South Dakota Politics

The Fiscal Crisis Goes to College

I am now almost past one of the greatest financial challenges in American middle class life: paying for your kids to go to college. Good thing. For what it costs to see your kid walk across the stage at a private college graduation, you could just about buy a house in South Dakota every year for four years. Rent 'em out, and maybe your kid won't have to work. Public education is cheaper, but rising fast.

The President and his presumptive opponent are making an issue of student loans as they campaign. What they propose, the Washington Post opposes.

IN JULY, THE interest rate on certain federal student loans will double, to 6.8 percent. Who could want that? Not President Obama or Mitt Romney, both of whom railed against the scheduled increase last week. And not Senate Democrats or House Republicans, who have competing plans for preventing the hike…

This isn't the first election in which this superficially appealing line has appeared; the current 3.4 percent rate began as a campaign gimmick that Democrats cooked up to help them retake Congress in 2006. It has all of the drawbacks it did then, and more: It's expensive, it's poorly targeted, and it diverts attention and money from bigger problems facing federal support for higher education.

According to the New America Foundation's Jason Delisle, a former GOP Senate Budget Committee staffer, Democratic lawmakers were shocked at the cost of their campaign promise to halve student-loan rates after they assumed control of Congress in 2007. So, among other things, they decreed that the rate would revert back to 6.8 percent after five years, which made costs look lower over a decade. At least Democrats could say they kept their promise — for a time, anyway.

Well, that is the way Congress budgets these days: they "pay" for policies by promising to make cuts they aren't going to make. Meanwhile, Congress ignores the real problem facing College students and the rest of us.

The Maine Sun Journal has this:

Earlier this year, President Barack Obama signed a bill ending the federal government's 45-year relationship with private lenders. Now it will make loans directly to students. That, however, will do little to reduce what many see as a looming student loan default crisis that could cost taxpayers billions.

New data from the U.S. Department of Education show that 46.3 percent of all loans given to students at two- and four-year for-profit colleges eventually go into default.

That is the way we budget these days. We make the loan and we take the loan, without anyone bothering to calculate whether or who can pay for it.

The high student loan default rate is the result of two things. One is the souring economy. The other is the skyrocketing costs of college. There are a lot of reasons for that, but chief among them is the good work that Congress has done to hold down the costs of a college education. From the Boston Globe:

To ensure that anyone who wants to go to college will be able to foot the bill, Washington has showered hundreds of billions of dollars into student aid of all kinds — grants and loans, subsidized work-study jobs, tax credits, and deductions. Today, that shower has become a monsoon. As Neal McCluskey points out in a Cato Institute white paper, government outlays intended to hold down the price of a college degree have ballooned, in inflation-adjusted dollars, from $29.6 billion in 1985 to $139.7 billion in 2010, an increase of 372 percent since Ronald Reagan's day.

Most of that prodigious growth is very recent. The College Board, which tracks each type of financial assistance in a comprehensive annual report, shows total federal aid soaring by more than $100 billion in the space of a single decade — from $64 billion in 2000 to $169 billion in 2010. (The College Board's data, unlike Cato's, includes higher-education tax credits and deductions.)

So the cost of college has soared as federal outlays to higher education have soared. Is it too much to suggest that the latter might be driving the former? Instead of trying to figure out how to balance their books, college administrations have been figuring out ways to absorb more of that federal largess. I know! Let's raise tuition again! No one is thinking about how to make the system sustainable. Everyone is bending all his or her will toward keeping the good times rolling.

College presidents aren't stupid and neither am I. I know full well that my own livelihood depends on this industry and I know how much the industry has come to depend on federal money. I just don't think that flooring the pedal as we race toward the precipice is necessarily the best strategy for securing my job or the future of higher education.

The problem described above is one example of a dysfunction that is evident at every level of government in the United States and, I might add, Europe: it is a refusal to think rationally about the consequences of our policies or make rational budgeting decisions with an eye to the future. The editors of the Washington Post put it this way:

The president is right that college access is a critical priority. But the country can't afford every appealing initiative.

That would be the problem. For decades we have been consistently favoring what is appealing over what is real.

When Profiling Saves a Woman’s Life

Old version: Be careful what you wish for, you might get it. New version: Be careful what questions you ask, you might get an answer. The New Republic is not afraid to ask questions. Tim Stelloh asks "Has one state discovered a simple way to combat domestic violence?"

In recent decades, one of the great grassroots movements of the twentieth century built a raft of protections designed to help abused women. These included a sprawling network of community shelters, gun restrictions for abusers, protection orders, and the nation's first federal anti-domestic violence legislation, the Violence Against Women Act (VAWA). Yet, despite this sustained effort—and even as overall homicides have plummeted nationwide—victims of domestic violence… are today killed in basically the same numbers as they were about 15 years ago. Between 40 and 50 percent of female homicide victims are killed by their husbands, boyfriends, and exes. And, for about half of these victims, police had been alerted to previous incidents of abuse.

There is, however, one exception to this grim trend: Maryland. Since 2007, domestic violence homicides in the state have fallen by a stunning 40 percent. What is Maryland doing that other states are not?

Stelloh tells a number of dreadful stories of domestic violence. His main story is how Jacquelyn Campbell, a professor of nursing at Johns Hopkins University, figured out what to do about it.

A few years after moving to Johns Hopkins in 1993, Campbell and a team of researchers began studying domestic violence murders in Maryland. Their work, which was published in 2002, sought to identify the key indicators that predicted whether a case of domestic violence was likely to become a domestic homicide. The study produced some surprisingly precise findings. If a man had a history of hitting his partner, that in itself was a predictor of murder. But certain kinds of behavior came with even higher chances of death. For instance, if a man choked his partner, she was five times more likely to be killed by him at some point. If he was unemployed, he was four times more likely to kill her. The researchers also found that only 4 percent of homicide victims had ever sought help from a shelter; in a follow-up study, they found that a stay in a safehouse decreased the risk of violent re-assault by 60 percent. Their findings offered new ways to measure risk. "It also informed the system about which cases needed heightened scrutiny," says Campbell…

Indeed, it was clear that the prevailing methods of dealing with domestic violence were inadequate. There had been a slight dip in domestic violence murders in the '90s following the passage of VAWA (which funded anti-domestic violence training and services) and the Brady Law (which required gun dealers to run background checks). But, since then, the number of women killed each year by their partners and exes has hovered around 1,600—that is, only about 500 fewer deaths per year than in 1976. For men, however, domestic homicides have declined from about 1,600 to 600. In other words, all the increased protections for women, the infrastructure of shelters and hotlines, had done a better job of protecting abusers rather than their victims…

By the end of 2005, the group had developed a series of questions that they called "the screen." The first three questions concerned the most important predictors of future homicide: Has the abuser used a weapon against you? Has he threatened to kill you? Do you think he might kill you? If the woman answered yes to any of those questions, she "screened in." If she answered no, but yes to four of the remaining eight questions, again, she was in. Among these were other, less obvious indicators of fatal violence: Has he ever tried to kill himself? Does she have a child that he knows isn't his?

This looks like one of those rare examples of a smashing policy success, from Stelloh's telling. "The screen" provides the essential information that almost always makes the difference in interventions: it tells the police which cases to focus their resources on.

I would note, however, that there is another term for "screening". It is "profiling". Profiling is exactly what Stelloh is talking about here. The term simply means that you come up with a list of criteria that help the police decide who to pay attention to.

Profiling has become a political stigma. This is so for very good reasons. Racial profiling, whether deployed by a cop looking for drug runners on a Florida highway or a TSA agent on the lookout for terrorists at an airport, carries two significant burdens. It presents inconveniences for persons of certain races and, worse, involves an assumption of guilt on the basis of race.

The profiling described by Stelloh seems innocent of these problems. It focuses on actions of the potential abuser as the potential victim reports them. But what if it turned out that Canadian men were significantly less likely to murder their spouses and girlfriends than, say, Texans? Would you omit that from the screen, even if it meant that some women would die as a consequence?

Profiling is an essential element in law enforcement. We are a long way from resolving the problems involved in it, but it is stupid to think we can dispense with it. Meanwhile, three cheers for Maryland and Jacquelyn Campbell. Protecting women from murderous abusers is what law is about if it is about anything.

What Fiscally Irresponsible Government Looks Like

Perhaps Sweden is a model of fiscal sanity, as Robert Samuelson argues. If you look up fiscal insanity, you might see a map of California. I lived for ten years in the golden state and then got out when the gettin' was good. A few years later I returned for a visit. I discovered what decades of an anti-automobile ideology had produced. It took me two hours to drive fifty miles from the beach inland.

Joel Kotkin argues at the Daily Beast that President Obama is a Californian at heart. Like Governor Jerry Brown, Obama is trying to make fossil fuels less available in favor of green energy. The necessary result of that, in the foreseeable future, is to raise the costs of energy while depressing growth in industries that actually produce high paying jobs in favor of industries that promise jobs but cannot deliver.

Obama regularly asserts that green jobs will play a crucial role in the future of the American economy, but California, a trend-setter in the field, has yet to reap such benefits. Green jobs, broadly defined, make up only about 2 percent of jobs in the state—about the same proportion as in Texas. In Silicon Valley, the number of green jobs actually declined between 2003 and 2010. Meanwhile, California's unemployment rate of 10.9 percent is the nation's third highest, behind only Nevada and Rhode Island…

Texas has created 200,000 oil and gas jobs over the past decade; California has barely added 20,000. The state's remaining energy producers have been slowing down as the regulatory environment becomes ever more hostile even as producers elsewhere, including in rustbelt states like Ohio and Pennsylvania, ramp up. The oil and gas jobs the Golden State political class shuns pay around $100,000 a year on average.

That is obviously true, but his focus on California itself is devastating.

Over the past decade the Golden State has grown its middle-skilled jobs (those that require two years or more of post-secondary education) by a mere 2 percent compared to a 5.3 percent increase nationwide, and almost 15 percent in Texas. Even in the science-technology-engineering and mathematics field, where California has long been a national leader, the state has lost its edge, growing just 1.7 percent over the past 10 years compared to 5.4 percent nationally and 14 percent in Texas.

One of the claims made on behalf of California-style government is that, if it sacrifices growth, at least it makes the economy more equitable. Does it? Kotkin references a Public Policy Institute of California study showing bad news.

California's families have been hit hard by the Great Recession and its aftermath. Family income has declined across the spectrum, with lower incomes seeing the steepest losses. The gap between upper- and lower-income families is now wider than ever. And the number of families in the middle-income range is shrinking. California's families have been hit hard by the Great Recession and its aftermath. Family income has declined across the spectrum, with lower incomes seeing the steepest losses. The gap between upper- and lower-income families is now wider than ever. And the number of families in the middle-income range is shrinking.

The best test of policy is to watch who goes where. California continues to attract immigrants; however, four million more people have flowed out to other states than have flowed in from the same over the last two decades. Look up "voting with your feet".

California's tax and regulatory regime is debilitating for business growth. Steven Greenhut, at Reason, has this:

California's elected officials have been doing as little planning as possible, unless one counts planning to spend tens of billions of dollars the state doesn't have on a high-speed rail line that will partially replicate what the airlines already do now. Our leaders are battling new water-storage facilities and punishing farmers with absurd water restrictions. They impose roadblocks toward building new highway systems and land-use regulations make it nearly impossible to build the homes and businesses necessary to meet the needs of a growing population. One can hardly call that planning…

California remains a beautiful place, but it no longer is the destination for entrepreneurs, free-spirits, and dreamers. These are the fruits of modern-day progressive policies. This should be the cause of much sadness.

Neither Greenhut nor Kotkin bother with the other elephants in the Sacramento chamber. The state's public pension system is underfunded by a $100 billion. Its retiree health care obligations are enormous and altogether unfunded.

California is the poster child for big government excess coupled with a neglect of planning. I would love to tell you that Republicans would have managed better if they had run the state. I imagine that they would have run it into the hole just as fast.

The European has an interview with economist Joseph Stiglitz that is very revealing. I note this comment:

The critical question right now is how we grade economic systems. It hasn't been fully articulated yet but I think we will win this one. Even the Right is beginning to agree that GDP is not a good measure of economic progress. The notion of the welfare of most citizens is almost a no-brainer.

Stiglitz displays the moral flaw that underlies the problems of modern governments. The point of GDP growth as a measure of economic progress is that it tells us something we need desperately to know but may not want to hear: whether we are in fact providing for the social outcomes we desire. Those who purport to measure the welfare of citizens almost always measure something else: whether their favorite policies have been enacted.

California shows what happens when a government ignores fiscal realities in favor of impressionistic goals. The outcome does not favor the welfare of most citizens. There is a lot of this going around in the modern world.

What Fiscally Responsible Government Looks Like

Just right now governments at every level are stuck between a rock and hard place. Budgets are unsustainable, taxes are maxed out, sources of lending are maxed out, and cutting spending (austerity) seems guaranteed to produce recession and thus further reduce incomes. What's a mother to do?

I don't know, but I note with interest Robert Samuelson's tale of one success story. Sweden is one of the few European nations in good fiscal shape. Its unemployment rate is relatively low. Its growth rate is better than Germany's and its debt to GDP ratio is lower. Not half bad. How did it turn the trick? Samuelson tells a story that will please and discomfort both conservatives and liberals.

Conservatives can take heart that many post-crisis policies came right from their playbook. Sweden's income tax base was broadened and tax rates were sharply reduced. (In 1996, the average marginal rate — the rate on the last bit of income — was 46 percent; in 2010, it was 33 percent.) Spending was cut on old-age pensions, child allowances, unemployment benefits and housing subsidies. Union power over wages was reduced. Many markets (banking, air travel, telecommunications, electricity production) were deregulated. Low inflation and balanced budgets became broadly embraced popular goals.

On the other hand, liberals will also be reassured. Although Sweden trimmed social benefits, it hardly abandoned the welfare state. Overall government spending is still about 50 percent of the economy (gross domestic product), much higher than in the United States, where the usual ratio is about 35 percent. To reduce income tax rates, the government raised other taxes. Gasoline and cigarette taxes were increased; so were taxes on dividends and capital gains, hitting the rich. Altogether, deficit reduction totaled a huge 12 percent of GDP from 1991 to 1998. Slightly more than a third of that came from higher taxes.

I think that there is a lot more there to please conservatives, but it also shows liberals how a welfare state can be sustained.

What the case of Sweden shows is that a fiscally responsible government is not an oxymoron. It also shows the benefits of timely action. Sweden suffered its economic crisis in 1992. It then did something astounding. Instead of putting off any effective action it acted, effectively. It also benefitted by acting when conditions were most favorable.

In the early 1990s, the rest of the world economy was relatively healthy. Sweden could offset the depressing effects of its domestic policies by exporting more — and that's what happened, aided by a huge devaluation of its currency, the krona. The devaluation made its exports more price-competitive.

"They let it [the krona] go down by about 25 percent, and that produced an export boom," says economist Desmond Lachman, a former top economist at the International Monetary Fund who has studied the Swedish crisis. "It allowed them to do massive [budget] adjustment without putting the economy into a deep recession."

The world's struggling economies don't enjoy such a favorable condition. Almost all of them, including ours, are in trouble. When every economy is in the toilet, there is no one left to pull anyone out.

Still, Sweden is the model. In the U.S. a large part of the political culture is still firmly dedicated to keeping spending levels high and avoiding fiscal realities. We could have acted decades ago, as Sweden did, but we did not. While responsible policy might be much more painful now than it was for Sweden in the 1990's, irresponsible lack of policy is the best way to prolong the pain as long as possible. Samuelson says:

Sweden's good fortune is that it had its crisis two decades ago.

That is the only thing he says in his essay with which I am prepared to disagree. As Machiavelli would put it, it wasn't fortuna but virtù that was responsible for Sweden's success. They prospered because they decline to put off until tomorrow what they desperately needed to do today. Just right now the Democratic Party in these United States is committed to the opposite.

Arizona v. United States

The Obama Administration had another bad day in court. Eight members of the Supreme Court heard arguments in Arizona v. United States. Justice Kagan recused herself because of previous involvement in the issue. I am on record as saying that this recusal is unnecessary and is bad policy. It doesn't make much difference, for five votes will still be necessary to render a decision.

Here is SCOTUSblog's summary of the specific provisions of the Arizona law that are under review [my paragraph breaks]:

Four different provisions of S.B. 1070 are currently before the Court. One provision, Section 2(B), requires police officers to check the immigration status of anyone whom they arrest; it also allows police to stop and arrest anyone whom they believe to be an illegal immigrant.

Section 3 makes it a crime for someone even to be in the state without valid immigration papers,

while Section 5(C) makes it a crime to apply for or hold a job in Arizona without proper papers.

Finally, in Section 6, the law gives a police officer the power to arrest someone, without a warrant, if the officer believes that he has committed a crime that could cause him to be deported, no matter where the crime may have occurred.

There are two general issues here. One is whether these provisions involve due process violations. The initial argument in the transcript concerned whether the first provision, Section 2(B), would mean that an individual could be detained for a substantially longer period.

The second and more important issue is the federalism question. By enacting its own law enforcing U.S. immigration laws, is Arizona preempting federal authority? It was on this issue that the Administration took a beating. From the WaPo:

Justices on both sides of the court's ideological divide expressed skepticism that Arizona's requirement that police check the immigration status of people they arrest or detain is an impermissible intrusion on Congress's power to set immigration policy or the executive branch's ability to implement it.

"You can see it's not selling very well," Justice Sonia Sotomayor told the federal government's lawyer. Arizona's attempt to alert federal authorities that a person may be in the country illegally does not force "you to change your enforcement priorities," said Sotomayor, one of the court's liberals and its first Hispanic member.

States cannot act where Congress is has the exclusive authority under the Constitution (deciding who can legally enter the U.S., for example) nor can a state legislate in a way that is contrary to federal law. Neither seems to be the case here. Arizona is insisting only on making its own efforts to enforce federal law within state borders, something the state has an obvious interest in. John Hinderaker at Powerline explains the incoherence of the Administration's position.

Justice Sotomayor [commented on] an extraordinary aspect of the Obama administration's position, to the effect that it is OK if individual Arizona law enforcement officers decide to cooperate with federal immigration authorities, but if the state directs them all to cooperate, it is somehow unconstitutional. The Obama administration literally argued that for a state to engage in "systematic cooperation" with the federal government on immigration is unlawful. We can't blame Mr. Verrilli for his inability to sell that bizarre argument. We do blame Barack Obama and Eric Holder for trying to assert it.

Well, yes, that is a difficult argument to make and it suggests the weakness of the Administration's position. General Verrilli did nothing to recover from his embarrassment in the ObamaCare hearings, but I agree with Hinderaker that the fault was not largely Verrilli's. The problem is the Constitutional Law Professor in Chief.

Justice Scalia pushed what has been called a radical proposal: that states may close their borders to anyone who has no legal right to be there. It is not clear to me what is radical about that. It almost seems tautological.

* * *

This case would have been unnecessary if Congress had been able to fashion a coherent and effective immigration policy. It should be easy for people who are willing to legally apply to come to the United States when there are jobs for them and it should be possible to control the borders. What we have done instead is to keep forbidding obstacles to legal immigration while selectively enforcing those laws. That has served the interests of businesses that depended on undocumented workers and political interests that favored larger numbers of immigrants. It is the ability of the government to selectively enforce the law that the Administration is really defending.

The issue may become moot, as illegal immigrants seem to be voting with their feet. Michael Barone has pointed out that the flow of immigrants from Mexico has come to a sudden stop. Researchers at the Pew Hispanic Center on Mexican immigration to the United States conclude that:

from 2005 to 2010, some 1.39 million people came from Mexico to the United States and 1.37 million went from the U.S. to Mexico. "The largest wave of immigration in history from a single country to the United States," they write, "has come to a standstill."

The turning point seems to have come with the collapse of housing prices and the onset of recession in 2007. Annual immigration from Mexico dropped from peaks of 770,000 in 2000 and 670,000 in 2004 to 140,000 in 2010.

As a result, the Mexican-born population in the United States decreased from 12.6 million in 2007 to 12.0 million in 2010. That decrease consisted entirely of Mexican-born illegal immigrants, whose numbers decreased from 7.0 million in 2007 to 6.1 million in 2010.

I am not sure that this doesn't bode ill for the U.S. economy. It does relieve the pressure somewhat. Perhaps now we can get around to a coherent immigration policy.

Who’s Killing Social Security & Medicare?

If efficiency in government is measured by how fast major programs are going bust, we have a very efficient government. While we are moving rapidly toward fiscal insolvency, it turns out that fiscal insolvency is moving just as rapidly toward us. From Bloomberg:

The budget outlook for Social Security is getting dimmer, the U.S. government said, with its primary trust fund now projected to run dry three years sooner than anticipated.

The fund that helps finance benefits for 44 million senior citizens and survivors of deceased workers will be exhausted by 2035, the program's trustees said in an annual report yesterday. Aid would have to be cut at that point if Congress doesn't intervene.

Social Security's disability program, which helps support 11 million Americans, will run through its trust fund in 2016, two years earlier than predicted. The report attributed the fiscal stress in part to the weak economy.

The main trust fund that supports the Medicare health-care program for the elderly will run out of money in 2024, the report said.

Bear in mind that the trust funds are not assets that the government can draw on. They are liabilities on the treasury. When the trust funds are paying for the programs money is automatically transferred from the treasury to the programs without Congress yet having to take any responsibility. That means that programs are now putting enormous fiscal pressure on the rest of the budget.

I have been told by one of my cherished interlocutors that any concern about the future is a sign of mental illness. If so, then the trustees of the programs are suffering from the same. From the WaPo:

"Lawmakers should not delay addressing the long-run financial challenges facing Social Security and Medicare," the trustees wrote. "If they take action sooner rather than later, more options and more time will be available to phase in changes so that the public has adequate time to prepare."

For seven straight years the trustees have issued the same warning, to no avail.

On Monday, Treasury Secretary Timothy Geithner called Social Security and Medicare the "twin pillars of retirement security in this country," and he declared, "It is critical that reforms are slowly phased in over time so current beneficiaries are not affected and future beneficiaries do not experience precipitous changes."

President Barack Obama's health care law is supposed to trim Medicare expenses by $500 billion, extending the life of the program. But some independent experts doubt the full savings will materialize, and even the administration concedes more cuts are needed.

Okay. If it's critical to phase in reforms, shouldn't we start phasing in reforms? Shouldn't reforms be real reforms that actually do something about the problem?

In fact, the problems facing the entitlement programs are probably worse than the trustees can legally report.

The trustees conceded that their own Medicare projections could be too rosy. Based on current law, they assume cuts in payments to doctors that Congress routinely waives will actually take place. They also assume the health care law will squeeze the full amount of its cuts from the program.

"Medicare's actual future costs are highly uncertain and are likely to exceed those shown ...in this report," the trustees said.

For two years the Democrats had the White House, the House of Representatives, and a filibuster proof majority in the Senate. They did nothing to advance the reforms that the trustees and Secretary Geithner acknowledge as necessary. Neither the Administration nor the Democrats in Congress have offered anything since. What have they done? Again from the WaPo:

In a blow to the Obama administration on Medicare, government auditors Monday called for the cancellation of a costly bonus program for private health plans that congressional Republicans have criticized as a wasteful political ploy.

The nonpartisan Government Accountability Office said it's not clear that the $8.3 billion Medicare Advantage bonus program will improve quality because most of the money is going to plans just rated average. The auditors did find, however, that the bonuses would temporarily ease the pain of unpopular cuts to insurance plans under President Barack Obama's health care overhaul law.

In other words, the GAO auditors confirmed what the Republicans are saying. The $8,300,000,000 program is doing nothing useful, except politically. It's hiding the pain involved in the Affordable Health Care act until after the election.

If it's true that a concern for the future and a willingness to offer solutions is a sign of mental illness, then the Republican Party and yours truly are in need of counseling. The Democrats, by contrast, are invincibly healthy.

The Point of Democracy

Several years before the USSR finally collapsed, a group of Americans representing a key industry traveled to Moscow to share our technology with their Soviet counterparts. The industry was the manufacture of women's underwear. What our folks found out about the Soviet industry was amusing, at least if you enjoy drinking like a Russian and then leaving like an American. Soviet brassieres were stiff, had the texture of number 40 sand paper, and came in exactly two sizes. How many of each size seems to have been determined by lottery.

Why was the American industry so much more effective in meeting the needs of women than the Soviet industry? Elementary, my dear Watson. The American system included a feedback loop between consumers and producers. Changes in consumer preference force changes in production. No such feedback loop existed in the Soviet system. The managers had no way to know how well they were meeting the needs of consumers, let alone any reason why they had to ask. What was true of the differences between American and Soviet industries was true as well of the difference between their governments.

For that reason, I am less than impressed with Steve Chapman's complaint about American voters in Reason.

In fact, many won't learn the most rudimentary facts about the people running for office and the policy issues they will have to address. Some of us will jump to believe any half-baked rumor or stereotype that confirms our prejudices.

We'll vote to reward or punish incumbents for events that they have nothing to do with. Some voters won't even find out the names of the people running for many offices. In short, the citizenry as a whole will carry out what looks like a giant cartoon parody of democracy. Our form of government is one of those inventions that often look much better in concept than in practice…

This knowledge void is hard to square with our belief in democracy -- which relies on ordinary people to 1) figure out what the government should do and 2) elect candidates who will implement their preferences.

This is a perennial complaint, and it is true enough that many voters are not well informed. A poll run by Zogby shortly after the 2008 election found that more than half of Obama voters did not know which party controlled both houses of Congress. Chapman, however, almost misses both the point and the necessity for representative institutions.

Their depressing failure is enough to raise doubts about the validity of government by the people. Of course, the founders of the American republic had plenty of those doubts. That's why they built in checks on popular control, particularly restrictions on who may participate in elections.

I say "almost" because he goes on to add this:

Even an ill-informed electorate will fare better if it has a role in choosing its leaders -- just as patients gain from being allowed to choose their doctors, despite not having been to medical school.

That is indeed the point. It is true that many states at the time of the founding had property qualifications for voting. This was not, however, because the propertied were better informed; it was because they were thought to have more of a stake.

You don't have to know anything about the executives who run Fruit of the Loom to know whether your boxers are comfortable. You don't have to know anything about Steve Jobs to know whether you like your lap top. You don't need to know much at all about the President or Congress to know when they are sinking the ship of state.

I am all for better informed voters. Efforts to educate the electorate are one way of recognizing the dignity of individual citizens. It may well increase their attachment to liberal institutions. The basic function of democracy is something else. It is to make sure that the producers of policy cannot ignore the needs of the citizen consumers.

Public confidence in American institutions has sharply declined over the last decade. The same thing is happening in Europe. This isn't because the voters are ignorant about the shrewd policies of their betters. It is because they can damn well tell when the crew is running the ship aground.

A Glance at France

The French go to the polls on Sunday for the first round of Presidential voting. Opinion polls suggest that President Nicolas Sarkozy and Socialist François Hollande will face each other in a second round to be held in May. Most of the money says that Hollande will win.

The campaign so far suggests that the French are doing with characteristic flair what all the other major democracies are doing with or without flair: avoiding reality at all costs. See this excellent piece by Oliver Guez in the New York Times:

FROM the subject of halal meat to the matter of driver's licenses, the French presidential campaign that culminates in voting on Sunday has been marked by peripheral squabbles and endless invective among the 10 candidates. But few things have been said about the gravity of the French economic crisis: the deficits in France's public accounts and balance of payments; its drop in competitiveness; its decline in international commerce; its apathetic growth.

Nor have we heard much about the threat of increased unemployment and reduced purchasing power from the austerity measures that the markets expect any president to take — right after the election, of course.

This is the kind of election you have to put up with when you can't talk about the challenger tying a dog to the roof of his car or the incumbent actually eating one.

There are two big problems with this silliness. The obvious one is that it means delaying difficult decisions about France's and Europe's critical situation. The fiscal crisis of Europe gets solved every day and every next morn it appears again. If any of the candidates for President in France has any idea what to do about it, they are keeping quiet about it.

The less obvious but far more ominous problem is that the failure of the leadership is undermining confidence in liberal institutions. One of those institutions is the world community.

All 10 candidates had one enemy in common: globalization, that perpetual movement of capital, people and merchandise that endangers the French social model cherished by 90 percent of French people even as it threatens to definitively bring them to ruin. Among all inhabitants of developed nations, it seems, none hate globalization more than the French. All their political leaders have promised to "fight against" it.

Of course, fighting against globalism is fighting against reality. Guez thinks that the French are set to vote against the 21^st century.

That, unfortunately, is far from the worst of it. Nicola Clark, also writing in the NYT's, has this:

François Kahn has had enough of the French mainstream. Raised in a conservative Parisian family, his sympathies growing up were on the right. About 10 years ago, he switched his allegiance to the Socialists, who seemed to embody values that had grown important to him, such as equality and social justice.

But on Sunday, the first round of France's presidential elections, Mr. Kahn, a 30-year-old strategic planner and graduate of one of France's top business schools, will be voting for Jean-Luc Mélenchon, a former teacher and Trotskyist, whose party, the Front de Gauche, groups a hodgepodge of former Communists, environmentalists and anti-globalists disheartened by a presidential race that many voters feel is out of touch with their bread-and-butter concerns about jobs, the rising cost of living and the future of their state pension and health care benefits.

Polls suggest that extreme parties will capture as much as 30% of the vote in the first round election. Perhaps Ms. Clark feels more comfortable talking about the extreme left than the extreme right, but it is the latter that is more likely to take advantage of Europe's disaffected voters. That is what lies in wait for Europe if its leadership doesn't get its act together. The problem is that it isn't clear at this point that it has an act.

The U.S. is in better shape that Europe politically and socially, if not necessarily fiscally. We have no serious communist or fascist parties. Racists and anti-immigrant passions here are a pale shadow of what they are in Europe. Nonetheless, our national leadership is strenuously avoiding the real problems we face.

We aren't frightened, yet. It may be that we won't really come to terms with fiscal realities until something really gruesome happens. That seems to be the road we are on.

UPDATE Updated: First round numbers.

1. Hollande 28.6%
2. Sarkozy 27.1%
3. Le Pen 18%
4. Mélenchon 11.1%
5. Francois Bayrou 10%

The good news is the poor showing for Mélenchon.  The French aren't completely nuts yet, they just French.  Le Pen's showing is worrisome, except if you are Nicholas Sarkozy.  Hollande and Sarkozy all but tied.  Sarkozy probably has a better chance of winning over the Le Pen voters. 

Keystone Divides Democrats

President Obama was elected in a year that was very good for Democrats. He surely gets some of the credit for their success across the board in 2008. Since then, he has not been all that helpful. He pushed Cap & Trade and it passed the House only to die in the Senate. A lot of House Democrats thought that they had stuck their necks out for nothing.

In my last post I noted that Barney Frank, now retiring, spoke frankly about the cost that Democrats paid for passing ObamaCare. Now we have another example of a burden that the President has placed on his own party. Byron York has this at the Washington Examiner:

The president has put his feet in cement in opposition to the Keystone oil pipeline. But on Capitol Hill, more and more Democrats are joining Republicans to force approval of the pipeline, whether Obama wants it or not.

The President's decision to delay the pipeline pleased his allies among the environmentalists and angered his allies among the unions. However that washes out for him, it has proved a problem for Congressional Democrats. At a moment when gas prices are high and jobs are scarce, it isn't all that easy for a Senator or Representative to explain to his or her constituents why the Keystone pipeline was just the thing. The result is that a lot of Democrats are peeling off.

The latest action happened Wednesday, when the House passed a measure to move the pipeline forward. Before the vote, Obama issued a veto threat. The House approved the pipeline anyway -- by a veto-proof majority, 293 to 127. Sixty-nine Democrats abandoned the president to vote with Republicans. That's a lot of defections.

When the House voted on the pipeline in July of last year, 47 Democrats broke with the president. Now that it's an election year and the number is up to 69, look for Republicans to hold more pipeline votes before November. GOP leaders expect even more Democrats to join them.

The action now is in the Senate.

Democrats are using the filibuster to stop the pipeline, which means 60 votes are required to pass it. (Some Democrats who bitterly opposed the filibuster when Republicans used it against Obama initiatives are notably silent these days.) In a vote last month, 11 Senate Democrats stood up against Obama to vote in favor of the pipeline. Add those 11 to the Republicans' 47 votes, and the pro-pipeline forces are just a couple of votes away from breaking Harry Reid's filibuster.

My guess is that the Senate Majority Leader Harry Reid will manage to block a vote. After all, that is what he is good at. He has managed to avoid bringing a budget to a vote, in defiance of federal law, for three years now.

The stakes are pretty high here. White House Press Secretary Jay Carney called the current Keystone push a "partisan" maneuver. It is obviously a bipartisan maneuver. Sixty-nine Democrats in the House is close to half of the Democrats in the House. What happens if the Republicans do come up with two more Democratic Senators? President Obama will then have to decide whether to veto the bill or not. If he does, the House will vote to override. The Senate will sustain his veto, I am guessing.

Republicans are hoping this plays out as long as possible. They think it is a winning issue for them and they are right. The Keystone pipeline is going to be completed. If not now, then after the election. I don't know whether the President will benefit from his decision to delay it. It's pretty clear that it is dividing his party.

Sixty-nine Democrats peeling off on Keystone is a sign that a lot of the President's party doesn't think that loyalty to the President is an asset in this year's election.

How To View Polls

Let me briefly break blogging silence to commend to readers this post by Nate Silver of the NYT's 538 blog.  It gives an effective guide to viewing polls and handicapping the presidential race, at least through mid-summer.  One of the most tempting things is to overread data to suit one's prejudices, and Mr. Silver gives us a sober guide on how to avoid that error. 

My own view right now is that Mr. Obama holds a slight but sufficient lead.  Probably if the election were held today he'd win by 4-6 points.  Two addendums to that.  An incumbent president who at this point is only marginally ahead has plenty of reason to be sweating.  Also, certain fundamentals (economic, presidential approval, right track/wrong track) do not do the president any favors.  Still, I cautiously place my bets with Mr. Obama because I think he has a much easier route to 270 electoral votes than does Mitt Romney.  Last thought: Once we get well into the summer, pay close attention to Ohio and Pennsylvania.  Obama can win without Ohio, but Romney probably (probably!) can't.  On the other hand, if Obama is losing Pennsylvania (which has gone Democrat for president since 1992, but has been hit hard by economic slowdown and Obama is not super popular there) that probably means he is losing the election. 

Choosing between a Choice and a Referendum

In a much quoted New Republic column, William Galston drew a distinction between two kinds of elections: a choice and a referendum. If I read him correctly, 2008 was a choice. With no incumbent running for reelection, the voters had to choose between two sets of promises. This year the election will be a referendum. Voters will essentially be deciding whether or not to give Barack Obama four more years. If they decide that he does not, then Mitt Romney only has to present himself as a modestly alternative. Galston lays out a number of reasons why the referendum might be difficult for Obama.

There is a little truth to this, but only a little. It is true that in 2008 Obama has the luxury of running without a record. The same was not true, however, of John McCain. McCain had not only to make a case for himself; he had to bear the burden of voter anger at George W. Bush. The last presidential election was as much a referendum on Bush as it was a choice between a war hero and hope and change.

Likewise, in 2004 Bush was running with a lot of baggage. However, he managed to turn the election into a referendum on his challenger. Kerry was never able to decide exactly what he was offering the voters except for being "not-Bush", and in that year it wasn't enough. The Obama campaign is busy trying to do the same thing to Mitt Romney.

I find it interesting that a lot of Obama's defenders took issue with the referendum thesis more than the list of Obama weaknesses. Ed Kilgore, also in the New Republic, argues that the election is not just a referendum on Obama.

A more nuanced version of the referendum hypothesis holds that challengers to even the weakest incumbents must cross some threshold of credibility before achieving victory.

That supports my argument about 2004. Joe Klein argues at Time that this election is indeed a choice, not a referendum. Because we end up knowing more about the candidates for president than we do in virtually any other election, presidential contests are virtually always more choice than referendum.

In the end, though, presidential elections are about character, not policies. That is why Obama has a good chance to be reelected this year–people may disagree with or be disappointed by him, but they see him as smart and solid and decent. Mitt Romney may trump that in the debates this October, but for now he is perceived, especially by women, as inconstant and insensitive.

Chris Weigant at the HuffPo attacks the choice/referendum dichotomy as a distinction without a difference.

In case you've just returned from an expedition to Mars and haven't heard this formulaic nonsense before, allow me to explain what it is supposed to mean. A "referendum" election means that the voters, en masse, will decide that it doesn't matter who the Republican candidate is; they will be voting solely on how they feel Barack Obama has done in his first term. A "choice" election means that voters, again as a monolithic group, will contemplate the two major-party nominees and decide which of them would be the better president. Using this "logic," the Republicans hope it'll be a referendum, and the White House hopes it will be a choice.

It bears noting that this question was in play well before Galston's piece was published or Rick Santorum withdrew from the Republican contest. Katrina vanden Heuvel insisted last January that

The president should be pleased that his Republican challengers are making the race into a choice rather than just a referendum on the economy. Most Americans will readily agree that returning to the Bush policies doesn't offer a way out.

Let's review. Kilgore points out that Romney has to meet a minimum "threshold of credibility" as a not-Obama for the referendum to work. Klein thinks that it's a choice and that Obama can win because voters think he is a splendid fellow. Ms. vanden Heuvel thinks that Obama can win because the Republicans are turning the race into a referendum on Bush. What is the pattern here?

Weigant hit the nail on the head, even if he was wasn't aiming at the nail. Republicans hope the election will be a referendum on Obama. The Obama campaign desperately hopes that it will be a referendum on Romney. What everyone seems to agree on is that if the election becomes a referendum on Obama, his ass is oatmeal.

Obama's record is dreadful. We are suffering through the slowest, most anemic economic recovery on record. It will be years before we recover the jobs lost, if indeed we do. We have been running deficits of more a trillion a year since Obama took office.

It is not just the economy, stupid. It's the stupid priorities. Obama's one significant legislative achievement, ObamaCare, remains deeply unpopular. Michael Hirsh, writing at the National Journal, explains why this is so problematic.

President Obama pushed through a historic health care law. But in so doing Obama downplayed the historic nature of the economic crisis he had inherited, and the historic depths of anger in the country caused by it. Never mind the polls (which seem to be coming out by the minute now): if Obama is defeated in November, that will probably be why.

This is one of the most salient points to come out of a fascinating exit interview given to New York magazine by retiring Rep. Barney Frank, one of the most dominant House members in recent decades and generally a dogged ally of the president. Frank says he now regrets Obama's decision to focus on comprehensive health care reform. "I think we paid a terrible price for health care," Frank said.

Hirsh goes on to show that the Administration badly underestimated the depth of the nation's economic problems. So Obama spent the sweet spot of his term in office getting something that Democrats care deeply about at the expense of the problem that the voters care most about.

We have already had a referendum on Democrats in general and Obama in particular. That was 2010. I don't know what is going to happen in November, but there seems to be a general if unstated agreement that Obama had better make sure it doesn't become a referendum on him.

Buffet Zone

When the Secret Service starts acting like the GSA, the Administration might have a problem. Much worse than that, however, is what is happening to the President's one and only issue recently, the Buffet Rule. Should we ensure that rich guys pay a larger percentage of their income than their secretaries? The rule polls well and the Washington Post thinks it makes sense as a matter of fairness. But the Post focuses on another point: it is all but useless as fiscal policy.

The Tax Policy Center estimates that this version, sponsored by Sen. Sheldon Whitehouse (D-R.I.), would affect 116,000 households in 2015. Because of that small number — and because the tax would be gradually increased as income rose from $1 million to $2 million — the tax would bring in a scant $47 billion over 10 years, assuming that the Bush tax cuts for upper-income earners expire on schedule. (If the tax cuts are extended, the Buffett Rule would affect more households — 217,000 — and therefore bring in more revenue.) You read that right: $47 billion over 10 years. Less than $5 billion a year.

Obama is making a mountain out of a policy molehill. But don't take my word for it. Ask Obama.

Mr. Obama on Wednesday addressed those "who are saying, 'Well, this is just a gimmick. Just taxing millionaires and billionaires, just imposing the Buffett Rule won't do enough to close the deficit.' Well, I agree. That's not all we have to do to close the deficit. But the notion that it doesn't solve the entire problem doesn't mean that we shouldn't do it at all."

No, Mr. Obama, the fact that your policy de jour is a gimmick doesn't mean we shouldn't do it. It just means that it doesn't matter. It won't help or make any appreciable difference. That means that you aren't being serious about anything that matters.

Meanwhile, the WaPo exposed something that does matter. From a piece by Lori Montgomery:

President Obama's landmark health-care initiative, long touted as a means to control costs, will actually add more than $340 billion to the nation's budget woes over the next decade, according to a new study by a Republican member of the board that oversees Medicare financing.

The study is set to be released Tuesday by Charles Blahous, a conservative policy analyst whom Obama approved in 2010 as the GOP trustee for Medicare and Social Security. His analysis challenges the conventional wisdom that the health-care law, which calls for an expensive expansion of coverage for the uninsured beginning in 2014, will nonetheless reduce deficits by raising taxes and cutting payments to Medicare providers.

Believing that the PPACA would actually reduce deficit spending is like believing that an herbal supplement will really help you lose weight without dieting or exercise. Bear in mind that this was the major argument that the President made on behalf of the legislation when it was still working its way through the bowels of Congress.

More surprising, perhaps, is Patrick B. Pexton's apology for Montgomery's story. Pexton, the WaPo's Ombudsman, has this:

So why does a modest and short Post story about the health reform law become a blockbuster online? And what does that say about our reactive, partisan, hyperventilating media culture?...

Putting the story on A3 was the right judgment for a print publication. Montgomery urged her editors, correctly, not to put it on the front page: it wasn't worth that.

So let me get this straight. The Buffet rule is properly front page news, even though it had no chance of being enacted and, as the WaPo acknowledges, would have only trivial consequences if it were enacted. Meanwhile the likelihood that ObamaCare, which has been enacted, will not reduce the deficit by $575 billion as claimed but will increase it by somewhere between $340 billion and $527 billion dollars, is small news.

This is what it looks like when a great regime strives with all its powers to ignore reality rather than dealing with it.

For Whom the Bell Polls

Well, the good news is that President Obama is leading in the Washington Post/ABC News poll. In the first place he is leading himself. He has a job approval/disapproval of 50/45%. That's not far off the Gallup, which has it at 45/45%. Not horrible, but not good for an incumbent.

Less important at this stage is that Obama is leading Mitt Romney 51/43%. Eight points is a healthy lead, if the President can maintain it. Of course, it still shows him barely above 50%.

Jay Cost points out that the poll is not nearly as good as it looks for Obama. Here is the partisan breakdown:

Democrat	Republican	Independent	Other (vol.)	No opinion
34	23	34	5	3

That shows an eleven point lead in party identification for Democrats over Republicans. Is that credible? No.

As a point of historical comparison, the party spread in four of the last five elections since 2002 has basically been an even split between the two sides. In 2008, a "perfect storm" of bad news for the GOP, the party ID advantage was "only" +7. So, a Democratic advantage of +11 is an unjustifiable number, at least in terms of what the electorate is thinking.

But consider for a moment what the poll is saying if it's accurate. Even with a sample that's less than 25% Republican, Barack Obama can barely break 50% against Romney or 50% in overall approval. And consider the results on other questions. Romney beats Obama on the economy, the budget (by a mile), and energy.

Cost points something that might be much more important. The best single question for predicting the outcome of presidential elections is the "do you think the country is headed in the right direction?" question. In the ABC poll, the wrong direction/right direction results are 64%/33%. Those are terrible numbers for an incumbent.

Rasmussen gives Romney a 4 point lead over Obama. That's without the pro-Democratic slant and sampling likely rather than registered voters. I think the WaPo/ABC poll is in fact worse news.

Old Jews Tellling Jokes

Addressing the Problem

I have largely ignored the Northern Valley Beacon for some time, but I will quote that fountain of bile here because it is instructive. After four paragraphs about Nazis, Professor Newquist has this:

The financial problems of the developed countries have resulted in the designation of a new class of useless eaters by some people. An article in The Atlantic contends that the impending demise of Europe and the eventual failure of America are because there are too many old people on pensions, useless eaters, and not enough young people who contribute to productivity. Advances in medicine have prolonged life expectancy and controlled births, creating the imbalance between old and young. Moreover, these old people raise up in rebellion and protest when the governments propose reducing or taking away their pensions. Furthermore, they tend to watch their money and do not spend a hell of a lot to stimulate the economy. One blog recommended this article as brilliant. The article and its advocates seem irritated that old people do not seem willing to go gently into poverty, destitution, and beyond when it is proposed for them. As it is in the Paul Ryan budget.

In the original paragraph, the word "brilliant" links to my post on an article by Meagan McArdle.

McArdle pointed out that it will be hard for Italy in particular and Europe in general to solve their fiscal problems without economic growth and that it is hard to generate economic growth with declining populations. These judgments strike me as near mathematical certainties and I thought it germane to point them out. Whether or how we can remedy the problem is a much bigger question.

Focusing on something more specific, Social Security is an example of what are called transfer payments. In this case, wealth is transferred from people who work to people who don't. The ratio between the number of people paying in and the number of beneficiaries will matter. If the former is shrinking relative to the latter, the system is very probably in trouble. Anyone who wants to know whether or how the system can be maintained had better pay attention to that ratio.

Professor Newquist seems to assume that, because I and McArdle note that the ratio is shrinking, we are advocating the elimination of the beneficiaries. Thus we are Nazis. The adolescent non sequitur aside, there is still a logical problem. A ratio can be altered by changing either side. McArdle and I were clearly focusing on the problem of declining populations. Of course, Professor Newquist has never been very good when it comes to logic.

Economist Robert Samuelson addresses the problem in his latest column. He notes that FDR was not in fact in favor of what Social Security actually became.

When Roosevelt proposed Social Security in 1935, he envisioned a contributory pension plan. Workers' payroll taxes ("contributions") would be saved and used to pay their retirement benefits. Initially, before workers had time to pay into the system, there would be temporary subsidies. But Roosevelt rejected Social Security as a "pay-as-you-go" system that channeled the taxes of today's workers to pay today's retirees. That, he believed, would saddle future generations with huge debts -- or higher taxes -- as the number of retirees expanded.

What FDR wanted was a genuine pension plan. Worker contributions would be invested and the resulting investments would be paid out. It didn't happen. Congress quickly transformed the system into a pay-go scheme. The left has been very fond of that system. It has meant, so far, that Congress could guarantee levels of payment regardless of economic realities. It depended, however, on a favorable payee/beneficiary ratio. That ratio has changed.

Early Social Security beneficiaries received huge windfalls. A one-earner couple with average wages retiring at 65 in 1960 received lifetime benefits equal to nearly 14 times their payroll taxes, even if those taxes had been saved and invested (which they weren't), calculate Eugene Steuerle and Stephanie Rennane of the Urban Institute.

But now, demographics are unfriendly. In 1960, there were five workers per recipient; today, there are three, and by 2025 the ratio will approach two. Roosevelt's fear has materialized. Paying all benefits requires higher taxes, cuts in other programs or large deficits. Indeed, the burden has increased, because it now includes Medicare, which is also viewed as an entitlement.

That is the problem. The Social Security system as it exists is unsustainable. Medicare is much more so. Pointing out the role that demographics is playing in this drama is merely pointing out the hard facts. If we don't reform these systems, they will collapse. Probably a lot more of the economy will collapse with them.

Newquist is a crackpot; however, his rhetorical strategycondemning anyone who points out the problems, let alone actually tries to address themis distressingly common.

Budgets & Bad Government

If history were any guide, President Obama should be cruising to reelection with high approval ratings just now. Economic recoveries are generally proportional to the severity of the recessions that preceded them. A president who is lucky enough to face reelection when a recovery is well under way should be a blessed incumbent.

The following charts suggest that something rather different is happening.

That's not Carter-horrible, but it is well below Reagan and Clinton levels. Here is another chart that is more unfortunate, perhaps, for 1600 Pennsylvania Avenue.

This isn't only merely bad; it's really most sincerely bad. The most recent jobs report is especially disheartening. It casts doubts about the recovery that seemed to be under way. This may be a blip and it may be revised upward when better data becomes available. The problem remains that we are seeing the weakest jobs recovery after the greatest jobs loss in a half century. At this rate, we don't get back to where we fell from for years. Why is line for the recent recession so different from those of previous recessions?

There is a reason why economic recoveries are usually robust. Recessions are caused by inefficiencies that build up in the private economy over time and they are the cure for that problem. That is why they are sometimes called "corrections". Unfortunately, recessions cannot correct for bad government.

Governments have enormous powers to keep paying out when their revenues dry up, something that private businesses cannot do. But with great power, I have heard it said, comes great responsibility. Another way to put that is that with irresponsible behavior by governments come great disasters.

The current dilemma is not the President's fault. It is the result of long term trends in government behavior. At virtually every level of government in virtually all developed countries, the same chickens are coming home to roost. Consider the state of Illinois, as told by the Chicago Tribune:

The state of Illinois admits to $83 billion in pension underfunding, a staggering weight on today's and tomorrow's taxpayers. Add to that the as yet uncalculated billions in unfunded pension obligations for city, county and other local governments… Beyond that $83 billion in unfunded pensions, state government alone faces an unfunded liability of more than $54 billion in retiree health liabilities over the next 30 years.

And then there is California. From the City Journal:

From health care to state and local public-employee retirement benefits, Californians face as much as $500 billion in unfunded liabilities for pensions alone. The state's unfunded health-care liabilities top $62 billion. Brown's new budget actually proposes a 7 percent increase in spending, though it offers to cut some services.

And then there is Spain. From the editors of the Washington Post:

EUROPE IS supposed to be well on its way to resolving the debt crisis that threatens the coherence of the European Union and the stability of its common currency, the euro. But apparently the bond markets didn't get the memo. Creditors balked at the latest offering of Spanish 10-year bonds, forcing Madrid to pay an interest rate of almost 5.8 percent, the highest rate since December and dangerously close to the 7 percent level believed inconsistent with national solvency.

That is why the current recovery in the US is so anemic and why the European governments are floundering in their attempts to economic stability. The basic problem is not in the private sector, which ordinary economic cycles can correct, but in the public sector. It is at root a failure of budgeting.

A responsible budget is a plan for the future. No one can see the future, but one can project realistic and honest estimates of the costs of government programs and balance those projections against equally realistic and honest expectations of revenues. Across the board and at every level and for decades, governments have failed to budget responsibly.

The President has acknowledged the need for entitlement reform and fiscal responsibility, but he has made no attempt to produce a budget that seriously addresses the problems we face. The budgets he has produced over the last two years, projecting long term deficits into the stratosphere, have failed to gain a single vote in House of Representatives.

The Republican majority in the House has produced a budget two years in a row. I am not here defending those budgets. I do note that what is supposed to happen is that the Senate would produce a budget of its own and conference committee would hammer out a compromise to be passed by both houses and sent to the President for his signature. That is how legislation works and in the case of budgets it is required by law.

The Democratic majority in the Senate refuses to produce any budget at all. It has been over a thousand days since they have done so. As long as the Senate continues to refuse to do its duty, the Federal Government will remain fiscally constipated. It can't pass a budget.

The severity of our economic crisis is due to a loss of confidence by business managers and investors. That will not be remedied until our own government and those of other economically important nations begin to put their fiscal houses in order. I don't know who will win the elections this fall. Whoever does will face some extraordinary challenges.

Barack the Clueless 2

My spirited interlocutors in the comments section of this blog have been defending the President's remarks on judicial review with, well, spirit. Their chief argument has been that the President was pursuing a daemonically clever strategy. How could the Court dare to overturn ObamaCare after he had affixed to such a decision the scarlet letters JA, for judicial activism?

I pointed out that it were not so clever to begin his case with a manifestly ignorant comment about judicial review. Contrary to my esteemed commenters, it isn't just conservatives who took issue with the President's remarks. I quoted Ruth Marcus, and I note here that the Washington Post editors also took the President to task.

It's fair to note that the President walked back his infamous rejection of judicial review the next day. He was asked this question when he addressed the Associated Press:

Mr. President, you said yesterday that it would be unprecedented for a Supreme Court to overturn laws passed by an elected Congress. But that is exactly what the Court has done during its entire existence. If the Court were to overturn individual mandate, what would you do, or propose to do, for the 30 million people who wouldn't have health care after that ruling?

Okay, that wasn't exactly the right question. Mr. Obama addressed the right one:

Well, first of all, let me be very specific. We have not seen a Court overturn a law that was passed by Congress on an economic issue, like health care, that I think most people would clearly consider commerce — a law like that has not been overturned at least since Lochner. Right? So we're going back to the '30s, pre New Deal.

And the point I was making is that the Supreme Court is the final say on our Constitution and our laws, and all of us have to respect it, but it's precisely because of that extraordinary power that the Court has traditionally exercised significant restraint and deference to our duly elected legislature, our Congress. And so the burden is on those who would overturn a law like this.

The second paragraph is perfectly reasonable and, I think, correct; except that it wasn't the point he was making before, it is a retraction. Court's should exercise "significant restraint and deference to our duly elected legislature." However, precisely because the President is right about the Court's power to determine what the laws mean, the burden of proof will be judged by the majority of the Court.

The first paragraph, unfortunately, appears just as clueless as the comment he is here retracting. It's nice when the President gets specific. Here is the footnote from Powerline:

Is there any truth to Obama's claim that the Supreme Court hasn't invalidated any statutes that are "economic" and relate to "commerce" since Lochner v. New York, which was in 1905?

Of course not. To name just a few examples a great deal more recent than 1905, the Court ruled unconstitutional provisions of the Sarbanes-Oxley Act that had permitted only "for cause" removal of members of the Public Company Accounting Oversight Board in 2010; the 1990 Mushroom Promotion, Research and Consumer Information Act in 2001 (this case was actually quite similar to Obamacare because the Court held unconstitutional provisions that required mushroom growers to contribute to mushroom promotion programs); provisions of the Patent and Plant Variety Remedy Clarification Act, the Trademark Remedy Clarification Act, and the Copyright Remedy Clarification Act in 1992; the Harbor Maintenance Tax Act in 1998; the Transfer Act which authorized the transfer of operating control of Washington National Airport and Dulles International Airport from the Department of Transportation to the Metropolitan Washington Airports Authority in 1991; and many, many more dating back to 1905.

I don't expect the President to keep all these cases in mind. Surely he could have his staff help him prepare a comment that would not be legally illiterate. The Court has overturned over a hundred laws that were "passed by Congress on an economic issue," since Lochner.

I continue to doubt that the President's remarks on this issue have been clever at all. To the contrary, he and apparently his staff and his administration have been extraordinarily inept at making a case for the constitutionality of the mandate. This isn't because they are stupid or because they are unlearned. The problem is not that they can't understand why anyone would think that ObamaCare is not good law, though they can't. The problem is that they cannot imagine why anyone would object to a good law out of principle.

Reid’s Crazy Train

Senate Majority Leader Harry Reid has once again declined to allow a vote on the Federal Budget. Neither the budget that the President submitted to Congress nor the budget passed by the House nor any other budget will come up for a vote on the Senate floor. This is a major dereliction of duty; however, Reid is busy with more important things. From an editorial in the Washington Post:

The Federal Railroad Administration is considering lending $4.9 billion to a company called Desert Xpress, for the purpose of building a high-speed rail line to Las Vegas from Victorville, Calif., some 81 miles east of downtown Los Angeles.

The brainchild of several wealthy Las Vegas casino moguls, Desert Xpress enjoys the backing of Senate Majority Leader Harry M. Reid (D-Nev.) and has already secured approvals from the Bureau of Land Management, the Army Corps of Engineers and the Fish and Wildlife Service, among other federal and state agencies. It is pursuing about $1.6 billion in private financing.

All that's left is the Federal Railroad Administration's okay on the loan. According to a recent Associated Press report, the $4.9 billion loan would be three times as much as all previous lending by the Railroad Rehabilitation and Improvement Financing (RRIF) program, a little-known pot of low-interest, long-term credit previously used mainly to upgrade existing lines.

The Desert Xpress would funnel gamblers from all over Southern California and shuttle them and their plastic at high speeds to the Vegas tables. You can well understand why the Fish and Wildlife Service is willing to shell out cash for that.

The WaPo asks the right questions:

If this train is such a good idea, business-wise, how come private banks aren't lining up to finance it? Previous high-speed rail projects around the world have been plagued by poor ridership, requiring government subsidies to continue operation. You might save travel time by taking the train instead of a car — as long as you're content to depend on the train's schedule.

The train's backers project an average round-trip L.A.-Vegas fare as low as $89 in 2017, with luxury amenities available. (We're skeptical; the one-way Acela Express fare from Baltimore to New York, a similar distance, is more than $200.) In any case, you can already fly round-trip for as little as $109, with no drive to Victorville. A bus service called My Party Ride will take you and two dozen friends for $99 each and include burgers and drinks. The train won't help Las Vegans visit Los Angeles, unless they want to ride to Victorville and rent a car for the rest of the trip.

As for jobs, any that the Vegas train creates will come at the expense of alternative uses of the money — upgrading the Northeast Corridor to accommodate higher-speed trains comes to mind — not to mention My Party Ride and other competing businesses, large and small.

Yes. Money is to be shuffled from sensible projects to line the pockets of high rollers who have sense enough not to risk their own money. The post does not speculate on what the real costs of the project would be. You can be all but certain that the five or six billion mentioned above will be no more than the ante. The ride, meanwhile, would cost only a little less than climbing on a plane at your local airport; except that it will cost a lot more, for reasons the WaPo suggests.

This is five kinds of crackers. I have written a number of posts about the ruinous fantasy known as high speed rail. The WaPo backs me up. Washington, like many governments around the world, is hopelessly addicted to this fantasy. It is rare nonetheless to see it so shamelessly combined with crony capitalism.

It's a good thing that Senator Reid is busy with things like this. Otherwise he might find time to address the fiscal future of these United States.

Judicial Activism De Jure & De Facto

Defenders of the President's recent faux pas on judicial review tend to focus on the following sentence in the now infamous paragraph:

And I'd just remind conservative commentators that for years what we've heard is, the biggest problem on the bench was judicial activism or a lack of judicial restraint -- that an unelected group of people would somehow overturn a duly constituted and passed law.

This remark unfortunately confuses two issues: judicial activism vs. judicial restraint and judicial review, i.e., the power of "unelected" judges to strike down a "duly constituted and passed law." They are not at all the same thing. You might find the occasional scholar who thinks that judicial review is a mistake. This is not at all a typical position for conservatives or anyone else.

Judicial activism is something that conservatives almost universally oppose. It does not, however, mean what the left seems to think that it means. It doesn't mean doing something exciting or deciding some important question in a way that conservatives prefer.

Judicial activism means legislating from the bench. If a judge thinks that it is part of his job to make sure that the right policies are enacted and the right social outcomes are achieved, then he is certainly a judicial activist. The best example is Justice Brennan on the death penalty and Justice Blackmun on abortion. Brennan tried with all his considerable might to strike down the death penalty despite the fact that it is explicitly constitutional. He did so because he believed that the death penalty ought to be abolished, and that the Court should more sensitive to human dignity. Justice Blackmun, when asked why the Court created a right to abortion, offered no reasoning based on the Constitution or precedents or history. He just replied "I think it's about time, don't you?"

Judicial restraint means that the judge ought to confine herself or himself to saying what the law is, whether he likes it or not. In this view, the judge should act like an umpire in baseball, whose job is call a strike a strike, not to make sure that the cubs finally win a series. Justice Scalia voted to strike down a Texas law banning flag burning. It wasn't because he had any sympathy for flag burners. It is because he thought that the Constitution's principle of free speech was clear.

Unfortunately, it is not always so easy to tell. In Bush v. Gore, did the majority vote the way they did because of the principles they decided the case on or because they wanted Bush to win? If you think you know the answer, you are naïve. It is quite possible that the Justices don't know the answer. I think the Court's decision was correct because it is patently unconstitutional to change the rules of elections after an election. Of course, I also wanted Bush to win.

Citizens United v. FEC was manifestly not a case of judicial activism, despite conventional wisdom to the contrary. This is so because no one could guess in advance the policy outcomes or political consequences. The largest single donor in the last election was a public employees union. Barack Obama, after promising not to use a Super PAC, decided to break his promise. Go figure. I think the case was rightly decided nonetheless because corporations are in fact legal persons and in fact have constitutional rights recognized in an extensive body of cases.

It is possible of course that the four conservative justices and the king of swing will strike down ObamaCare because of political sentiments while claiming to do so because of constitutional principles and that the four liberal justices will vote the other way for the same reasons. If that were true, then everyone on the Court is a de facto if not a de jure judicial activist.

I do not think that is what is going on. The four liberal justices really believe that the commerce clause allows the mandate and Justice Kennedy is really concerned about relationship between the Federal Government and the citizen. The issue of judicial activism is a red herring. This is a genuine disagreement about the scope and powers of Congress under the Constitution.

Barack the Constitutionally Clueless

There is a good reason why academics like yours truly are encouraged to present scholarship at conferences and publish papers. It keeps us in shape. If you say a stupid thing in a conference paper or published paper, someone is likely to stand up and point out that it was stupid. Been there. Done that.

Barack Obama was editor of the Harvard Law Review and a faculty member of the University of Chicago Law School. If he ever published anything or presented a paper anywhere, no one has managed to obtain a copy. That may help to explain this amazing comment at his recent (rare) press conference. The reference, of course, is to the recent Supreme Court hearing on ObamaCare.

Ultimately, I'm confident that the Supreme Court will not take what would be an unprecedented, extraordinary step of overturning a law that was passed by a strong majority of a democratically elected Congress. And I'd just remind conservative commentators that for years what we've heard is, the biggest problem on the bench was judicial activism or a lack of judicial restraint -- that an unelected group of people would somehow overturn a duly constituted and passed law. Well, this is a good example. And I'm pretty confident that this Court will recognize that and not take that step.

There is nothing the least bit "unprecedented" in a Court overturning a law passed by Congress. Does this constitutional scholar really not know about Marbury v. Madison (1803), perhaps the most famous case establishing the power of the Court to review acts of Congress? Does he really not know that the High Court has frequently overturned acts of Congress? Apparently not. I would hope that any student taking an undergraduate Con Law class would know better.

And then there is that bit about "a law that was passed by a strong majority of a democratically elected Congress." ObamaCare barely passed the House of Representatives, where the Democrats held a 75 vote majority. The vote was 219–212, with 34 Democrats and all 178 Republicans voting no. In the undemocratic Senate it passed 60 to 39, the exact minimum number of votes needed to pass it. Even then, the Senate has to work some chicanery to pass the final version. To say that the law was passed by a strong majority is a gross linguistic inexactitude, otherwise known as a big, fat, lie. That's assuming the President knows enough to actually tell a lie.

The bit about judicial activism is too easy. Everyone is opposed to judicial activism except when it comes out their way. The bit about "an unelected group of people" overturning "overturn a duly constituted and passed law," cannot pass without comment. Is the President really opposed to judicial review? Does he not understand that this is exactly what the Supreme Court is supposed to do when a majority has concluded that the duly constituted and passed law is in violation of the Constitution?

President Obama seems to be utterly clueless about the role of the Courts in the constitutional system. If you don't believe me, ask Ruth Marcus, who is all in favor of ObamaCare:

Obama's assault on "an unelected group of people" stopped me cold. Because, as the former constitutional law professor certainly understands, it is the essence of our governmental system to vest in the court the ultimate power to decide the meaning of the constitution. Even if, as the president said, it means overturning "a duly constituted and passed law."

I wouldn't go quite as far as Marcus did in granting the Court the ultimate power to interpret the Constitution. It has that power only in individual cases. I would also put an asterisk next to "as the former constitutional law professor certainly understands," since it is clear that he understands nothing at all.

Killing the Goose that Lays the Golden Eggs

Show me someone who is strongly in favor of ObamaCare and strongly prochoice and I will show you a strong liberal. Big government solutions on economic policy and a strong preference for personal freedom on matters of sexuality define the American left more reliably than anything else.

Unfortunately for the left, the latter has been relentlessly undermining the former. This is the (unstated) implication of Meagan McArdle's brilliant piece on the European fiscal crisis in the Atlantic.

A fiscal crisis isn't hard to understand. For decades, the European governments have been doing what the U.S. is now doing: spending far beyond their means. Deficits occur when government expenditures exceed revenues. The deficit must be covered by borrowing, thus adding to the public debt. Lenders charge interest. As the debt grows, so also grows the portion of the budget going to interest payments. At some point the interest payments begin to put a squeeze on other spending and begin to grow so fast that a government cannot hope to slow that growth down, let alone pay down its debt. That is called insolvency.

McArdle notes that Italy is facing such a situation. That is a bigger deal than Greece or even Spain, as Italy has a much larger economy.

Consider Italy. It is no exaggeration to say that the fate of Italy is the fate of the euro zone: if Italy can keep its debt under control and its banking system solvent, the euro zone will probably make it; if Italy defaults, the resulting panic will probably force Portugal, Ireland, Greece, and Spain to follow suit.

This linchpin is under a great deal of strain. Italy's public debt stands at $2.3 trillion, roughly 20 percent larger than the country's GDP. If not for that debt, Italy would have run a slight budget surplus in 2011. But interest payments alone soaked up nearly 5 percent of the GDP, creating a deficit of about 3.6 percent of national income and increasing the debt even more.

There are only two ways to restore fiscal stability. One is to reduce expenditures. This is called "austerity" in the coin of the times. It hurts. Sometimes it reduces economic growth thus further reducing revenues. The other way is to increase revenues by means of genuine economic growth. Therein lays the problem.

Economies grow when workforce output grows. That can happen when workers become more productive or when you get more workers. In actual fact, it is usually the latter. Italy and Europe are going in the opposite direction.

Everyone agrees that rapid growth would be much nicer than higher taxes and slashed pension payments. The hitch is that over the past five years, growth in the Italian economy hasn't averaged even 1 percent a year. Soaring growth will be tough to achieve, because more and more Italians are getting too old to work—and fewer and fewer Italians have been having the babies needed to replace them.

Italy's fertility rate has actually been inching up from its 1995 low of 1.19 children for every woman, but it is still only about 1.4—well below the number needed to replenish its population (2.1). As a result, even with some immigration, Italy's population growth has been very slow. It will soon stall, and eventually go into reverse. And then, one by one, the rest of Europe's nations will follow. Not one country on the Continent has a fertility rate high enough to replace its current population. Heavy debt and a shrinking population are a very bad combination.

Why did Europeans stop producing Europeans?

Since the invention of birth control and antibiotics, country after country has gone through a fairly standard shift. First, the mortality rate drops, especially among the young and the aging, and that quickly translates into a bigger workforce. Then, birthrates drop, as families realize that they no longer need to birth a basketball team to ensure that a couple members will survive to adulthood. A falling birthrate means that parents can invest more in each child; with fewer mouths to feed, more and better food can nourish each of them, and children can spend more years in school, causing worker productivity to rise from one generation to the next. As the burden of bearing and rearing children lightens, mothers can do more work outside the home, boosting both household resources and the national economy.

As medicine makes it possible for people to live longer, they focus more on their golden years than on the next generation. The result is that we kill and cook the goose that lays the golden eggs.

For more than a half century the left has relentlessly encouraged policies and celebrated lifestyles that result in population decline. This now undermines their desire for the growth of government spending. Europe is now facing the reckoning. We are only a little bit behind.

High Editorial Malpractice @ NBC

I have left the Trayvon Martin shooting case alone since my initial post. I haven't changed my mind about my point, but I think I can fairly be accused of jumping in before the facts were known.

Here is an element of the story about which the facts seem pretty clear. A segment on NBC's Today show played a portion of the conversation between George Zimmerman and the police dispatcher. You can hear the conversation and see the words spelled out on the screen. Here is that portion, from Erik Wemple at the Washington Post.

Zimmerman: This guy looks like he's up to no good. He looks black.

That suggests that Zimmerman was motivated by racism and that Martin was targeted because he was Black. Regardless of the facts of the case, what NBC did was to deliberately distort the recording by selective editing. Here is what was actually said:

Zimmerman: This guy looks like he's up to no good. Or he's on drugs or something. It's raining and he's just walking around, looking about.

Dispatcher: OK, and this guy — is he black, white or Hispanic?

Zimmerman: He looks black.

That, as Wemple puts it, is "high editorial malpractice." Zimmerman did not spontaneously mention the racial identity of the man he was following. He answered the dispatcher's question. The point is not to defend Zimmerman; it is to condemn NBC. They constructed a deliberate lie about what was said in order to push the version of the story that they favored.

NBC has launched an internal investigation of the matter, as well they should. I would note that this came to light because Fox News went after it. This is why we need conservative media outlets. We may wish we had a mainstream media with a sense of professional responsibility that overrides their passions and partisan views. We don't. The next best thing is to have an opposition so that the two sides can keep an eye on one another.