My colleague Alan Reynolds has a message for all the paranoid androids in Washington…
Sign up to have blog posts delivered straight to your inbox!
On the campaign trail, Barack Obama promised that bills coming to his desk from Congress would sit for five days so the public could read, analyze and comment on them before he signed them into law. In yesterday’s Cato Daily Podcast, Jim Harper, Cato’s director of information policy studies, discussed Obama’s record on fulfilling that promise.
Of course, Obama’s guarantee to let a bill sit for five days did not include emergency legislation. As for the stimulus bill, should it be considered “emergency legislation?” Harper says no.
A five day difference from the time it goes into effect is very small, especially in regard to the fact that most of the people who are expecting to change their behavior in light of the passage of the bill will be able to do that during the five day pendency of it…it should sit for five days before it gets signed, according to the promise that President Obama made during his campaign.
News reports indicate there is some sort of final deal on the so-called stimulus. Some of the politicians are acting as if this massive spending bill is “fiscally responsible” merely because the total amount of money is fractionally smaller than the House and Senate proposals. Ironically, as Veronique de Rugy explains for reason.com, even the Congressional Budget Office, which relies on a deeply-flawed Keynesian economic model, is warning that bigger government will hurt the economy’s long-run performance.
In a report to Sen. Judd Gregg (R‑N.H.), the nonpartisan Congressional Budget Office (CBO) writes in plain English—well, economic language—that the Senate bill would eventually cause not a stimulus but a recession in “the longer run.” …On the CBO’s The Director’s Blog, Elmendorf explains why the Senate legislation would eventually reduce economic output:
The principal channel for this effect is that the legislation would result in an increase in government debt. To the extent that people hold their wealth in the form of government bonds rather than in a form that can be used to finance private investment, the increased government debt would tend to ‘crowd out’ private investment—thus reducing the stock of private capital and the long-term potential output of the economy.
The Senate might have done something straightforward, like cutting the corporate income tax or cutting the payroll tax that all workers pay. Instead, most of the provisions are tax credits, many of which are refundable. In other words, individuals and businesses need to pay their taxes up front and then will get money back from the government. These sorts of programs, aimed incentivizing investment, are better understood as spending programs disguised as “tax cuts.”
And here is one more thing to consider: There is absolutely no evidence that any stimulus package in the past 80 years has goosed economic activity—not FDR’s during the Great Depression, not Japan’s during the 1990s, and not George W. Bush’s in 2001 and 2008. If anything, the economic evidence suggests that such spending packages actually intensified and prolonged misery.
The Congressional Budget Office is right, albeit for reasons other than the ones generated by its garbage-in-garbage-out model. Bigger government hurts economic efficiency by diverting resources from the productive sector of the economy, and it does not matter whether government spending is financed by taxes or borrowing.
HITN’s Destination Casa Blanca has posted their hour-long program — featuring yours truly — on the State Children’s Health Insurance Program expansion that President Obama just signed into law (the utter lack of evidence of effectiveness notwithstanding).
During the program, I shatter the myths that SCHIP is for low-income children, that it’s a cost-effective way of improving children’s health, etc.
I guess we know what you’ll be doing for the next hour.
Sen. Mike Enzi (R‑WY), the ranking Republican on the Senate’s Health, Education, Labor, and Pensions Committee, has a good op-ed in today’s edition of The Hill.
Enzi rather interestingly does not see Medicare Part D as an example of Congress “simply throwing more money at Medicare.”
That aside, Enzi stakes out a position against creating a new Medicare-like program to compete with private insurance, and against price controls in health care. Those are two of the three positions I advised free-market advocates to take in this op-ed.
The third is a firm opposition to mandates that require individuals to purchase health insurance, whether directly or through an employer. I’m sure Enzi’s saving that for his next op-ed.
Today, the Latin American Commission on Drugs and Democracy released a report providing more evidence that Latin Americans are fed up with the war on drugs and that momentum is building for a paradigm shift in dealing with drug abuse.
Headed by ex-presidents of three leading Latin American countries—César Gaviria of Colombia, Ernesto Zedillo of Mexico, and Fernando Henrique Cardoso of Brazil—the commission calls for Latin American and other leaders to “break the taboo” of criticizing anti-drug policies.
It is imperative to rectify the ‘war on drugs’ strategy pursued in the region over the past 30 years…
Prohibitionist policies based on the eradication of production and on the disruption of drug flows as well as on the criminalization of consumption have not yielded the expected results. We are further than ever from the announced goal of eradicating drugs.
The commission further calls for drug use to be dealt with as a public health issue, notes that prohibition has increased violence and corruption, and has otherwise undermined democracy as it has led to “the criminalization of politics and the politicization of crime.”
Leading Latin American intellectuals, including Peruvian writer Mario Vargas Llosa, Mexican writer Enrique Krauze, and Venezuelan policy expert and editor of Foreign Policy Magazine Moisés Naím, were also members of the commission.
This is a significant report and comes after Honduran President Zelaya’s recent call for legalization. In the past, Latin American leaders have expressed frustration with Washington’s heavy handed war on drugs, but have nevertheless relented in the face of enormous U.S. pressure. A few public officials, such as former Mexican Minister of Foreign Affairs Jorge Castañeda, have been openly critical of prohibition, but they have been virtually alone and without official support for their views. The commission’s report is a sign that Latin American leaders feel more confident in acting together to counter a policy approach that is destroying the region. And, as my Cato colleague Ted Carpenter notes, now that Mexico is being consumed by an unwinnable war against drug trafficking that is spilling over into the United States, Washington can no longer easily ignore the damaging effects of its policy in the region.
In how many ways is this wrong? (Think Detroit’s chronic financial problems, public officials-private schools, and even a little sexism thrown in for good measure.) I suppose, though, the officers are making extra money, and any time that happens it stimulates the economy, right? That makes everything OK.