The NYT Publishes An Op-Ed Proposing More Cuts Than The Ryan Budget Plan

A Congressman named Paul Broun has an op-ed in today's New York Times titled "Paul Ryan's Ax Isn't Sharp Enough," and proposing substantial cuts in Federal spending beyond Ryan's budget proposals.   Actually, as Broun points out, Ryan's budget doesn't propose net cuts at all, but rather proposes modestly to restrain increases in the level of spending to 3.4% a year.  Broun, whose district lies east of Atlanta, is trying to make himself some reputation as a spending hawk.  I say bravo!  But even his proposals are extremely modest.​  This discussion need to be fundamentally re-oriented.

Basically, Broun proposes (1) eliminating two Federal departments, Education and Energy. (2) making Medicaid and SCHIP block grants to the states, and (3) repealing Obamacare.  Numbers (2) and (3) do not constitute reductions in current spending, but only avoidance of future increases.  Education is currently running at about $77 billion per year, Energy only at about $27 billion.  The Education budget could well be zeroed out.  Energy is a mixed bag.  The destructive "green energy" and efficiency programs turn out to be a very small part of the budget -- under $3 billion per year.  Most of the budget is involved in defense-related activities, particularly producing and securing atomic weapons.  Broun concedes that that's not so easy to get rid of and proposes transferring it to Defense.  OK, but that doesn't lead to much spending reduction.  We're only up to about $80 billion.  The loan guarantees should be wiped out, but of course they are off budget to begin with.  I'm looking for cuts of at least $1 trillion!

So come on, Congressman Broun.  Let's get a table of Federal departments and agencies and start drawing a line through them.  It's not hard:​

Agriculture:  Proposed 2013 spending is $155 billion.  Farm subsidies of $20+ billion per year clearly need to go.  The big item is food stamps -- $80 billion per year.  Food stamp spending has doubled in Obama's four years, all of which were supposed to be an economic "recovery."  It should be an immediate priority to get back to the 26 million recipients of just a few years ago.  Where does the other $55 billion go?  To lots and lots of stuff the government should not be doing and that almost nobody would miss if it disappeared over night.  Here is a list of agencies and offices in the DOA (good acronym).  Agricultural Marketing Service, Agricultural Research Service, Animal and Plant Health Inspection Service, Center for Nutrition Policy and Promotion, etc., etc., etc., etc.  OK, we need to figure out a way to do food inspection, although I don't see why it has to be the government.  The rest is dead loss.  There is easily $100 billion per year to be saved in this department.

Housing and Urban Development.  ​The spending by this department is not just wasteful, but actively destructive, acting as a poverty trap for a large portion of the intended beneficiaries.  It should all be zeroed out:  $27 billion annually for rental subsidies, $13 billion for "community development" grants, $12 billion for housing finance programs, $9 billion for public housing projects.  This could start to be some real money!

I'm barely getting started, and already I'm up to $240 billion!  ​How about eliminating all job training programs and "trade adjustment assistance" in the Labor Department (about $8 billion)?  Getting rid of the Drug War (about $15 billion per year at the Federal level according to drugsense.org)?  I'll bet it's a lot more than that if you count how much of the U.S. Attorneys' offices, the FBI, the Federal courts, and prisons go into this useless effort.  NASA is running about $18 billion per year.  I can never understand the attachment of otherwise libertarian-oriented people to NASA, which, as a government entity, is way too risk averse to run a high risk program.

Dare anyone ask how the number of recipients of Social Security Disability went from about 3 million in 1990 to over 8.5 million today, just 23 years later?  Does the current generation really have three times as many disabled people as the prior generation?  By the way, this program is running at $124 billion per year and metastasizing at an accelerating rate.  In a remarkable event, mainstream press organs like NPR and the Atlantic have started noticing in just the past few days. ​ Read those two articles and then tell me whether a rational version of the program could not save half of the $124 billion.

I'm not going to make this post into a full-blown new budget for the Federal government, but it's clear that if one is prepared to seriously consider eliminating the wasteful programs, it is not difficult to get the Federal budget to a size commensurate with its revenues.​  When can we get started?

Federal Judge Rules National Security Letters Unconstitutional

If you don't know about National Security Letters, you should.  They are the missives sent by the FBI to the institutions that hold your electronic information -- mainly banks, telecoms, ISP providers.​  The gist is, provide us all the information you have about Mr. or Ms. X, and, by the way, you are not allowed to mention to anyone, most particularly Mr. or Ms. X, that you are doing this, and if you so much as breathe a word it is a felony and we will prosecute you.  So this is all done behind your back, without any ability on your part to object or even to know that it is going on.  (The existence of these NSLs is the principal reason why you should assume that all your electronic communications and bank transactions are monitored by the government at all times.  Use cash.)

The authority for this is found in the so-called USA PATRIOT Act, ignominiously signed by George W. Bush in 2001.  Needless to say, the sanctimonious Barack Obama has continued issuing the letters and enforcing the gag orders with the same frequency and enthusiasm as his predecessor.

I have always believed that when this issue reached the courts the statute would immediately go down, and particularly that the part prohibiting the recipient of the letter from telling anyone including the subject could not possibly survive First Amendment scrutiny.   But it has been a long twelve year wait.  Why?  Because not a single one of the weasels otherwise known as the banks, telecoms and ISP providers has stepped up to the plate to mount a challenge.  But now an unnamed telecom, backed by the Electronic Frontier Foundation, has finally taken on the government in a case that has gone to decision before Judge Susan Illston in the Northern District of California.  Result:  statute unconstitutional. ​  Among many reports on the internet, here is one from Wired.

A comment about the conduct of the banks, telecoms and ISPs in this matter:  All of them are highly "regulated" by the government.  Do you indulge in the illusion that "regulation" is no more than oversight by neutral, disinterested experts who assure that the evil capitalists do not overreach into exploitation of the weak and helpless?  What we have gotten for ourselves are sniveling government supplicants who do whatever the bureaucrats say and are completely willing to spy on the American public behind their backs in the effort to win bureaucratic favor for approval of the next merger or spectrum purchase or whatever.​

Judge Illston has stayed the effectiveness of her injunction for 90 days.  After that, perhaps we will start to get some insight into the dark world of government surveillance on the public.  The Act was sold to the public as a response to terrorism.  What is the chance that these NSLs are limited to that arena?  I would say zero.  What percentage are actually part of the drug war as opposed to the war on terrorism?  My bet is the majority have nothing to do with terrorism.  Prove me wrong!  Use in the drug war may well be the least of the abuses.  Given the fallen character of all humans, what is the chance that no NSL has ever been used to investigate the guy that some FBI agent suspects of having an affair with his wife; or worse, to investigate some political opponents of the current administration.  Many human beings given this kind of power are just not capable of resisting these sorts of temptations.  Time will tell.​

Meanwhile, Wired reports on a few abuses of the NSLs that have already come to light.  For example, from an IG report in 2007:​

In 2007 a Justice Department Inspector General audit found that the FBI had indeed abused its authority and misused NSLs on many occasions. After 9/11, for example, the FBI paid multimillion-dollar contracts to AT&T and Verizon requiring the companies to station employees inside the FBI and to give these employees access to the telecom databases so they could immediately service FBI requests for telephone records. The IG found that the employees let FBI agents illegally look at customer records without paperwork and even wrote NSLs for the FBI.

Not much chance that the banks don't do the same thing.  How exactly are we better than say, East Germany in the Communist era?​

​

More Climategate E-mails

The anonymous source calling himself "FOIA" has released another trove of e-mails of the fraudulent climate campaigners sometimes known as the "Hockey Team" -- the likes of Mann, Jones, Bradley, Hughes, Briffa, Trenberth, Ammann, Wohl, Hansen, Schmidt, et al.  The release comes via sending a password to a select list of climate bloggers, ​including Steve McIntyre (climateaudit.org), Anthony Watts (wattsupwiththat.com), Andrew Montford (bishophill.squarespace.com), and Tom Nelson (tomnelson.blogspot.com).  (If you don't check all of these blogs regularly, you should.)

Along with the password came a letter from Mr. FOIA, not giving his name, but containing a long statement of his motivations for what he has done.​  I don't know who he is, but he certainly sounds a lot like me. 

If someone is still wondering why anyone would take these risks, or sees only a breach of privacy here, a few words…  The first glimpses I got behind the scenes did little to  garner my trust in the state of climate science — on the contrary.  I found myself in front of a choice that just might have a global impact.  Briefly put, when I had to balance the interests of my own safety, privacy\career of a few scientists, and the well-being of billions of people living in the coming several decades, the first two weren’t the decisive concern.

It was me or nobody, now or never. . . .  Most would agree that climate science has already directed where humanity puts its capability, innovation, mental and material “might”.  The scale will grow ever grander in the coming decades if things go according to script.  We’re dealing with $trillions and potentially drastic influence on practically everyone. . . . It makes a huge difference whether humanity uses its assets to achieve progress, or whether it strives to stop and reverse it, essentially sacrificing the less fortunate to the climate gods.

I'm particularly taken by that last line.  The thing that I most can't understand about the climate campaign is how the so-called "progressives" -- the New York Times, the Washington Post, the left-wing bloggers -- are totally willing to sacrifice the poor of the world to a life without electricity to appease the green climate gods.​

FOIA admits that he has not gone through all of the 200,000+ e-mails in this collection, and is looking for others to do it.  It could be a long process of drip, drip, drip as careful readers put together pieces of the puzzle.​

The Fundamental Unseriousness Of The Federal Spending Charade

With the Federal deficit set to shrink this year, just maybe, to a tad under a trillion dollars (not counting, of course, the Social Security/Medicare accrual of multi-trillions that must not be discussed in polite company), perhaps we should check in on the state of the debate over next year's budget.  Big news:  the Senate has actually made a budget proposal for the first time in four years!  The President, required by law to put forth his own budget proposal by the first Monday in February, hasn't done it; but there's talk that he might actually produce a budget this year, perhaps as early as April.  Could this mean there is actually a sense of seriousness in Washington?

No.  ​In the humble opinion of the Manhattan Contrarian, the Federal government's spending and commitments to future spending need to shrink by about half.  Nobody dares even mention that.  Last night Sean Hannity had Paul Ryan as his guest for an extended interview to talk about the "bold" Republican House budget plan.  Bold?  Both Hannity and Ryan immediately began emphasizing that there was no suggestion here of actual cuts in government spending or commitments.  Instead spending under this plan would increase by 3.4% per year, a good deal faster than the economy has been growing in the current "recovery."  But there won't be any tax increases!!!!!  Well, exactly how does tax revenue increase faster than economic growth without tax increases?  The answer is inflation plus bracket creep, which in my view is tax increases of the most insidious sort.  I don't mean to be too harsh on Ryan.  To his credit, he does propose substantially to de-fund the black hole of Obamacare.
 

But even as Ryan and his team try to put the slightest limits on the spending gusher, it just takes a little reading of the news to see the infinite credit card mentality rolling on.   Start with the President's State of the Union Address:  With no idea how much Obamacare is going to cost, he just goes on to propose another huge Federal program, universal pre-K.  No price tag given for that either -- budgets are for babies! 

​On March 12 the Agriculture Department released data showing that food stamp recipients reached an average of 46.6 million in 2012, up from just 26.3 million in 2007.  The program now runs over $80 billion per year, metastasizing on autopilot like all the other entitlements.

In this morning's New York Times, we have Senator Jay Rockefeller, Democrat of West Virginia, proposing a big increase in Federal funding to speed up internet connections in elementary and secondary schools.   “'As every educator knows, digital information and technology will continue to play an increasing role in education, so we need to think about how we are going to meet the broadband infrastructure needs of our schools and libraries,' Mr. Rockefeller said."   ​In Mr. Rockefeller's world, the term "think about" something means only one thing, namely, have the Federal government write a big check without ever giving a moment's thought to where the money comes from.

Or here in my e-mails this morning, Mark Alcott (partner of my next door neighbor law firm Paul Weiss, former President of the New York State Bar Association, member of House of Delegates of the American Bar Association) touting the successful efforts of the New York delegation to the ABA to get that organization to lobby to avoid any cuts to the Federal courts or to the Legal Services Corporation from the "sequestration."  LSC is just lawyers lobbying for more money for lawyers as far as I can see.  Does Mr. Alcott think he has any obligation to specify what should be cut if his pet causes should not?  Of course not.

But here is my favorite one of the day:  Senator Schumer announces where a couple of billion dollars of the Hurricane Sandy relief money will go.​  How about $750 million for "beach restoration" for the 83 miles from Fire Island to Montauk?  Well, $750 million is just a rounding error in this exercise, but am I really the only one offended by this giveaway to the very richest people in America, the Long Island oceanfront homeowners?  They were trying to get this money from the Feds back when I owned a house there in the 90s.  The Clinton Administration, to its credit, said no.  Now, with Hurricane Sandy, we can use those sad Staten Islanders as cover to sneak through $750 million for the richest of the rich. 

As I say, it's just fundamentally unserious.​

Does It Really Count As Law Any More?

Steven Hayward at the Powerline blog has a picture today, released from the office of Mitch McConnell, of the regulations released so far​ under Obamacare piled up in a stack and wrapped in a bow.​  The stack is a lot taller than you are. 

The problem of course is that it is physically impossible for the citizenry to read all this stuff and attempt to comply.  When we have reached that point, in what sense is it really "law" any more?  The concept of "law" only works to the extent it is reasonable to expect the citizens to be aware of what the law is and to live within it.  ​

Well, my two sentence understanding of Obamacare, which is about how much you can expect an informed citizen to have, is that the dumbest thing you could do is comply with it.  Supposedly, everyone is now going to be required to have health insurance.  Oh, but the health insurance is going to cost a lot more than the penalty for not having it.  Oh, and also, if you don't have it, you can just wait until you get sick and then buy it.​  We might as well just declare 100% of all Americans to be lawbreakers.  It couldn't be more obvious that this is going to be a disaster.  The only question is whether it will crash and burn on Obama's watch, or whether he can escape in the great tradition of give-away-promising politicians everywhere and leave the disaster to his successor.

The SEC Catches Up To One Of The Small Fry

The Wall Street Journal has the story on this morning's front page:  The SEC has caught one of the biggest crooks in the sale of billions of dollars of fraudulent securities.  The crook?  It's the state of Illinois!  The problem?  Disclosures relating to the extent of its pension obligations.

Here is a link to the SEC release, which in turn links to the consent order.​ 

An SEC investigation revealed that Illinois failed to inform investors about the impact of problems with its pension funding schedule as the state offered and sold more than $2.2 billion worth of municipal bonds from 2005 to early 2009. Illinois failed to disclose that its statutory plan significantly underfunded the state’s pension obligations and increased the risk to its overall financial condition. The state also misled investors about the effect of changes to its statutory plan.

Good thing that the people who missed Madoff are starting to catch up to the Manhattan Contrarian in noticing the huge problems in pension disclosures in at least one state.  ​Perhaps they might notice the problems of California, New York and many others some time soon?  Why not -- this is free grandstanding.  Bondholders who weren't already aware of Illinois's pension problems should probably be declared too dumb to be allowed to invest.  The SEC settlement contains no penalties, of course.  Also, no admission of wrongful conduct.  Just a list of so-called "remedial measures," including such powerful remedies as "provid[ing] a hyperlink to a February 2009 COGFA monthly briefing in which COGFA provided certain negative information regarding . . . the State's pension system assets," and "commission[ing] a Pension Modernization Task force to evaluate the benefit structure, costs, and funding of the State's pension systems."  Yup, that'll work.  Meanwhile, the state legislature has met repeatedly to address the funding shortfall issue, and has very pointedly done exactly nothing about it so far.  But, in the SEC's defense, that's not their issue.

Meanwhile, in the grand Keystone Kop tradition of missing Madoff, can the SEC please explain why they haven't noticed that the Federal government's disclosures of its own pension and retiree obligations, aka Social Security and Medicare, is misleading to the tune of multiple tens of trillions of dollars?  (By contrast, the Illinois Policy Institute puts the underfunding of Illinois pensions in the range of $85 billion -- around 0.1% of the size of the Federal problem.)  As a potential investor in Treasury securities, the amount of the unfunded liability for Social Security and Medicare is number one at the top of my list of what is absolutely essential to know.  Well, of course, there is the even bigger fraud in Federal accounting, namely counting all Federal expenditures on goods, services and salaries as a 100 cent on the dollar increase in GDP.  But I guess that one doesn't go to its own solvency.