Tag Archives: spending

Just Say Neigh

I have a post over at the AmSpec blog about a $4.6 million bridge used by 50 horses and the people who ride them. That’s $92,000 per horse.

Stimulus Roundup

Most people doubt Congress’ ability to spend money wisely. The stimulus has given them some proof:

-$800,000 for an African genital-washing program.

-$700,000 to create computer software that can tell jokes.

$40,000 for ten trash bins.

-$1.6 million to irrigate a golf course inTexas.

-Thousands of dollars to replace – twice – a sidewalk “that doesn’t front any homes or businesses, and leads into a ditch”

300 truckloads of oyster shells.

Bonus non-stimulus spending: “[T]he Census spent $23,000 on a totem pole in Alaska. Census representative Hector Maldonado says the agency thought it was a great idea. The plan was to increase participation in Alaska, but despite the totem pole, participation dropped in the state by two percent from the last census.”

Why Government Layoffs Tripled in June

This graph from just-released Federal Reserve data caught my eye. It shows government layoffs and discharges from late 2000 through June of this year (raw data set downloadable here). Government jobs are remarkably stable. According to this BLS chart,government workers enjoy roughly three times the job security of private sector jobs. Government workers also compensated more than twice as well as the people who pay their salaries.

For most of the last decade, government workers had as small as a 1-in-200 chance of getting fired or laid off in a given month. This stability mostly held up even during recessions, which are marked as the shaded areas in the graph.

But notice the big spike that happened this June. The economy is out of recession. But times are still tough. And government deficits are at record highs. Is the sudden jump in layoffs and discharges due to government cutting spending to avoid fiscal disaster?

I’d guess not. June was when large numbers of temporary census workers finished their jobs. Still, for one shining second, I thought that Washington had come to its senses.

Making a Difference – A Very Small Difference

The House passed a budget enforcement resolution yesterday. It sets 2011’s discretionary spending $7 billion below what President Obama has requested.

Next year’s discretionary spending target is $1.12 trillion for next year. The $7 billion difference represents savings of 0.625 percent. Barely a rounding error. If total spending (including mandatory and defense spending) ends up at $3.5 trillion next year, the savings becomes 0.2 percent.

Of course, 2010 discretionary spending was $1.39 trillion. 2011 spending will very likely end up much closer to that than the targeted $1.12 trillion. The appropriations process is not kind to non-binding resolutions, however well-intentioned. Especially when the resolution “doesn’t detail how Congress should reach that [deficit reduction] goal.”

Congress lacks the will to cut $270 billion of spending. The interests benefitting from that spending will scream bloody murder the second their programs are put on the chopping block. In an election year when incumbents are more fearful than usual, no politician worth his salt wants to cause an uproar.

Congress need not worry too much, though. Even in anti-incumbent years, re-election are almost always above 90 percent. The vast majority of congressional turnover happens through retirement, running for other office, or death.

The pattern is holding this year, so far. The University of Virginia’s Larry Sabato recently pointed out that 5 incumbents have lost their state primary elections this year, while 240 were re-nominated. That’s a 98 percent success rate. There will be a few more casualties, especially in the November general elections.

Most members are safe. They can, and should, rock the boat by cutting unnecessary spending. If anything, the most aggressive cutters might become folk heroes like Chris Christie in New Jersey. They just don’t have the guts.

I will be more than happy if Congress proves me wrong. We’ll find out over the next few months.

The Rahn Curve

A little government can do a lot of good. A lot of government can do little good.

Rules protecting life, liberty, and property can create the stable conditions that entrepreneurs need to flourish. It works best when these rules are simple, clear, and few. But problems emerge when government takes on other missions.

Rules that are complicated, opaque, and numerous create instability. Entrepreneurs are less likely to invest or innovate if they fear the rules of the game might change tomorrow on a whim. Complying with regulations takes up time and effort that could be spent creating wealth. When governments get involved in business, businesses will involve themselves with government. This is an invitation to corruption, rent-seeking, and regulatory capture. Many backs get scratched, but economic growth suffers.

Dan Mitchell‘s latest video introduces the Rahn Curve, named after top-notch economist Richard Rahn, to illustrate that concept visually. Most academic studies on the subject estimate that governments that take up 15 to 25 percent of GDP is about the right size. The U.S. government consumes roughly 40 percent of GDP. That wide range is because different government policies have different effects, and because the complexity of even the smallest economies makes any macro-level study uncertain.

The academics might be guessing too high, though. Historical data from the 19th century show that the best-performing economies had governments around 10 percent of GDP. That includes the U.S. and most of Europe.

Returning to that size government wouldn’t even be particularly austere. the U.S. government would have a $1.4 trillion budget. Roughly what we had during the Clinton years.

I hope you’ll take a few minutes to watch. The Rahn curve contains valuable insights.

Friday Regulation Roundup

Postal Service pays incompetent employees over $20 per hour to not work. They can’t be fired because of union rules. So they come to the office and take naps, play cards, and fill out coloring books. And get paid for it.

-It is apparently against regulations to sell burgers and porn together without a permit.

NSF funds research to identify star soccer players.

Illinois high school administrator had $885,327 salary; retires with $601,978 annual taxpayer-funded pension. Total value of the pension? More than $26 million. Watch your back, Greece. America is right behind you.

-Ever want to have a web chat with the federal government about combustible dust? Here’s your chance.

Arizona spends $1,250,000 to save 250 squirrels. That’s $5,000 per squirrel.

Friday Regulation Roundup

$1.6 million in stimulus money to be used to irrigate a golf course in Texas.

-A new study by Susan Dudley and Melinda Warren finds that regulatory spending grew 31 percent under Bush. Regulatory staffing grew 42 percent.

-Selling shellfish to the Department of Veterans Affairs? There are regulations for that.

-It is illegal to possess pliers in the state of Texas.

-The federal government’s Integrated Nitrogen Committee is having a public teleconference on June 8.

-In Virginia, it is illegal to take a bath without a doctor’s permission.

-Government programs never die. One Cold War relic is the Federal Radiological Preparedness Coordinating Committee.

-The federal government’s Wild Horse and Burro Advisory Board is holding a public workshop June 14-15.

$300,000 of stimulus money to pay for floating toilets.

How Much Would a Congressional Pay Cut Save?

Rep. Ann Kirkpatrick is proposing a 5 percent pay cut for members of Congress.

“In the face of our ever-deepening federal debt, the federal government must follow their example by finding common-sense solutions to do more with less,” she told The Hill.

A noble sentiment. And one that would save $8700 per member. With 535 members of the House and Senate, the total savings are $4.65 million.

The federal government is on track to spend about $3.8 trillion this year. Trimming $4.65 million means that for every $816,502 the federal government spends, it would save one dollar.

Rep. Kirkpatrick is proposing a 0.00122 percent spending cut. That’s not even a rounding error.

I do not intend to mock Rep. Kirkpatrick. Her spending cut is better than nothing, and I am glad she is proposing it. But placed in proper context, it is very, very small. It is a largely symbolic proposal, and should be treated as such. A 5 percent pay cut for Congress is no austerity measure.

More fundamental solutions would involve fundamental entitlement reform paired with a deregulatory stimulus. Cato’s Chris Edwards has some other spending cut ideas that deserve a serious look. They total $380 billion, or ten percent of federal spending.

Tea Parties and Corporations

Milwaukee’s alternative weekly, the Shepherd Express, recently ran a thought-provoking article by Lisa Kaiser criticizing the tea party movement. I haven’t written a whole lot about the tea party movement. But my reaction has been mixed.

The positive is that a large and vocal constituency is agitating for lower spending and lower taxes. That’s been missing from the protest scene since at least Vietnam.

The negative was summed up almost perfectly by Koch Industries VP Richard Fink: “Some of their worries are… more thoughtful, some of them are less thoughtful.”

If you think about it, tea partiers are the right-wing analogue of Bush-era Iraq war protesters. Both of their main causes are true and just. War against a country that never attacked us is wrong. So is the Bush-Obama spending spree.

But both movements attracted a fringe. A loud fringe. A fringe that, because of their volume, their kookiness, their entertainment value – attracted disproportionate press coverage. Tea partiers have their birthers and John Birchers and so on. The anti-war movement has its Code Pink, truthers, and other strange, fascinating, creatures.

Now suppose you’re a journalist covering one of these protests. You’re on a deadline, and you don’t know a whole lot about what you’re covering.

You could write a story about the ordinary people in jeans and t-shirts, kids in tow, holding up their signs with quiet dignity.

Or you could talk to outlandish – and outlandishly quotable! – nutjobs from Code Pink or the John Birch Society. It’s pretty obvious which tactic gets you the more entertaining story in less time.

An economist would point this out as a classic example of the law of demand. If something costs less, people consume more of it. If it costs more, then less. Since writing a story about colorful kooks costs less time and effort than interviewing ordinary people, no wonder so many newspaper stories are of the cheaper-effort variety.

Which brings us to the article in question.

The words “corporate,” “corporations,” and variations of the same appear nine times. And it is not a long article. Each time, the epithet is unsubtly used as shorthand for “I disagree with this.”

This is a mental shortcut — evidence that Kaiser did not give the issue deep thought. If your gut feeling is that you don’t like something, you can research it to find out for sure. But that is very costly in terms of time and effort. It’s mentally cheaper to just blame “the corporations.”

This is not a rigorous line of thought. Arguments are either right or wrong. The presence or absence of corporate funding has nothing to do with whether an argument is right or wrong.

Take the pull quote from the print edition:

“Americans for Prosperity is a corporate-funded front group that is trying to extract as much of our public dollars as they can and then put it (sic) in the hands of the corporations that fund it.”

That isn’t actually true. AFP is against corporate bailouts. Against corporate subsidies. AFP thinks that corporations should compete in the marketplace. Not in Washington. Public dollars should be kept as far away from corporations as possible. The source who Kaiser quotes is factually inaccurate. And she doesn’t correct him. She agrees with him.

He uses the same mental shortcut that Kaiser does. Just use the word “corporate” to stand for that which he disagrees with. Then he attributes those views to AFP, blissfully unaware of AFP’s actual stances on taxpayer-to-corporation wealth transfers.

This is intellectually lazy. If Kaiser and the activist are against government funding of corporations, they actually have a lot in common with AFP.

Kaiser quotes another activist:

“It’s no coincidence that profits from giant corporations are being pumped into front groups like AFP to further those corporate interests.”

This guy doesn’t get it either. Dollars tend to flow to causes that the donors already agree with. The arrow of causality is pointing in the opposite direction that he thinks.

For example, I favor legalizing same-sex marriage. Suppose that I’m planning to donate money to an organization to advance my view on that issue. Will I get better results by giving to a group that already agrees with me, or by giving to Focus on the Family in hopes of changing their mind?

Koch Industries in particular comes under fire for its longtime support of free-market organizations. And they have much to gain from the crony capitalism they are accused of promoting.

But they aren’t actually promoting crony capitalism. If their political giving actually was made in the name of corporate self-interest, they’d be giving to groups like the Center for American Progress, which openly favors giving billions of taxpayers’ dollars to corporations.

Instead, Koch-funded groups believe, across the board, that corporate welfare is wrong. The Koch brothers are free-market ideologues, and it shows in their philanthropy.

Kaiser’s Shepherd Express article is an interesting read. But not for what it says about tea parties and corporations. It’s interesting because of what it says about her, and about how the law of demand partially explains the poor quality of most journalism.

On the Radio: Regulation

3,503 new regulations hit the books last year. That’s a new rule every two and a half hours, day and night, seven days a week.

Tomorrow morning, I’ll be on the Paul Molloy Show at 10:15 EST to talk about that outrage and more. Tune in to WTAN 1340 AM if you live in the Tampa Bay area, KLRG 880 AM in Little Rock, AR, or click here to listen online.

Better yet, CEI’s Wayne Crews’ latest edition of “Ten Thousand Commandments” is coming out tomorrow morning. Read it to learn how much regulation costs the economy (8.3 percent of GDP), and how much we would prosper if Washington would just lighten the load.