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William Niskanen, RIP
Posted By: Andrew Moylan - 10/27/11

I was very saddened to hear that William Niskanen, famed economist and Chairman of the Cato Institute, passed away yesterday at the age of 78. Bill was a giant in the limited-government movement and his contributions will live on for generations to come. His pioneering work in public choice economics, his turn as Chairman of President Reagan's Council of Economic Advisors, and his more recent role as a respected scholar at Cato all contributed mightily to shifts in economic thought and public perceptions of government. George Scoville wrote a nice piece at United Liberty documenting his lasting influence.

Unfortunately, I can't claim to have known Bill terribly well myself. Back when I graduated from the University of Michigan, I moved to Washington and began an internship at the Cato Institute during his tenure as Chairman. I can only recall running into him once (at a large organization like Cato interns don't often have occasion to work with the top brass) when we shared an elevator ride to the top floor. In my mind, he seemed about 6'5" and looked every bit the part of the brainy economist (a sentiment apparently shared by Cato's Randal O'Toole, as Bill was apparently less than 6' tall) and I was too intimidated to say more than an awkward "Hello."

The "his legacy will live on" stuff one hears after someone's death is often lionizing pablum, but not with Bill Niskanen. His work truly serves as the foundation upon which many of NTU's efforts are built. As but one specific example, our recent support of Representative Justin Amash's "Business Cycle Balanced Budget Amendment" is directly informed by Bill's work in identifying a better structure for fiscal limits.

He will truly be missed, and the thoughts and prayers of NTU are with the Niskanen family and our friends at the Cato Institute for their loss.

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Enough With the Procedural Hijinks, Focus on Pro-Growth Policies
Posted By:  - 10/07/11

“Stunning,” wrote the Washington Examiner’s Phillip Klein. “Shocking,” said the Alexander Bolton in The Hill. “Procedural chaos,” as Manu Raju described it in Politico.

In political drama that Aaron Sorkin couldn’t have thought-up, Senate Majority Leader Harry Reid invoked the so-called “Nuclear Option” last night, using a simple majority vote to effectively rewrite the Senate rules to further tilt the playing field in favor of the majority party.

The Senate is a procedural mess that only a parliamentarian (or avid C-Span viewer) could appreciate, but I’ll attempt to break it down as simply as possible.

Under normal rules, if 60 Senators agree to invoke cloture in order to end a filibuster then 30 hours of debate is granted. During that time amendments may be considered if both sides agree or if 67 Senators vote in favor of a “motion to suspend the rules.”

This allows the Minority at least some procedural protection, especially important now that Leader Reid almost always “fills the tree” – meaning he shuts out the minority’s ability to offer amendments by filling all the open slots with inconsequential amendments from his own party.

Have I lost you yet?

Last night, Sen. Mitch McConnell, frustrated by his inability to secure any votes on Republican amendments, filed a “motion to suspend the rules.” It was doomed to fail, but at least it was a way to get Democrats’ opposition on record.

Then Leader Reid did something unprecedented. He filed a “point of order” that any motion to suspend would not be allowed after a filibuster was broken.

 Now, I’ve probably lost you at this point, and at any rate I’m starting to confuse myself, so I’ll sum it up this way: By a simple majority vote Harry Reid broke with decades of Senate precedent in order to shut down the minority. Or as Allahpundit said more succinctly: “This is procedural esoteric and therefore it’s very confusing, but here’s the nutshell version: Reid’s finally lost his mind.”

For something as momentous as this, you’d at least think that Reid was sure in his procedural footing. You’d be wrong. After the vote Reid said, “Am I 100 percent confident that I’m right? No. But I feel pretty comfortable with what we’ve done.”

Such nonchalance when fundamentally toying with the rules of what has been dubbed “the world’s greatest deliberative body” is troubling at best, frightening at worst. Then again, it’s highly likely that Senator Reid will likely backtrack on this rule change, not because he knows it wouldn’t be enormously helpful in pushing through his agenda this term, but because the political winds may soon be blowing his party out of the majority, and Reid out of his spot as Majority Leader.

If only the Senate could set aside its political chicanery and procedural machinations and actually go about the business of passing pro-growth legislation perhaps we’d see at least a dash of hope in our economy. Then again if they did that, it would truly be “shocking” and “stunning.”

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It's Been An Exciting Day in DC
Posted By:  - 08/23/11

It's been an exciting day in DC.  If you haven't heard, there was an earthquake.  Then there was a piece in today's Wall Street Journal by Cass Sunstein, who is an administrator in OMB's Office of Information and Regulatory Affairs.  He writes: 

Last May, agencies released over two dozen preliminary plans, identifying reforms that will save billions of dollars. At the same time, agencies asked the public to evaluate the preliminary plans, identify new reforms, and participate in creating a 21st-century regulatory system that protects public health and safety while also promoting economic growth and job creation.

Today I can announce that agencies are releasing their final plans, including hundreds of initiatives that will reduce costs, simplify the system, and eliminate redundancy and inconsistency.

Here is one of the reforms that Mr. Sunstein announced today:  "By the end of this year, the Internal Revenue Service will eliminate 55 million hours in annual paperwork burdens by consolidating reporting requirements and streamlining various tax forms."

I hope the streamlining hasn't brought us to this tax form.


(cybersalt.org)

 

Earthquakes.  Regulatory reform.  What's next?  Warren Buffett writing a check to the Treasury Department because he wants to pay more taxes?  These are certainly exciting times in DC.

 

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Mitch McConnell Proposed What?!?!
Posted By: Andrew Moylan - 07/12/11

It's been a crazy week in Washington, but it just got substantially crazier. I'm sitting at my desk plugging away at some work when my email starts blowing up with details of a new debt ceiling plan being floated by Senator Mitch McConnell (R-KY), the Minority Leader. It's a doozy, but the basic breakdown is this: the President would be authorized to request from Congress three separate debt ceiling increases of between $700-$900 billion each. He would be required to submit a plan for an equivalent amount of spending reductions. Congress would then be given a chance to "veto" this package by voting on what's called a "Resolution of Disapproval." If that resolution failed, then the President would have his debt ceiling hike alongside a toothless set of spending reduction ideas. Even if the disapproval passed, he could then veto the resolution meaning that a two-thirds majority of Congress would have to override his veto in order to have the disapproval stand.

So what does that mean in reality? It means the President gets his debt ceiling increase, lock, stock, and barrel, unless a miracle occurs and two-thirds of Congress (AKA every Republican in the House and 50 Democrats along with every Republican in the Senate and 20 Democrats) engage in a sudden burst of bipartisanship and override his veto. True, the plan requires the President to submit a plan to reduce spending by an equivalent amount, but a plan isn't the same as actually cutting spending. Congress would have to actually incorporate those spending reductions into future bills, and the whole reason we have the debt ceiling impasse right now is that they can't agree on what spending reductions to include in future bills.

This is a point that appears to have been missed by some. There are otherwise-solid conservative legislators and activists who have said nice things about the plan because it appears to put the debt ceiling onus directly on the President. But, let me repeat, it does NOT force any cuts in spending. It contains nothing in the way of Congressional fast-track authority, the way several "spending commission" proposals that preceded the President's Fiscal Commission executive order did. Unless I'm missing something (which is always possible), I don't see a single thing that actually requires a spending cut, just a requirement that the President identify a list of spending cuts.

People smarter than I am have also raised real constitutional questions about this plan, as it essentially reverses the legislative process by allowing the President to propose something and Congress to veto that proposal. There is something of a precedent with the Congressional Review Act, which was established to allow Congress to modify or eliminate regulations proposed by executive agencies, but that's a much narrower case where Congress has delegated its legislative authorities relating to regulatory issues. This, on the other hand, strikes right at the heart of Congress' proper authority to determine levels of spending and borrowing as defined in Article I, Section 8 of the Constitution. It also bears a resemblance to the line-item veto debate of the 1990s, where a proposal was ruled unconstitutional because it allowed for the President to implement a set of policies not with Congress' APPROVAL, but simply by its lack of DISAPPROVAL.

Beyond all of the technical issues (which are substantial and important), it strikes me as a classic case of being worried about politics over policy. The reason this proposal was drafted in this way is because it would lay responsibility for raising the debt ceiling at the feet of the President. Of course, in shifting slightly more of the "blame" on to Obama (by the way, I think it can be argued that he already will bear most of the public responsibility for hiking the debt ceiling), it grants him a huge increase in the debt limit without including any kind of enforceable reforms to spending now or in the future. That might be a cutesy way to damage the President politically, but it's absolutely horrible if your actual goal in this whole debate is to address Washington's overspending problem.

The solution to our debt disaster is not some complicated form of legislative Jiu Jitsu, it's "Cut, Cap, and Balance." Cutting spending in the short-term will address our deficit, establishing a strong statutory spending cap will put us on a glide path to balance in the medium-term, and the passage and submission to the states of a strong Balanced Budget Amendment will provide a real long-term constraint on a Congress that has proven incapable of fiscal discipline.

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What Does Economic Freedom Look Like?
Posted By: Dan Barrett - 06/28/11

Pundits can talk your ear off about what they think, politicians can endlessly tell you how their plans will fix things, and professors can give you their views on what they feel is necessary. Luckily there are real numbers to compare these groups, and their claims, with reality. Economic indicators and statistics can be manipulated to fit arguments and talking points but you’ll always find similarities. Factors such as GDP (Gross Domestic Product) and average income always has the US on the positive side of the scale, while countries like North Korea almost always fall on the failing, or at best struggling, side of global economic comparisons. The difference? Americans can do what they wish, when they want, and in a way they so choose. North Koreas are told how to act, what to say, and even how to think. Americans have significantly more freedoms than, say, North Koreans. This has been our publicized “secret to success.” Here’s hoping more people understand that the more thick the U.S. Code gets with minute instructions and limits to how we handle our money, and thereby our ideas and rights, the thinner our achievements will be in long-term economic development and happiness.

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The "S" Doesn't Stand for Security
Posted By:  - 06/23/11

In case you didn't know the "S" in IRS stands for service not security.  A recent report from the Treasury Inspector General for Tax Administration indicates that the IRS could certainly use a healthy dose of security.  As Robert W. Wood writes at Forbes.com, "I recently asked if your IRS data is at risk.  I suggested it might not be, but I didn’t tell you to start worrying.  Now I’m not so sure." 

Here's a very disturbing finding:  "100% of IRS Databases TIGTA tested are vulnerable to hackers."  At least it's not more than 100 percent.  Fortunately, I suppose, "IRS has agreed with TIGTA’s recommendations and is taking steps to develop strategies to deal with these issues."  Given that hackers have hit Sony, the U.S. Senate, and the CIA recently, does anyone think that the IRS will develop and implement its strategic plan in time to prevent the loss of taxpayer data?

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Is House Leadership Trying to Kill a BBA?
Posted By: Andrew Moylan - 06/09/11

The fix is in, my friends. Speculation on Capitol Hill runs rampant that House Leadership is actively undermining the prospects for passage of a Balanced Budget Amendment to our Constitution, effectively eliminating the most powerful tool we have to enforce budgeting discipline into the future. While all 47 Senate Republicans co-sponsored a strong BBA that included a spending limit and a supermajority threshold for tax increases, House Leadership has been either ambivalent or subtly hostile towards real structural budget reform. In interviews, House Speaker John Boehner (R-OH) has said he isn't interested in "gimmicks," which many regarded as a backhanded comment about a BBA or a statutory spending cap.

This bad-mouthing seems to be working. The National Journal surveyed Members of Congress about what they expected from a debt ceiling agreement and only 39% of Republicans thought a BBA would be a part of the deal. For some perspective a recent poll found that 81% of Republican voters support a BBA, so I think it's safe to say that elected Rs appear to not be reflecting the will of their constituents very well.

And now word is leaking that Republican House leaders seem to be rushing through a BBA not in order to actually pass it, but to give it a speedy euthanasia and get it out of their hair. Just this morning, I received an email from a House staffer who said "Leadership is planning on bringing H.J. Res. 1 to the floor for a vote sometime over the next two weeks to delegitimize the BBA and separate it from the debt ceiling vote."

H.J. Res. 1 is the version of a BBA that was sped through a House Judiciary Committee markup last Friday with little notice. NTU has been advocating for a BBA for 40 years and I was one of just three people invited to personally testify in its favor at a House Judiciary Subcommittee on the Constitution hearing last month, yet I heard NOTHING about the proposed markup until the morning it was occurring. That's not how a leadership team that's trying to build support for something operates, it's how you try to sneak something through quickly without a lot of scrutiny.

What's so peculiar about this turn of events is that a BBA is not some controversial too-conservative provision toxic to moderate Members' reelection prospects. This isn't, for example, Medicare reform, where dozens of Republican members had to swallow hard and cast the right vote in support knowing that Democrats would demagogue the issue mercilessly. Simply stated, NOBODY will have to "walk the plank" to vote for a BBA knowing that attack ads await them on the other side. It's a rare combination of good politics AND good policy, yet some Republicans are trying to kill it.

The next few weeks will tell you all you need to know about whether or not Republican leaders actually heard the message that was sent last November. Rushing a Balanced Budget Amendment through without allowing grassroots BBA supporters across the country to weigh in and build support would be a pretty clear indication of their true colors. If leaders in the House of Representatives schedule a vote on the Balanced Budget Amendment in the month of June, I'd consider it the equivalent of a big middle finger to the millions of fiscal conservatives who helped create the majority they now enjoy.

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Some Democrats Joining Adult Conversation Over Debt Limit
Posted By:  - 04/29/11

"Adult conversation” and “serious debate” have become the top political buzzwords over the past couple of months.

President Obama said in February that his “hope is that what’s different this time is we have an adult conversation where everybody says, “Here’s what’s important and here’s how we’re going to pay for it.” Representative Paul Ryan echoed the call, “The fiscal commission gave us hope that we were going to finally have that adult conversation in Washington about how we preempt our debt and deficit crisis.”

Apparently serious adults are rare in Washington. If that’s the case, they must be bordering on extinction among the liberal pundits, journalists and bloggers who have been covering the deficit battle.

This has become no more clear than in the coverage over the debt ceiling debate. The debt ceiling is a cap set by Congress on the amount of debt the federal government can legally borrow. The ceiling currently stands at an eye-popping $14.294 trillion. The utter ridiculousness of that number and the sad fact that we’re constantly exceeding it has engendered some serious concern by conservatives.

They argue that the debt limit vote provides the necessary kick-in-the-pants that Washington needs to pass some real cuts and reforms so that we’re not right back here in six months talking about the debt limit again. A pretty sensible argument. Even President Obama thinks so. In an interview with the Associated Press, Obama said “I think it’s absolutely right that [the debt limit vote is] not going to happen without some spending cuts.”

Ah, sounds like the beginning of an adult conversation. We agree on the end goal, now let’s set about working out the details. And then the pundits got involved.

Take for example what Progressive Paul Waldman wrote in the American Prospect earlier this week:

The reason we're now seeing an unprecedented amount of attention paid to a vote that ordinarily passes with little notice is that the Republican Party's agenda is being set by a group of ideological radicals who seem quite willing to cripple the American economy if that's what it takes to strike a blow against the government they hate so much.

And now we’re back to the kiddies’ table, bickering over who gets the next turn on the Xbox.

Sadly, Waldman is not alone. With an understanding that succeeding in Washington is often about who can yell the loudest, rather than who can speak the most truthfully, liberals have pulled out their bullhorns. Their strategy is transparent enough: Use Armageddon-ish language to describe what happens if the debt limit isn’t raised, then blame any Republican attempt to reduce spending as a ploy to kill the economy.

Mature discourse? No. Would it have worked anyway? Possibly. Until today, when the second part of their plan got trounced worse than the San Antonio Spurs in this year’s playoffs. From today’s Washington Post:

A growing number of Democrats are threatening to defy the White House over the national debt, joining Republican calls for deficit cuts as a requirement for consenting to lift the country’s borrowing limit.

The push-back has come in recent days from Sens. Kent Conrad (D-N.D.), chairman of the Senate Budget Committee, and Joe Manchin (D-W.Va.), a freshman who is running for reelection next year. Sen. Mark Pryor (D-Ark.) told constituents during the Easter recess that he would not vote to lift the debt limit without a “real and meaningful commitment to debt reduction.”

Even stalwart White House allies like Sen. Amy Klobuchar (D-MN) said the debt-ceiling vote should be tied to deficit reduction. And Sen. Mark Udall (D-CO) went as far as to say, “As catastrophic as it would be to fail to raise our debt ceiling, it’s even more irresponsible to not take this opportunity to own up to our unsustainable spending path.”

More and more people are joining the adult conversation, understanding that our deficit problems are just too big to ignore. There’s always room at the table. Let’s hope some others are willing to set aside their partisan bombastry and help us solve our spending problems.

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Taxpayers Threatened By Growing State Pension Shortfall
Posted By:  - 04/27/11

Washington Post blogger Ezra Klein is fond of describing our government as an insurance conglomerate protected by a large, standing army. It’s a pithy way of making the point that our government is defined by what it spends its money on, and in the case of the federal government that is largely Medicare, Medicaid, and the military.

But what about state governments? How should we define them? If it were based on the average interaction a citizen has with their state and local governments we would typically think of it as a service provider – they educate our children, pave our roads, collect our trash, and protect our streets. But this quaint view of where our taxpayer dollars are going is quickly being tossed out the window due to the growing cost of underfunded public sector benefit programs. In Klein’s terms, our state government is quickly becoming a publicly funded retirement community for well-heeled government workers.

A new report by the Pew Center on the States found that the state funds devoted to paying pension and health care benefits to retired government workers is $1.26 trillion underfunded. Even that eye-popping number likely understates the problem. As Pew explains in their report, “The $1.26 trillion figure is based on states’ own actuarial assumptions. Most use an 8 percent discount rate – the investment target that states expect to earn, on average, in future years.” If the last decade is any guide, the 8 percent rate is wildly optimistic. From 2000 to 2009, the average annual return for the pension investments was 3.9 percent.

Using a more likely rate of return, the funding shortfall could be as much as $1.8 trillion, using investment assumptions required in the private sector by the Financial Accounting Standards Board, or even $2.4 trillion, using a conservative rate analogous to the 30-year Treasury bond which guaranteed a 4.38 percent return.

As the funding gap grows the annual bill for pension and health care benefits will continue to climb. “In many states, the bill for public-sector retirement benefits already threatens strained budgets and is competing for resources with other critical needs, including education, infrastructure and health care,” said Susan Urah, managing director of the Pew Center on the States.  

This could lead states into the dire fiscal mess being experienced in California and Illinois where growing public sector retiree costs are eroding spending on other programs. In an op-ed last August California governor Arnold Schwarzenegger revealed the starling truth that the cost of retirement benefits was growing so fast that it would exceed what the state was spending on higher education this year. But it wouldn’t stop there, next year costs would rise another 15 percent – far outstripping any growth in revenue. By 2020, annual pension spending will have grown nearly five-fold, from $6 billion in 2011 to $28 billion.

This is a direct threat to taxpayers. As Mercatus researcher Veronique de Rugy explains, “Once pensions plans run out of money, payments will have to come out of general funds, meaning taxpayers’ pockets.” Even now, an exorbitant amount of taxpayer money is going to outsized public sector salaries, lavish benefits, and cushy retirement plans, taking money away from states’ ability to fund Medicaid, schools, and other programs.

Reforms will not be accomplished unless there is some public outrage at this gross mismanagement of taxpayer funds. I have a feeling most people wouldn’t be happy to know state governments are becoming little more than an exclusive retirement resort for their own workers.

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Rep. Giffords Hopes to Give Congress a Pay Cut
Posted By:  - 04/13/11

It has been 78 years since Congress took a pay cut. In the midst of the Great Depression Congress voted to cut their pay from $9,000 to $8,500. Now, with the economy still struggling to get on its feet under the crushing weight of historic deficits, a bipartisan group of Representatives is once again pushing to cut Congress’ salaries.

The effort began under the leadership of Representative Gabrielle Giffords (D-AZ) who introduced H.R. 204, the “Congressional Pay Cut Act”, in January. NTU endorsed the bill soon after as a common sense measure to reduce spending and to have Members of Congress endure what millions of American have in this economy: a pay cut. While she recovers from the horrifying shooting that left her hospitalized, Representatives David Schweikert (R-AZ) and Kurt Schrader (D-OR) have taken up the lead to bring the legislation to the floor.

In a joint op-ed, the two Representatives spoke of the importance of setting an example at a time when Americans are still feeling the effects of the lingering recession. “American families are adapting to these challenging economic times by tightening their belts and learning to do more with less,” write Reps. Schweikert and Schrader. “They have the right to expect their government to do the same.”

This echoes the sentiment of Representative Giffords who, upon introducing the bill, said that “Members of Congress can’t ask any American to cut back before we are willing to make some sacrifices of our own.

The “Congressional Pay Cut Act” would create this shared sense of sacrifice by imposing an across-the-board five percent pay cut on all Members of Congress salaries. This would match the House of Representative’s earlier budget cutting effort in which they returned all office budgets to 2008 levels – a five percent cut.  

Our nation is facing unprecedented fiscal problems. “The American people are looking for bold action to reduce spending,” write Reps. Schrader and Schweikert. “They want to see members of both parties show a renewed commitment to cutting spending in every corner of the government, including our own.”

Representative Gifford’s bill is a step in the right direction. It is a small demonstration that Washington can move beyond the politics of pain for thee but not for me. It won’t solve the problem on its own, or anything close to it, but it’s a reasonable step that all Members should support. While Americans are struggling to find work and America’s spending problem will necessitate bold action, it is good to know that some Representatives are willing to share with us in the sacrifice.

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