I present you Robert Laszewski’s magnificent take on ObamaCare and Wisconsin, Democrats and Republicans.

Rep. Robert Aderholt (R‑AL) is the chairman of the House Appropriations Subcommittee on Homeland Security. That’s the subcommittee that makes spending decisions for the Department of Homeland Security and the programs within it, including the REAL ID Act.

Earlier this month, a constituent of his from Fyffe, Alabama posted a question on Mr. Aderholt’s Facebook page:

Rep. Aderholt, I’ve seen reports that the “REAL ID ACT” will be implemented in May of this year, giving the govt the ability to track every person who has a drivers license via encoded GPS. Is this actually the case and if so, what is the House going to do to stop this Orwellian infringement of our Liberty. Also, HOW could this have happened in the first place!

Mr. Aderholt has not replied.

But Right Side News recently reported on a hearing in which DHS Secretary Janet Napolitano presented her agency’s budget request. The DHS has not requested funds for implementing REAL ID. But according to the report, Chairman Aderholt “pointedly reminded” the committee of the need for funding of REAL ID.

It is good of Representative Aderholt to give his constituents a means to contact him and to invite public discussion of the issues. It’s an open question whether he will listen more closely to the voice of his constituents or to influences in Washington, D.C. who would like to see law-abiding American citizens herded into a national ID system.

The big schooling story is U.S. Secretary of Education Arne Duncan’s assertion that this year 82 percent of public schools could be identified as failing under No Child Left Behind. That’s a huge percentage, and also hugely disputed. But the real story here, as always, is that government control of schooling is all about politics, not education.

Start with the 82 percent figure. It’s a consequence of NCLB’s demand that all students be “proficient” in mathematics and reading by 2014. That’s a severely reality-challenged goal, especially if proficient is supposed to mean having mastered fairly tough material. But the law largely wasn’t driven by reality — it was driven by politicians wanting voters to see them as uncompromising on bad schools.

Now the controversy. People who track NCLB results — including many Democrats — say the 82 percent figure is ridiculously inflated. Reports the Washington Post:

“I find it hard to believe,” said Jack Jennings, a former Democratic congressional aide who is president of the Center on Education Policy, an independent think tank that tracks the law. “I think they really stretched it for dramatic effect.”

And why the possible prioritization of “dramatic effect” over “reality”? Because the Obama administration is pushing to get the law rewritten along lines it likes, and might very well feel the need to scare the bejeepers out of the public to get momentum behind it:

Charles Barone, a former congressional aide who helped draft the 2002 law, called Duncan’s projection “fiction.” Barone tracks federal policy for a group called Democrats for Education Reform, which is generally in accord with Obama’s policies on education changes.

“He’s creating a bogeyman that doesn’t exist,” Barone said of Duncan. “Our fear is that they are taking it to a new level of actually manufacturing a new statistic — a ‘Chicken Little’ statistic that is not true — just to get a law passed. It severely threatens their credibility.”

But hold on! With only about 37 percent of schools identified as failing last year, the leap to 82 percent certainly does seem improbable. But quietly evading the spirit of NCLB — actually improving educational outcomes — some states backloaded their improvement goals to very late in the full-proficiency game, betting NCLB would be gutted by 2014 and they’d never be held accountable. So some states really might be on the verge of having to pay the piper big time, and the failure rate perhaps could be set to rise dramatically. But you’d have to know a lot about the political machincations in every state to figure that out. 

Indeed, that’s been the biggest problem with NCLB all along. It talks tough about proficiency, but leaves it to states to write their own standards, tests, and proficiency definitions. Again, it makes perfect political — but not educational — sense. Many of the federal politicians who voted for NCLB also know Americans cherish “local control” of education, so they wanted to appear to be both zealous protectors of local control and no-excuses enforcers of excellence. The result has been an endless stream of conflicting, confusing information — like the 82 percent figure — that few parents could ever hope to have the time or ability to sort through. And yet, as reported by the Post:

many educators agree that the law’s focus on standardized testing and minority achievement gaps shined a critical spotlight on problems that public schools have long sought to avoid.

A “critical spotlight”? NCLB is more like a deranged disco ball, randomly shooting out bits of light that make it impossible to ever know what’s really going on.

And the befuddling hits just keep on coming. At the same time the Obama administration is pushing national curricular standards that have little concrete content, as well as tests to accompany those standards that won’t be available until 2014, Duncan is decrying the “one-size-fits-all” nature of NCLB. Reports CNN:

“By mandating and prescribing one-size-fits-all solutions, No Child Left Behind took away the ability of local and state educators to tailor solutions to the unique needs of their students,” Duncan said calling the concept “fundamentally flawed.”

So at the same time he’s championing the ultimate one-size-fits-all solution — national curriculum standards — he is attacking NCLB for eroding local and state control. Of course, if you want to get political credit for fixing American education you first have to demonize what’s there, even if your solution comes out of basically the same mold. Don’t, though, think national standards coupled with as-yet-unseen national tests will solve our problems by ending state obfuscation. If the administration gets its way, the games will all just be played in Washington.

Trying to understand what’s really going on in education is enough to make you pull your hair out. But that’s what you get when you put government — meaning self-interested politicians — in charge.

With State AGs and the Federal Government pushing to further extend the mortgage foreclosure process for late borrowers, one might assume that these government officials believe that further delay has no costs, and is at most a transfer from the lender to the borrower. Judging from the results of a recent working paper, by economists Shuang Zhu and Kelley Pace at Louisiana State, they would be wrong. Further foreclosure delays impose significant costs, not just on the economy and lenders, but also on other borrowers.

Zhu and Pace start with the observation: “The longer the period between first missing payment and foreclosure sale, the more valuable the default option becomes. The borrower preserves the option to either keep defaulting or cure the default in the future. Since this option value grows with the foreclosure period, longer expected foreclosure periods increase the propensity to default on mortgage loans.”

As state and local law govern the foreclosure process, the authors examine differences across areas to see if such differences in delay impact the rate of foreclosures. Interestingly enough, they do find that the longer are delays, the greater is the foreclosure rate. 

Given that lenders understand that delays are costly, this is likely to show up in the price of the mortgage. Zhu and Pace find that with each additional six month delay in foreclosure, mortgage rates increase by 10 basis points. As delays are running an extra year or so now, mortgage rates are higher by about 20 basis points due to government efforts to extend the foreclosure process. This might seem small, but its also the amount many claimed Fannie Mae and Freddie Mac lowered rates by. Clearly the costs of delaying foreclosures are not borne just by the banks, but by anyone hoping to get a mortgage. For those who would respond “but mortgages are cheap” — they are only cheap due to cheap money. The spread of mortgage rates over Treasuries is actually about 20 basis points above its historical norm.

Also of interest is that Zhu and Pace, using S&P/Case-Shiller house price futures, find that in cities where borrowers have lower future home price expectations, they default at a greater rate. I believe this lends some support to the notion that we should stop trying to hold up prices and let them hit a point where up is the only direction. The paper is full of interesting findings, and also includes a useful literature review of the default literature.

Long time political observer, David Broder, passed away yesterday. He did not believe in free markets and limited government, but he did have some nice things to say about the work of the Cato Institute. Here is a 2002 column that I sometimes pass on to people who do not know much about the role of think tanks:

Thanks to Two Think Tanks–Heritage and Cato

by David S. Broder
Wednesday, May 8, 2002; Page A21

This is a week of celebration for two of Washington’s great dissenters on the right. On successive nights, dinners are honoring Edwin Feulner for his 25 years at the helm of the Heritage Foundation and Edward Crane for his role in founding the Cato Institute a quarter-century ago. The success of their think tanks is something to cheer, even if, as is my case, you often disagree with their policy prescriptions.

To appreciate what they have achieved, you have to recall that in 1977, when Feulner left his congressional staff job to run the four-year-old Heritage (which he had helped found) and when Crane started Cato out in San Francisco, Jimmy Carter had just been inaugurated and Democrats controlled both houses of Congress. “It was not a hospitable time for Republicans, let alone conservatives,” Feulner recalled.

Today, with Republicans running the White House and the House of Representatives and one vote away from regaining control of the Senate, it is easy to see the triumph of conservatism as a historical inevitability. It was not. The political victory can be credited largely to Ronald Reagan. But it was also an intellectual battle, in which Heritage and Cato, along with the older American Enterprise Institute, played a critical role.

Heritage and Cato have become so proficient in generating and promoting ideas that the liberal movement has had to create its own think tanks to compete. With generous corporate and foundation support and thousands of grass-roots contributors, Heritage boasts a staff of 185 and a budget of $28 million; Cato, 98 staffers and $16 million.

In their headquarters buildings, Heritage on Capitol Hill and Cato in a handsome modern structure closer to the White House, they sponsor a steady stream of conferences and churn out papers and books, nudging and prodding the policymakers and opinion-shapers. Feulner has Heritage on hair-trigger, rushing out suggestions before congressional hearings and bill markups. “We sweat the details” critical to the legislative process, he told me. Cato, Crane remarked in a separate interview, “is a little more academic and long-term in its thinking.”

Heritage, which had a foothold in Washington when Reagan arrived, wrote a blueprint for his first term called Mandate for Leadership, which became a kind of handbook for the new administration. Tax cuts, missile defense, enterprise zones for cities and scores of other ideas migrated from Heritage to the White House and Capitol Hill.

Cato, which moved to Washington in 1982, has sponsored legal studies influential in the Supreme Court decisions reviving the 10th Amendment limits on federal authority. At times, their agendas overlap. A central, but still unfulfilled dream of Cato’s since 1979, now shared by Heritage, is the conversion of Social Security into a system of private retirement accounts.

But the two are not twins. Heritage is mainstream conservative, emphasizing free-market economics and robust national security policy, with some forays into social policy on health care and welfare reform. Cato is libertarian in its roots, more radical in its critique of federal programs, more skeptical about the U.S. international role and decidedly liberal (in the classic sense) on issues of personal freedom and civil liberties.

Their usefulness in Washington politics stems from their intellectual honesty and their willingness to question conventional wisdom, even when their friends are in power. A case in point is the bipartisan but outlandishly expensive farm subsidy bill, which President Bush is preparing to sign. Heritage’s Stuart Butler denounced it last week as “a shameless example of corporate pork-barrel spending.” And when the establishment was recently cheering the latest campaign finance “reform,” Cato and Heritage held forums challenging the government’s right to regulate political speech.

In this city, noted for the narrowness of its intellectual range, it is sometimes wildly unpopular — but absolutely vital — to have institutions that question fundamental assumptions and occasionally declare that the emperor of the moment has no clothes. Cato and Heritage do that — to Republican presidents as well as Democrats.

They are also models of healthy democratic discourse at a time when too much of the policy debate here takes the form of “Crossfire”-style exchanges of insults. They have staffed themselves with scholars and writers who share their basic political orientations. But their doors are open to other views, and the policy forums they run are not only stimulating but good-tempered.

What Crane told me is true: “The Washington think-tank world is a great example of how people can have a civil discussion and debate. You don’t see it in politics, but politics these days is largely devoid of content.”

As long as that is true, all of us who work here in politics or journalism have reason to be thankful that Heritage and Cato are around.

Last night’s vote by the Wisconsin-based portion of the Wisconsin Senate has received enormous attention. The scope of collective bargaining by school district and other government employees has been narrowed, and the state will no longer automatically garnish workers’ wages to pay union dues.

This was the right thing to do. But how much of a difference will these changes actually make to the state’s bottom line? As I’ve noted, the presence or absence of collective bargaining is not strongly correlated with school district spending. Instead, unions have won their massively (42%) above- market compensation through well-funded political action; which brings us to the question of automatic paycheck deduction of union dues.

Without automatic dues withdrawals, will public school unions still be able to afford their fantastically successful political activities? There’s no reason to doubt it. Given the huge compensation premium public school employees enjoy over their private sector counterparts, they have a powerful incentive to voluntarily keep funding the political action that helped win it.

Indeed, we can see this already in right-to-work states like South Carolina. Public school employees there have no collective bargaining rights and there is no automatic union dues withdrawal, but the Palmetto State nevertheless has a teachers’ union and an administrators’ association that have spent large sums of money on political action. It’s worked. Despite not being the wealthiest of states, South Carolina still spends roughly $12,000 per pupil on its public schools, and its public school teachers earn more than the state’s median household income. The teacher and administrator groups have also successfully defeated every legislative effort thus far to open up the state’s education system to private sector competition and parental choice.

The only way to rein-in out-of-control public school spending is thus to give both families and taxpayers an alternative to the government monopoly status quo. Cut taxes on folks who pay for their own children’s education, or who donate to non-profit scholarship organizations that subsidize private school tuition for the poor. Many states are doing this already on a small scale. By so doing so on a larger scale, families will have much greater choices and taxpayers will reap enormous savings.

The U.S. trade deficit rose in January, according to this morning’s monthly trade report from the U.S. Commerce Department, and on cue the news is being greeted as a bad omen for the U.S. economy.

Reflecting the conventional wisdom, this morning’s Associated Press story states as a matter of fact, with no attribution:

A widening trade deficit hurts the U.S. economy. When imports outpace exports, more jobs go to foreign workers than to U.S. workers.

Oh really? As I’ve documented elsewhere, the U.S. economy actually grows faster during periods when the trade deficit is widening compared to when it is shrinking. That’s because an expanding economy increases demand for imports as well as domestically made goods. Stronger growth also attracts more foreign investment, which is the flip side of the trade deficit.

The same story is true for jobs. In Chapter 5 of my 2009 Cato book, Mad about Trade, I show how the unemployment rate invariably rises during periods when the trade deficit is “improving,” and declines during periods when the deficit is “worsening.” (Check out Table 2.2 on p. 81, courtesy of Google Books.)

Just think back to the 1990s. From 1992 to 2000, the trade deficit widened from 0.5 percent of GDP to 3.9 percent. During that same period, the unemployment rate fell from 7.3 percent to 3.9 percent and the economy added more than 18 million jobs.

More recently, the trade deficit narrowed sharply between 2007 and 2009 as a share of GDP, while the economy lost more than 8 million jobs and unemployment soared.

The conventional wisdom on trade deficits and the economy is due for a reality check. If politicians believe that “a widening trade deficit hurts the economy,” contrary to all the evidence, they will be more tempted to reach for the snake oil of protectionism.