Heritage's Bill Beach speaks to the Journal about the appointment of Henry Paulson as Secretary of the Treasury:

What does Paulson's nomination mean for the markets and the economy?

Beach: It seems to me there's very little of the Bush administration that's left from a policy standpoint, except their economic policy … If you look over into the other areas, from education, to disaster recovery, to defense policy, the Bush people are heavily blocked-in [and] stymied. But in the economic area they still seem to have that aura of leadership. So it's really a great opportunity for Paulson, he may have sensed that … even though the rest of the ship was tilting toward the waterline, this part of the ship was solid and he could in fact affect the rest of it by being a strong leader on the economic side.

Will Paulson have more influence than his predecessors on policy making?

You certainly have seen the center of gravity in economic policy shift from Treasury and Commerce to the national economic council and the council of economic advisors. So it's shifted from the departments back to the White House. Now, it goes and it comes. Over the course of the past 60 years, there's been an ebb and flow. And this time it has flowed toward the White House. The president has wanted to have policy reins in his own hands … Now, the white House economic team is not as deep as it once was. A lot of the really talented people have burned out, they've gone on to K Street or back to the academy, and so I think it is almost inevitable that for the next two years Treasury will play a larger role than it has in the past. The talent is in treasury, not at the White House. Not to say the White House doesn't have good people they just don't have very many of them. And I do expect now some resurgence in the leadership of the Treasury Department.

What are the responsibilities of the Treasury Secretary?

The Treasury Secretary is the trustee of our monetary system, our banking system. More so than just being an administrator of programs and a policy chief, there is a special responsibility that goes only with a few departments, to maintain and preserve. And that's a big job for the Treasury Secretary … The Treasury Department has a major judicial role to play. It defends our monetary system against counterfeiting which continues to be an enormous problem. It defends our banking system against fraud, our credit system against abuse, our Internet and Web services against financial phishing.

All of these sorts of things that are more of police powers are surprisingly there. The U.S. Marshall's service is part of the Treasury Department so they're responsible for a lot of our air traffic safety and the transport of prisoners. So he has those kinds of jobs in addition to ... administering the world's largest tax system and being one of the permanent trustees of the world's largest retirement system. I think he is the principal trustee of the federal government's employee retirement system, which is a very, very large system indeed.

Just the fact that he has to review and authorize every single debt instrument deployed by the U.S. to fund those activities that are not paid for by taxes, is a huge responsibility. So you don't want to put someone in there who has not had big weight on their shoulders, because they'll just crumble.

Do you expect to see policy shifts as a result of Paulson's nomination?

I'm hopeful that they'll just deliver on what the president has been pronouncing for the past many years and that is a better tax system one that's more fair and more pro-growth. I think that's crucial … I don't think they're going to shift. I think it's too late for shifts. But I think there are some things they can accomplish.

Posted by Andrew Grossman at 09:24 AM in Taxes | Permalink | TrackBacks (0)

On Memorial Day, President Bush visited Arlington National Cemetery where he laid a wreath at the Tomb of the Unknowns. He also made a brief statement:

In this place where valor sleeps, we acknowledge our responsibility as Americans to preserve the memory of the fallen. On this Memorial Day, we look out on quiet hills, and rows of white headstones -- and we know that we are in the presence of greatness. (Applause.) The markers here record the names of more than 296,000 men and women. Each of the soldiers, sailors, airmen and Marines buried here answered the call to serve, and stepped forward to protect the nation they loved.

In the Wall Street Journal, Christopher Hitchens wrote on our efforts at commemoration.

"Always think of it: never speak of it." That was the stoic French injunction during the time when the provinces of Alsace and Lorraine had been lost. This resolution might serve us well at the present time, when we are in midconflict with a hideous foe, and when it is too soon to be thinking of memorials to a war not yet won. This Memorial Day, one might think particularly of those of our fallen who also guarded polling-places, opened schools and clinics, and excavated mass graves. They represent the highest form of the citizen, and every man and woman among them was a volunteer. This plain statement requires no further rhetoric.

Prof. Peter Schramm, the 2006 Salvatori Prize recipient, has posted a podcast of a Memorial Day speech he made in 2004.

Now that the weekend is over, Washington, D.C. has welcomed summer and sweltering temperatures. The flurry of weekend activity was prelude to what looks to be a quiet week in Washington--while the rest of us have returned to work, Congress has the week off.

On Thursday of last week, the Senate Subcommittee on Federal Financial Management, Government Information, and International Security held a hearing on budget priorities and process. Some highlights:

• "It is a source of understandable frustration to many that contemporary budget policy is devoid of much-needed strategies to slow the growth of mandatory spending for retiree income and health care, to take the most significant example," former CBO chairman Douglas Holtz-Eakin said. "In these circumstances, it is tempting to impose a budget process that 'solves' these problems…this is misguided. The budget process cannot be a substitute for policy choices by the Congress."

• "The need to find budget savings and cut the waste will be intense in coming years," Chris Edwards of the Cato Institute said. "Members of Congress and the public need better information and more powerful tools to control spending and avoid a fiscal train wreck. Creating a new statutory cap on the growth in total federal outlays would be a good step toward increasing both transparency and control in the budget process."

• “Let me begin by saying that even the best budget process cannot serve as a replacement for responsible budget decisions and proper oversight,” said Maya McGuineas of the Committee for a Responsible Federal Budget.
  

Even though Congress is out for the week, it can't escape scrutiny over earmarks. In Saturday's Wall Street Journal, Rep. Jeff Flake's efforts to strip out pork are highlighted.

Mr. Flake counts 400 ag-bill earmarks in all, ranging from $100,000 for the National Grape and Wine Initiative to $180,000 for tomato production, to $229,000 for dairy education. The point of the latter was to "improve the image of the dairy industry." (Our own image advice, which costs less than $229,000, would be for the industry to refuse subsidies for image advice.) These are precisely the kinds of earmarks that have proliferated by 1,100% in the last decade and that Republicans claimed to have sworn off only weeks ago. Yet Mr. Flake's amendment to strip them won only 93 votes.

The bigger scandal here is why taxpayers are spending billions of dollars a year on payments to agribusiness, despite soaring commodity prices. Corn prices are up almost 50% over the last two years, thanks in part to rising demand due to taxpayer mandates for ethanol. Yet corn itself remains one of the most heavily taxpayer subsidized crops in America.

Saturday's New York Times reports on the internal conflict that the debate over earmarks is fueling in Congress.

"I think it's important for the federal government to have the input of legislators who live in the districts," Ms. Pryce said. "I'm not sure the Army Corps of Engineers would have made as strong a case for a floodwall in West Columbus as I would have."

Indeed, earmark defenders say it is the job of Congress — not the bean-counters at the Office of Management and Budget — to determine how tax dollars should be spent.

"Excuse me," Mr. Weldon said, "but I don't think I was elected to come here and just bow down to the White House and the O.M.B. when it comes to spending priorities."

Earmark opponents counter that money gets allocated based not on need, but on how much power a particular member of Congress wields. And Mr. Flake says any special project can be justified on the grounds of economic development.

"If you accept the premise that we ought to be funding items like the Rock and Roll Hall of Fame, then you can make a case that it ought to go through the Congress rather than the executive branch," he said. "But if you don't accept the premise, which I don't, then it's a red-herring argument."

The Arkansas Democrat-Gazette also takes a look at the earmark issue.

Arkansas’ Rep. Marion Berry would like to be known as the king of pork. “Nothing would please me more,” he says.

Pork-barrel spending is the derisive term critics apply to earmarks — Capitol Hill lingo for federal funds set aside for specific projects at the request of individual lawmakers. In the past year, as ethics and lobbying scandals have surfaced on Capitol Hill, the earmarking process has come under scrutiny, and the number of spending requests has dropped.

Berry, a Democrat who sits on the Appropriations Committee, acknowledges that there is more sensitivity about earmarks among his colleagues, who fear being seen as big spenders. But he maintains earmarks have relatively little impact on the budget, compared with the tax cuts Congress has passed.

During the fiscal year that ends Sept. 30, member-requested projects received $ 29 billion of the total $ 843 billion budgeted for discre- tionary programs, according to Citizens Against Government Waste, a Washington group that advocates cuts in federal spending.

“Earmarks are not the problem,” Berry says.

When Congress returns, the Senate will open with three items sure to attract the attention of conservative activists. There's a vote on the Federal Marriage Amendment. (Here's Fred Barnes with more.) There will be a vote on the Native Hawaiian bill (better known as the Akaka bill), which would establish an extra-constitutional government of Native Hawaiians. Click here for more on this legislation. And, the Senate will vote on full repeal of the death tax.

In today's Washington Times, Dan Mitchell opines on our tax code.

Unfortunately, there are several reasons taxpayers shouldn't expect politicians to fix America's corrupt tax system. First, politicians of both parties are hopelessly addicted to big government. Democrats actually think it's a virtue to make America more like France by spending taxpayer money like drunken sailors. Republicans pretend they prefer smaller government, but the past five years show their compulsion to spend other people's money rivals the need of a drug addict to get another fix.

The Americans for Prosperity blog notes the Treasury Departments decision to stop collecting the excise tax on long-distance phone service. The purpose of the 1898 tax was to fund the Spanish-American War.

The Club for Growth blog alerts us to the release of Forbes's 2006 Tax Misery and Reform Index.

Human Events Online kicks off the summer with some beach-read picks.

Posted by J. Lawrence Scholer at 12:53 PM | Permalink | TrackBacks (0)

The previously strong House opposition to the supplemental appropriations pork is losing members. Yesterday, 45 Members--including the unpredictable Ron Paul and at least six members of the Republican Study Committee--wrote a letter to Speaker Dennis Hastert and House Minority Leader Nancy Pelosi to support $4 billion in funds for farm bailouts. Heritage's Brian Riedl and Alison Fraser explain why this money is unnecessary:

After averaging less than $14 billion during the 1990s, annual farm subsidy spending has topped $25 billion throughout the current decade, following the passage of the most expensive farm bill in American history in 2002. Yet even as net farm income in 2005 topped $72 billion for only the second time ever, Senators Byron Dorgan (D-ND) and Conrad Burns (R-MT) secured an amendment to provide $4 billion in nationwide agriculture disaster assistance. These funds were not requested by the Department of Agriculture (USDA), and many of them would be spent in areas not affected by Hurricane Katrina.

Furthermore, many of the specific spending items are duplicative and necessary. Assistance for livestock, trees, and specialty crops are already covered by Section 32 disaster payments. Dairy assistance duplicates payments already made by dairy co-ops. Other payments may cover land already receiving Conservation Reserve Program payments. The $246 million in sugar and sugarcane subsidies could exceed that industry's losses, which may be partially covered by Section 32 and crop insurance funding, anyway. Finally, USDA will have to spend tens of millions of dollars to administer this complex law, and farmers may be required to submit large amounts of paperwork.

It is also noteworthy that Washington is subsidizing farmers who enjoy average an income that is 17 percent above the national average and an average net worth double the national average. And two-thirds of all farm subsidies are distributed to the wealthiest 10 percent of farmers, most of whom report household income of above $135,000.

USA Today has an excellent article that highlights the need for entitlement reform:

Taxpayers owe more than a half-million dollars per household for financial promises made by government, mostly to cover the cost of retirement benefits for baby boomers, a USA TODAY analysis shows.

Federal, state and local governments have added nearly $10 trillion to taxpayer liabilities in the past two years, bringing the total of government's unfunded obligations to an unprecedented $57.8 trillion.

That is the equivalent of a $510,678 credit card debt for every American household. Payments on this delinquent tax bill must start soon if financial promises to the elderly are to be kept.

The cost of retirement programs will start to soar when baby boomers - 79 million born between 1946 and 1964 - begin collecting Social Security in 2008 and Medicare in 2011.

"This is a monster financial problem that both parties are going to have to solve," says Rep. Jim Cooper, D-Tenn., a member of the House Budget Committee. "Most Americans and Congress members don't realize the terrific burden we are putting on future generations."

Yesterday, we commented on the article:

In the last paragraph, the article also presents some evidence that the political consensus needed to address the long-term spending issue has not yet coalesced: "Economist Dean Baker of the liberal Center for Economic Policy Research says the nation can afford Social Security but not the current health care system."

Baker, of course, went hog wild last year in the debate over Social Security reform, putting out, as policy papers, simple Powerpoint presentations that those opposing reform mined for numbers. While he is literally right that we probably can afford Social Security in its current form--really, we can afford all sorts of inefficient and distortionary and horribly expensive programs--that's beside the point. How much will we sacrifice to pay for Social Security, is the better question, and taking such a massive program off the table is plain irresponsible--$6.5 trillion, after all, is nothing to sneeze at.

Last week, Rep. Cooper, along with United States Comptroller General David Walker and Rep. Chris Chocola, served on a breakfast panel that explained the scope of the problem:

Rep. Cooper opened, calling the effects of entitlement spending "an urgent topic" that "could be the greatest issue of our time." The government's short-term accounting is "a type of accounting that's [long] been illegal in the private sector." Indeed, this has become very clearly lately for other levels of government, which thanks to new accounting standards, are learning that they face somewhere around $1 trillion in unfunded pension and medical liabilities. Of course, the federal government faces even larger problems.

Rep. Chocola, a former business CEO, was similarly critical of the government's accounting, calling for "accountability and transparency" in federal budgeting. He added that the taxpayers "don't understand what we really do with their money." Fixing entitlement spending, he said, was "kind of like the levee commission." In other words, one can't fix a levee when it's in the middle of bursting; one has to strengthen it before the storm--now. Chocola continued, saying that fixing Social Security was easy compared to fixing Medicare: "Social Security has about four moving parts. Medicare's got like a thousand moving parts." Just because something should be easy doesn't mean that it will happen in Washington, though. We all learned that last year.

Walker took the podium and came out swinging. Last year, he said, the United States "ran the largest accrual-based deficit" in its history and spent "$1.35 for every dollar of revenue." The federal government's unfunded liabilities have risen from "$20 trillion to $46 trillion in [the last] five years," or approximately "$411,000 per household." Decrying the government's "imprudent and unsustainable fiscal path," Walker concluded, "We are out of control....We need tougher [spending] controls now."

The Washington Monthly profiles anti-earmark warrior Rep. Jeff Flake:

As Flake sees it, the first step in returning his party to its conservative roots is to reform Congress by making it more difficult for politicians to slip pork projects into budget bills. "In 1994, Republicans ridiculed Democrats for earmarks, and justifiably so," he reminded me. "But we've taken it to a new level and made it far, far worse." That new level includes using earmarks to "convince" members to change their votes on key measures and to dole out favors to lobbyists in a way that is virtually untraceable.

Although his current proposal is just a first step to strip earmarks of their anonymity, requiring representatives to be identified with the funding they request, Flake would like to do away with the practice completely.

Flake's efforts have the attention of the New York Daily News:

Congress has been raising a stink over pork barrel spending lately, but lawmakers are still larding the budget with suspicious projects - including some that definitely don't pass the smell test. Take, for example, a $1 million effort to control chicken flatulence in Iowa - described bureaucratically as "mitigating emissions from egg farms." Or a $388,000 pork project for pork - studying what to do with pig waste - aka "manure management research."

"I've got to hope that people around the country will say these guys are off their rocker," said Rep. Jeff Flake (R-Ariz.), referring to fellow lawmakers who insert such programs, known as "earmarks," in spending bills.

Flake has mounted a one-man crusade in the House to let voters see those lawmakers defend their projects by forcing the House to vote on some.

Yesterday, his colleagues approved $600,000 for a mysterious Center for End-of-Life Electronics in West Virginia stashed in an energy and water appropriations bill. They also allotted $400,000 for a Research and Environmental Center at Mystic Aquarium in Connecticut.

A project Flake has targeted for years - one that has cost $85 million, with $6.4 million slated for next year - is Wood Utilization. Translated, that's studying the wood industry and teaching graduate students that it's a renewable resource.

"It is just pathetic," said Flake, who lost all of his votes aimed a stripping such pet projects.

Commenting on Flake's recent efforts, Mary Katharine Ham at Hugh Hewitt says:

It's about shining light. Even if the American people decide they want Congress spending money on this stuff, Congress should have to tell them they're doing it and explain why.

Americans for Prosperity provides a scorecard for Flake's recent amendments to the Energy and Water appropriations bill.

[F]or those keeping score at home, Congressman Flake has now forced five recorded votes this week to strike specific pork-barrel earmarks from two appropriations bills. Unfortunately, support for his amendments has dropped with each successive vote - from 92 votes for his first amendment, to 90, 87, 64, and just 46 votes for his most recent amendment.

This obviously isn't a good sign for the taxpayers - are some Members of Congress trying to send Congressman Flake and other fiscal hawks a message? If so, it's more likely than ever that the taxpayers and the fiscally conservative base will be the ones delivering the more powerful message - in November.

Stephen Spruiell at National Review Online tells the story of last week's anti-pork successes in the military construction bill:

Less than 48 hours after the passage of the budget resolution, appropriators started dipping their hands into the new fund. The FY07 Military Quality of Life Appropriations Bill included 66 earmarks (projects that the administration did not request), which put the bill approximately $500 million over the budget's $95 billion cap. These earmarks included $8 million for a physical-fitness facility at Fort Bliss, Texas, and $4 million for a kennel at Whitman Air Force Base, Missouri.

Instead of cutting spending, the appropriators tried to bring the bill back under the cap by funding part of it out of the emergency fund for future war supplementals. They found 20 projects totaling $500 million that the administration did request and decided to try to pass these off as "emergency" spending. These projects included $18 million for bachelor enlisted quarters at Camp Pendleton, California, and $10 million for a vehicle-maintenance shop at Fort Campbell, Kentucky—worthier, probably, than the gym and the kennel, but hardly emergencies related to the global war on terror.

When House conservatives discovered this budgetary prestidigitation, they determined not to let the appropriators raid the fund for which they fought so hard—especially not two days after its creation. [Rep. Jeb] Hensarling, a leading member of the conservative Republican Study Committee, raised points of order to remove the $500 million, and Speaker of the House Dennis Hastert backed him up. As a result, the 20 projects were stripped out of the bill before it passed the House last Friday....

"I think there are good earmarks, but I think it's lead to a culture of spending that's gotten out of control," Hensarling says. "And every time they choose to fund the hydroponic tomato program, the World Toilet Summit, or dairy education, they could have used that money to fund bachelor officer quarters in Kansas."

Chris Field of Human Events Online has more:

The most recent GOP fight was over $507 million in military projects that were designated "as war-related expenditures that could be financed from an emergency reserve outside the agreed-upon spending limits."

Outraged conservative Republicans blasted the move. The [Wall Street] Journal reports:

Conservatives pounced, and the ensuing brawl turned bitter after the money was struck down on a parliamentary motion. "The greatest threat to our country is the war on terror but we also have another threat, and that is out-of-control federal spending," said Republican Rep. Jeb Hensarling of Texas. "We had better quit wrapping the butter in the American flag in this sleight of hand."

The really outrageous part of this whole episode, despite the spending shenanigans, was [Rep. Ray] LaHood's response to Hensarling:

"You picked the wrong bill to have your earmark fight," answered Illinois Rep. Ray LaHood, a Republican member of the Appropriations panel. "Please do not tell us you support the troops. Please do not tell us you support the war, when you came out here and X'd out all of these important projects that help our troops, that help us win the war."

Mr. LaHood, might I suggest that you should not tell voters -- or anyone else for that matter -- that you support the American taxpayer. Please do not tell us you support the economy of the U.S. and our fiscal footing when you take to the floor to defend sneaky, underhanded attempts to designate earmarks as "emergency" funding.

The Capital Press Agricultural Weekly covers the agriculture appropriations bill:

The U.S. House of Representatives on May 24 passed an $18.4 billion fiscal year 2007 agriculture appropriations bill that would stop the Agriculture Department from proceeding with plans to create a national animal identification program until it has satisfied concerns of the House Appropriations Committee.

The vote was 378-46. That $18.4 billion in discretionary spending is $96 million less than what is being spent this fiscal year, but $564 million more than President Bush's request. The bill also contains authority for $76.1 billion in mandatory spending, including farm subsides and food stamps. The bill now goes to the Senate.

Not surprisingly, the article is very supportive of government spending in agriculture:

Early in the day, points of order were used to strike provisions in the bill that would have extended peanut warehousing and Milk Income Loss Contract [MILC] programs that were part of the 2002 farm bill but which will end before that law expires. If the programs are not extended, they will not be included in the budget baseline for the upcoming 2007 Farm Bill and make it less likely they will be renewed.

The points of order were sustained over objections from Rep. Dave Obey, D-Wis.

"This was done not for policy but as a gimmick to get around the budget act," he said of the provisions in the farm bill that end funding for those programs earlier than the rest of the bill. "There will be many small dairy farmers who will go out of business if they don't have the payments from that supplemental program."

Last week, Citizens Against Government Waste explained its opposition to the MILC program:

The dairy industry is already subsidized through the Dairy Price Support Program (DPSP), which cost taxpayers an average of $500 million per year from fiscal 1999 to fiscal 2004 for the purchase of surplus dairy products.

The MILC program subsidizes dairy farmer income through production-linked payments, which leads to expanded production and lower milk prices. Then, the DPSP purchases the surplus milk production caused by the MILC program. The Congressional Budget Office estimated that MILC would cost $1.3 billion over four years. However, the program cost more than $2 billion during that period of time. Over the objection of groups such as [Council for Citizens AGainst Government Waste], Congress already extended the MILC program to September 2007 in the 2006 Budget Reconciliation Act.

We've also explained why MILC is bad policy:

[The MILC program] makes direct payments to farmers, based on the amount of the milk they produce, whenever the price falls below a specified level. According to the Department of Agriculture, MILC so perfectly counteracts existing dairy subsidies as to effectively cancel them out. Really, the only lasting effect would be the cost to taxpayers: about $1 billion.

Some lawmakers remain proud of their earmarks. Rep. Tammy Baldwin provided money for canal restorations in Wisconsin:

Kimberly Johnson, with Kjohnson Engineers Inc., said the problem had a silver lining of sorts thanks to a $1.7 million federal earmark for the second phase of the project, from Adams Street to the Canadian Pacific railroad bridge. That award, which was secured in late 2005 by U.S. Rep. Tammy Baldwin, is given out over the course of five years, Johnson explained. It is possible for the city to take up to two years of the funding and apply it to the current project immediately.

Another wasteful project, reported by the Auburn Citizen:

More outside funding should be on the way for Cayuga County's methane digester project.

The federal government's 2007 energy and water appropriations bill passed this week by the U.S. House of Representatives includes $300,000 for the $3.3 million county project, said U.S. Rep. Sherwood Boehlert, R-New Hartford.

Boehlert said he fought for the funding during a tight budget year for the federal government because the project is a great example of fostering renewable energy sources, something the country needs to develop.

The digester will process manure and other organic materials to produce cheap electricity.

The Journal News explains why earmark transparency is a good thing:

Earmarks are often slipped anonymously into legislation at the last minute, with no discussion. The thinking behind the requirement that sponsors identify themselves and justify the spending's public purpose was that it would limit the number of earmarks. Why? Because

--Such pork-barrel projects add to the deficit, and surely no lawmaker would want to be accused of doing that.

--Some proposals — such as allocating $500,000 for a teapot museum in North Carolina — are criticized as so wasteful and frivolous that no one would sponsor them if a legislator's name had to be attached.

--The connection between the sponsor and any lobbyists involved would be clear, not something the lawmaker would necessarily want made public.

--Powerful committee heads and other senior members of Congress who get millions of dollars worth of earmarks year after year would appear downright piggish.

Other efforts to cut wasteful spending are also running into problems, reports the AP:

The troubled Amtrak passenger railroad would see its federal subsidy cut to what one lawmaker termed "a shutdown number" under a bill advancing in the House. But that one-third cut is actually an improvement over a bill approved last year by the Appropriations Subcommittee on Transportation, which would have slashed Amtrak's budget by more than half and shut down 18 routes. Amtrak's allies in the full House reversed those cuts on the floor....

The total matches President Bush's $900 million request for Amtrak, down from a budget of $1.3 billion this year. That figure is virtually certain to rise either on the House floor or after negotiations with the Senate, which won't begin work on a companion bill until after Congress' Memorial Day recess....

Bush's budget lambasted the railroad for "a lack of clarity about its purpose and mission," adding that "while other countries have turned to new models for providing passenger rail service, the American approach is unchanged."

Among the proposed changes, Amtrak would have to find savings from its money-losing first class and food and beverage services. Steep marketing discounts could not be offered in peak hours.

Heritage's Ron Utt has supported major Amtrak funding cuts:

As has been the case since Amtrak's creation in 1970, the executive branch has offered the least costly bailout proposal. President George W. Bush has offered the railroad $900 million for fiscal year (FY) 2007, but with tight strings attached to ensure that meaningful reforms are adopted....

In 2003, according to the U.S. Government Accountability Office, Amtrak spent $158.8 mil­lion on food and drink that it sold to passengers for $78.4 million, thereby incurring a loss of $80.4 million—more than its gross revenues on those sales. Moreover, this estimate may actually under­state the loss: According to the Amtrak Inspector General, Amtrak spends another $50 million annually to operate and maintain its dining, snack, and lounge cars....

One of the least efficient routes is the Sunset Limited connecting Los Angeles and Orlando. Serving only 81,348 passengers in 2005, the route generated annual losses of $35.2 million (compared to $29.3 million in 2004) while earning revenues of only $10.8 million, yielding a loss of $433 for each passenger. Amtrak could save money by shutting down the line and buying each existing passenger an airline ticket....

With a new commitment to cost-effective service, Amtrak's new board and management team should begin to eliminate some of the system's more wasteful routes. A good place to begin would be the Sunset Limited, with its $433 subsidy per passenger. This should be followed by the Silver Service [New York to Florida], with total losses exceeding $100 million in 2005. Nothing in current law requires that Amtrak operate these routes. The law requires only that Amtrak give four months notice before terminating a route and give the displaced workers generous severance packages, which will cut into the short-run savings from terminating the routes.

Utt also suggests some privatization in the system:

[L]osses of the size that Amtrak experiences each year are not unique to rail service, but rather stem from the archaic socialist model that Congress imposes on Amtrak. Many other countries have struggled with the same problem, and most have turned to some form of privatization to reduce costs and improve service.

Demian Brady at NTU's Government Bytes reports on the CBO's cost estimates for the Senate's immigration reform bill:

CBO's analysis of the introduced version of the bill (available as a pdf here) estimates that it will increase spending by $38 billion over five years and by $117.3 billion over ten years. This is before Senators added additional spending via amendments.

A lot of the costs will come from Social Security and Medicaid, two federal programs that are already scheduled to leave a massive fiscal burden on future taxpayers....

Heritage's Robert Rector came up with even starker numbers before Senate amendments were passed cutting down on the number of allowable immigrants:

The long-term cost of government benefits to the parents of 10 million recipients of amnesty could be $30 billion per year or more. In the long run, S. 2611, if enacted, would be the largest expansion of the welfare state in 35 years.

Posted by J. Lawrence Scholer at 01:37 PM | Permalink | TrackBacks (0)

The Associated Press profiles legal immigrants who do things by the book—who would be left in the lurch if Congress approves amnesty.

"They are putting as a priority illegal immigration, and legal immigrants are left out of the loop. It's the curse of doing things right," one legal immigrant told the AP. "They think that the legal ones can wait — hey!"

The story addresses some important questions:

Even though they have loyalty to their immigrant origins, many legal immigrants also feel a twinge of resentment toward others who have broken the law, and they fear illegal migrants could complicate their own quest for citizenship.

Will the already backlogged system gridlock because of a surge in applications from illegal immigrants? Will those who jumped the Rio Grande jump in the line ahead of those who have spent an average of $10,000 and five years waiting to be granted permanent residency? Will legal immigrants feel the backlash from those who resent immigration without making status distinctions?

Posted by Nathaniel Ward at 11:15 AM in Immigration & Borders | Permalink | TrackBacks (0)

Government debt--explicit and implicit--sped past $500,000 per household over the past year. According to USA Today's analysis, state, local, and federal government debts amount to a near-incomprehensible $57.8 trillion--or $510,678 per household, which is up about $25,000 over last year's total.

Driving the increase are entitlement obligations, primarily Medicare and Social Security, and following not far behind are retirement benefits owed to civil servants.

In the last paragraph, the article also presents some evidence that the political consensus needed to address the long-term spending issue has not yet coalesced: "Economist Dean Baker of the liberal Center for Economic Policy Research says the nation can afford Social Security but not the current health care system."

Baker, of course, went hog wild last year in the debate over Social Security reform, putting out, as policy papers, simple Powerpoint presentations that those opposing reform mined for numbers. While he is literally right that we probably can afford Social Security in its current form--really, we can afford all sorts of inefficient and distortionary and horribly expensive programs--that's beside the point. How much will we sacrifice to pay for Social Security, is the better question, and taking such a massive program off the table is plain irresponsible--$6.5 trillion, after all, is nothing to sneeze at.

Democrats' solid resistance to any serious Social Security reform, reflected in Baker's blithe dismissal, is a fairly recent political phenomenon and one that may begin to fade as more Americans recognize our long-term fiscal crisis. But we're not there yet, obviously.

Posted by Andrew Grossman at 10:37 AM in Federal Spending | Permalink | TrackBacks (0)

Jeff Flake's anti-earmark crusade continues. Andy Roth at Club for Growth blog tells us what the congressman was up to last night:

Republican Congressman Jeff Flake, who represents Arizona's Sixth District, today will offer several amendments to the Energy and Water Appropriations bill to effectively eliminate various earmarks in the bill.

Congressman Flake has prepared six amendments to the Energy and Water Appropriations bill that would block funding for the following earmarks:

• $600,000 for Center for End-of-Life Electronics in West Virginia
• $1,850,000 for Southwest Gas Corporation GEDAC Heat Pump Development in Nevada
• $250,000 for the Virginia Science Museum in Virginia
• $750,000 for the Missouri Forest Foundation in Missouri
• $1,000,000 for the Juniata Ultra Low Emission Locomotive Demonstration in Pennsylvania
• $400,000 for Research and Environmental Center at Mystic Aquarium in Connecticut

After some background research, Ed Frank of Americans for Prosperity discovers that the "Center for End-of-Life Electronics" owes its earmark funding to Rep. Alan Mollohan:

I got curious about the $600,000 earmark for the "Center for End-of-Life Electronics" in West Virginia.

Turns out it's the "Mid-Atlantic Recycling Center for End-of-Life Electronics," but West Virginia Congressman Alan Mollohan already knew that. Yes, that Congressman Alan Mollohan -- the one who's currently under federal investigation for allegedly using earmarks to funnel millions of dollars to friends and family back home, possibly enriching himself greatly in the process.

Here's an excerpt from an October 2005 news release on Congressman Mollohan's website regarding his previous work for the Mid-Atlantic Recycling Center for End-of-Life Electronics, who he affectionately refers to as just "MARCEE" ...

"Through his work on the House Appropriations Committee, Mollohan has earmarked several million dollars to develop MARCEE.

"We are deeply appreciative of Congressman Mollohan's continued vision and support of this most difficult project," said PAZ President R.V. "Buddy" Graham.

I bet you're deeply appreciative, "Buddy." But with one Member of Congress already behind bars for earmark-related corruption, another one recently busted for hiding $90k in his frozen Lean Cuisines, and several others still under investigation, why in the world would any sane Member of Congress want to go on record supporting another questionable earmark sponsored by the guy who could soon be Duke Cunningham's cellmate?

Flake's efforts to stop MARCEE weren't successful, reports Andy Roth:

Now one wonders what the majority of the House plans to do with the Mollohan project. Will they side with Flake, who's a champion for American taxpayers? Or will they side with a man under investigation for abusing the very process that these amendments are attempting to shine a spotlight on?

We're always given a glimpse, from time to time, at the true character of Congress. Tonight, we're going to get a chance to gawk.

UPDATE (8:44pm): Well, there you have it. The House voice voted to reject Flake's amendment that would strike Mollohan's project from the bill. Mollohan was nowhere to be found.

That amendment went down 359-64. Flake's sixth amendment targetting "$400,000 for Research and Environmental Center at Mystic Aquarium in Connecticut," failed 372-46.

BNA has more on the energy appropriations bill:

The House began debate May 24 on a $30 billion fiscal year 2007 spending bill (H.R. 5427) for the Department of Energy, the U.S. Army Corps of Engineers, and the Interior Department's Bureau of Reclamation.

A final vote was expected late May 24 after debate on more than a dozen amendments on nuclear waste policy, energy research and conservation measures, and several individual water projects.

By a vote of 128-295, House lawmakers rejected an amendment from Rep. Ed Markey (D-Mass.) that would have reduced funding for DOE's waste reprocessing initiative, the Global Nuclear Energy Partnership, from $120 million to $80 million.

GNEP calls for the United States to work with other nations possessing advanced nuclear technology to develop a waste recycling technology that does not produce weapons-grade plutonium. The reprocessed fuel would be used in a new type of "fast" nuclear reactor yet to be developed.

"The problem with this proposal is that the Department of Energy is only guessing about how much it is ultimately going to cost," Markey said. "The range is from $3 million and $6 million just for a demonstration project."

House appropriators have already cut $130 million from DOE's $250 million request, saying the department failed to provide Congress with enough technical data and other information to justify the expenditure. The bill's conference report also instructed the National Academies' National Academy of Engineering to conduct a peer review of the GNEP program.

Flake's earlier amendments (unsuccessfully) challenging earmarks in the agriculture appropriations bill continue to earn press. Americans for Prosperity has a scorecard of the votes, and thanks Flake for the attempt:

We applaud Congressman Flake for leading the charge against wasteful pork-barrel spending in the House. Even though his amendments weren't approved, they helped taxpayers get a better idea who's truly looking out for them, and who's more interested in logrolling and pandering to the special interests. And believe me, the taxpayers are paying more than taxes at this point - they're paying attention.

Even the New York Times has taken notice of Flake's efforts:

A battle for the soul of the Republican Party flared up in Congress this week as fiscal conservatives heightened their attack on pet projects stuffed into spending bills with the consent of House leaders.

Recent scandals have not diminished lawmakers' appetite for such spending, but now they must openly defend their projects on the House floor - a new experience....

"Over the last decade, we have simply gone hog wild with earmarks," said Representative Jeff Flake, Republican of Arizona, who led efforts to cut parochial projects from the two spending bills this week. "We do not have enough staff to police this. We are out of control. I am frustrated. So are taxpayers."

But Mr. Flake appeared to make little headway in changing the entrenched culture of Congress, where lawmakers see the allocation of earmarks as part of their job, a prerogative of office.

"Everybody understands the game here," said Representative Henry Bonilla, the Texas Republican who is chairman of the subcommittee that produces the agriculture appropriations bill....

Instead of attacking hometown projects, Mr. Bonilla said, fiscal conservatives should focus on government benefit programs. "Anyone who is truly serious should work on entitlement reform," Mr. Bonilla said. "That's where the vast majority of our government funds go."

The House crushed Mr. Flake's efforts to delete items from the agriculture spending bill. He tried unsuccessfully to strip out $229,000 for dairy education in Iowa, $180,000 for hydroponic tomatoes in Ohio, $250,000 for the wine industry in California and $6.4 million for research on wood products in 10 states.

Though they failed to kill earmarked projects on the House floor, fiscal conservatives said they were pleased to have forced the sponsors into the open.

The Wall Street Journal writes on the increasing tensions between fiscal conservatives and appropriators in the House:

The greatest source of division is conservatives' concern about spending, aggravated by the mounting cost of the Iraq war. The personal sniping between younger members and those on the House Appropriations Committee continued this week and underscores the split over the government's growth under Republican control.

Despite scandals and promises of change, the Appropriations Committee persists in setting aside billions of dollars for home-state projects without disclosing the sponsors of such "earmarks." To get around budget caps, the committee even opted to designate $507 million for 20 military construction projects as war-related expenditures that could be financed from an emergency reserve outside the agreed-upon spending limits.

Friends say the committee is leading with its chin by not disclosing the earmark sponsors. "I personally don't agree with that," says House Speaker Dennis Hastert. And the House Rules Committee -- controlled by Mr. Hastert -- didn't protect the $507 million in military projects when that bill came to the floor Friday.

Conservatives pounced, and the ensuing brawl turned bitter after the money was struck down on a parliamentary motion. "The greatest threat to our country is the war on terror but we also have another threat, and that is out-of-control federal spending," said Republican Rep. Jeb Hensarling of Texas. "We had better quit wrapping the butter in the American flag in this sleight of hand."

Kristina Rasmussen at NTU's Government Bytes calls for more accountability:

We've heard a lot about earmark reform from various Members of Congress, but when one brave Member bucked the system and called out those earmarks on the House floor yesterday, a majority of both Republicans and Democrats voted to keep these wasteful projects in the 2007 Agriculture Appropriations bill.

While many the Flake amendments we outlined yesterday failed on a voice vote, you can click on the roll call vote number to see which Members decided to match their press statements with their voting record. Votes like these help separate the average from the stellar when it comes to Taxpayer Friends.

The conferees couldn't agree on the contents of the supplemental spending bill before the Memorial Day recess, Andrew Taylor of the AP reports:

Congressional Republicans will miss a Memorial Day deadline set by the White House to complete work on a huge bill to supply new funds for troops overseas and hurricane victims at home.

Even though closed-door talks between top House and Senate negotiators had produced a series of tentative agreements, obstacles such as President Bush's $1.9 billion request for a new border security initiative are proving too difficult to resolve before Congress leaves Friday for a weeklong Memorial Day recess.

"We are going to take the necessary time to develop the right product that is narrowly focused on the war on terrorism and hurricane recovery," said House Appropriations Committee Chairman Jerry Lewis, R-Calif. He said an agreement would be reached soon after Congress returns in early June.

Just last week, the White House sent lawmakers a letter saying that it is "critical" that the measure - which ballooned from Bush's $92.2 billion request to almost $109 billion during its consideration by the Senate - be enacted before the end of May.

The New Orleans Times-Picayune has more:

Sen. Thad Cochran, R-Miss., said he was disappointed that House and Senate negotiators couldn't reach an accord by their self-imposed deadline. But he said the two sides are "very close" to a deal. Rep. Jerry Lewis, R-Calif., chairman of the House Appropriations Committee, said he is confident the sides can strike a bargain soon after Congress reconvenes.

After much contentious debate over the size of the spending bill, a Capitol Hill source familiar with the closed-door talks said both sides have agreed to a cap of $94 billion, including $92.2 billion for on-going military operations in Iraq and hurricane relief and $2.3 billion to combat bird flu. The amount would be a dramatic reduction from the $109 billion passed by the Senate and a slight increase over the $92 billion bill approved by the House and proposed by the Bush administration.

The White House urged quick action last week on the spending package with Acting Budget Director Clay Johnson warning that a delay "would seriously impact" military operations, slow training of the Iraqi security forces and stall the deployment of U.S. troops to the region. However, Rep. [Jerry] Lewis on Thursday said the Pentagon has signaled that it can wait a little longer.

"While it is not preferable," Lewis said, "they have informed us that they can tolerate a delay into June."

Yesterday's Washington Post explained where the Railroad to Nowhere and Northrop Grumman earmark money isn't going--to help people trying to recover from Hurricane Katrina. Ed Morrissey of Captain's Quarters is outraged:

Trent Lott insisted on keeping the cash outlay to Northrup despite its own failure to insure its facility, opting to gamble on good weather rather than pay for insurance. Lott and the rest of the Senate now wants to indemnify Northrup against stupidity with our tax dollars. That's not just outrageous, it also removes the incentive for large companies to get insurance at all, harming that industry and making them more reliant on tax subsidies for their existence. And it's not as if Northrup would go bankrupt if they had to face the consequences of their own bad decision; they made a record profit of $2.4 billion in 2005 on an operating income of 7.1%, even with the loss from Katrina.

Nor is that the only ridiculous earmark in this package, as the Post notes. While Katrina victims must rely on volunteers to slowly repair or rebuild their homes, the home of Jefferson Davis will get $38 million for its restoration -- the same Jefferson Davis who rebelled against the United States because of undue government interference in the South. How's that for rich irony? At least we know the rich part is accurate. That comes along with the previously derided "Railroad to Nowhere", for which we will pay $700 million to relocate train tracks that we just spent $250 million to repair after Katrina, thanks to Lott and fellow Mississippi Republican Thad Cochran.

It's not just the Republicans, either. Ken Salazar (D-CO) has hijacked the emergency appropriations bill for Katrina and Iraq in order to open a new war -- on the bark beetle. This insect has attacked Colorado's pine trees, but rather than propose this expenditure in, say, Colorado, Salazar instead piggybacked the pork onto Katrina relief. Ted Kennedy tossed in $15 million for New England shellfisherman to assist in the economic impact of a red tide in 2005. Bear in mind that the Gulf Coast's fishing industry has been almost wiped out by Katrina. Kennedy will exploit their utter loss in order to buy a few Gloucester votes.

Citizens Against Government Waste has named Sens. Trent Lott and Thad Cochran their co-Porkers of the Month:

Citizens Against Government Waste (CAGW) today named Mississippi Senators Thad Cochran (R) and Trent Lott (R) Porkers of the Month for adding $700 million for the "railroad to nowhere" to the Emergency Supplemental Appropriations Act of 2006 (H.R. 4929). The Senate's version of the bill for operations in Iraq and Afghanistan and hurricane aid in the Gulf Coast costs $109 billion. President Bush requested $92.2 billion and the House passed a $91.9 billion version in March.

The Mankato Free Press criticizes the earmarks in the supplemental bill:

The [Northrop] Grumman money is part of a $109 billion bill to fund recovery from Hurricane Katrina and the Iraq War. Other Katrina related items in the bill include: $38 million to repair the historic home of Jefferson Davis, leader of the confederacy; $176 million for a military retirement home in Gulfport; and $700 million to buy an 80-mile stretch of railroad to build a new highway.

That project, dubbed "railroad to nowhere," was an earmark inserted by Lott and Mississippi's other senator Thad Cochran, a Republican who chairs the Appropriations Committee. It would reroute a train line damaged by Katrina - which was already rebuilt at a cost of at least $250 million.

Meanwhile, only about half of the 42,000 homeowners who suffered damage will be offered federal housing money and for those the payments will only equal the limit on their homeowners insurance policy, and many poor people were simply underinsured.

Clearly, the earmarks have their own kind of momentum that often defy logic and good fiscal sense.

BNA says that President Bush reissued his veto threat on the supplemental yesterday:

In a speech in Pottstown, Pa., May 24, President Bush repeated his threat to veto a supplemental from Congress that comes in above his requested number. During his tenure in the White House, Bush has yet to veto a bill.

"I've made it very clear that I intend to participate with them in keeping the spending down. And if they exceed the $92.2 billion request, plus monies for avian flu, I'm going to veto the bill. See, that's one way you keep fiscal discipline in Washington, D.C.," Bush said.

Timothy Lynch of Cato @ Liberty has recommendations for Congress and the administration:

Polls show voters generally believe the federal government is not on the right track. Runaway spending is a chief concern.

A new report shows "extensive fraud" at Fannie Mae.

Options for the GOP Congress:

(a) Forget this news story and look for creative ways to increase popularity with likely voters. Maybe a congressional resolution that will call for Barbaro's speedy recovery.
(b) Act on today's report. Issue scores of news releases denouncing fraud.
(c) Schedule a hearing after the summer recess "to get to the bottom of these allegations."
(d) Trim the government. Now.

Memo to Congress: Choose (d). It would be good politics and good policy.

Memo to the White House: If Congress chooses (d), this would not be the right moment for Mr. Bush to use his veto for the first time. That would be bad politics and bad policy.

Meanwhile, Congress's earmark reform efforts are still plodding along, BNA says:

In a move to jump-start stalled legislation to reform lobbying and ethics rules (S. 2349/H.R. 4975), Senate leaders on May 23 appointed members of a House-Senate conference committee. House leaders are also expected to appoint conferees before a Memorial Day congressional recess begins May 26.

The moves mean that Republicans, who control both chambers and will have a majority of both House and Senate conferees, could move quickly to hammer out a final bill and bring it up for votes in June, Capitol Hill sources said.

In the San Francisco Chronicle, Debra Saunders covers the Fiscal Wake-up Tour:

Washington politicians, especially on the GOP side, often complain about inheritance taxes. U.S. Comptroller General David M. Walker, however, thinks elected officials should be talking about "the birth burden," the $156,000 that represents each American's share of the $8 trillion federal debt, plus $35 trillion in unfunded spending promises. Every child born in America receives this dubious legacy: a $156,000 IOU.

Walker was in San Francisco on Tuesday, speaking at what participants call, "The Fiscal Wake-up Tour." Their first hurdle is to break through Americans' numbness on numbers. You see a tab in the billions, and it doesn't mean anything to you. So Walker puts the numbers in personal terms. The average household share of the federal fiscal mess is $411,000. Imagine if every household in America had a $411,000 mortgage, but no house.

You can thank the crew in Washington -- President Bush and the GOP-controlled Congress -- for, among other mistakes, passing a new Medicare prescription-drug benefit without paying for it. America's liabilities have more than doubled from some $20 trillion in 2000 to $46 trillion in 2005, according to the Government Accountability Office.

How can the average citizen fix this? Saunders has some suggestions:

Sure, readers can tell their congressional representatives that they want a bipartisan commission and that they want Washington to reduce the deficit. Now.

The fact is, those messages will ring hollow in a Capitol where politicians know very well that the best way to win re-election is to promise something for nothing.

So here's my advice: In state and local politics, look for the candidate who tells you what you don't want to hear. Look for the rare pol who argues that you -- not someone else -- have to give up something. Then vote for that person.

Heritage president Ed Feulner writes on the dire state of Social Security and Medicare in the Chicago Sun-Times:

Earlier this month, the trustees of the Social Security and Medicare trust funds issued their annual report on the future of the programs -- to little fanfare. Yet the report merits large headlines. It's important. And it's grim.

The trustees report that the two programs have promised $37 trillion more in benefits than they can deliver. In years to come, these entitlements are set to eat up shocking amounts of tax income.

One of the trustees estimates that, unless we fix these programs now, more than a quarter of all federal income taxes in 2020 will be spent on Social Security and Medicare benefits. That's up from about 7 percent today, in addition to the more than $764 billion in payroll taxes in 2005, to fund the two programs. By 2030, roughly half of all income taxes would be needed to keep these two programs afloat.

The trustees also report that the Medicare Hospital Insurance Trust fund will run out of money by 2018, two years earlier than they projected just last year. Since we allowed 2005 to pass without doing anything, this means we've actually lost three years that could have been used to fix the program. That fact alone should spur lawmakers to act.

Unfortunately, the most recent attempt at reform made the problem worse. In 2003, lawmakers tacked an open-ended prescription-drug entitlement onto Medicare, an expansion the trustees say will cost $8 trillion over the next 75 years.

It's time for Congress and the administration to change Medicare from today's open-ended entitlement to a defined-contribution program, one that adjusts contributions for age, health costs and income.

Sen. Tom Coburn will be holding a hearing on government spending:

U.S. Senator Tom Coburn, M.D. (R-OK), chairman of the Senate Homeland Security and Governmental Affairs Subcommittee on Federal Financial Management, will hold a hearing Thursday, May 25, titled, "Congress' Role in Federal Financial Management: Is it Efficient, Accountable and Transparent in the Way it Appropriates Funds?" The hearing will focus on ways to reform the inefficient manner in which Congress spends taxpayer dollars.

"Congress is in a bad habit of setting its own spending limitations and rules and repeatedly breaking them. The consequences of that behavior on the economy and the American taxpayer are devastating," Dr. Coburn said. "If we continue to spend like this, our children and grandchildren will be left with an enormous bill that will deny them the same opportunity for prosperity that we have enjoyed."

For example, since 1990, Congress has habitually misused budget rules related to emergency or "supplemental" spending in order to subvert annual budget caps. Supplemental spending does not count against annual budget limits but the borrowed money still must be repaid by future generations. According to the Congressional Research Service, the use of supplemental spending from 1991 to 2002 increased the budget deficit by 5.3 percent. Supplemental spending provides additional funds for a fiscal year already underway, and has been used since the second session of the first Congress. In just three years, from 2003 to 2005, the budget deficit increased by 23.8 percent. Less than 1 percent of supplemental spending requests have been offset since 2003.

Surprise: Andrew Roth at Club for Growth Blog praises Rep. Barney Frank's speech on sugar subsidies:

Let me set up the speech this way - on Tuesday, the House debated the Agriculture Appropriations bill. Several Republicans were offering amendments to subsidize and protect various industries. Or they were publicly voicing their opposition to proposals that cut protectionist programs (i.e. an amendment that sought to cut sugar subsidies by 6%). This prompted Barney Frank to stand up and say:

Mr. Chairman, I am here to confess my reading incomprehension. I have listened to many of my conservative friends talk about the wonders of the free market, of the importance of letting the consumers make their best choices, of keeping government out of economic activity, of the virtues of free trade, but then I look at various agricultural programs like this one. Now, it violates every principle of free market economics known to man and two or three not yet discovered.

So I have been forced to conclude that in all of those great free market texts by Ludwig von Mises, Friedrich Hayek and all the others that there is a footnote that says, by the way, none of this applies to agriculture. Now, it may be written in high German, and that may be why I have not been able to discern it, but there is no greater contrast in America today than between the free enterprise rhetoric of so many conservatives and the statist, subsidized, inflationary, protectionist, anti-consumer agricultural policies, and this is one of them.

Roth proceeds to call the speech "Brilliant!" Mary Katharine Ham at Hugh Hewitt echoed Roth's praise, saying:

[I]t's a great speech. A reality check for all the conservatives in Congress who preach free-market economics except for when it comes to agriculture.

Jesse Walker of Reason's Hit and Run is surprised by Frank's oration:

He's Slamming Statism, He's Protesting Protectionism, He's Citing Mises and Hayek on the Floor of Congress, He's...Barney Frank?

Posted by J. Lawrence Scholer at 12:47 PM | Permalink | TrackBacks (0)

Watch Heritage's Matt Spalding discussing the 1986 amnesty for illegal aliens on last night's "O'Reilly Factor."

Find Ed Meese's New York Times op-ed, mentioned in the discussion, here.

Posted by Andrew Grossman at 09:22 AM in Immigration & Borders | Permalink | TrackBacks (0)

In today's news, appropriations get interesting thanks to Rep. Jeff Flake's drive to strip members' pet projects from the ag spending bill, the battle over the Railroad to Nowhere heats up, and Sen. Thad Cochran explains his shocking take on emergency spending priorities.

Find the full report in the extended entry.

Rep. Jeff Flake's anti-earmark crusade is taking shape. Americans for Prosperity reports on the pork he's challenging in the agriculture appropriations bill:

--Aquaculture (OH) $900,000 The Committee has previously directed that funds for this project be used in northwest and central lake counties. The goal of the program is to establish a program in Ohio to foster the development of a state-wide aquaculture industry.

--Competitiveness of Agriculture Products (WA) $679,000
The goal of this research is to provide information on markets and product technologies that can open higher-valued international markets to U.S. exporters of Pacific Northwest agriculture products.

--Food Marketing Policy Center (CT) $579,000
The goal of the research is to identify marketing problems, analyze them, and make recommendations as to how the problems might be solved. An accomplishment of the data gathered was its use in a Forbes magazine article.

--Fruit and Vegetable Market Analysis (AZ, MO) $350,000
The purpose of this research is to provide timely knowledge and analysis of the impacts of trade, environmental, and monetary, and other public policies and programs upon the Nation’s fruit and vegetable farmers, etc.

Yesterday, Flake met with a group of conservative bloggers and explained his strategy:

Today, Flake plans to offer twelve amendments that highlight various earmarks in the agriculture appropriations bill. The amendments will shine light on the earmarks, asking of each:

-Where is the federal connection?
-Was it authorized?
-Who sponsored it?
-Is it a sole source contract?
-Does the sponsor have ties to beneficiaries of the earmark?

"We're not trying to kill the bill," Flake told us. "We're simply trying to have a discussion on earmarks."

Flake recalled lobbyist Jack Abramoff's comment that the Appropriations Committee was a "favor factory." Shining light on these earmarks as Flake intends to do will test whether Abramoff was right.

The Ag bill contains 400 earmarks, none of which identify the sponsor. "When we don't know these things, we get embarrassed."

Many House Republicans, and even some of Flake's colleagues in the Republican Study Committee, object to Flake's tactics, particularly if he happens to target one of their programs. "This process is [so] ingrained now that people consider it their constitutional right," he explained.

Yesterday evening, the battles began, with Club for Growth Blog's Andrew Roth providing updates. He provides a list of the representatives who spoke against Flake's amendments, criticizes them, and throws in some of Flake's lines:

Flake just offered his final amendment which would strip funding for the National Grape and Wine Initiative. As described in a previous post, "the program is to support and enhance the public health through improved understanding of the nutritional benefits to be derived from grapes and grape products."

Flake just said, "If you can find a definition of corporate welfare, this would be it."

As Roth concludes, "Who needs American Idol with this kind of Must See TV?"

Mary Katharine Ham at Hugh Hewitt, before the debate started, had this to say:

Flake's statement on his goals is great.... People are gonna get ill tonight.

Not surprisingly, Flake's amendments were defeated, reports Amy Fagan of the Washington Times:

Flake, the Arizona Republican who led the charge, unsuccessfully offering more than 10 amendments that would have blocked a slew of earmarks in the bill. Most of the proposals were defeated on voice votes, but he did force recorded votes on three of his amendments.

The three proposals that received recorded votes would have killed grants to dairy education in Iowa, to hydroponic tomato production in Ohio and to the National Grape and Wine Initiative in California -- three proposals worth less than $510,000 combined. All of Mr. Flake's amendments were defeated overwhelmingly, and the earmarks survived -- the dairy program by 325-92, the tomato project by 328-90, the wine program by 328-87.

The Houston Chronicle has more on the proceedings:

"Members have said they're more careful in what they're requesting," Flake said. "If nothing else ... it keeps the process more honest."

The issue of such projects, known as earmarks, has grown in visibility after former Rep. Randy "Duke" Cunningham pleaded guilty to taking bribes from defense contractors in exchange for securing earmarks. Tuesday's sometimes testy debate featured Republicans and Democrats alike defending the practice.

"Who knows the needs of their constituents better? Bureaucrats in Washington, D.C., or members of Congress?" said Rep. Mike Simpson, R-Idaho.

"The number of earmarks has gotten grotesquely out of hand," said Rep. David Obey of Wisconsin, the top Democrat on the Appropriations Committee and an avid practitioner of getting earmarks. He said if the fall elections put Democrats in control of the House, requests for such projects will face more scrutiny.

Rep. Henry Bonilla of Texas, GOP floor leader on the bill, suggested Flake was hungry for headlines while the Appropriations Committee did the hard work of curbing agency budgets.

The committee chairman, Rep. Jerry Lewis, R-Calif., said the bill contains $435 million worth of projects for lawmakers' districts. He says that total is $35 million below a comparable figure for last year's bill.

CQToday says Flake didn't expect much:

Flake was under no illusions that he would achieve a single victory.

"I don't know what else to do, I really don't," he said, blaming "logrolling," or the practice of threatening members that they will lose their earmarks if they vote to delete someone else's.

Many other money-saving amendments to the ag bill were also rejected. BNA has a summary:

The House rejected an amendment, offered by Rep. Ron Paul (R-Texas), that would have ended funding of about $15 million for the USDA's voluntary national animal identification program. Paul argued that the program will amount to "another huge bureaucracy...."

The House rejected an amendment, offered by Rep. Steve Chabot (R-Ohio), that sought to strike funding for the USDA's Market Access Program, which provides financial assistance for overseas marketing of U.S. agricultural products.

"We have spent more than $1 billion on this dubious program," Chabot said, calling it "wasteful spending." "We're not sure [U.S. farmers] wouldn't spend this money overseas anyway."

Rep. John J. Duncan (R-Tenn.) said, "If we can't do this, we can't call ourselves conservatives...."

The House rejected, with a 135 to 281 vote, an amendment that sought a six-percent reduction in the loan rate for U.S. sugar producers.

Rep. Earl Blumenauer (D-Ore.) called the U.S sugar policy an "archaic, misguided program" that costs U.S. taxpayers nearly $2 billion per year.

The sugar program guarantees a minimum price that U.S. sugar producers receive for their product, and the price is often between two and three times the amount of the world price.

However, there was some good news from the agriculture appropriations fight, reports AP's Andrew Taylor:

Efforts to extend federal programs helping peanut and dairy farmers were quashed Tuesday as the House debated a bill funding several farm and food programs.

The Milk Income Loss Contract program pays dairy farmers when milk prices fall below a specified level. The peanut storage program pays storage and handling fees as peanut farmers market their crop.

Georgia GOP Rep. Jack Kingston obtained a one-year extension of the peanut program during Appropriations Committee debate on the bill earlier this month. Rep. David Obey, D-Wis., won a one-month extension of the MILC program.

Those steps were noteworthy because they extended the two programs until the 2002 farm bill expires next year.

That would have given supporters a leg up in extending them during next year's farm bill debate.

But Agriculture Committee Chairman Robert Goodlatte, R-Va., objected to the intrusion onto his turf and killed the provisions on procedural grounds.

Yesterday's news on the Railroad to Nowhere has inspired a cautious optimism. Americans for Prosperity comments:

According to National Journal's Congress Daily and Congressional Quarterly's Daily Monitor, the $700 million "Railroad to Nowhere" earmark has been removed from the Iraq/Katrina emergency spending bill. This is obviously a positive development, but we'll hold off on popping the champagne until we see the final conference report.

Tim Chapman cites Congressional Quarterly and adds:

[Sen. Thad] Cochran and fellow Mississippi Republican Sen. Trent Lott have defended the relocation as being necessary to prevent future hurricane damage.

A budget aide to Frist had said Monday afternoon that the CSX project was out of the final supplemental spending measure.

But Jenny Manley, Cochran's spokeswoman, disputed that. "It is certainly subject to negotiations, but right now it is not off the table," she said. "No one has agreed to cut CSX out of the supp right now."

Meanwhile, Lott said of the provision's inclusion, "Until it's not, it is."

Well, let's make it not.

Today's Washington Times provides an update on the status of the supplemental:

The House officially appointed negotiators yesterday, indicating a deal may be possible before the Memorial Day break.

"We are very hopeful, but I wouldn't say for sure yet," Mr. Boehner said.

Critics of the railroad money have dubbed it the "railroad to nowhere," and House Republicans strongly oppose it. But it's backed by the powerful Senate Appropriations Chairman Thad Cochran, Mississippi Republican.

A Senate Republican leadership aide said the House won't pass a final bill with the railroad money in it. The aide also said the agriculture money will likely be reduced.

We would be remiss if we did not mention that the President is largely to thank for this positive development. House leadership is leaning heavily on the President's veto threat, as revitalized last week.

House Speaker Dennis Hastert reiterated his opposition to the bill's earmarks, BNA reports:

Although Senate Appropriations Committee Chairman Thad Cochran (R-Miss.) said conferees would find a way to scale back its version of the spending bill to fit the House and president's "top line number of $94.5 billion, House Speaker J. Dennis Hastert (R-Ill.) again issued a threat May 23 that he would not accept a measure that contains nonemergency dollars....

Hastert issued a statement warning House and Senate conferees to be good stewards of taxpayer dollars. "The Senate bill is bloated and excessive," Hastert said. "House members have no intention of accepting any compromise that doesn't cut excess non-emergency dollars."

And CongressDaily has more, along similar lines:

The House today appointed its conferees on the FY06 emergency war and hurricane relief spending bill, in a sign that GOP leaders are serious about completing action this week. House Appropriations Chairman [Jerry] Lewis, who will chair the conference, said he had not yet decided when conferees would meet. But Senate Appropriations Chairman [Thad] Cochran said he was hopeful the bill would be completed this week, although he acknowledged negotiators have numerous unresolved issues. "We've made no agreement except to keep the bill within the limits the president suggested," Cochran said, which after adjusting for avian flu funds is no more than $94.5 billion. "We don't want to have a bill that'd be vetoed."

The pressure for military funding is growing, CQToday reports. Leadership is taking notice, and perhaps the Senate "delay" strategy won't win out:

Majority Leader Bill Frist, R-Tenn., said he thought that the Senate would act this week to clear a bill for President Bush's signature.

"I think we have to get it done this week. The military people are out of money," agreed Sen. Robert F. Bennett, R-Utah.

The Washington Post talks to victims of Hurricane Katrina who aren't pleased by the pork spending:

[M]any local officials say those expensive projects may be pushing aside more-immediate demands from people still struggling to rebuild their lives.

"What they're saying to Northrop Grumman is 'Here -- here's $140 million. Go get yourself back together,' " said Bill Stallworth, a Biloxi City Council member running a relief center out of a church building here. "What we're saying is 'Look, people, we need more money to get people back in their homes. We need housing. Volunteers can't do it all.'" He said that if the volunteer building crews he uses could just hire a handful of licensed plumbers and electricians, they could increase the number of homes being rebuilt in the area from 10 a month to 100. But there isn't enough money....

Eddie Favre is mayor of nearby Bay St. Louis, a small city that bore some of the worst of the storm surge. He said he found it difficult to support the purchase of the CSX rail line because of the more pressing demands he faces.

The city's property tax base has dropped from $87 million to $27 million because of the destruction, he said, and the city is in dire financial straits.

The railroad purchase "may be a great project, but to me there's a lot more pressing needs that the $700 million could cover," he said. "I don't know how I'm going to pay our police. I don't know how we're going to pay our teachers. I don't even know if there is going to be a city anymore."

Mississippi's Jackson Clarion-Ledger, which has consistently supported the Railroad to Nowhere, provides its take on the conference proceedings, including a priceless quote by Sen. Thad Cochran:

Congressional negotiators on the latest hurricane-spending bill said Tuesday they've agreed to go along with the White House on how big it should be.

That means a $109 billion Senate-approved bill that would move the CSX railroad line from the Mississippi Gulf Coast and help Northrop Grumman in Pascagoula pay for uninsured losses has been scaled back to $94.5 billion.

President Bush had vowed to veto the bill, which also would pay for the cost of the wars in Afghanistan and Iraq, if it costs more than that.

"I'm optimistic that we'll pass something that the president will approve," said Mississippi Sen. Thad Cochran, chairman of the Appropriations Committee.

To meet the $94.5 billion cap and still have money for some Senate priorities, negotiators are considering shifting some of the bill's $71 billion in war costs to hurricane-related purposes.

"There's no portion of the bill that's more important than any other," Cochran, a Republican, said.

Emphasis is ours.

Michigan's Daily Mining Gazette calls for President Bush to get tougher on spending:

Throughout his presidency, Bush notoriously has declared limits on spending programs or even major legislation while leaving the details to Congress - and to date he always has let himself get rolled on the final spending numbers and policy details.

He wanted a Medicare drug benefit so badly that he gave away broader Medicare reform to get it.

The president should get serious about spending. In this instance, merely declaring a spending limit is not enough. He should make abundantly clear that either exceeding the cap or stealing flak jacket [military] money to pay for hometown pork will meet with a veto.

In Human Events, Gary Bauer has some suggestions for Congress and the administration:

Republicans should lead off by addressing the scourge of wasteful spending. With Republicans on the mound, there has been a surge in pork barrel spending and enactment of the largest new entitlement in 40 years, the Medicare drug benefit. The Treasury Department recently reported that government spending hit an all-time high for a single month in March. In all, spending has increased 42% and inflation-adjusted domestic discretionary spending has risen more under Bush than it did under big spending Democrat Lyndon Johnson. That fact prompted columnist Andrew Sullivan to wonder, "Is Bush a socialist? He's spending like one." He's not, of course, and he can start to recapture his reputation as a responsible fiscal conservative by going to the bullpen for the veto.

As Congress considers budget reform legislation, it should include forced spending restraint procedures, a presidential line-item veto, and measures that create better transparency in the budget writing process. Congress should also terminate corporate welfare and use the savings for capital gains and business tax cuts. Finally, the government should privatize activities that could be performed better by the private sector, such as Amtrak and public broadcasting.

John Hawkins, also writing for Human Events, adds:

Today, if the Democrats want to spend $100 million—instead of saying, "no way," the Republicans are more philosophically inclined to say, "How about $50 million instead?" Then after the new boondoggle becomes law at $50 million, they pat themselves on the backs for, "taking an issue away from the Democrats," and "saving" the taxpayers $50 million. That is not exactly a formula for reducing the size of the budget, especially when we have a President who has never vetoed a single bill for having too much pork in it (or for any other reason).

So, what can we do to get the deficit under control? Fight for a Balanced Budget Amendment? Good idea. Support members of Congress like Sen. Tom Coburn and Rep. Mike Pence who're fighting tooth and nail against pork? Yes. Insist on having a presidential candidate in 2008 who believes in cutting spending? Absolutely.

In the Washington Times, former Reagan budget chief James Miller explains that cutting many earmarks doesn't take a veto:

It is obvious that overspending by Congress, stories of relocating a recently rebuilt railroad, erecting an indoor rain forest, providing subsidies for shiitake mushroom research, dog therapy and housing, music education at the Rock 'n' Roll Hall of Fame, and suchlike have caught the public's attention. They demand change. The president can give it to them.

One of the little secrets in Washington is that the vast majority of earmarks are not included in appropriations bills, but are described in the committee reports that accompany those bills. Since these mandates don't meet the presentment clause of the Constitution, they are not law and can be ignored. What cannot be ignored is the appropriation itself. The Congressional Budget and Impoundment Control Act requires the president to spend the money on the account for which it is appropriated, but not on the specific items listed in the committee reports.

In his 1987 State of the Union address, President Reagan held up a copy of the recently approved omnibus appropriations bill, cited a bevy of pork committee reports, and announced, "if you send me another one of these I will not sign it" -- and promptly received a standing ovation from the very people who had sent it to him in the first place.The next day, as the president's budget director, I endeavored to do something about report-mandated pork.

After checking with the Justice Department's Office of Legal Counsel as well as my own general counsel and being assured a string of court precedents had affirmed report language is not law, I instructed each executive agency head to spend money on the accounts appropriated but to spend it wisely, and in no case spend the money on projects inconsistent with the president's program (read: "ignore the pork").

The Missoulian reports on Sen. Max Baucus' attemped pork-barrel provision to repair Going-to-the-Sun Road in Glacier National Park:

The measure affixed the missing $50 million [for the road repairs] onto an emergency supplemental spending bill, legislation President Bush warned he would veto if Congress packed it with too much pork.

Specifically, the Baucus proposal would "rescind" unused contract authority already approved in the highway bill - in other words, would tap money approved by the bill but not spent by the states.

Baucus insisted his project was not pork, in the usual sense, because it already had been through the committee process and would require no "new" money. He was, he said, only tidying up a bit of legislative housekeeping, clarifying congressional intent by cleaning up the mess caused by the imprecise language of the original highway bill.

But after Senate approval, the measure still had to pass muster in the House, where conservatives have vowed to slice any fat from the emergency legislation.

Columbus Business First covers yet another waste of taxpayer dollars:

Dublin's Central Ohio Innovation Center is slated to get $750,000 from the fiscal 2007 energy and water development appropriations bill passed by the House Appropriations Committee.

The money will go toward water and sewer infrastructure improvements at the proposed 1,500-acre tech park. The spending bill still needs to pass the whole House of Representatives and Senate.

In the Heber Springs Sun-Times, Jerry Jackson explores some of the difficulties of stopping earmarks:

Members of both parties fight like crazy for all kinds of government pork. But who is really at fault here? When a senator or congressman delivers a grant for a new federal project or even receives a $100,000 grant for the 16th study of poverty in the Delta, praises are heaped upon the mighty warrior. Do you suppose a senator or a congressman has ever received a call or a letter thanking him or her for not pursuing money for a particular project because the government can't afford it?

USA Today criticizes the Army Corps of Engineers and Congress for being more concerned with pork than safety:

For years, the Corps has wasted money on projects of dubious utility, often ones that encourage development in dangerous, flood-prone areas. Congress is equally at fault: Lawmakers earmark money in the Corps budget for local pet projects, instead of setting national priorities for flood control.

Louisiana, for example, got $1.9 billion for water projects in the five years preceding Katrina but spent most of it on projects that had nothing to do with New Orleans' levees, according to a separate report by environmental and taxpayer advocacy groups.

Curious about the Corps' budget? Ron Utt has much more.

John Wennberg of Dartmouth Medical School's Center for the Evaluative Clinical Sciences explains how Medicare's outcomes are hurt by overspending:

The Dartmouth Atlas Project studied the records of 4.7 million Medicare enrollees who died from 2000 to 2003 and had at least one of 12 chronic illnesses. The study demonstrates that even within this limited patient population, Medicare could have realized substantial savings—$40 billion or nearly one-third of what it spent for their care over the four years—if all U.S. hospitals practiced at the high-quality/low-cost standard set by the Salt Lake City region....

The financial incentives used by Medicare and most other payers encourage the overuse of acute care hospital services and the proliferation of medical specialists. The care of people with chronic illness accounts for more than 75 percent of all U.S. health care expenditures, indicating that overuse and overspending is not just a Medicare problem—the health care system as a whole has not developed efficient, effective ways of caring for people with severe chronic illnesses.

Finally, the National Taxpayers Union continues its excellent "Better Know a State Budget" series. They've already looked at Maryland and Illinois, and now they turn to New Jersey:

Our very own Sam Batkins breaks down the taxing and spending habits of our most driven-through state (thanks, New Jersey Turnpike!). From 2000-2002, spending rose 21 percent while revenues actually declined by 23 percent. Incoming Governor Jon Corzine has proposed $1.8 billion in tax and fee increases (which he could probably pay for out of his pocket). Batkins estimates that if spending had been restrained to population growth plus inflation, average per capita savings would have been $900.

Posted by Andrew Grossman at 01:10 PM in Federal Spending | Permalink | TrackBacks (0)

Earlier this afternoon, Rep. Jeff Flake of Arizona sat down with a group of bloggers and discussed earmarks.

House conservatives have recently stepped up their efforts in combatting earmarks and wasteful spending. On Friday, Rep. Jeb Hensarling of Texas successfully stripped out $507 million in earmarks from the Military Quality of Life appropriations bill.

Today, Flake plans to offer twelve amendments that highlight various earmarks in the agriculture appropriations bill. The amendments will shine light on the earmarks, asking of each:

• Where is the federal connection?
• Was it authorized?
• Who sponsored it?
• Is it a sole source contract?
• Does the sponsor have ties to beneficiaries of the earmark?

"We're not trying to kill the bill," Flake told us. "We're simply trying to have a discussion on earmarks."

Flake recalled lobbyist Jack Abramoff's comment that the Appropriations Committee was a "favor factory." Shining light on these earmarks as Flake intends to do will test whether Abramoff was right.

The Ag bill contains 400 earmarks, none of which identify the sponsor. "When we don't know these things, we get embarrassed."

Many House Republicans, and even some of Flake's colleagues in the Republican Study Committee, object to Flake's tactics, particularly if he happens to target one of their programs. "This process is [so] ingrained now that people consider it their constitutional right," he explained.

Despite the opposition of many in the Republican conference, Flake did credit House Leadership with accommodating his attempts at restoring fiscal order. "I have to give the Leadership high marks on this, especially John Boehner," Flake said.

Flake concedes that putting a stop to wasteful earmarks requires a culture change in Congress--Members need to realize that they don't need to use pork to ensure reelection. "We've have got to change our whole M.O. in terms of winning elections," he said.

"People haven't lost elections for being fiscally conservative," he later added.

Posted by J. Lawrence Scholer at 03:25 PM | Permalink |