A post below asks, "So how will voters' view of spending impact the elections?"

In a Miami Herald column today, Brian Riedl doesn't make any predictions, but he does admonish politicians who think that they can woo voters with government largesse.

Spending restraint is sound policy but awful politics.

That's the conventional wisdom among a Republican congressional majority that, haunted by memories of the 1995 government shutdown and the demonization of former Speaker Newt Gingrich, views the electorate as various special interests selling their votes to whichever party offers the largest subsidies. As former Republican Party chairman Ed Gillespie once reportedly told the Manchester Union Leader: The American people want big government, and the Republican Party has decided to provide it....

Which raises the question: If runaway government spending is supposed to buy popularity, why has Congress' approval rating sunk to a 12-year low of 24 percent? Why do so many pro-spending incumbents face uphill reelection battles?

Posted by J. Lawrence Scholer at 04:17 PM in Federal Spending | Permalink | TrackBacks (0)

Rep. Curt Weldon is under investigation for exchanging campaign contributions and the like for legislative favors. McClatchy reporter Greg Gordon has an extensive analysis. This paragraph stood out:

MGB's Griffin declined to specify what Weldon did to fuel the subsidiary's growth, except to say that he assisted in earmarking appropriations for an Air Force program to replace aging parts on aircraft landing gear.

Emphasis added.

When will Congress realize that the current earmarking culture is not only bad for America but also bad for Congress?

Wondering how the whole earmarking thing works? See Ron Utt's primer. In a paper from earlier this year, Brian Riedl outlines "Six Budget Reforms to Restrain Lobbyists and Special Interests."

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

This from CNN is encouraging:

The poll released Friday...showed that an overwhelming majority of Americans perceive, correctly, that the size and cost of government have gone up in the past four years, when Republicans have had a grip on the House of Representatives, the Senate and the White House....

Queried about their views on the role of government, 54 percent of the 1,013 adults polled said they thought it was trying to do too many things that should be left to individuals and businesses. Only 37 percent said they thought the government should do more to solve the country's problems....

When asked if the size of the federal government has increased in the past four years, 72 percent said it had, and 86 percent said they thought federal spending had gone up during the same period.

This is good news--Americans should be aware of what their elected officials are up to. And by the numbers, the basic conservative premise of America remains intact--at least by a slim majority.

Any voter seeking a by-the-numbers overview of federal spending would do well to peruse this Brian Riedl paper, one of Heritage's most popular over the past year. It's chock-a-block with charts and graphs that drive the point home: federal spending has been growing at an explosive rate.

So how will voters' view of spending impact the elections? It is not for us to say. Perhaps our friend Ed Morrissey has an opinion.

Posted by Andrew Grossman at 09:43 AM in Federal Spending , The Hill | Permalink | TrackBacks (0)

Economic growth has cooled due to the long anticipated slow down in the real estate market. Housing prices have not only stopped rising quickly but have begun to fall, causing a drop-off in investment in new housing. Residential housing investment dropped at a 17.4 percent annual rate in this quarter.

Also, the increase in imports exceeded the increase of exports in the third quarter. An increase in imports lowers measured GDP, but it does not signal an economy that is less productive.

Outside the housing sector, business investment continues to grow at a strong clip: 8.6 percent, almost twice the rate it grew at in the second quarter and faster than at any point in 2005. Business investment should continue as energy prices recede and inflation becomes less of a worry.

The U.S. economy will surmount the housing slowdown and continue to grow in the future. The U.S. growth rate, while slower than it has been since the 2003 tax cuts, still exceeds the growth rate of other developed countries, such as those comprising Old Europe. The countries that adopted the Euro experienced a collective annual growth rate of only 1.3 percent between 2004 and 2005.

Posted by J. Lawrence Scholer at 09:43 AM in Economy | Permalink

Today the Financial Times reports on a proposal to require the federal government to account for future entitlement spending. FT reports,

The proposal by the federal accounting standards advisory board (FASAB) – which would also require the government to account for benefits accrued under Medicare and other social insurance programmes in the same way – is unprecedented internationally. It would radically change the presentation of US government finances, in effect bringing forward the cost of rapidly increasing social security and Medicare obligations and greatly increasing the reported fiscal deficit.

Last year Alison Fraser argued why accrual accounting is fiscally responsible. She wrote,

Amending the federal budget process to include this principle of planning for future obligations would:

• Impose responsible fiscal management on the budget process. Significant policy undertakings such as the Medicare drug benefit should contain a sound financial plan and make an annual allocation toward any liability or obligation.
• Require recognition of future liabilities and obligations in annual budget plan­ning. The budget is now written on a cash basis and does not plan for the huge liabil­ities and obligations that will come due in the future. This would provide Congress with a long-term budgetary context for proposals to fix entitlement programs within which new costs would be evalu­ated against future savings.
• Force lawmakers to recognize the true cost of proposed future entitlements in the annual federal budget. This would require Congress to begin to rein in the federal govern­ment’s commitments that will come due in the future and would discourage lawmakers from voting for new benefits and passing on the cost to future Congresses.

Posted by J. Lawrence Scholer at 11:21 AM in Federal Spending | Permalink | TrackBacks (0)

U.S. News and World Report has a story on the distribution of homeland security grants and the controversy surrounding the distribution of that money. DHS grant proposals have angered many officials in urban areas who had anticipated more generous federal grants.

Despite the anger among many, the changes in grant distribution do represent some progress, according to experts cited in the article, including Heritage's Jim Carafano. Until 2006, grants were distributed according to a formula by which, the article notes, "Wyoming got seven times as much per capita as New York." Now, grants are distributed according to risk. More, however, needs to be done.

Last month, Carafano and Jamie Metzl laid out a plan for reforming federal grants. "Homeland security grant funding is a means to an end, not an end in itself," they wrote. "Continuing to throw federal dollars at states in the name of homeland security without a strategy for building a national capacity for disaster response will leave America at square one, with pre-9/11 effectiveness and a grow­ing, yet ineffective, homeland security budget."

Posted by J. Lawrence Scholer at 10:52 AM in Homeland Security | Permalink | TrackBacks (0)

Yesterday USA Today reported on the lucrative business of being related to a Member of Congress or a congressional staffer. According to the report,

Lobbying groups employed 30 family members last year to influence spending bills that their relatives with ties to the House and Senate appropriations committees oversaw or helped write, a USA TODAY investigation found. Combined, they generated millions of dollars in fees for themselves or their firms.

Heritage's Ron Utt weighs in and tells USA Today that Congress is not bound by the same rules as the judicial and executive branches.

For example, laws bar executive branch employees from taking action affecting the financial interests of their spouses or minor children. Federal judges are required to remove themselves from cases affecting the financial interests of their spouses or minor children, or when lawyers or parties to the case are related to the judge. "It's particularly troublesome, because (Congress is) in an environment that has very limited, formal ethical standards to begin with," Utt said.

Utt detailed the confluence of lobbyists and spending earlier this year is his paper, "A Primer on Lobbyists, Earmarks, and Congressional Reform."

Posted by J. Lawrence Scholer at 09:50 AM in The Hill | Permalink | TrackBacks (0)

Federal Times is a real niche publication. It bills itself as "The one-stop news and information service for Federal Managers," and its media kit claims "BPA AUDITED CIRCULATION of more than 40,000 government executives." So if you're not a government executive, you probably don't read Federal Times; and if you are, you do.

This matters because it gives some weight to the informal polls that Federal Times runs on its website. And these polls really are something. For example, it's one thing to complain about government waste in the abstract, but it is wholly another when 74 percent of government executives responding say that their offices' spending "could be trimmed through greater efficiencies and better planning without it hurting performance." Just look at the results:

How much of your office's spending do you think could be trimmed through greater efficiencies and better planning without it hurting performance?

Pretty amazing, no?

And take a look at this one:

Do you think your agency is wasting money sponsoring or sending employees to conferences?

And here's one more:

How often do you take sick leave when you are not really sick?

To sum up, 74 percent of government executives say that their offices could cut spending significantly with no impact on services, even with cuts of more than 20 percent; two-thirds of government executives can identify wasteful trips to conferences; and almost half of government executives play sick to take off of work.

The good news is that there's so much room for improvement; the bad news is the same. From a policy perspective, we wonder that competitive sourcing wouldn't address the lax and wasteful budgeting and work procedures behind these poor results. The basic idea is that government workers compete with private-sector entities in submitting bids for the functions that they now perform. This makes sense especially when the functions are not inherently governmental, such as: trash collection and recycling programs, janitorial services, facilities management, motor vehicle service and repair, operation of prisons and jails, data processing, park maintenance, etc. Why shouldn't private firms do these tasks, at lower costs to taxpayers and often far greater efficiency than government workers?

Of course, government workers' unions are dead set against their members having to compete for work. (After all, isn't that part of why they joined the government to begin with?) And the unions have had some success in slowing the spread of competitive sourcing. But Federal Times has some good news on that front, too:

Are federal employee unions losing their clout?

Nice.

Posted by Andrew Grossman at 07:44 AM in Federal Spending | Permalink | TrackBacks (0)

The Club's Andy Roth quotes a CQ story, which in turn quotes Heritage's Tim Chapman:

Because Coburn and Obama, senators with vastly different ideological bases, worked together on the database bill, some bloggers hope they will combine forces for similar legislation. They would like to see them form a type of Open Government Caucus that would provide inspiration all along the political spectrum. “I’d love to see it happen,” [Heritage Foundation Director of the Center for Media and Public Policy Tim] Chapman said. “Because I think they’d have a whole chorus of bloggers at their backs that would echo everything they’re trying to do.”

Responds Roth, "I like the sound of that." True, it doesn't sound terrible, but this thinking equates weblogs with plain old grassroots lobbying. That sells (some) weblogs far short, including Andy's and Tim's. It's great that Coburn, Obama, and a few others in Congress want to work to promote transparency in government affairs. But remember that the main consumers of the information that will be released, though, are reporters, researchers, and (yes) bloggers--and in the end, the broader public. Policy changes to increase transparency are a means, not an end.

So bloggers shouldn't just be cheerleading; they should be leading the charge. This seems to be, generally, Mark Tapscott's view of things. (Much of bloggers' and reporters' capability in data crunching is due to the CARR classes that he's run with Heritage.) The Capitol, after all, isn't exactly a hothouse of policy innovation.

So maybe a Greek chorus is a better metaphor. It stands as the voice of reason and propriety, no mere echo.

Posted by Andrew Grossman at 02:13 PM in Federal Spending | Permalink | TrackBacks (0)

From the Raising Farrahzona weblog:

I just finished an 8,459 page partnership tax return with 25 partners. Of those 8,459 pages only 602 relate to the actual tax return. The rest of the return is information the IRS requires to be filed. No impact on taxable income, just a document dump for the IRS. To make matters worse, with these type of disclosures, e-filing is practically impossible. It’s going to take 2 boxes and over $150 to mail the tax return to the IRS.

And lefties want the government to manage our health care? I shudder. I really do.

But don't its proponents take as a given that a government-run single-payer system would cut down dramatically on paperwork (e.g., here, here, and here)? Perhaps someone could direct us to a paper or study that makes this point as more than a bare assertion. For now, the balance of experience, such as recounted above, argues against it.

(via Club for Growth)

Posted by Andrew Grossman at 01:55 PM in Health Care , Taxes | Permalink | TrackBacks (0)

In 2007, Congress will debate reauthorization of the farm bill--and agriculture often brings out the worst in legislators, turning self-proclaimed free traders into protectionists. In May during debate over Agriculture Appropriations bill, Barney Frank--who would have guessed?--called out certain Members for their hypocrisy. He said on the House floor,

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.

Ouch.

Now, the Washington Post has a website devoted to coverage of agriculture subsidies in anticipation of the 2007 farm bill reauthorization. A quick scan of some recent stories makes it hard to justify the $25 billion in agriculture subsidies. Take a look:

• Farm Program Pays $1.3 Billion to People Who Don't Farm
• No Drought Required For Federal Drought Aid
• Money for Nothing

And here on the Policy Blog is a discussion of crop insurance subsidies.

Heritage's Brian Riedl recently wrote on ag spending that threatens to bust budget caps this year and suggests a way of reining in farm waste.

Posted by J. Lawrence Scholer at 11:52 AM | Permalink | TrackBacks (0)

The Washington Post introduces a new phrase to invoke wariness and skepticism:

An eruption ensued. The other companies quickly turned to Congress to quash the idea. In congressional testimony and letters to lawmakers and regulators, they complained that competing on price threatened the "unique public-private partnership" that the companies had with the government.

The article details the business of "a collection of niche insurance companies that have made billions in profits from the federal crop insurance program, even as the government has lost billions covering the riskiest claims..." Here are the numbers involved:

Last year, the companies made $927 million in profit, a record. They received an additional $829 million from the government in administrative fees to help run the program. On top of that, taxpayers kicked in $2.3 billion to subsidize premium payments for farmers.

All of that to pay farmers $752 million for losses from bad weather.

When the government decides to fund or subsidize a service in some way, letting private firms deliver it is a recipe for lower costs, greater efficiency, and increased satisfaction. Usually. That's assuming that the firms don't hijack the legislative or regulatory process from the beginning to undermine competition and secure truly windfall profits.

It looks like that's what's going on with crop insurance subsidies. Certainly, insurers will have good years and bad years, especially when the risks involved are sector-wide, such as drought and blight and other maladies that afflict (or not) large swathes of the agricultural industry at once. But insurers deal in risk, not redistribution. It's suspicious that the insurers here have done so well, year after year, excepting once or twice when they suffered modest losses.

The problem with this program, aside from the probably unnecessary government subsidies, is that "Each of the 16 companies sells policies at the same rate set by the government." There is no competition on price. When one insurer attempted to run an endgame around this policy and offer lower prices, other firms complained that it would "place companies in financial jeopardy and might result in Crop 1 agents "cherry-picking" larger, more profitable accounts while sidestepping smaller, riskier farmers."

That argument doesn't hold water. Insurers compete on price across the economy, covering trillions in business activity from all manner of possible risks, such as drought, flooding, commodities fluctuations, deaths, and anything else you might imagine. These markets--even the ones for highly esoteric forms of coverage--are by and large very competitive and very price-focused--e.g., ask a university risk administrator how much time he or she spends negotiating on price for liability coverage and playing insurers off one another.

Mandated prices are particularly pernicious in the insurance industry because they destroy incentives to engage in risk-mitigating behavior. A warehouse, for example, might install fire sprinklers at the behest of its insurer, which might offer a premium reduction in return. And premiums are almost always lower for firms and individuals who have claimed less in the past, often due to risk-mitigating behavior. So would farmers plant more drought-resistant crops without the incentive of lower premiums when they are insulated from the direct loss? Why bother?

Even if the government is going to subsidize insurance (a matter basically beyond the scope of this post, but we're dubious), there is no reason for it to set prices, especially when those prices appear to be higher than the market-clearing rate. The result of the current policy is a simple and direct transfer of money from taxpayers to crop insurers that doesn't especially benefit those it's meant to help, the farmers. This is inexcusable and indefensible on economic or practical grounds.

To that end, we particularly enjoyed this quote, by a spokesman for Sen. Conrad Burns, on Burns's proposing legislation to block premium competition: "But his rationale was that the premium reduction program wasn't working. It was a bait and switch. There was no guarantee that farmers would get a reduction in their premium in the end." Price mandates, of course, guarantees that no one gets reductions.

Kudos to the Post for another excellent investigative piece on the nation's failing farm policies. Find more here.

Posted by Andrew Grossman at 11:03 AM in Federal Spending | Permalink | TrackBacks (0)

This is true: Basically everyone in Washington who spends a substantial part of his or her day sitting in front of a computer screen reads the Drudge Report. Drudge is great with breaking stories, political gossip, under-the-radar items, and generally, capturing the zeitgeist of things, usually better than the newspapers.

OK, but there's more of course. Drudge is weird, and I've never seen anything like this on the front page of the New York Times's website:

Posted by Andrew Grossman at 10:01 AM in Irrelevancies | Permalink | TrackBacks (0)

It's bad enough when industry or an interest group of some sort gets teams up with the bureaucracy to push measures on (an all-to-willing) Congress. But somehow it seems worse when the bureaucrats cut out the middleman and take to lobbying on their own.

In today's Washington Times, Richard Rahn describes two of the more odious examples of government entities using taxpayer dollars to push for, well, more taxpayer dollars and taxpayer-hostile policies:

Rather than get rid of inefficient routes and shape up its operations, Amtrak's management has been giving grants to the National Association of Railroad Passengers (NARP), which lobbies for more federal spending on Amtrak. Last month, several individuals who helped establish train-advocacy groups, including NARP's former chairman, called on NARP to stop accepting funds from Amtrak, which they called an "ethical breach": "The time is long passed for NARP to remain in league with the government monopoly responsible for one of the world's worst passenger rail systems in terms of costs, performance, and innovation." ...

he U.S. provides about a quarter of the almost $400 million OECD budget. Concerned about the OECD's move away from pro-growth free-market principles and at the urging of the Center for Freedom and Prosperity and other public policy organizations, the Senate decided to include a provision in the Foreign Operations appropriations bill barring the OECD from pursuing antitax competition policies....

The head of the OECD's Washington office, Sandra Wilson, then wrote (on Sept. 28) to U.S. Senate and administration officials requesting "that this language be removed from the bill." Here we have a case of a representative of an international organization directly lobbying for both increased U.S. government spending and increased taxes on U.S. citizens, using, in part, U.S. taxpayer dollars to do so.

So far as agencies pulling this kind of nonsense, the recently-passed spending database bill should curtail the worst abuses. For what it's worth, agencies already aren't supposed to lobby Congress in certain ways, but there are myriad ways around that restriction. In past years, for example, the EPA has given piles of dough to environmentalist groups; while that money wasn't intended for (and can't be used for) lobbying, it is of course fungible.

And what about other government entities, like Amtrak and the OECD? Some face statutory restrictions, but for others, shame will have to do. A recent Sun editorial shows how Amtrak structured its relationship with NARP to appear entirely above-the-board:

Since the mid-1990s, Amtrak has paid NARP to administer the rail service's Customer Advisory Committee, a group that is supposed to offer periodic quality-control feedback to Amtrak's management.

Not only can Amtrak collect such feedback for free via the complaints section of its Web site, Amtrak may well be overpaying NARP. In 2005, NARP spent $21,840 directly administering the advisory committee, and received $34,464 from Amtrak. The $12,624 difference went to overhead costs like office space and communications, NARP's treasurer, Robert Glover, claimed in an e-mail sent to Amtrak critics.That overhead cost covers more than 20% of NARP's office-related expenses, according to figures Mr. Glover himself provides in the e-mail.

One wonders how many other federal entities engage in similar shenanigans. Again, Capital Research has the broadest data...for now. Once the spending database comes online, expect a free-for-all.

Posted by Andrew Grossman at 09:00 AM in Federal Spending | Permalink | TrackBacks (0)

One particularly bad habit Congress has acquired during the war on terrorism is the emergency appropriation. Originally intended for actual, unforeseen emergencies (Hurricane Katrina would be one example), both Congress and the White House have use emergency spending bills to bypass normal budgetary controls. The Heritage Foundation’s Brian Riedl and Alison Acosta Fraser addressed this issue six months ago:

Supplemental spending should be reserved to unforeseen emergencies. Congress should offset additional spending by reducing funding for lower-priority projects elsewhere in the budget. It is unrealistic to think that all war spending would be offset, especially because there is a placeholder for some of this spending in the budget resolution. However, all non-war spending should be offset. The Administration and some in the Senate—such as Senators John McCain (R-AZ), Tom Coburn (R-OK) and John Ensign (R-NV)—acknowledge the need to cut spending elsewhere in the budget to pay for Katrina-related expenses. Polls show that Americans strongly support this kind of fiscal restraint…

Unfortunately, many of the spending items that wind up in supplementals are all too foreseeable. Because emergency supplemental bills do not count against budget caps, they are routinely loaded with additional spending that is unrelated to the original purpose of the legislation.

Unfortunately, Congress lacks that level of fiscal discipline, or at least it has up to now. One item that will greet Congress when it returns from its midterm recess will be HR 6176, the Responsible Emergency Appropriation Limits (REAL) Supplemental Act. Rep. Randy Neugebauer of Texas introduced this legislation at the end of September. It would limit the ability of Congress to use emergency appropriations to fund activities that should be easily foreseen:

Neugebauer’s legislation, the Responsible Emergency Appropriation Limits (REAL) Supplemental Act (H.R. 6176) reforms House rules so that an emergency supplemental appropriations bill can only provide for a single emergency, contain only emergency spending, and must be free of earmarks.

“The practice of loading up emergency bills with pork and other non-emergency items needs to come to an end,” Neugebauer said. “Too often, good bills that address real emergencies turn into bad bills and taxpayers are left to foot the bill.”

Neugebauer pointed to the recent emergency appropriations bill to fund the War on Terror as an example of an emergency appropriations bill that became a spending magnet. Soon after President George W. Bush submitted his request for War on Terror funding in February, 2006, a separate bill to fund Gulf Coast recovery was added to his request. In addition, unrelated, non-emergency items to fund projects in California, Hawaii and Illinois, among others, were included that increased the cost of the bill. Although President Bush’s initial request totaled $72.4 billion, the final price tag came to $94.5 billion. Neugebauer says that number would have been even bigger had it not been for fiscal conservatives in the House.

Emergency appropriations typically get rushed through both chambers of Congress, as most of them relate in part to some pressing need. The pressure of immediate action acts as an earmark attractant, and the need for haste keeps the legislation from getting the necessary oversight to remove the waste. Rep. Neugebauer’s proposal would keep the speed of the emergency appropriations process intact but filter out any provisions that did not solely and specifically focus on true emergencies. Neugebauer defines the term in HR 6176:

(1) As used in this section, the term `emergency' means a situation that-- (A) requires new budget authority and outlays (or new budget authority and the outlays flowing therefrom) for the prevention or mitigation of, or response to, loss of life or property, or a threat to national security; and (B) is unanticipated. (2) As used in paragraph (1), the term `unanticipated' means that the situation is-- (A) sudden, which means quickly coming into being or not building up over time; (B) urgent, which means a pressing and compelling need requiring immediate action; (C) unforeseen, which means not predicted or anticipated as an emerging need; and (D) temporary, which means not of a permanent duration.

The REAL Supplemental Act explicitly rules any emergency appropriation request out of order if it contains any earmarks at all. This closes the door on chronic porkers and might actually dissuade Congress from abusing the supplemental-funding process altogether. Look forward to Rep. Neugebauer’s bill coming before the Rules Committee after the recess.

Posted by Ed Morrissey at 10:33 AM in Captain Ed , Federal Spending | Permalink | TrackBacks (0)

As printed in today's White House Bulletin:

David Letterman: “You folks hear about the new scandal in Washington, DC? Police have broken up a call girl operation. And apparently it catered exclusively to politicians, politicians -- yup. And instead of cash, one girl actually got an interstate highway.”

Posted by Andrew Grossman at 02:55 PM in Federal Spending | Permalink | TrackBacks (0)

Louisiana State-Shreveport professor Jeffrey Sadow has an up-close view of Louisiana politics, which he writes about on his blog. Yesterday, he blogged on Louisiana's attempts to redesign its healthcare system.

In Louisiana, there is a "two-tiered" health care system--the poor and uninsured are served by a system of charity hospitals while those with insurance are free to make choices concerning their care. (This article has a brief description over the health care system and proposals for its redesign.) Louisiana officials, as Sadow notes, want to preserve the charity hospital system.

Sadow wisely points out that there are alternatives to the status quo in the Bayou State, and he refers to Heritage's work on state health insurance exchanges. State health insurance exchanges create a single market for a variety of health insurance plans where plans could be purchased with pre-tax dollars. In the end, individuals, not their employers, would own their own coverage and would be able to take that coverage with them regardless of their job situation without losing tax benefits.

Adopting a state health insurance exhange would eliminate the two-tiered health system in Louisiana because the charity hospital system would no longer be necessary. Instead of being relegated to government-run hospitals, the uninsured could use the health insurance exchange to get their own private insurance. Instead going to charity hospitals, government money could be used by the uninsured as premium assistance for private insurance. This system of premium assistance is one aspect of Massachusetts' health plan.

The Louisiana State Medical Society is supportive of a health insurance exchange. "The object is to get rid of state-run health care and make it individual-run health care," Dr. Floyd Buras, the head of the society, told the Times-Picayune.

Posted by J. Lawrence Scholer at 11:42 AM | Permalink | TrackBacks (0)

As much of a folly as the benefit was to enact at all, the mechanism by which it is organized has turned out to be surprisingly efficient. Competition between drug benefit providers has led to far lower prices--and thus less in expenses to seniors and the federal government--than the government had initially projected.

And the good news in terms of the benefit's market-based implementation continues today. The Times reports the latest:

Medicare beneficiaries will have access to more options for prescription drug coverage in 2007, with many insurers offering better value and a larger number of medications, the Bush administration said Friday.

A bit more detail on what to expect next year:

[Snarky infinitive clause snipped] Medicare officials said the average premium for drug coverage next year would be $24 a month. That is the same as this year and 40 percent less than first estimated for 2007. But, the officials said, the average number of drugs covered by insurers will increase by 13 percent, to 4,390 next year.

Monthly premiums in 2007 will range from a low of $9.50, under a drug plan offered by the HIP Insurance Company of New York, to a high of more than $110 under plans offered by Sierra Health Services in New Jersey and some other states.

OK, pretty impressive, right? Apparently not. Here's the line we snipped from the first blockquote above: "But the potential for confusion may also increase."

The horror!

Posted by Andrew Grossman at 01:03 PM in Health Care | Permalink | TrackBacks (0)

Supporters of fiscal discipline in federal spending should note two important articles. First, the New York Times reviews the impact that pork-barrel spending has on the expansion of the federal budget. David Kirkpatrick’s article should be read not for its identification with one particular House member but with an understanding that many appropriators in Congress use earmarks to push legislation through to law without much consideration or debate (emphasis mine):

After becoming chairman of the defense spending panel in 1989, Mr. Murtha imposed a new discipline. Previously, the House often debated defense spending bills, which account for about half of federal discretionary spending, for weeks of contentious amendments and speeches, both in the committee and on the floor. Most Democrats often voted against the measures. “It took day after day after day,” Mr. Murtha recalled.

Not any more. Mr. Murtha installed a new system that the Republicans have continued: the chairman and ranking member work out the details behind closed doors, pack the bill with plenty of earmarks, and link future projects for members to their support for the bill. The appropriations committee now typically debates and approves the bill in less than eight minutes and the full House in less than half an hour. (The $437 billion measure passed last week took under 20 minutes.)

This is the true danger of pork. It greases the skids on legislation so that no debate of any worth takes place by essentially buying the necessary votes from House members. The House last week took all of 20 minutes in discussing one of the most complex and expensive expenditures in the federal budget. Does anyone think that this amount of time provided any member with enough information to seriously understand where that money would go?

Small wonder, then, that Congress as a whole has lost all sense of fiscal discipline. Brian Riedl wrote an alarming analysis last week that clearly shows that spending has not only failed to slow, but has actually gained momentum in this last session of Congress:

Federal spending in 2006 is set to rise 9 percent, the largest increase since 1990 and enough to earn Congress near failing grades from the Heritage Foundation’s third quarter report card. Most families facing steep new expenses would cut back on additional spending. However, the Senate is preparing to bust fiscal year (FY) 2007 discretionary spending caps by at least $32 billion to:

1. Reimburse the Pentagon for the $9 billion raided from its budget earlier this year and given to domestic programs, as well as fund additional defense and border security programs ($26.8 billion in total);
2. Fund another massive farm subsidy bailout despite high subsidy levels and a booming farm economy ($4.2 billion); and
3. Reimburse NASA for funds that lawmakers had diverted into parochial pork projects ($1.0 billion).
4. And in addition, lawmakers have promised $2 billion to $3 billion more for the labor, health, and education programs. Senators classify much of this new spending as “emergency” so that it does not technically count against the budget caps. But this spending is foreseeable—and often the predictable result of budget gimmickry—and so is not an “emergency.” For the sake of taxpayers, Congress needs to set its budgetary priorities, make tough choices, and offset any increases.

Riedl exposes the “emergency” tactic that Congress has adopted of late, especially since the beginning of the war on terror. In reality, Congress creates the emergencies by playing shell games with spending, and then pushing through these “emergency” appropriations that serve two purposes. One, they allow Congress to bypass spending caps; and two, they attempt to pre-empt criticism of the spending by casting the bills as a rescue for some vital program.

Fortunately, Congress has to deal with much more sunlight than ever before. The corrosive nature of earmarks and the fiscal irresponsibility they produce has already aroused the ire of the American electorate. We need to keep educating ourselves in these budgetary parlor tricks in order to hold our representatives accountable for their actions. As Andrew Grossman points out, these stories will become more frequent in direct relation to increases in federal spending, giving more opportunities for Americans to discover these sordid machinations. Only then will Congress start operating with any discipline on spending.

Posted by Ed Morrissey at 12:50 PM in Captain Ed , Federal Spending | Permalink | TrackBacks (0)

The NY Times today runs a piece detailing Rep. John Murtha's (D-PA) decades of experience and leadership in doling out billions in defense earmarks to fellow representatives, favored lobbyists, and corporations in his own district (including one that he founded).

Murtha is ranking member of the House Defense Appropriations Subcommittee and has long "operated a political trading post in a back corner of the House of Representatives" where "two dozen Democrats mill around his seat" and Murtha "delivers Democratic votes to Republican leaders in a tacit exchange for earmarks for himself and his allies."

One lawmaker especially grateful to Murtha is Rep. Paul E. Kanjorski (D-PA), whose own relatives have benefited personally from his and Murtha's earmarks. But that's OK because, as Kanjorski explains it, his relatives stand apart from other men:

Mr. Kanjorski, the Pennsylvania Democrat, said he had help on “8 to 10” projects, including a $9.5 million deal four years ago for research by a firm partly owned by his nephews. In an interview, Mr. Kanjorski said his relatives “just happened to be the only people who would take responsibility” for developing the technology, which involved using water jets to pulverize materials. He said he recently gave Mr. Murtha a pair of high-tech disease-resistant socks made with silver fibers by a company in his district. After padding around in them, Mr. Kanjorski said, Mr. Murtha was so pleased that he agreed to an earmark to buy them for soldiers.

It is a great service to us all that Kanjorski's relatives were willing to "take responsibility" for developing a technology that the military probably doesn't really want (otherwise, why the earmark) and that has passed such rigorous testing as Rep. Murtha's private review on his very own feet.

In addition to socks, Rep. Murtha seems to know a thing or two about family business:

Mr. Murtha’s brother, Kit, recently retired from a smaller lobbying firm, KSA Consulting, that sought defense earmarks and represented many companies in Mr. Murtha’s district. From 1998 through 2003, he received more contributions from military contractors than has any other member of the House, according to the Center for Public Integrity, a nonpartisan group.

Perhaps thanks in part to his brother's efforts, Murtha "has steered billions of dollars to his district over the years, including more than $80 million in the defense spending bill passed Friday, according to a preliminary tally."

A word to the wise: when the federal spending database is up and running, this sort of in-depth reporting will become routine and accessible to even the smallest local papers. We look forward to it.

Posted by Andrew Grossman at 09:49 AM in Federal Spending | Permalink | TrackBacks (0)