Author Archive | Tad DeHaven

Beltway politicians like to pretend that smaller spending increases amount to spending “cuts.” As Dan Mitchell has pointed out numerous times (see here for one example), that’s baseline budgeting baloney. Now that the 2011 Budget Control Act’s spending caps are in place, politicians are making an even more ridiculous claim: the so-called “cuts” have alreadyoccurred.

The caps apply to spending over ten fiscal years – the last year being 2021. We are obviously not in the year 2021, so it’s impossible for the so-called “cuts” to have already been implemented. Yet here are two examples from a recent Politico article where politicians suggest that to be the case:

“There are people that think we need to cut more,” House Armed Services Committee Chairman Buck McKeon (R-Calif.) acknowledged in an interview. McKeon said he’s been pushing back against budget hawks in the GOP conference by pointing to the nearly $600 billion in spending cuts that the Pentagon has already absorbed in recent years — and that’s before sequestration would even begin.

…

“I think there’s spending that can be taken out of all departments,” said freshman Rep. Ted Yoho (R-Fla.). “And I’ve talked to people from the Pentagon. There’s just areas that, yeah, we can pull back a little more, even though they did their $470 billion already. They said it hurt, but we possibly could.”

I’ll cut Rep. Yoho a little slack because the article indicates that he’s open to cutting defense. Rep. McKeon, on the other hand, deserves no such leniency. (Why McKeon said $600 billion and Yoho $470 billion I have no idea.)

The following chart illustrates why it is ridiculous to act as if smaller future increases in projected spending amount to realized spending cuts. The chart shows the Congressional Budget Office’s August 2001 baseline estimate of defense spending from 2002 to 2011 versus the actual outlays: Continue Reading →

Richmond Times-Dispatch columnist A. Barton Hinkle recently made what should be a simple point to understand, but it’s unfortunately one that few people seem to appreciate. Writing about the supposed win-win situation whereby states expand Medicaid coverage and the federal government foots most of the bill, Hinkle reminds readers that the “free” federal money isn’t really free:

In Virginia, officials estimate expanding Medicaid would cost the state $137.5 million over nine years, while the state would receive $23 billion from Washington.

Other states report similar figures. California expects to enroll up to 910,000 residents for a cost beginning at only $46 million a year, while collecting $44 billion in federal funds over a six-year period. An Illinois study estimates that state would spend about $2 billion on expanded Medicaid over the next decade, while reaping $22 billion in federal funds. According to Danielle Holohan, who is in charge of New York’s insurance exchange, Medicaid expansion “actually works out to be an enormous savings” for the Empire State. And so on.

This all sounds great—if you are a state official. But if you are a lowly taxpayer, it leaves out one rather significant point: Where is all that federal money coming from?

No great mystery: Most of that money would come from taxpayers who live in the very states that are looking forward to these supposed windfalls. According to the Kaiser Family Foundation, if every state signed up for Medicaid expansion, then the federal government would spend nearly $1 trillion over the next nine years—paid for by you.

So you don’t have to wait for Medicaid expansion to reap this sort of “windfall.” Just take 5 bucks out of your left pocket and put it in your right. As far as your right pocket is concerned, you’re 5 bucks richer. It’s free money!

In addition to not being free, federal subsidization of state spending makes it harder for taxpayers to understand and appreciate where their money is going and how it’s being spent. A Cato essay on fiscal federalism explains: Continue Reading →

via the CATO Institute

A study [$] published in the winter edition of Political Science Quarterly considers two possible reasons for why the 2009 American Recovery and Reinvestment Act (ARRA) failed to sprinkle Uncle Sam’s magic dust onto those areas of the country that were being hardest hit by the recession.

Was it because well-positioned politicians were successful in delivering the pork?

Or was it because the recession created a “window of opportunity” for politicians to quickly spend a bunch of additional money on pet causes, which had the effect of benefitting certain areas of the country?

I’m going to skip right to the answer: the uneven geographic distribution of stimulus funds had only a little to do with traditional pork barreling and much to do with Obama’s then chief of staff Rahm Emmanuel’s famous quip that “You never want a serious crisis to go to waste.”

On the possibility of traditional pork-barreling, the authors found no statistically significant relationship between the distribution of funds and whether a county was represented by a politician serving on a congressional committee relevant to stimulus funding. Nor was a relationship found between funding and counties that were represented by a Democrat in the House or Senate. However, a relationship was found between funding and those counties that overwhelmingly voted for the president:  Continue Reading →

It appears likely that congressional Republicans are eventually going to accept a tax increase in exchange forreal spending cuts smaller spending increases in the future. If and when that happens, Speaker Boehner should surround himself with Santa Claus, the Easter Bunny, and the Tooth Fairy at the press conference on the deal.

I could spend days explaining my pessimism, but I’ll just point to two pertinent examples of Congress being unable to control itself. First, we have the so-called Medicare “doc fix,” which was adeptly explained by Reason’sPeter Suderman earlier this week. In 1997, Congress created a formula (“sustainable growth rate”) to constrain physician reimbursements. But shortly after the formula started to do what it was intended to, Congress got cold feet: Continue Reading →

In December 2010, I wrote that “An indicator of the incoming House Republican majority’s seriousness about cutting spending will be which members the party selects to head the various committees.” The final roster ended up leaving a lot to be desired from a limited government perspective. For example, the House Republican leadership and its allies went with “The Prince of Pork” to head up the Appropriations Committee.

Two years later, the committee situation is about to get even worse now that the House Republican leadership has decided to send a message that casting a vote according to one’s beliefs instead of one’s instructions is a punishable offense. On Monday, four congressmen were booted from “plum” committee assignments for failing to sufficiently tow the leadership line. I suspect that the purge was motivated, at least in part, by Team Boehner’s desire to have the rest of the rank and file think twice before casting a “no” vote on whatever lousy deal is struckwith the White House to avoid the “fiscal cliff.”

Three of the purged Republicans are returning members of the 2010 freshmen “Tea Party Class”: Rep. David Schweikert (R-AZ), Justin Amash (R-MI), and Tim Huelskamp (R-KS). Over the past year, I have been keeping a loose record of how the freshmen voted on opportunities to eliminate programs and prevent spending increases. On seven particularly telling votes*, Schweikert and Amash voted in favor of limited government every time. Continue Reading →

If you’re a hockey fan, you’re probably pretty irritated that the National Hockey League’s owners and players still haven’t reached a deal on a new collective bargaining agreement, and thus the 2012-2013 season remains in limbo. You also probably know that negotiations got off to a rough start after the owners, who are presumed to have the upper hand, made a rather insulting initial offer to the players.

Well, the Obama administration must’ve stolen a page from the NHL owners’ negotiating playbook. Yesterday, Treasury Secretary Tim Geithner—playing the role of NHL Commissioner Gary Bettman—delivered to congressional Republicans the president’s opening proposal to avert the so-called “fiscal cliff.” The proposal’s reported contents were too extreme for the GOP, and they should insult anyone who gives a fig about the federal government’s unsustainable budgetary path.

Here are the details as reported by the Wall Street Journal: Continue Reading →

According to the New York Times, New York Gov. Andrew Cuomo and the state’s congressional delegation want the federal government to pay for $33 billion in storm damage from Hurricane Sandy plus another $9 billion for preventative measures:

“I understand the fiscal pressures that Washington is under,” Mr. Cuomo said. “I also understand the fiscal pressure that New York is under. And I know that the taxpayers of New York cannot shoulder this burden, and I don’t think it’s fair to ask them to shoulder this burden.”

I suppose one could make the argument that it wouldn’t be “fair” to make New York citizens foot the bill given that New Yorkers have helped pay for the cleanup following natural disasters in other  states. But is it “fair” for the residents of other states to subsidize rebuilding efforts on coastal areas that are prone to natural disasters? Is it “fair” for Gov. Cuomo – rumored to have eyes on running for president – to use Hurricane Sandy as an opportunity to get federal taxpayers to fund infrastructure projects that he would have otherwise had to ask his constituents to pay for? Continue Reading →

House freshman Allen West (R-FL) – a tea party and Fox News favorite – finally conceded defeat to his Democratic opponent on Tuesday. According to a Politico article, “The congressman’s unexpected loss left his advisers, donors and legion of tea party fans searching for answers.”

Here’s one answer: West’s hypocritical votes in favor of federal programs that inappropriately subsidize local concerns apparently didn’t buy him goodwill from voters. I’m referring to West’s votes earlier this year to save the Community Development Block Grant program and the Economic Development Administration, which I previously discussed:

On West’s congressional website, he states that “As your Congressman, I will curb out of control Government spending.” He also says that “we need to challenge the status quo in Washington and stop the floodgates of government spending” and that he will “carry the torch of conservative, small government principles with me to Washington.” West, however, voted to save the CDBG programand he also voted back in May to save the Economic Development Administration, which is another parochial slush fund. In April, he accused Democrats of being communists. That’s pretty rich given that he proceeded to vote to protect programs that engage in central planning.

Those who understand and appreciate the need for a return to the fiscal federalism of our constitutional roots should not mourn West’s electoral demise. Indeed, supporters of limited government need to start taking a deeper look at the politicians that they embrace.

Voting to Save Pork Programs Doesn’t Save Allen West is a post from Cato @ Liberty – Cato Institute Blog

Back in August, Cato adjunct scholar Veronique de Rugy expressed concern about Republican campaign rhetoric on Medicare. As Republicans tell it, they want to “protect” and “strengthen” Medicare, whereas President Obama wants to “cut” and “weaken” it. Veronique thinks that the GOP’s “Mediscare” campaign could end up backfiring by making it harder to reform Medicare if Republicans succeed in taking control of Washington.

What I find irritating is that for all the standard platitudes from Republicans about getting federal spending under control, they’re simultaneously attacking Democrats for allegedly wanting to cut the budget’s big-ticket items like Medicare and military spending. Democrats might deserve it for decades of trying to scare the pants off of seniors, but the GOP’s adoption of their tactics is evidence in support of the view that the parties merely represent two sides of the same coin. (Don’t forget the last big expansion of entitlements came from the Republican-engineered addition of a prescription drug benefit to Medicare in 2004.)

That brings me to the Pennsylvania race for U.S. Senate , where Republican challenger Tom Smith is trying to unseat Democrat Bob Casey. Smith is apparently in striking distance after months of running television ads attacking Casey. However, one particular ad being run by the Smith campaign is a good example of how low Republicans have sunk when it comes to Mediscaring: Continue Reading →

A Washington Post investigation found that 73 members of Congress have “sponsored or co-sponsored legislation in recent years that could benefit businesses or industries in which either they or their family members are involved or invested.”

Here’s the part that caught my eye:

When the House and Senate wrote their first set of modern ethics rules in the 1970s, in response to the Watergate scandal, they expressly prohibited members from engaging in legislative activities that would financially benefit them. But both chambers immediately carved out exemptions to the rule.

The greatest latitude was provided to lawmakers whose business interests aligned with major industries within their home states. “If a dairy farmer represented a dairy farming state in the Senate, and introduced, worked for, and voted for legislation to raise or maintain price supports for dairy producers, he would not fall under the strictures of this rule,” the Senate ethics manual says.

In other words, it’s a-okay for members of Congress to help themselves to the Treasury’s vault  so long as they intend to share the loot with the special interests back home.

Members of Congress Financially Benefit from Legislation They Support is a post from Cato @ Liberty – Cato Institute Blog