The following headlines were on a magazine cover I saw over the weekend: 

• “Why People are Mad at Washington” 
• “Less Zip in Business” 
• “Republican Split” 
• “New York on Brink Again” 
• “Mideast War Jitters” 

With, perhaps, the exception of the headline about New York, one could easily conclude that the magazine is a current issue. However, that’s not the case. The cover actually belongs to the June 21, 1976 issue of U.S. News & World Report.

My parents kept it because that was the day I was born. Evidence, I believe, that God has a sense of humor. I can’t help but wonder though: will headlines in another 37 years be that much different?

An issue with my paper on corporate welfare in the federal budget is that cases can be made for other expenditures not on the list. A prime example would be Pentagon weapons procurement. I’ll simply say that deciding what counts and what doesn’t is complicated. 

The New York Times has another example of what could be considered a form of corporate welfare: excessive federal reimbursement rates for anti-anemia drugs used by dialysis centers. This snippet provides the background: 

The multibillion-dollar dialysis industry has been accused by medical researchers and former employees of putting a higher priority on profits than on care before, giving patients for many years too many doses of the expensive anti-anemia drug Epogen to collect higher reimbursements — allegations the companies have strongly disputed. 

The excessive payments to the companies since 2011 came about, in fact, as the federal government tried to create a single bundled payment for each patient visit. The idea was to eliminate the incentive to prescribe too many doses of Epogen, which medical research showed was harming patients. 

With the profit incentive gone, use of Epogen dropped even more than the federal government expected. So the amount of money set aside in the new bundle exceeded the cost of the drugs, two separate federal audits in the last year have shown. 

The industry, as a result, has collected an extra $530 million to $880 million a year in federal payments since 2011, compared with the actual use of Epogen and other dialysis drugs. That is the windfall that Congress ordered Health and Human Services to eliminate in January. 

Thanks to a massive lobbying campaign from the dialysis industry ($8 million since 2009), Congress is now considering giving back the taxpayer-financed windfall. According to the Times, “more than 100 of the same members of Congress who voted in January to impose the cut are now trying to push the Obama administration to reverse it or water it down.” Leading the charge to reverse the cuts are “lawmakers who are among the top recipients of campaign contributions from the industry, including Representatives John Lewis, a Georgia Democrat, and John M. Shimkus, an Illinois Republican, as well as Mr. [Ben] Lujan [D‑NM].” 

And, surprise, the effort is bipartisan: 

The full-court press has energized Congress. A broad coalition, including conservative Republicans and liberal Democrats and many in between, has joined the industry appeal, with 205 members of the House alone signing a letter this month to the Medicare administrator asking her to reconsider the proposed cut. Half of those signers voted in favor of the cut in January.

In sum, Republicans are teaming up with Democrats to keep the taxpayer dollars flowing to a special interest. 

It’s just another day in the Beltway. 

Earlier this week, the Los Angeles Times ran a column repeating the simplistic notion that since homeownership is “good” then subsidies for homeownership must therefore also be “good.” Never asked, or apparently even contemplated, is the question of whether all our various homeownership subsidies actually deliver homeownership. Let’s start with the ever popular mortgage interest deduction (MID). The chart below, reproduced from Glaeser and Shapiro, shows the value of the MID and the homeownership rate. Hard to see any relationship there, probably because there isn’t one. I discuss the MID in more detail here. 

Next would be Fannie Mae and Freddie Mac. The chart below shows the homeownership rate and the Fannie/​Freddie share of the mortgage market. What should be immediately obvious is that the long run homeownership rate steadied out in the mid-60 percents when Fannie & Freddie were bit players, having a market share in the single digits. In no way can we say that Fannie & Freddie have increased the long-run trend rate of homeownership. 

So even if one believes homeownership is worthy of subsidy, a questionable proposition on its own, it should be beyond question that our current system of homeownership subsidies has not delivered long run gains in the homeownership rate.

Last fall, I reported that the Obama administration lagged the House of Representatives on transparency. The conclusion was driven by a study of the quality of data publication regarding key elements of budgeting, appropriating, spending, and the legislative process. (Along with monitoring progress in these area, we’ve been producing data to show that it can be done, to produce a cadre of users, and to simply deliver government transparency at a less plodding pace.)

There are signs that the administration may make a run at improving its transparency record. Buried deep in the FY 2014 budget justification for the Treasury Department’s Bureau of the Fiscal Service, it says that funds will support “government-wide data standardization efforts to increase accuracy and transparency of Federal financial reporting.” That means the public may get better access to where the money goes — outlays — in formats that permit computer-aided oversight.

In parallel, a Per​for​mance​.gov effort called the Federal Program Inventory says that, in May of 2014, it will publish a Unique Federal Program Inventory number (pg. 4–5) for each federal program, along with agency IDs and bureau IDs. This may be the machine-readable federal government organization chart whose non-existence I have lamented for some time.

If this sounds jargon‑y, you’re normal. Think of federal spending as happening on a remote jungle island, where all the inhabitants speak their own language. On Federal Spending Island, no visitor from the U.S. mainland can understand where things are there, or who is saying what to whom.

True machine-readable data will turn Federal Spending Island into a place where English is spoken, or at least a some kind of Federal Spending-English dialect that makes the movement of our tax dollars easier to track.

The Washington Post’s David Fahrenthold counts six budget “showdowns” in Washington over the past two and half year. The looming battle this fall over funding the government and raising the debt ceiling will be number seven. That led Fahrenthold to examine what the six showdowns have accomplished with regard to the size of government. 

In sum: we had big government two and half years ago and today we have…big government.  

Some left-leaning pundits are in a tizzy that the Washington Post would dare run an article that doesn’t speak of “draconian” spending cuts to “popular programs.” Instead, Fahrenthold looked at four measures and concluded that little has changed: federal spending is slightly down, the number of federal employees is slightly down, the number of regulations is up, and the federal government still has a lot of real estate. 

Fahrenthold’s sin (one of them) is that in pointing out that spending has gone flat after the bipartisan spending explosion of the 2000s he didn’t recognize the alleged virtues of increasing government spending to “stimulate” the economy. I’m guessing Fahrenthold didn’t get the memo that a journalist writing for a mainstream news outlet is supposed to supply a quote from some macroeconomic forecasting Nostradamus like Mark Zandi.  

I do wish, however, that Fahrenthold would have explicitly differentiated between the size and scope of government. When it comes to the scope of government activity—basically, what all Uncle Sam does—I don’t know how anyone could argue that it has receded in the past two and a half years. Or the past ten years. Or, well, you get the point. 

Does Obamacare represent a reduction the federal government’s scope? How about the NSA’s eavesdropping? Continued subsidies for flights to dinky airports? Here’s Fahrenthold on that one: 

This Congress has also indulged in the habit of letting “temporary” giveaways become effectively permanent. A prime example is the Essential Air Service, a $240 million program that subsidizes flights to 161 small airports. 

It was supposed to die in 1988. It didn’t. 

Congress has renewed the program, again and again. Now it subsidizes flights to places such as tiny Glendive, Mont., where the government pays for a 19-seat aircraft to visit twice a day. 

On average, two people get on each day. The subsidy works out to $836 for each of their tickets. 

“If we can’t cut this, we can’t cut anything,” said Rep. Tom McClintock (R‑Calif.), who sponsored an attempt to kill the program last summer. 

They can’t cut this. 

McClintock’s amendment lost by 74 votes. Then he tried again this summer. And lost. Many members explained their “no” votes by saying they were unwilling to sacrifice the subsidies to airports in their districts. “It’s that old problem of concentrated benefits with diffuse costs. The benefits are lavished on a few select communities, and the costs are diffused across the entire tax base,” McClintock said afterward. The beneficiaries, he said, are the only ones who care enough to fight. 

Still, McClintock says he’s holding out hope. After all, the first time he got 164 votes in favor of this cut. 

This year: 166. 

“We picked up two votes,” he said. “I suppose that’s progress.” He needs 218 to win. 

Indeed, over the past couple of years I have noted several occasions where Republicans—including so-called “tea partiers”—voted to spare federal programs from termination. (See here, here, here, here, here, and here.) 

Although I’m not a macroeconomic forecaster and thus cannot see the future, I’m going to go out on a limb and predict that after budget showdown #7 in the fall we will still have big government. And, unfortunately, the situation isn’t going change after we go through additional budget showdowns in 2014. 

It’s going to be Groundhog Day for a while. 

Well, this is awkward.

OK, not really. Because despite the fact that a mooted Ex-Im loan will help my homeland (or, more precisely, a company based in my homeland), it is still not ok.

The Ex-Im bank touts itself as an easy yes, a no-brainer of an institution to which no rational person who likes exports, jobs, and children could ever possibly object. It’s self-funding! It lends only for entirely risk-free purposes! It creates jobs! It is merely correcting a market failure, so even conservatives should support it! (I’ve written before about why those areallmyths).

But often when Ex-Im funds a purchase abroad, some other American firm will suffer. Delta Airlines has long been critical of loans supporting Boeing exports that it says enable its competition to offer cheaper flights and hurt its business. And now we have a new example of the unintended consequences of picking winners, whereby Ex-Im is reportedly considering financing the sale of about $520 million worth of Caterpillar earthmoving equipment to an Australian mining firm. That has attracted the ire of Minnesota Senators Franken and Klobuchar, because it could hurt mines in their state. From the Duluth News Tribune: 

It’s not that Minnesota’s congressional delegation doesn’t like Australia, mate. But the idea of a U.S. government bank loaning money to an Australian iron ore mine that will compete with Minnesota taconite?

That’s what they don’t like.

U.S. Sens. Al Franken and Amy Klobuchar and U.S. Rep. Rick Nolan, all Minnesota Democrats, are on record opposing a plan in front of the U.S. Export-Import Bank to invest in equipment for the giant Roy Hill iron mine in Australia’s northwestern Outback…

Cleveland-based Cliffs Natural Resources, with four mines in Minnesota and Michigan, has led the charge to stop the loan, saying it threatens U.S. mining jobs and, with new Asian steel produced from Australian ore, eventually threatens U.S. steel industry jobs.

Details of the loan, including the name of the beneficiary U.S. company, are supposed to remain secret to prevent foreign competitors getting a leg up. But the News Tribune has learned that the U.S. manufacturer is Caterpillar Inc. and that the equipment includes giant trucks, bulldozers and shovels made in Illinois and Wisconsin.

And that means the Export-Import Bank now is being squeezed by two titans of U.S. industry.

The bank is conducting an “extensive economic impact study” on the loan, Phil Cogan, vice president of communications for the Washington-based bank, told the News Tribune.

The deal is expected to reach the bank’s board for a vote in the next few weeks, and that’s why lawmakers and some Minnesota mining interests are weighing in as the bank accepts public comments.

Incidentally, the project in question is operated by Australia’s richest person, Gina Reinhart. From everything I’ve heard and read, Ms. Rinehart seems an extremely able businesswoman, more than capable of financing her own purchases if she decides they are viable. This seems like yet another misguided “investment” by the Ex-Im Bank. Mate.

Rep. Tom McClintock tells David Fahrenthold of the Washington Post what economists mean by “concentrated benefits and diffuse costs”:

This Congress has also indulged in the habit of letting “temporary” giveaways become effectively permanent. A prime example is the Essential Air Service, a $240 million program that subsidizes flights to 161 small airports.

It was supposed to die in 1988. It didn’t.

Congress has renewed the program, again and again. Now it subsidizes flights to places such as tiny Glendive, Mont., where the government pays for a 19-seat aircraft to visit twice a day.

On average, two people get on each day. The subsidy works out to $836 for each of their tickets.

“If we can’t cut this, we can’t cut anything,” said Rep. Tom McClintock (R‑Calif.), who sponsored an attempt to kill the program last summer.

They can’t cut this.

McClintock’s amendment lost by 74 votes. Then he tried again this summer. And lost. Many members explained their “no” votes by saying they were unwilling to sacrifice the subsidies to airports in their districts. “It’s that old problem of concentrated benefits with diffuse costs. The benefits are lavished on a few select communities, and the costs are diffused across the entire tax base,” McClintock said afterward. The beneficiaries, he said, are the only ones who care enough to fight.