Monthly Archives: January 2017

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Reagan Redux? The Federal Budget Battle Shapes Up

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English: A graph of the US GDP compared with F...
A graph of the US GDP compared with Federal budget outlay. (Photo credit: Wikipedia)

It’s Donald Trump’s first work week as president of the United States and already, The Hill reports, he “may be headed into a big fight with Republican lawmakers with his plans for dramatic cuts to federal spending.”

Dramatic cuts? Not really: “Team Trump is relying on proposals outlined last year by the Heritage Foundation in its ‘Blueprint for Balance: a federal budget for 2017.’”

The Heritage plan is weak tea. It doesn’t even claim to cut overall government spending, but rather to merely “control the growth” of that spending. And its claim to balance the budget by 2023 is pure sleight of hand. The “primary balance” it mentions excludes interest on existing government debt, which is fast approaching the  half a trillion dollars per year mark.

The  developing Trump plan is the usual tinkering around the edges, searching for “waste, fraud and abuse” in “discretionary spending.” Baby steps like that will never bring the budget into balance, but they’re still too much for Congress.

“Discretionary spending” is politicianese for “spending Congress uses to buy votes back home.”

US Senator Lisa Murkowski (R-AK) and US Representative Don Young (R-AK) blew their stacks when they learned that something called the “essential air program” — a federal subsidy for the rural airports so important to their state — might be on the chopping block.

Mississippi Republicans don’t want to lose one of two federal “catfish inspection programs” that hand out artificial government and regulatory compliance jobs to their constituents back home.

A few Republicans will likely peel away from their party to save some discretionary programs usually associated with Democrats: Legal services for the poor, arts funding, and state-subsidized media.

And then of course there’s the single biggest federal budget line: “Defense,” politicianese for “government contracts for expensive planes, ships and weapons systems that keep my campaign contributors happy and let me artificially inflate my district’s employment statistics.”

If you’re not serious about cutting “defense” spending, you’re not serious about cutting spending. The Trump White House and congressional Republicans want to increase, not cut, that budget line.

Some Republicans point out that a balanced budget is impossible without reforming “non-discretionary” spending — Social Security, Medicare and so forth. They’re right. But they’re also making excuses: They won’t cut the spending that it’s easy to cut unless they can also cut the spending that it’s hard to cut, and come hell or high water they’ll find a way to lose the latter fight.

We’ve been here before. Ronald Reagan came into office with plans to balance the budget while cutting taxes and increasing military spending by going after “waste, fraud and abuse,” too. It didn’t work then and it won’t work now.

One difference: Reagan could fob some of the blame off on a Democratic House of Representatives. Trump doesn’t enjoy that luxury. The Republican Party owns the House, and the Senate, and the White House — they own the entire federal government. For at least the next two years, that means they also own 100% of the coming fiscal failure.

Thomas L. Knapp (Twitter: @thomaslknapp) is director and senior news analyst at the William Lloyd Garrison Center for Libertarian Advocacy Journalism (thegarrisoncenter.org). He lives and works in north central Florida.

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Rick Perry’s Sudden Change of Heart is Business as Usual

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Rick Perry presidential candidate on campaign ...
Rick Perry presidential candidate on campaign trail interacting with voters in Iowa. This is at the Iowa State Fair. (Photo credit: Wikipedia)

When Rick Perry sought the Republican Party’s 2012 presidential nomination, eliminating the US Department of Energy was part of his campaign platform. Granted, he had trouble remembering its name, but he wanted the department gone. Completely.

On January 19, Perry appeared before the US Senate’s Energy and Natural Resources Committee, a first step toward his confirmation as Secretary of Energy in the coming Trump administration. How does he feel about the department these days? Well, somewhat differently:

“My past statements made over five years ago about abolishing the Department of Energy do not reflect my current thinking …. after being briefed on so many of the vital functions of the Department of Energy, I regret recommending its elimination.”

As a cabinet official, Perry’s bailiwick will sprawl across all 50 states and the several US territories. He’ll dispose of a budget a fraction of the size that he controlled as governor of Texas (less than $30 billion versus more than $100 billion), but within his sphere of influence, he’ll actually wield more, and less contestable, power.

Is anyone surprised that Perry doesn’t want to eliminate a particular job now that it’s going to be HIS job? If so, you shouldn’t be. David Stockman told you all about that phenomenon 30 years ago.

US president Ronald Reagan appointed Stockman, a former Republican congressman from Michigan, to the post of Director of the Office of Management and Budget in 1981. He served in that post until 1985 before his candor and honesty got him in trouble and brought him to the point of resignation. Then he authored what, to my mind, remains the classic account of how power corrupts, The Triumph of Politics: Why the Reagan Revolution Failed.

Most summaries of The Triumph of Politics emphasize Congress’s profligacy in running up huge deficits by increasing spending while cutting tax rates. But Stockman also takes a hard look at the executive branch, and not only from the angle of the president’s willingness to cooperate with Congress.

Each newly appointed Reagan cabinet secretary, swept into power on the promise to hack away at government root and branch, was happy to do so in every department. Except his own. “Yes, cut spending — everywhere but here. THIS department is indispensable and, by the way, under-funded.”

As the Perry saga demonstrates, thus shall it ever be. There may be a way to cut government down to size, but if so “electing the right people” probably isn’t it.

Thomas L. Knapp (Twitter: @thomaslknapp) is director and senior news analyst at the William Lloyd Garrison Center for Libertarian Advocacy Journalism (thegarrisoncenter.org). He lives and works in north central Florida.

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A Reminder: What Insurance Is

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English: Barack Obama signing the Patient Prot...
Barack Obama signing the Patient Protection and Affordable Care Act at the White House (Photo credit: Wikipedia)

“Elections have consequences,” outgoing US president Barack Obama once told Republican congressional leaders, and “I won.” He was right. One consequence of the 2016 election, in which the Republican Party maintained its House and Senate majorities and got a president of their own party, is the near-certain, near-future repeal of the Affordable Care Act, aka “ObamaCare.”

What will replace ObamaCare? That’s far less clear, but president-elect Donald Trump, in a January 14 interview with the New York Times, promises “insurance for everybody … in a much simplified form — much less expensive and much better.”

I doubt it. The Republican replacement for ObamaCare will likely have little to do with insurance. On the healthcare front, very few Americans have had “insurance” for decades. What they’ve had, especially since the Health Maintenance Organization Act of 1973, is “pre-paid health care.” Here’s the difference:

Insurance is what’s called a “hedged bet” — a bet you’ll likely “lose,” and would prefer to, but that protects you against major costs if you “win.”

With car insurance, you bet a little each month (your premium) so that if you get in a wreck (that is, if you “win”), your liabilities (and with full coverage your own losses) are covered. You don’t want to get into a wreck. You probably won’t get in a wreck. But if you do, it’s going to be expensive. Better to pay a little out of pocket each month on that hedged bet, just in case.

Real health insurance works the same way. You pay a little each month to protect yourself from the costs of catastrophic illness or injury. You don’t expect the insurance company to provide for your every need, pay part or all of the cost of every office call for the flu, etc. Insurance only comes into play if you have a heart attack, get hit by a truck, or come down with cancer.

Modern (especially post-1973) “health coverage” isn’t insurance. It’s a program through which you pre-pay (or your employer or the government pre-pays) on a monthly basis to have all your health needs at least partially covered.

Obviously this is going to be more expensive than real insurance, especially when the law requires companies to provide coverage for pre-existing conditions, pay for optional/preventative pharmaceuticals that customers might not even want, etc. And since consumers are paying for an all you can eat buffet, demand for  care is going to constantly increase, pushing prices up and up and up.

If the Republican replacement for ObamaCare is just another pre-paid healthcare scheme, and especially if it includes the “individual mandate” requiring everyone to buy in,  they might as well not bother. Healthcare won’t be affordable again until government gets out of the way.

Thomas L. Knapp (Twitter: @thomaslknapp) is director and senior news analyst at the William Lloyd Garrison Center for Libertarian Advocacy Journalism (thegarrisoncenter.org). He lives and works in north central Florida.

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