Can Anybody Around Here Admit Out Loud That The Federal Government Cannot Fix Every Human Problem With Another New Program?

When you get right down to it, the fundamental fallacy of the progressive movement is the idea that the central government can fix every human problem by just creating some new programs and spending some new money. And the most important theme of this blog is showing by a thousand examples how that effort always fails.

That’s why one of my favorite recent posts is the one of the past November 23, titled “The Idea That Just Won’t Die: The Right Federal Program Can Solve Any Human Problem.” Key quote:

Take a some of our very brightest thinkers. Send them to some top Ivy League or equivalent schools to get the very best educations. Then turn them loose into the policy arena, full of moral righteousness and energy and a burning passion to fix the world. And what will emerge? Remarkably, in every case you can find, what will emerge will be the exact same thing: a proposal for some new government “program” and spending that supposedly will fix whatever problem the particular guru may focus on at the moment.

That particular post focused on federal job training programs. Federal job training programs are perhaps the very best illustration of the fallacy that some new federal program and spending could possibly be the solution to a human problem at hand, since by now there are around 50 of them, all of which continue to fail utterly. Yet despite that incredible track record, every time a government official or policy wonk looks at an issue of job lay-offs or high unemployment, the proposed solution is always another federal job training program. The failure of the previous 50 or so of them is never mentioned. That would just be too impolite. Nor does anyone ever suggest cutting back, much less eliminating any of the 50 failures. That’s just not how this game is played. Instead, one more program is added, and this one is really, really going to work this time. . . .

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On The "Cost" Of The Green New Deal

A few weeks ago on February 7 and 8, I had a couple of posts (here and here) commenting on the so-called Green New Deal, which had just been dropped on Congress by the team of Socialist it-girl Alexandria Ocasio-Cortez and long-time Massachusetts Congressman and now Senator Edward Markey. In those posts, I did not attempt to put any “cost” figures on these proposals, but rather offered this general reaction:

In short, in the aggregate, this would be the total takeover of all economic activity in the United States.

According to the FAQ released along with the GND resolution, at least the following Democratic candidates for President support the GND: Elizabeth Warren, Cory Booker, Kamala Harris, Jeff Merkeley, Julian Castro, Kirsten Gillibrand, Bernie Sanders, Tulsi Gabbard, and Jay Inslee.

In the interim, a few intrepid souls have gone where I had not, and have put some fairly specific cost estimates on the socialists’ proposals. Most notably, there is something called the American Action Forum, headed by Douglas Holtz-Eakin. On February 25, AAF came out with a Research Report titled “The Green New Deal: Scope, Scale, and Implications,” with Holtz-Eakin as the lead author. Holtz-Eakin is not nobody in this game, having headed the CBO for about three years (2003-05) during the George W. Bush administration. If there’s anybody who ought to be able to put credible cost figures on proposals for new government programs, it would be a former head of CBO. The fact that CBO is a non-partisan operation would also seem to give an added level of credibility to the conclusions of its former leaders.

After introducing their Report with a series of qualifiers (e.g., many of the changes “are impossible to quantify at this point”), the AAF guys nonetheless forge ahead with the exercise to at least put some broad ranges on the potential costs. In the aggregate the sums of the lows and highs of their ranges come to about $51 trillion to $93 trillion over the course of the 10 year span of the GND. The $93 trillion figure is the one most frequently attributed to the Report in subsequent press accounts.

$93 trillion compares to total U.S. GDP currently running at about $20 trillion per year. In other words, if you think that Holtz-Eakin and AAF are right, or even close to right, then they are saying that the GND will “cost” close to half of the entire U.S. GDP over the next decade or so. . . .

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Progressivism: What Is The Limiting Principle?

Yesterday’s semi-official launch of the Green New Deal has done a big favor for our national political debate: It has finally put squarely on the table the fundamental question that needs to be addressed, yet never is addressed, namely, what is the limiting principle of the progressive project? Or really, is there any limiting principle at all? Let me illustrate.

Always (or at least, always before now) the progressive proposals to make the world perfectly just and fair have been presented one by one. Wouldn’t the world be so much more fair if we only had free (government paid) college for all? Many people look at such a proposal and think, sure, that would make things a little more fair; I guess I could get on board with it. Then, wouldn’t the world be so much more fair if we had universal (government paid) health care for all. In isolation, same reaction. Separately, wouldn’t it be great to “save the planet” by getting carbon emissions under control (by some form of government subsidy and/or command)? Addressed separately, and with no context of what other proposals may be coming, many people find themselves nodding along. With your attention diverted from the big picture, any of these proposals might get your support. . . .

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What Is The Biggest Problem Facing The United States?

If you were asked to identify the biggest problem facing the United States today, what would be your answer? I think that the answer is obvious: out-of-control entitlement spending that threatens to bankrupt the country.

Reasonable people might differ about this assessment. For example, some might cite the threats posed by international strategic adversaries, like China or Russia or Iran. Or the threat of a rogue power like North Korea or Iran getting, and maybe using, nuclear weapons. I’m not saying that these aren’t serious problems, but just that there’s not much that can be done about them that we aren’t already doing. Also, I don’t think the chances of any of these guys doing something really stupid, like launching an unprovoked nuclear strike, are very high.

By contrast, the entitlement funding problem is gigantic, and obvious, and by no means imaginary, and currently nobody is doing anything about it whatsoever. The bonded national debt — currently around $20 trillion and about 100% of annual GDP — is often cited as a big problem. But the unfunded future liabilities of the Social Security and Medicare programs are far higher. The 2018 Trustees’ Reports for the Social Security and Medicare programs put their 75-year unfunded liabilities at approximately a combined $50 trillion (approximately $13 trillion for Social Security and $37 trillion for Medicare). And many analysts give credible reasons why those figures represent substantial low-balling of a much bigger problem. For example, James Capretta of the American Enterprise Institute, in a June 2018 post following release of the Trustees’ Reports, points to highly optimistic assumptions about ability to control future Medicare costs (“the Medicare projections assume deep, permanent, and ongoing cuts in payment rates for physicians and hospitals that are difficult to believe will be implemented”), as well as equally optimistic birth rate assumptions. Other credible observers think the shortfalls, particularly on the Medicare side, could easily be double or more the government’s official projections. For example, from Michael Tanner of the Cato Institute in 2015 (“[I]f we return to double digit health care inflation, we could see Medicare’s liabilities swell to more than $88 trillion.”).

You may recall that President George W. Bush made a serious effort at least to begin to address this problem. During his first term, he appointed a Commission to come up with some solutions on the Social Security side, and the Commission proposed a series of reforms. None of them went anywhere in Congress. W did not try again in his second term. President Obama, and now President Trump, have showed no interest in this subject.

Anyway, I mention this subject today because not only is nobody paying any attention whatsoever to the huge problem, but over on the Democratic side, with the 2020 presidential sweepstakes just getting started, there has suddenly erupted some kind of a bidding war as to who can offer the most grandiose and completely impossible set of proposed expansions to the existing entitlement state.

It was Bernie Sanders, of course, who laid down the original marker for the bare minimum list of new entitlements for a true “progressive” Democrat to embrace. Bernie’s list in his campaign for the 2016 nomination included the following:

  • Medicare for all.

  • Social Security benefit increases

  • Infrastructure program

  • College affordability (free tuition for all!)

  • New paid leave fund

  • Bolster private pension funds

  • Youth jobs initiative

In a September 2015 article, the Wall Street Journal put a ten-year price tag on that list of $18 trillion. Others put the figure at $30 trillion or more. Whichever it is, Bernie’s list has turned out to be merely the small opening bid in what is quickly becoming a much grander game.

Credit new “it” Congressperson Alexandria Ocasio-Cortez with launching the advocacy for what she calls the “Green New Deal.” We’ll eliminate all fossil-fuel energy within 10 years! With government spending and subsidies tossed out left and right, of course. Next thing you know, the presidential candidates are lining up to get on the bandwagon: Elizabeth Warren, Cory Booker, Beto O’Rourke, Kamala Harris. Do any of them have a clue how much this might cost, let alone how it could be engineered? Not a chance. A recent study by Roger Andrews at the site Energy Matters put the cost of batteries alone for a wind/solar/battery system just for California at about $5 trillion. Multiply by about 8 to get a cost for the full U.S.: $40 trillion. As you know from your cell phone, the batteries would need to be replaced every few years. The cost of the wind turbines and solar collectors is extra.

Where to from here? Ms. AOC is never short of other bright new ideas. How about “Housing as a human right”? She must be inspired by the great “success” of the New York City Housing Authority — an infinite sink for about $2 billion a year in federal funds and in desperate need of some $30 billion for capital repairs. Multiply those numbers by about 30 if you want to replicate on a national scale. Oh, and the 170,000 units of NYCHA housing somehow never make a dent in the “homeless” problem.

And then there is the proposal for “reparations” for black Americans, most prominently pushed by Representative Maxine Waters. She has recently become the Chair of the House Financial Services Committee. Any price tag for that? It’s whatever you want it to be. Make your bid!

These are people who talk endlessly about “sustainability.” They just have a different definition of the word than I do.

The Idea That Just Won't Die: The Right Federal Program Can Solve Any Human Problem

Let’s face it, our world is full of major human problems. Even very wealthy modern America has its share of these major human problems: poverty, drug addiction, homelessness, unaffordable health care, unaffordable housing, unaffordable education, and you could go on and on.

Now, how to address these problems? You could try this: Take a some of our very brightest thinkers. Send them to some top Ivy League or equivalent schools to get the very best educations. Then turn them loose into the policy arena, full of moral righteousness and energy and a burning passion to fix the world. And what will emerge? Remarkably, in every case you can find, what will emerge will be the exact same thing: a proposal for some new government “program” and spending that supposedly will fix whatever problem the particular guru may focus on at the moment.

The government in question will always be the federal government. Why not state governments (even all state governments) or local governments? My friend, have you no moral compass? Brilliant and righteous policy gurus do not go to Yale or Harvard or Princeton to think small. Fixing the world is going to require billions, and even trillions, and right now. Do not expect these experts to spend a decade or two in the wilderness in Nebraska trying go get some puny experimental program involving mere millions off the ground. These urgent problems must be fixed immediately, and all at once, and with whatever money it takes.

As you’ve been reading this introduction, likely the examples that have run through your mind include current progressive icons like free healthcare for all, free college for all, and so forth. And those are indeed excellent examples. But to illustrate the proposition of a new federal program as the solution to literally everything, let me take you on a tour through some op-eds and reviews that have appeared in the Wall Street Journal just over the past few days. . . .

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Two Alternative Approaches To Fundamental Economic Policy. Which One Works?

The mid-term elections are upon us. Time to recognize once again that there are two alternative approaches to fundamental economic policy, and that one works while the other does not. For most of my life, both political parties opted to advance the approach that does not work. Today, that is much less true.

There can be many details and nuances to economic policy, but here I am talking only about the one big overriding fundamental issue, namely, which is better for economic success and prosperity: higher taxes and bigger government, or lower taxes and smaller government? They are opposites, and they can’t both be right. Today, the Republicans, and President Trump, whatever else you might think about him, are (mostly) advocates for lower taxes and smaller government. The Democrats are universally advocates for higher taxes and bigger government, although not all of them go to the same levels of extremism.

We’ve just been through a big real-world experiment to test the two competing theories. . . .

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