New School Politics

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From the NYT, regarding his proposals on taxes and spending:

The problem is that the campaign has been far, far more detailed about its tax cuts, which would worsen the deficit, than its spending cuts, which would reduce it. Mr. McCain has proposed the elimination of the alternative minimum tax (at a cost of $60 billion a year), new child tax deductions ($65 billion), a corporate tax cut ($100 billion) and faster write-offs for corporate investments in new equipment ($50 billion to $75 billion).

On the spending side, the senator talks broadly about cracking down on pork barrel projects and holding agencies accountable for their budgets. These steps, Mr. Holtz-Eakin told me, could eventually bring $150 billion a year in savings. He added that given Mr. McCain’s history of fighting against wasteful spending, he deserved the benefit of the doubt.

It would be easier to give him that benefit, though, if he weren’t so vague. For decades presidential candidates have been promising to cut waste, fraud and abuse, and no one has yet made a noticeable dent in the federal budget.

As Mr. McCain’s plan currently stands, The Economist magazine concluded that it “will not come anywhere close to paying for the tax cuts.” Most telling, I spoke over the past week with several other economists who admire Mr. McCain and have advised him over the years. None would defend his current fiscal package (or be quoted).

Neadless to say, there is a hole at least $150 billion wide in McCain’s economic agenda. At least, however, McCain isn’t using the old “the tax cuts will pay for themself” defense–didn’t work so well in the past eight years.

For a myriad of reasons though, I have relative confidence that McCain will attempt to control spending proportionately to the Bush and would-be McCain tax cuts. However, it will take much more than crusading against pork barreling, which accounts for about $30 billion of the budget if my memory serves me.

What it will take is addressing much, much bigger programs including the great third rails–Social Security and Medicare, whose costs are rising at an alarming rate (already SS is the biggest government program in the history of mankind). On his website he at all specific about how he will address these issues or control spending other than eliminating earmarks and freezing non-military discretionary spending.

Much of McCain’s credibility centers around the idea that he speaks his mind and does what he believes regardless of the political convenience. In this case, he is not living up to that. We have seen McCain’s specifics on tax cuts, but that’s the easy stuff. What really matter’s is how–and if–he will cut spending, but it is also not a very popular topic.

If McCain really believes what he says about spending and the size of government, he will begin thinking hard about how he will squeeze the budget. After all, if you don’t propose any cuts in spending, you shouldn’t expect the deficit to narrow any time soon.

Popularity: 17% [?]

Its nice to see a battle over spending for once in Washington. Surprisingly enough its the Bush White House who is trying to check Congress’ urge to spend. Block grants are the main area over which this disagreement is occurring:

…differences over how much federal aid should be provided to cities and states is only one part of the $22-billion chasm that divides congressional Democratic leaders and the White House.

Despite the fact that $22 billion is a large amount of purchasing power, in the context of our whole economy it does not make a dent in government spending. Additionally, cutting federal aid expenditures will do little to the Federal budget on the whole. If a real initiative to reduce the size of government existed it would aim at reforming entitlement spending which account for about 2/3 of total spending.

Moreover Social Security and Medicare especially are growing at a rate that make them grotesque liabilities in the near future.

[According to] Congressional Budget Office that Social Security and Medicare outlays will rise from 8.5 percent of annual economic output to 10.5 percent in 2015 and 15 percent in 2030.

These costs, in turn, would force the United States to keep borrowing, pushing the ratio of publicly held federal debt from its current level of 37 percent of the economy to about 100 percent in 2030, a level reached in the past only during World War II.

A wise first step would be to curb the growth of entitlements by tying it closer to an inflation index instead of a GDP index. Second would be to cut entitlements in general. Lastly it would be most wise, although most unlikely, to move towards ending these absurdly large bureaucracies.

Nevertheless, courage and reason are in short supply among politicians and I surmise that very few would sacrifice their political lives to initiate such wise reforms.

Popularity: 100% [?]

Here is a cool article on Senator Tom Coburn from Oklahoma who is the most steadfast of small government advocates in the Senate. I dont agree with him on many issues due to his Christian Conservative proclivity, however you’ve gotta love his conviction, his refusal to compromise, and especially the fact that he drives most of his colleagues nuts.  

Popularity: 45% [?]

Ht: Barry Day for his comment on “Is Ron Paul Worthy?”

Ron Paul took the liberty to defend his earmarking binge thusly:

Because earmarks are funded from spending levels that have been determined before a single earmark is agreed to, with or without earmarks the spending levels remain the same. Eliminating earmarks designated by Members of Congress would simply transfer the funding decision process to federal bureaucrats rather then elected representatives.

…

The real problem, and one that was unfortunately not addressed in last week’s earmark dispute, is the size of the federal government and the amount of money we are spending in these appropriations bills. Even cutting a few thousand or even a million dollars from a multi-hundred billion dollar appropriation bill will not really shrink the size of government.

Dr. Paul is correct on his second point. The bigger problem is the size of the total budget–mainly entitlements–of which earmarks are a relatively small portion.

His first point, however, is wrong. While it is correct that funding is appropriated before they are earmarked, it is incorrect to suppose that more requests for funds does not contribute to the growth of government.

If fewer congressmen (like Dr. Paul) requested earmarks, and less money, on the whole, was spent on earmarks than was appropriated for them, that money would go idle. Consequently, it would go towards financing other parts of the federal budget, over $200 billion of which is unfunded this year. Therefore, by reducing earmarks we could reduce the federal deficit, which reduces the size of government by reducing the amount of money the government needs to borrow from the private sector.

Also, if fewer congressmen requested earmarks, that would lower the demand for discretionary spending. If that happened, the next year’s amount of funds appropriated for earmarks would be reduced because of the fall in demand. When basic supply and demand is applied to the earmarking process it shows that if Congressmen would restrain their corrupt urges to appease special interests through pork barreling, it would reduce the impetus for earmarking in the future.

Popularity: 61% [?]

Two opinion pieces today, one in the Wall Street Journal and one in the Dallas Morning News, shed some negative light on the libertarian Congressman.

First, a revelation from the WSJ editorial entitled “Ron Paul’s Earmarks” (just the title could strike fear into the heart of any Ron Paul admirer):

After reporters started asking questions, the Congressman disclosed his requests this year for about $400 million worth of federal funding for no fewer than 65 earmarks. They include such national wartime priorities as an $8 million request for the marketing of wild American shrimp and $2.3 to fund shrimp-fishing.

When we called Mr. Paul’s office for an explanation, his spokesperson offered up something worthy of pork legends Tom Delay or Senator Robert C. Byrd: “Reducing earmarks does not reduce government spending, and it does not prohibit spending upon those things that are earmarked,” the spokesperson said. “What people who push earmark reform are doing is they are particularly misleading the public–and I have to presume it’s not by accident.”

On the other hand, good libertarians should want to start cutting somewhere. The problem with earmarking is that each year the habit grows by leaps and bounds so that it now represents real money. It is also a gateway to political corruption–a la Duke Cunningham, and other Congressmen currently under investigation for trading favors for earmarks.

Mr. Paul is one of Congress’ better fiscal conservatives. So the fact that even he feel obliged to grab multiple earmarks is all the more reason to keep fighting for transparency in the earmark process, as well as for the line-item veto, which would give Presidents a chance to impose some spending discipline from outside Congress.

Mr. Paul’s defense is in vain. This does not change the fact that Mr. Paul’s request increases the demand for government appropriation of private funds. The $400 million in frivolous projects proposed by the Texas Congressman is money that is taken from private producers and out of the private market and does nothing more than further erode the private citizens’ economic liberty. 

While Congressman Paul still stands as most in favor of individual liberty on the domestic front among presidential candidates, this development is, at least, troubling. Keep in mind that $400 million is a lot of money, and the day that we all start saying that it is not a large sum, we know that the size of our government has gotten out of hand. If all 535 congressmen got $400 in earmarks for their own constituencies–like Dr. Paul desired–that would amount to a total of over $200 billion in earmarks. I wonder if the Congressman would be in favor of that?

The second editorial mention of Ron Paul was by Mark Davis of the Dallas Morning News:  

File all that under disturbing quirkiness. But it is the Ron Paul take on fighting terror that makes him unfit for even the briefest consideration for the presidency.

In the now-famous May 15 GOP debate in South Carolina, he stood out among the crowded field by blaming America for 9/11. “We’ve been over there,” he lectured. “We’ve been bombing Iraq for 10 years. … What would we say here if China was doing this in our country?”

That phony equivalency rises to the level of sheer moral idiocy, and it doesn’t stop there. Dr. Paul’s longstanding unfortunate tendency is to rope Jesus into his war objections. Today, the notion of going to war to actually prevent additional terrorism strikes him as antithetical to the concept of a “Prince of Peace.”

We should expect sixth-graders to recognize that peace is not the mere cessation of hostilities. Peace is what you get when the good guys win.

Joined by a host of Democrats who clearly do not view America as “the good guys,” Ron Paul has shown he is one of many otherwise respectable Americans wholly unworthy of the White House.

As I have said many times, I have plenty of problems with Dr. Paul’s foreign policy and I think that Davis lists some of them here in an entertaining manner. For one, the origin of hatred for America in the Islamic world is ideological and it goes far deeper than something as nominal as American foreign policy in the post-Cold War era. Try the fact that Islamist believe that God–through his prophet Mohammed–wants Muslims to wage a jihad against all cultures and peoples that do not conform all aspects of their lives to Islam.

The second troubling fact is that he uses–as Davis says–Jesus to justify his foreign policy. My question is, what major war in America’s history could General Christ have won?

Popularity: 78% [?]