Grand Bargains and Budget Battles

The “Grand Bargain” refers to a yet-to-be-realized agreement between Republicans and Democrats to put the federal government’s finances on a more stable trajectory in which both sides capitulate on long-standing policy positions. For Republicans, that means agreeing to more tax revenues. For Democrats, it means agreeing to reduction in entitlement program benefits.

(Ignore the new “grand bargain” proposed by the president on Tuesday, which called for meager corporate tax reform in exchange for blowing more taxpayer money on the administration’s favorite bad ideas. The offering was a DOA political stunt.)

The “Grand Bargain”—as originally understood—hasn’t happened and it’s not going to anytime soon. A group of eight Republican senators has reportedly been discussing a possible deal with the White House, but similar efforts in the past have gone nowhere and the political landscape remains unchanged: Republicans control the House; Democrats control the Senate and White House. With the 2014 elections looming on the horizon, the House isn’t going to raise taxes and the Senate will continue to be in no hurry to touch entitlements.

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Feds and the States Tag-Teaming on Corporate Welfare

In a recent op-ed for the Indianapolis Star I discussed the symbiotic relationship between federal and state government when it comes to doling out corporate welfare subsidies. The focus was primarily on Indiana, but the issue is a national concern.

A good example is the $2 billion Shepherd’s Flat wind farm in Oregon that was largely financed with federal and state taxpayer support. Ted Sickinger, a reporter for theOregonian, has done an excellent job of digging into details behind the project (see here thenhere then here) and it appears that Shepherd’s Flat was one big taxpayer handout. In fact, the Obama administration signed off on the federal government’s share of the subsidies even though it knew the project didn’t need any support from taxpayers: 

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Economic Development Administration Goes ‘Rambo’ on Itself

There exists in the Department of Commerce an irrelevant Great Society relic called the Economic Development Administration. With a relatively small budget of around $400 million, the EDA acts as a slush fund for Congress to shovel subsidies to their districts for projects that should be funded locally or privately.

That’s why it’s been hard to kill. Indeed, last year 175 Democrats and 104 Republicans teamed up to defeat an amendment introduced by Rep. Mike Pompeo (R-KS) that would have finally put the EDA out of its misery.

Around the same time that the EDA came under attack from Rep. Pompeo, the agency believed that it had also suffered a cyber attack on its IT infrastructure. National Review Online’s Kevin Williamson has the story, which has to be one of the all-time greatest examples of bureaucratic ineptitude:

The trouble began in December 2011, when the Department of Homeland Security alerted Commerce that it had discovered a possible malware infection in the department, specifically within the network located within the Hoover Building. The EDA’s immediate reaction — based on absolutely nothing — was: cyberwar! According to the [Dept. of Commerce inspector general] audit, the main concern among the EDA’s top brass was that the agency was under attack by a nation-state actor. There was no evidence to support that fear, and a good deal of evidence to the contrary, but the EDA basically went to whatever is the Commerce Department’s version of DEFCON 1.

As Kevin deftly wise-cracks, “If the Chi-Coms wanted to hurt the U.S. economy, they wouldn’t attack EDA; they’d hire a lobbyist to increase its funding.” But, after all, we’re talking about an agency that has an amazingly inflated sense of self-worth. And so the EDA decided that it wasn’t taking any chances – the agency’s entire IT infrastructure had to go: 

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The Pentagon as a Jobs Program, Part 3

A couple of months ago, I cited the example of upgraded Abrams tanks being shoved down the Pentagon’s throat by certain members of Congress because tank production = jobs back in the district. I followed that up with some historical background on congressional Pentagon pork-barreling that is discussed in former Reagan budget director David Stockman’s new book. Yesterday, a Wall Street…

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And the Award for Most Hypocritical Performance by a Member of Congress Goes To…

During the House Agriculture Committee’s debate over a new farm bill, Tennessee Republican Stephen Fincher cited 2 Thessalonians 3:10 in defending relatively small cuts in food stamps after Rep. Juan Vargas’s (D-CA) cited Jesus’s call to feed the hungry:

“For also, when we were with you, this we declared to you: that, if any man will not work, neither let him eat.”

The federal government uses force and the threat of violence to obtain the money that is used to pay for food stamps, so I would argue that Rep. Vargas badly misunderstands what the Prince of Peace was getting at. But whereas Vargas was wrong, Rep. Fincher’s biblical counterpunch was breathtakingly hypocritical. As it turns out, Fincher has likely receivedmillions of dollars in federal farm subsidy payments over the years.

From the New York Times

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Should Murderers and Rapists Get Food Stamps?

Last week, the Senate accepted by unanimous consent an amendment to the pending farm bill that would ban convicted murderers, rapists, and pedophiles from receiving Supplemental Nutrition Assistance Program benefits (a.k.a. food stamps). Introduced by Louisiana Republican David Vitter, the amendment has received condemnation from the left and at least one round of applause on the right.

My initial reaction was “A few undesirables will lose a taxpayer-financed handout—so what?” But the more I thought about the amendment, the less I cared for it. For starters, the amendment appears to be politically motivated. Vote against it and a Senator can expect to see a negative campaign add from his or her next opponent. That’s probably why the amendment was agreed to by unanimous consent instead of being formally voted on in the Democratic-controlled Senate.

More importantly, what does it accomplish? In terms of budgetary savings, it probably won’t save taxpayers much money. In addition to doing little to curb the size of government, it does nothing to rein in the federal government’s scope. I believe that it is not a proper role of the federal government to fund and/or administer anti-poverty programs. At most, such concerns should be the domain of state and local governments. Ideally, poverty relief would be completely handled by charities and other private organizations. The Vitter amendment, however, is just another example of the Beltway’s one-size-fits-all mentality. 

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The Pentagon as a Jobs Program, Cont…

Last week I discussed the tendency for policymakers to treat the Pentagon like a giant jobs program. It was prompted by an article from the Associated Press on members of Congress shoving unwanted upgraded Abrams tanks down taxpayers’ throats because retooling tanks sustains jobs back in the district. As it turns out, former Reagan budget director David Stockman touches on the Abrams tank situation in his new book, The Great Deformation.

In Chapter 5 – “Triumph of the Warfare State” – Stockman gives an account of the behind-the-scenes dealings that resulted in the massive military buildup during the Reagan administration. Stockman says political calculations – and not “one scintilla of bottoms-up program detail or even a single hour of professional analysis” – drove the new Reagan administration to champion 7 percent (real) growth in defense spending every year for five years (1982-1986), and from a already elevated level. According to Stockman, the “7 percent real growth top line” was a “blank check” for the Pentagon to go on a spending binge – much to the pleasure of the military-industrial complex.

From p. 74:

No fresh start or strategically coherent defense plan was ever developed by the Reagan administration. This immense, content-free “top line” was simply backfilled by the greatest stampede of Pentagon log-rolling and budget aggrandizement by the military-industrial complex ever recorded.

In a process that went on week after week for the better part of a year, the huge swaths of empty budget space under the new defense “top line” were converted into more and more of virtually everything that inhabited the Pentagon’s vasty deep. Much of it, which had languished for years and decades on the wish lists of the brass and military contractors, now got funded without much ado.

With defense funds being virtually slopped onto the waiting plates of the four military services, it is not surprising that much of it went to the conventional forces. Notwithstanding all the scary stories about the nascent Soviet nuclear first-strike capabilities, there really weren’t many concrete programs to counter it except for a new strategic bomber and an MX missile upgrade.

At the heart of the Reagan defense buildup, therefore, was a great double shuffle. The war drums were sounding a strategic nuclear threat that virtually imperiled American civilization. Yet the money was actually being allocated to tanks, amphibious landing craft, close air support helicopters, and a vast conventional armada of ships and planes.

These weapons were of little use in the existing nuclear standoff, but were well suited to imperialistic missions of invasion and occupation. Ironically, therefore, the Reagan defense buildup was justified by an Evil Empire that was rapidly fading but was eventually used to launce elective wars against an Axis of Evil which didn’t even exist.

That leads to the Abrams tank. 

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The Pentagon as a Jobs Program

One of the realizations that helped me to dispense of the neoconish foreign policy views of my youth is that for federal policymakers, the Pentagon is like a giant jobs program. Regardless of need, a military installation or armament factory can generally count on the unwavering support of the member of Congress who represents the district or state where the facility is located.

On Monday, the Associated Press’s Richard Lardner provided a textbook example: over the past two years Congress has spent almost a half billion taxpayer dollars—and wants to spend another $436 million—upgrading Abrams tanks that experts and the Army itself say aren’t needed.

Who are some of the biggest congressional backers of the tank upgrading? Why, Republican “deficit hawks”!

Keeping the Abrams production line rolling protects businesses and good paying jobs in congressional districts where the tank’s many suppliers are located.

If there’s a home of the Abrams, it’s politically important Ohio. The nation’s only tank plant is in Lima. So it’s no coincidence that the champions for more tanks are Rep. Jim Jordan and Sen. Rob Portman, two of Capitol’s Hill most prominent deficit hawks, as well as Democratic Sen. Sherrod Brown. They said their support is rooted in protecting national security, not in pork-barrel politics.

“The one area where we are supposed to spend taxpayer money is in defense of the country,” said Jordan, whose district in the northwest part of the state includes the tank plant.

Ah, yes, the “national security” excuse—probably the most cited justification by politicians to spend other people’s money since the ink dried on the Constitution.  

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On Spending Cuts, Politicians Prefer Gimmicks

The latest report by the Washington Post’s David Fahrenthold on Beltway tomfoolery tells of what happened when both Democrats and Republicans asked government workers and the public for suggestions on how to reduce government spending. Apparently neither party had much interest in the responses.

Fahrenthold first looks at the Obama White House’s effort:

After President Obama set up a national online suggestion box asking federal workers for new ways to cut the budget, 86,000 ideas came in Some, inevitably, were a little odd.

…But many others were more serious, sent in by people who had seen real government waste close up: stop the “use it or lose it” budgeting policy, which leads agencies to blow taxpayer money at year’s end; stop giving paper calendars to workers who already have online calendars; stop letting every armed service design its own camouflage.

In the end, none of those things happened. Instead, those suggestions became a little-known part of the maddening story of Washington’s budget wars.

…Obama, for instance, chose 67 suggestions out of those 86,000. While some produced results, many seemed unambitious. Often, the administration picked ideas that applauded what it was already doing, instead of forcing it to start new reforms. Still, the White House considers that a win.

Of course it does.

Fahrenthold then turns his attention to the GOP’s “YouCut” website. Created in 2010 and run by House Majority Leader Eric Cantor, regular Americans were to be given menus of potential spending cuts, and they were asked to vote for one. Winning ideas were then supposed to go to the House floor for a vote. In the end, only two of the 36 winning ideas became law. No bill was introduced for nine of the winning ideas, and 12 were “introduced only,” which means that they never even made it to the floor for a vote.

Like the administration and its online suggestion box, Cantor’s office claims that YouCut was a success:

“The purpose of the YouCut program was to change the culture of Washington,” Rory Cooper, a spokesman for Cantor, said in an e-mail. “Today, as is evident to anyone paying attention, that culture has been changed.”

Of course it has.

And now that the “culture has been changed,” it appears that the people’s input on spending cuts is no longer needed:

YouCut appears to be dead. No new votes have been held in the current Congress. Cantor’s spokespeople did not respond to questions about the program’s status this week.

Note: For more on the awesomeness of the GOP’s YouCut endeavor, see commentary from Chris Edwards and me hereherehere, and here

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Why I’m Not a Conservative

The Washington Post notes the following quote from Rep. Paul Ryan in his CPAC speech:

“We don’t see the debt as an excuse to cut with abandon, to shirk our obligations,” Ryan said. “We see it as an opportunity to reform government, to make it cleaner and more effective. That’s what conservatives stand for.”

That’s interesting because more effective (or efficient) government is also what liberals stand for.

As I wrote upon the release of Ryan’s latest budget proposal, more efficient government isn’t the same as limited government. I appreciate the argument being made by some limited-government advocates that Ryan’s budget is a “step in the right direction” because it would slow the growth in federal spending versus the Congressional Budget Office’s baseline. That’s a good thing—especially when compared to the bloated alternative put out by Sen. Patty Murray (D-WA). But I think that proponents of limited government should consider a “step in the right direction” to be a budget that actually attempts to extricate the federal government from involvement in every facet of our lives. In that regard, Ryan’s budget only represents a step toward a slightly cheaper big government.

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