. "Seven years into the experiment that is the Gwinnett Braves," reported the Atlanta Journal-Constitution in 2015, "the numbers make it clear: The county built it. They have not come." Coolray Field has the second-lowest attendance in its league. Just like Hartford, Gwinnett hoped the stadium would provide the catalyst for new development nearby. It hasn't happened. "None of the planned shops or restaurants has materialized," according to the AJC. And the bond payments for the stadium are bigger than the revenue it brings in. Gwinnett has had to take money meant for other functions to subsidize its money pit. A fluke? Hardly. Last year, in a story headlined "The Braves Play Taxpayers Better Than They Play Baseball," Bloomberg Businessweek reported on the way the Braves organization has turned public investment by others into its own private profit: Over the last 15 years, the Braves have extracted nearly half a billion in public funds for four new homes, each bigger and more expensive than the last. The crown jewel, backed by $392 million in public funding, is a $722 million, 41,500-seat stadium for the major league club set to open next year in Cobb County, northwest of Atlanta. Before Cobb, the Braves built three minor league parks, working their way up the ladder from Single A to Triple A. In every case, they switched cities, pitting their new hos[...]