Quotulatiousness

March 7, 2013

QotD: When bureaucrats have to cut back

Filed under: Bureaucracy, Government, Quotations — Tags: , , — Nicholas @ 00:01

Back in my teaching days, many years ago, one of the things I liked to ask the class to consider was this: Imagine a government agency with only two tasks: (1) building statues of Benedict Arnold and (2) providing life-saving medications to children. If this agency’s budget were cut, what would it do?

The answer, of course, is that it would cut back on the medications for children. Why? Because that would be what was most likely to get the budget cuts restored. If they cut back on building statues of Benedict Arnold, people might ask why they were building statues of Benedict Arnold in the first place.

The example was deliberately extreme as an illustration. But, in the real world, the same general pattern can be seen in local, state and national government responses to budget cuts.

At the local level, the first response to budget cuts is often to cut the police department and the fire department. There may be all sorts of wasteful boondoggles that could have been cut instead, but that would not produce the public alarm that reducing police protection and fire protection can produce. And public alarm is what can get budget cuts restored.

Thomas Sowell, “Will Obama turn the United States into the world’s largest banana republic?”, Washington Examiner, 2013-03-04

March 2, 2013

A 2% budget cut should not impact day-to-day services

Filed under: Bureaucracy, Government, Politics, USA — Tags: , , , — Nicholas @ 10:04

In the Washington Times, Gary Johnson looks at the wild claims about what the sequester will do to the services Americans receive from the federal government:

To listen to the parade of Obama administration officials warning of civilization-ending consequences from the measly $85 billion in spending “cuts” sequestration will bring, one can only reach one of two conclusions: Either they are just making stuff up to make the cuts as painful as possible, or the federal budget is so out of control that a mere 2.4 percent reduction in projected spending is more than the system can handle.

Frankly, it is both. Absolutely, in their zeal to make Republicans pay the maximum political price for what is actually both parties’ fault, it is almost comical to watch one Cabinet official after another step up to the microphone and tell us that a 2.4 percent reduction (that isn’t really a reduction) will cause airplanes to fall out of the sky, our national defense to be disabled and our children to starve. That game is among the oldest in Washington. Cut the Park Service budget, and suddenly they can’t find the money to keep the Lincoln Memorial or Yellowstone open.

This sideshow is entertaining, but it misses what may be the most important lesson to be learned from this sequester debacle. While there is certainly a heavy dose of Chicken Little falling-sky rhetoric coming out of the bureaucracy, it is probably true that the rather indiscriminate sequester formula is presenting some challenges for some agencies.

[. . .]

If “cutting” discretionary spending by a lousy 2 or 3 cents on the dollar is enough to create dire consequences (for the sake of argument), imagine what would happen if we tried to reduce that spending by the 30 cents it will take to balance the budget and stop digging ourselves even deeper into unsustainable debt.

March 1, 2013

Sequester nightmare: “The administration has every incentive to make the sky fall, lest we suffer that terrible calamity — cuts the nation survives”

Filed under: Government, Media, Politics, USA — Tags: , , — Nicholas @ 10:19

Charles Krauthammer on the differing aims of the President and the congressional Republicans over sequestration:

“The worst-case scenario for us,” a leading anti-budget-cuts lobbyist told The Washington Post, “is the sequester hits and nothing bad really happens.”

Think about that. Worst case? That a government drowning in debt should cut back by 2.2 percent — and the country survives. That a government now borrowing 35 cents of every dollar it spends reduces that borrowing by two cents “and nothing bad really happens.” Oh, the humanity!

A normal citizen might think this a good thing. For reactionary liberalism, however, whatever sum our ever-inflating government happens to spend today (now double what Bill Clinton spent in his last year) is the Platonic ideal — the reduction of which, however minuscule, is a national calamity.

Or damn well should be. Otherwise, people might get the idea that we can shrink government, and live on.

Hence the president’s message. If the “sequestration” — automatic spending cuts — goes into effect, the skies will fall. Plane travel jeopardized, carrier groups beached, teachers furloughed.

The administration has every incentive to make the sky fall, lest we suffer that terrible calamity — cuts the nation survives. Are they threatening to pare back consultants, conferences, travel and other nonessential fluff? Hardly. It shall be air-traffic control. Meat inspection. Weather forecasting.

Update: Mark Steyn was a guest on the Hugh Hewitt show the other day to talk about this:

I’m not big on those Mayan guys, but those Mayan guys only hold an apocalypse every few thousand years. Washington now has a Mayan apocalypse every six weeks, whether it’s the fiscal cliff or the debt ceiling, or now the sequestration. And as you say, it’s talking about $44 billion dollars, or about what the United States government borrows, borrows every nine days, every nine days. So in other words, we’ve just spent weeks talking about nine days’ worth of borrowing, which in any eventual deal isn’t actually going to be saved anyway, because the latest deficit reduction bill actually increases the deficit, because that’s just the way Washington works.

[. . .]

Yeah, and you know what’s crazy about this is that let’s pretend that the officials who are speaking on this, the cabinet secretaries who are coming out and telling us that the world will come to an end tomorrow, that the planes are going to be dropping from the skies, that our infants and seniors are going to be dying untended in hospitals, that your shower head is going to be blasting out fecal coliform on you in the morning, that all of this is going to be happening just for his hypothetical $40 billion dollars of so-called entirely phony sequestration cuts, now assuming they’re not just lying to us. They’re basically telling us that nothing can ever be done about Washington spending ever. If $40 billion of hypothetical cuts means that the planes are dropping from the skies, and Obama’s even cancelled the deployment of a carrier to the Gulf, you know, in other words, when the Iranians go nuclear, he’ll be able to say oh, I would have stopped that, but we were all tied up with the sequestration. Sequestration is what allowed the mullahs to go nuclear. If that’s true, nothing can ever be done about anything ever, and Washington might as well just close up and go home.

February 27, 2013

Parliamentary Budget Officer conducting “constitutional vandalism”

Filed under: Cancon, Government, Law, Media — Tags: , , , , — Nicholas @ 11:58

Senator Anne Cools is displeased by the PBO’s ongoing legal and media campaign against the Federal government:

An independent senator says the parliamentary budget watchdog, Kevin Page, overstepped his mandate by taking the government to court in a battle for spending figures, and the Senate should force Page to withdraw the legal proceedings.

In a speech to the Senate Tuesday, Sen. Anne Cools argued that Page’s regular comments to reporters and more recent comments to his international counterparts about his battles with the government over spending figures were “provocative and inflammatory public statements” that are “intolerable and unacceptable.”

Page’s actions, Cools argued, were tantamount to contempt of Parliament, were a breach of parliamentary privilege and were affecting the Senate’s credibility to carry out its functions.

“Contemptuous and un-parliamentary,” she said of Page’s actions and comments, “they are constitutional vandalism.”

“They are inappropriate conduct from a Library officer under the direction of the Speakers of the Senate and the House of Commons. This Senate cannot accept this and should take some ‘shock-no-more’ actions.”

Sequestration and the defence budget

Filed under: Military, Politics, USA — Tags: , , , — Nicholas @ 09:10

At the Cato At Liberty blog, Christopher Preble graphically refutes the notion that sequestration will automatically weaken the US military:

Click to see full-size infographic at the Cato Institute blog.

Click to see full-size infographic at Cato At Liberty.

Military spending will remain at roughly 2006 levels — $603 billion, higher than peak U.S. spending during the Cold War. Meanwhile, we live in a safer world. The Soviet Union has been dead for more than two decades; no other nation, or combination of nations, has emerged since that can pose a comparable threat. We should have a defense budget that reflects this reality.

To be clear, sequestration was no one’s first choice. But the alternative — ever-increasing military spending detached from a legitimate debate over strategy — is worse. We should have had such a debate, one over the roles and missions of the U.S. military, long before this day of reckoning. And politicians could have pursued serious proposals to prudently reduce military spending. Instead, they chose the easy way out, avoiding difficult decisions that would have allowed for smarter cuts.

Update: Nick Gillespie explains why you shouldn’t worry too much about the sequester:

Update, the second: Putting the actual numbers in perspective:

February 26, 2013

Budget cutting gets real in Ottawa

Filed under: Cancon, Government — Tags: , — Nicholas @ 11:11

David Akin tweeted some news about upcoming budget cuts for various Canadian government agencies:

February 23, 2013

Provincial budgets range from less-than-accurate to verging on financial fraud

Filed under: Cancon, Economics, Government — Tags: , , , , , — Nicholas @ 10:43

Andrew Coyne, after a short diatribe about our first-past-the-post electoral system (he’s agin’ it), gets down to brass tacks about provincial finances:

As bad as the federal government is, the provinces are worse. And as horrendous as the provinces are generally, the record in some provinces borders on the fraudulent. Saskatchewan and Alberta, for instance, have overspent their budgets in the past decade by an average — an average — of nearly 5%. And since each year’s overshoot becomes the baseline for next year’s budget, the cumulative impact is to produce spending, in the fiscal year just ended, vastly larger than was ever specifically authorized in advance: in Saskatchewan’s case, nearly 40% larger.

That’s as best the [C. D. Howe Institute] can make out. Provincial accounting is notoriously haphazard and inconsistent. Not only does each province use its own rules and procedures, making it impossible to compare the public accounts from one province to another with any confidence, but in several provinces — Newfoundland and Quebec are the worst offenders — the public accounts are not even stated on the same basis as the budget.

And while the public accounts must ultimately prevail, efforts to reconcile the two sets of figures, and to explain the discrepancies, remain spotty. In some provinces — Quebec, Saskatchewan, British Columbia — auditors have refused, repeatedly, to sign off on the books without attaching reservations.

So not only can voters have little confidence that governments will spend what they said they would, they can have little ability even to reckon how much they overspent, or to compare their own province’s performance with the others’. All in all, a thoroughly disgraceful performance. (Honourable exceptions: Ontario and Nova Scotia, though voters in both provinces have other reasons to doubt their governments’ fiscal candour.)

“The sequester’s ‘meat-cleaver approach’ of ‘severe,’ ‘arbitrary’ and ‘brutal’ cuts will ‘eviscerate’ education, energy and medical research spending”

Filed under: Bureaucracy, Economics, Government, USA — Tags: , , , , , — Nicholas @ 10:19

Head for the hills! The sequester is coming!

As in: Batten down the hatches — the sequester will cut $85 billion from this year’s $3.6 trillion budget! Or: Head for the storm cellar — spending will be cut 2.3 percent! Or: Washington chain-saw massacre — we must scrape by on 97.7 percent of current spending! Or: Chaos is coming because the sequester will cut a sum $25 billion larger than was just shoveled out the door (supposedly, but not actually) for victims of Hurricane Sandy! Or: Heaven forfend, the sequester will cut 47 percent as much as was spent on the AIG bailout! Or: Famine, pestilence and locusts will come when the sequester causes federal spending over 10 years to plummet from $46 trillion all the way down to $44.8 trillion! Or: Grass will grow in the streets of America’s cities if the domestic agencies whose budgets have increased 17 percent under President Obama must endure a 5 percent cut!

The sequester has forced liberals to clarify their conviction that whatever the government’s size is at any moment, it is the bare minimum necessary to forestall intolerable suffering. At his unintentionally hilarious hysteria session Tuesday, Obama said: The sequester’s “meat-cleaver approach” of “severe,” “arbitrary” and “brutal” cuts will “eviscerate” education, energy and medical research spending. “And already, the threat of these cuts has forced the Navy to delay an aircraft carrier that was supposed to deploy to the Persian Gulf.”

“Forced”? The Navy did indeed cite the sequester when delaying deployment of the USS Truman. In the high-stakes pressure campaign against Iran’s nuclear weapons program, U.S. policy has been to have two carriers in nearby waters. Yet the Navy is saying it cannot find cuts to programs or deployments less essential than the Truman deployment. The Navy’s participation in the political campaign to pressure Congress into unraveling the sequester is crude, obvious and shameful, and it should earn the Navy’s budget especially skeptical scrutiny by Congress.

The Defense Department’s civilian employment has grown 17 percent since 2002. In 2012, defense spending on civilian personnel was 21 percent higher than in 2002. And the Truman must stay in Norfolk? This is, strictly speaking, unbelievable.

February 21, 2013

The sequester rhetoric ratchets up: “By Friday, expect him to be invoking plagues of frogs and flaming hail”

Filed under: Economics, Government, Media, USA — Tags: , , , , , — Nicholas @ 11:43

Nick Gillespie rounds up the latest batch of rhetorical shit being spewed by both sides over the looming sequester:

Here’s what President Obama is promising will happen if the sequester goes through as he wrote it (yes, it was his idea, as a way of forcing a compromise):

    “If Congress allows this meat-cleaver approach to take place, it will jeopardize our military readiness. It will eviscerate job-creating investments in education and energy and medical research,” Obama warned in a speech at the White House, flanked by emergency workers. “It won’t consider whether we’re cutting some bloated program that has outlived its usefulness or a vital service that Americans depend on every single day.”

By Friday, expect him to be invoking plagues of frogs and flaming hail. As I noted earlier this week, the $85 billion figure that gets invoked is wrong; cuts in fiscal year 2013 will amount to $44 billion or about 1.2 percent of all federal spending. We’ve been hearing for a long time that sequestration alone would kill about 700,000 jobs.

That’s a claim taken as gospel that is based on what can be called “ugly modeling” at best. Because virtually all government spending is counted by definition as adding to GDP, any cut thus means reductions in activity and jobs. Add to that the idea that projectionists routinely assign a multiplier of more than 1.00 to government spending, so that each dollar the feds spend magically creates more than $1 in economic activity.

The country’s experience with recent stimulus spending should give pause to all of us (if it doesn’t, watch this). When the stimulus manifestly failed to reduce unemployment by its own predictions, its architects and defenders in the press nonetheless pronounced it a success and claimed that it saved us from an ever bigger problem. The real problem, you see, was that the stimulus wasn’t big enough. All it takes is a government failure for stimulatarians to channel their inner Andrea True.

Yet there’s every reason to believe that stimulus spending has a multiplier that is well below 1.0, meaning that every dollar that’s spent generated less than a dollar of activity, resulting in a net drain on economic activity. Think about it in a different context: Virtually everybody understands that when local governments shell out massive tax money on sports stadiums, the local economy doesn’t see any net benefits. If you’re lucky, existing entertainment dollars may be spread toward sports facilities, but nobody seriously believes any more that such spending grows the overall economic pie or stimulates anything other than owners’ and players’ bank accounts (in fact, simply having a major professional team in your metro area shaves about $40 per person per year). If building white elephant stadiums and museums with public dollars worked, Cleveland would be the hottest town in the country.

February 8, 2013

Telegraph runs “Shock, horror!” story about UK government’s wine budget

Filed under: Britain, Government, Media, Wine — Tags: , , — Nicholas @ 09:12

I’m a minarchist: I’m in favour of much smaller, less intrusive government. Even saying that, I can’t find it in my heart to get upset about this “shocking” revelation:

Ministers fail to balance books at £3million wine cellar
Ministers and guests have got through 5,000 bottles of alcohol worth more than £55,000 in the last year, report into the Government’s wine cellar has revealed.

[. . .]

The latest annual report into the Government’s wine cellar has revealed that ministers, officials and their guests got through nearly 5,000 bottles of alcohol worth more than £55,000 in the last year.

In total, the cellar holds 38,000 bottles costing £857,000 when bought, but are now valued on the open market at £2,953,000.

Some of the taxpayer-funded bottles are sold in shops for more than £1,000 each.

Guests at Government events drank 23 bottles of the 1982 Chateau Margaux Bordeaux, which sells for up to £1,100 a bottle.

Five thousand bottles? That’s all? David Cameron’s cabinet consists of 22 senior ministers. I assume there are junior ministers or parliamentary assistants for most of those ministers, so let’s call it 50 men and women who are entertaining on government business and would be drawing from the official wine cellar. Even if each of them only entertains one other person at each event, that’s roughly two bottles of wine per minister per week.

The Queen drinks more than that by herself!

And the eye-popping number of £857,000? That works out to less than £23 per bottle. And we’re told that some of the bottles could sell on the open market for £1,100 a bottle. But based on the figures, there can’t be very many of those ultra-expensive bottles, can there?

I fail to see a scandal here…

February 7, 2013

Almost a clean sweep of top Canadian military leadership

Filed under: Cancon, Government, Military — Tags: , , , , — Nicholas @ 00:02

As Andrew Coyne noted in a tweet, “In some countries, this would be big news”. Lee Berthiaume in the Ottawa Citizen on the upheaval at the top of Canada’s defence establishment:

Spring cleaning has come early at the Department of National Defence as the Conservative government announced Wednesday it was sweeping out a number of the military’s top officers — including the head of the Canadian Army and the Royal Canadian Navy — in a major shuffle.

The moves represent a dramatic change at the top as National Defence faces a major shift in focus from the days of the Afghanistan war and increasing budgets, to a state of deep budget cuts and limited deployments.

[. . .]

In addition to [vice-chief of defence staff, Vice-Admiral Bruce] Donaldson, those leaving include Royal Canadian Navy commander Vice-Admiral Paul Maddison and Canadian Army commander Lt.-Gen. Peter Devlin.

Maddison’s deputy, Rear-Admiral Mark Norman, will take over as commander of the navy; Lt.-Gen. Marquis Hainse, who was serving as deputy commander to the NATO headquarters in Naples, Italy, is the new head of the army.

Lt.-Gen. Walter Semianiw, who oversaw all Canadian military missions inside Canada and North America, including the Caribbean, is also on the way out, the apparent casualty of a Defence Department restructuring that started last year.

February 5, 2013

Ontario facing fiscal crisis that is worse than California’s

Filed under: Cancon, Economics, Government — Tags: , , , , — Nicholas @ 12:17

In the Financial Post, Jason Clemens and Niels Veldhuis look at the under-reported fiscal problems Ontario has to deal with … and soon:

‘I do not want Ontario to become like California,” Ontario Finance Minister Dwight Duncan once proclaimed. And it’s not hard to understand why — California is a fiscal nightmare. It has the lowest bond rating in the United States and its own treasurer, Bill Lockyer, referred to the state budget as “a fiscal train wreck.”

Yet, despite all that is said about California’s finances in the media and financial markets, Ontario is in much worse shape.

Back in 2002-03, the fiscal year before the governing Liberals took office, Ontario’s net debt (assets minus liabilities) stood at $132.6-billion. In the ensuing decade, the province’s debt ballooned by almost 78% to $235.6-billion (2011-12). Most worrying, however, is that if Ontario continues on its current path (status quo in terms of spending and revenues), its debt will balloon to over $550-billion (66% of GDP) by the end of the decade (2019-20).

[. . .]

On a per-person basis, Ontario’s bonded debt (the concept of net debt is not used in U.S. public accounting) currently stands at nearly $18,000, over four-and-a-half times that of California at $3,800. As a share of the economy, Ontario’s debt (38.6%) is more than five times that of the Golden State (7.7% of GDP). This is a stunning difference in the burden of debt, particularly given the attention and concern focused on California compared with Ontario.

While the two jurisdictions face similar average interest rates for their debt, the large difference in the stock of the debt means equally large differences in interest costs. Specifically, Ontario spends almost double what California does on interest costs in dollar terms and a little over three times what California spends as a share of the revenues collected, 8.9% compared to 2.8% of revenues. This is money that could have been spent on health care, education, public safety.

February 2, 2013

“The welfare state we have is excellent in most ways. We only have this little problem. We can’t afford it.”

Filed under: Economics, Education, Europe, Government — Tags: , , , , , , — Nicholas @ 00:02

Based on this report in The Economist, we really should strive to be more like Sweden, and not for the reasons most Canadians would expect:

Sweden has reduced public spending as a proportion of GDP from 67% in 1993 to 49% today. It could soon have a smaller state than Britain. It has also cut the top marginal tax rate by 27 percentage points since 1983, to 57%, and scrapped a mare’s nest of taxes on property, gifts, wealth and inheritance. This year it is cutting the corporate-tax rate from 26.3% to 22%.

Sweden has also donned the golden straitjacket of fiscal orthodoxy with its pledge to produce a fiscal surplus over the economic cycle. Its public debt fell from 70% of GDP in 1993 to 37% in 2010, and its budget moved from an 11% deficit to a surplus of 0.3% over the same period. This allowed a country with a small, open economy to recover quickly from the financial storm of 2007-08. Sweden has also put its pension system on a sound foundation, replacing a defined-benefit system with a defined-contribution one and making automatic adjustments for longer life expectancy.

Most daringly, it has introduced a universal system of school vouchers and invited private schools to compete with public ones. Private companies also vie with each other to provide state-funded health services and care for the elderly. Anders Aslund, a Swedish economist who lives in America, hopes that Sweden is pioneering “a new conservative model”; Brian Palmer, an American anthropologist who lives in Sweden, worries that it is turning into “the United States of Swedeamerica”.

[. . .]

This is not to say that the Nordics are shredding their old model. They continue to pride themselves on the generosity of their welfare states. About 30% of their labour force works in the public sector, twice the average in the Organisation for Economic Development and Co-operation, a rich-country think-tank. They continue to believe in combining open economies with public investment in human capital. But the new Nordic model begins with the individual rather than the state. It begins with fiscal responsibility rather than pump-priming: all four Nordic countries have AAA ratings and debt loads significantly below the euro-zone average. It begins with choice and competition rather than paternalism and planning. The economic-freedom index of the Fraser Institute, a Canadian think-tank, shows Sweden and Finland catching up with the United States (see chart). The leftward lurch has been reversed: rather than extending the state into the market, the Nordics are extending the market into the state.

Why are the Nordic countries doing this? The obvious answer is that they have reached the limits of big government. “The welfare state we have is excellent in most ways,” says Gunnar Viby Mogensen, a Danish historian. “We only have this little problem. We can’t afford it.” The economic storms that shook all the Nordic countries in the early 1990s provided a foretaste of what would happen if they failed to get their affairs in order.

January 31, 2013

Blaming “austerity” for most recent slowdown

Filed under: Economics, Government, Media, USA — Tags: , , , , , — Nicholas @ 09:47

David Harsanyi discusses the named (by the mainstream media) culprits for the unexpected drop in US fourth-quarter GDP:

So, U.S. consumer confidence unexpectedly plunged in January to its lowest level in more than a year. The U.S. economy unexpectedly posted a contraction in the fourth quarter of 2012 — for the first time since the recession — “defying” expectations that economic growth is in our future.

If the economy were as vibrant as President Barack Obama has told us it is, a belt tightening in a single sector of government surely wouldn’t be enough to bring about “negative growth.” But one did. Unexpectedly. No worries, though. Pundits on the left tell us that this contraction was good news — possibly the best contraction in the history of all contractions. The White House blamed Republicans and, I kid you not, corporate jet owners because — well, who else? But mostly, the left is bellyaching about the end of temporary military spending and a brutal austerity that’s enveloped a once great nation.

There’s a small problem with that argument. There is no austerity. In the fourth quarter of 2012, Washington spent $908 billion, which was $30 billion more than it spent in the last quarter of 2011 and nearly $100 billion more than it spent in the third quarter of 2012. Taxpayers took on another $400 billion in debt during the quarter. If this is poverty, can you imagine what robust spending looks like?

As always, for “austerity” to take the blame, there’d actually have to have been some austerity to start with. The US government certainly hasn’t been practicing austerity over the last four years.

January 30, 2013

Sequestration cuts must be more likely to happen because the sob stories are getting traction

Filed under: Economics, Government, Media, USA — Tags: , , , , , — Nicholas @ 11:53

Tad Dehaven thinks the upsurge in horror stories about what sequestration will do to the US economy means it’s more likely that those cuts will actually take place:

The odds that $85 billion in “unthinkable, draconian” sequestration spending cuts will go into effect in March as scheduled are looking better. The odds must be getting better because, as if on cue, the horror stories have commenced.

A perfect example is an article in the Washington Post that details the angst and suffering being experienced by federal bureaucrats and other taxpayer dependents over the mere possibility that the “drastic” cuts will occur. You see, the uncertainty surrounding the issue has forced government employees to draw up contingency plans. Contingency plans? Oh, the humanity!

[. . .]

I certainly believe that Washington’s bouncing from one manufactured fiscal crisis to the next is detrimental to the economy, but my sympathy lies with the private sector – not the federal bureaucracy. It’s the private sector that has been suffering under the constant uncertainty surrounding federal tax and regulatory policy. And let’s not forget that there is no public sector without the private sector – the former existing entirely at the latter’s expense.

Yet, what follows in the Post article is boo-hoo after boo-hoo without the slightest regard to those who are paying for it or whether the whiner’s agency could use some belt-tightening

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