Objective Government

What would Ayn Rand do?

Several months ago, my best friend called to ask if I could bring him the Emergency Room; he’d smacked his head hard after his bike tires got caught in railroad tracks.

Though Rand never wrote about bicycles in her several thousand pages of fiction, presumably she would have left my buddy lying dazed by the tracks. Helping him, she’d say, would only prevent him from taking responsibility for his own acts, dampening his ability to learn to avoid train crossings.

Some Rand followers would object to such a cold interpretation, but refusal to help others is the essence of her Objectivism philosophy, summed up by hero John Galt in Atlas Shrugged: “Do not cry that you need us. We do not consider ‘need’ a claim.”

Many say it less bluntly as, “Help others by helping yourself,” but however you phrase it, it has an appealing core. Be selfish! When you go after what you want, that’s also best for other people. Helping others hurts them, so don’t bother; just get what’s yours.

Does that sound too extreme? Former chairman of the Federal Reserve Alan Greenspan now suggests it is, a change of heart that Objectivists label “cowardly,” and “traitorous.” After decades of following Rand (she nicknamed him “the undertaker” because of his gloomy disposition), Greenspan admitted that unregulated derivative trading hurt markets in ways he hadn’t expected:

Rep. Henry Waxman (D-CA) pressed him to clarify his words. “In other words, you found that your view of the world, your ideology, was not right, it was not working,”

“Absolutely, precisely,” Greenspan replied. “You know, that’s precisely the reason I was shocked, because I have been going for 40 years or more with very considerable evidence that it was working exceptionally well.”

It was going well until there was a crisis, as is true for many people’s lives. You may not often need medical malpractice laws, or environmental regulation, or a vibrant support system, but when you do, they prove their worth.

I don’t want a government dictating our every move. You should be free to bike where you want, for instance. But for those rare times you take a fall, it’s good to know that there’s a hand ready to help you get back on your feet.

The Smartest Supreme Court Choice of All

President Obama's smartest move on the Supreme Court would be to choose someone smart. The court is losing an articulate champion, and it needs a strong new voice - not just a vote - as balance.

Can Sonia Sotomayor out-reason Justice Scalia? More important, can she convince other justices, and other Americans, of her views?

Some liberals say that even asking the question is sexist or racist, though none of the other minority candidates, from Elena Kagan to Harold Koh, drew fire for perceived lack of intellect. And it's a good question to ask. A judge in the spotlight of history must be able to make not just the right decisions, but also convincing arguments.

Supporters of Sotomayor say the doubt is misplaced; after all, she went to Princeton and then Yale Law. But if a school record guaranteed intelligence, we could count on brains from anyone who attended Yale and Harvard, like our previous president. 

So what is a better measure?

Here are three good  yardsticks of intelligence:

First, an articulate speaker is a good sign. While some smart people can't express themselves well in words, you might consider it a requirement for a Supreme Court justice, who must convince a nation of the soundness of each judgement. Sotomayor's wooden reading of her dull acceptance speech doesn't bode well, though she may yet surprise us.

Second, the ability to see the implications of a choice matters greatly. Sotomayor will get grilled on her upholding of Ricci, the New Haven firefighter denied promotion when no minorities passed the advancement test. Whether the verdict is sensible or not, the opinion was a single, anemic paragraph - wholly unacceptable for a divisive, sensitive issue. She upheld the case but settled nothing.

Which brings us to the final yardstick for intelligence:  the ability to place decisions in the context of the most important principles.  Any tough decision has several principles in conflict, as does the Ricci case above. On the one hand, you want to promote someone who has earned the position, yet on the other, you want to encourage success for anyone of merit. A judge needs to define which principles are affected by each choice, preferably in a convincing opinion.

It's exceptionally easy to let lazy thinking overwhelm such reasoning. Even Antonin Scalia does it, as when he said,

'I suppose it's the same thing about so-called torture. Is it really so easy to determine that smacking someone in the face to determine where he has hidden the bomb that is about to blow up Los Angeles is prohibited in the constitution?'

While I actually agree that fair treatment varies with context, I've never railed against 'judicial activism,'  the interpretive reasoning applied by judges for such cases. Scalia hates it or endorses it, as the need suits him.

Would Sotomayor stand up to this inconsistency? Would she be convincing?

Look at this summary of her skills from today's Times:

Judge Sonia Sotomayor's judicial opinions are marked by diligence, depth and unflashy competence. If they are not always a pleasure to read, they are usually models of modern judicial craftsmanship, which prizes careful attention to the facts in the record and a methodical application of layers of legal principles.

That's another frightening sign of a mediocre mind,  however well-disciplined. Precedent matters, but so does sound reasoning. Look at these two smart opinions from Souter, one 'liberal' (attacking a death-penalty requirement) and one 'conservative' (setting limits on minority activism):

He dissented in a 5-4 ruling when the Supreme Court upheld the right of Kansas to require the death penalty in an unusual tiebreaker arrangement:

'A law that requires execution when the case for aggravation has failed to convince the sentencing jury is morally absurd, and the court's holding that the Constitution tolerates this moral irrationality defies decades of precedent aimed at eliminating freakish capital sentencing in the United States.'

Yet he also wrote the unanimous court ruling that St. Patrick's Day parade organizers could refuse to include a troop promoting gay rights. Look at how well he recognizes value in both sides, and how clearly he places the priority:

'While the law is free to promote all sorts of conduct in place of harmful behavior, it is not free to interfere with speech for no better reason than promoting an approved message, or discouraging a disfavored one, however enlightened either purpose may strike the government. ...'

Souter's elegant phrasing applies to all such cases, regardless of political bent; gay rights parades are not required to make room for a troop from the religious Right, nor must the NAACP provide a marching slot for the local Klan. Sensible, yes?

I'm skeptical that Sotomayor would be so clear.

But perhaps she'll convince me.

This post comes today for timely reasons, replacing next Monday's column. I'll post again the following Monday.

A Tax Conservatives Can Love

This week's Economist calls a spade a spade: the world needs a carbon tax.

That's right, a conservative magazine favors a tax. (This one puts a pollution surcharge on energy produced from burning coal and oil, among other things). And they should, for two good, conservative reasons.

• A carbon tax helps market forces work.

Usually, free-market advocates hate taxes because they introduce inefficiencies. But taxes can actually help set proper rates for items with societal costs.

If your neighbor buys a new lawn mower, you're better off when instead of a gasoline-powered one, he chooses a quieter, less-noxious electric model. But there's no price-cut for him if he does so, nor is there a surcharge for the gasoline model. There's a clear advantage to one choice, yet that isn't reflected in the price. The market needs a 'nudge' to set it right.

This is sometimes addressed through rebates, as with electric cars, but that's inefficient and far less precise than a tax. More often, the government steps in with an outright ban of the offending item, which brings us to the second reason to favor a tax:

• A carbon tax means less government interference.

Often, the offending item faces an outright ban, as with lighter fluid (in Los Angeles), fast-flow shower heads (in San Francisco),  and large-flush toilets (nationwide). That's both heavy-handed (I wish I could apply my fine water-saving habits toward a good shower) and unnecessary.

We face even worse with the cap-and-trade system proposed for carbon. Under that system, the government would issue permits to coal and oil and other companies, allowing them to pollute up to a certain amount. It's become popular in Congress because politicians feel, perhaps correctly, that they can steer credits to their own states.

But what conservative would trust the government to get the levels right? And what liberal trusts companies to pass on to consumers the value of their new permits they've received?

It's far better to let the market work. Set a simple tax on pollution, then apply some of the revenue toward green solutions. That means less government intervention, less bureaucracy, and a greater chance for the market to work its magic.

What conservative wouldn't love that?

The Doomsayers and the Retirees

How can opposite sides of a debate both be right?

Doomsayers insist that Social Security has no 'trust fund' and will run out of money sooner than 2037, the new date listed in this month's official new projections.

Optimists say Social Security is well-funded and can continue with little additional money, if any.

They're both correct, at least partially so.

The doomsayers have latched on to a concept few media outlets understand: we're spending the Social Security surplus, and that means there's no 'trust fund.' Currently, Social Security takes in more money than it spends; that will change as we get more retirees per worker. Most news sources then report that the extra money Social Security has taken in - including this year and last - can then be spent to cover the gap until 2037.

But since we're spending that money now, there isn't any 'saved.' The surplus money goes into the general fund, which is spent by Congress on defense, education, and the like (see 'Where do your Taxes Go?').

It's as if you give $100 to your best friend in exchange for an I.O.U. while he or she then spends that cash. When you turn in your I.O.U., your friend needs to get that new money from someplace, since it hasn't been saved.

For Social Security, the I.O.U.'s are notes from the Treasury Department (or technically, they're an accounting entry made in the ledger for Social Security). To pay them off, the government will either need to borrow more (by issuing Treasury Bonds), or raise the income through taxes. There just isn't any saved. Really.

Optimists say the Treasury Department never defaults on payments, and that's true, too. Next week, we'll see why they're right: even though there isn't money saved, Social Security is not in crisis.

Words are Terroristical

Surprise! Barack Obama is a fascist, say GOP commentators, bloggers, and even politicians, including ex-presidential candidate Ron Paul.

Unless, of course, Obama is a socialist, as claimed by many of the same people, including Ron Paul and other folks at the first link above. Saul Anuzis, a contender for GOP party chair, explains that party supporters weren't getting enough traction from 'socialist,' so they're trying the new 'fascist' tag.

'We've so overused the word 'socialism' that it no longer has the bad connotation it had 20 years ago, or even 10,' says Anuzis. 'Fascism - everybody still thinks that's a bad thing.'

Or maybe President Obama is a Communist - people still hate Communists, right?

That link, like the previous one, comes from FreeRepublic.com, which used to be my favorite amusing conservative site until they kicked me off for offering opposing views. (Really! That's why you'll never read a dissenting opinion there. They don't allow them.)

Even if you can't ignore such trash (the above article states a KGB agent admits Obama is a secret Communist), you can use your head. Can he be all three at once?

Remember that it was the Communists who fought the Fascist government in Spain, and that makes sense. They're at opposite ends of the political spectrum; they combine no better than the Yankees and the Red Sox. Those pundits are just spouting play-yard taunts, and they might as well call Obama a 'poopy-head.'

We've seen this before, most recently with abuse of the word 'terrorism,' which has devolved into meaning only, 'something you don't like.' As you know, 'war is terrorism,' as is ignorance. Hate is terrorism, as are global warming, and of course - of course! - taxes.

Such word-napping aside, it's actually useful to have a word that describes the deliberate targeting of civilians. War is awful, of course, but there's a moral chasm between shooting an armed assailant and planting a bomb on a school bus. Equating the two elides an important distinction, and when we muddy the words, we cloud our thinking.

So don't believe the name-callers when they toss around the 'fascist' label, nor the 'socialist' one. You know the difference, or if you don't, you still know there is one.

After all, you're no poopy-head.

Handling Obama Derangement Syndrome

When conservative pundit Jonah Goldberg recently praised Barack Obama's handling of the Somali pirate incident, his email inbox overflowed with "snark and bile" from readers unable to stomach the good words.

Of course, there was nothing wrong with the actions themselves.

If Ronald Reagan had taken the same steps - sending Navy forces to the area and ultimately rescuing the American ship captain after killing his captors with astoundingly accurate sniper fire - conservative magazines would feature the Gipper on Mt. Rushmore.

What better response from the conservative perspective? We used military might to rescue an American hostage. You'd think that would win cheers from everyone without tie-dyed sheets, yet Republicans still sneer (see 'Obama Derangement Syndrome' in the Economist).

'There's no pleasing some people' takes on a special significance today, as the phrase has more literal meaning than in the past. The radical right will be pleased by nothing, absolutely nothing, undertaken by Barack Obama or his party, just as the radical left refused to endorse any action by George W. Bush (even such liberal-friendly acts as increasing AIDS treatment funding for Africa).

So why try to make the radicals happy? A better option is to ignore them completely.

No more trying to please the opposition. No more making tax cuts the single biggest part of the stimulus package, because the other guys will still hate you. No more resisting calls from both sides of the aisle to nationalize banks, because the opposition will still call you a socialist or a fascist or a communist... or even all three at once. (See the Economist article above.)

In fact, that's the very topic of next week's post, Words are Terroristical.

Dump the Political Clowns

What's wrong with being smart?

Republicans used to like smart people, back when they offered effective leaders. Even Ronald Reagan gave insightful radio addresses while governor of California, and he wasn't afraid to work with strong intellects.

But the previous administration had such a severe anti-intellectual bent that presidential advisor Karen Hughes  "rarely read books and distrusted people who had," bemoans the Economist. Speechwriter David Frum noted that 'conspicuous intelligence seemed actively unwelcome in the Bush White House.'

We may be glad that president is gone, but have we left him behind?

We're still holding up GOP candidates who drop their g's and tout their down-home qualities. I don't mind a politician of the people, whether a boy from a log cabin or a peanut-farmer, and 'rural' doesn't mean 'dumb.'

So why do we support the yokels in dunce hats? Do we really want only one party in America to offer intelligent candidates?

Glenn Beck, a rising star for FOX News, recently asked aloud if disaster relief agency FEMA was setting up concentration camps, calling it a rumor he was unable to debunk. That's the oldest, lamest journalistic trick of all, applicable to any stupid statement you wish to make. I, for instance, am unable to dispel rumors that Glenn Beck is French.

He's full of nutty comments. Take the recent one that 'the U.S. is on the road to socialism,' and compare that to your feeling about Wall Street bailouts.  Would you describe a president who hands money to investment banks as 'socialist'?

Comedian Dennis Miller noted when Ann Coulter says such things, she's acting like a dunk tank clown 'trying to sell more baseballs.' The goal isn't to inform or instruct, but just to incite.

We have enough clowns. Give us thinkers, too. Please.

In April, each Monday's post will be about society and technology. We'll return to economic issues in May, with Who Pays the Taxes?

Who Laughs at the Laffer Curve?

You've found me: the one and only person in America who believes in the Laffer curve.

Ever since Reagan championed the idea that the government can earn more from lower taxes, liberals have shunned the concept.

Oddly, conservatives have, too, though they love part of the idea. You can read some near-religious praise for part of the Laffer curve at FreeRepublic.com, a site whose crazy fervor used to tickle me until they kicked me off for suggesting there's a role for good government.

One poster says, 'its logic continues to elude the class-warfare lobby' and another insists, 'Laffer curve should be pasted on the ceiling above every child's bed.'

But they don't really want a Laffer curve. They want a Laffer bulge, a curve with no left side.

Look closely at that left side: at that point, government receipts fall with further tax cuts. That fits both our historical data and plain logic. If you cut taxes to 0%, we'll clearly have no government revenue.

So where are we on the curve?

For us to expect more revenue by cutting taxes to 10%, from 40%, we'd have to expect that people would work four times as many hours. That's simply not possible, and the tax change does not imply any leap in productivity to fill the gap.

Could people work twice as many hours to compensate for a cut to 20%? Since the average employed American works between 46 and 50 hours per week, doubling their time would be exceptionally hard. Remember, that's an average. Yes, some people already work 100 hours a week, but they can't double their time to 200.

Then here's where we are on the Laffer curve: we're close to the optimum level for receipts. We can't cut the top tax rate to 20% and expect people to double their work week, nor should we hike it to 60% while hoping it doesn't reduce hours. Neither is reasonable.

We can argue over whether we should shift 5% one way or another, but we're no longer at the punitive 80% top tax rate that existed when Reagan took office. The level now is close to where it needs to be.

So let's put away the Laffer bulge and call a spade a spade: lowering taxes now is liking taking medicine for last year's cold.

The Guilt-Free Stimulus

Do we really build debt when we move to increase spending?

In my column in today's Washington Post,  'Stimulating our Inner Consumer,'  I propose that we can use human nature to encourage consumer demand, easing the loss of jobs until longer-term stimulus projects take root.

If people find it easy to spend with a $2000 prepaid American Gift Card, we're likely to see such a boost, as convenience is hard to resist. People are likely to eat more when seated by a bowl full of chips, and many diners wave away bread to remove that very temptation.

But some people still wonder how much new spending a gift card would encourage. What if consumers ended up buying the same groceries as usual and saving more of their paychecks?

The answer is: that's fine. Doing so costs nothing, and it doesn't build real debt.

If you save the equivalent $2000 then repay it through taxes years from now, there's no cost to you or the government.

Even interest on the debt goes to you and back. When the government borrows money, it issues Treasury bills mainly to Americans; only one in six is held abroad. That means it borrows from you before loaning that same money back. If you save all the money, the result is exactly the same as if you got a $2000 IOU and then returned it a few years later.

In such a case, issuing the Gift Card truly does cost nothing (save administrative costs, which have tended to be low for past rebate checks), as it does nothing.

Fortunately, such absolute saving is unlikely, and we can expect real results. If you hand $2000 to the man on the street, he'll have a strong incentive to spend at least a portion more than usual. The 'marginal propensity to consume' varies with income - a gift card may have less influence on Bill Gates than on me - but it's always more than zero.

We really can encourage more consumer demand, just as surely as people will eat from a bowl of chips.

Ronald Reagan's Favorite Joke

Reagan used to quip that 'the most terrifying words in the English language are: I'm from the government and I'm here to help.'

The funny thing is that government can indeed help people to help themselves, and that's a lesson worth remembering in tough economic times.

Look at the recent proposal in Fairfax County, VA, to trim the budget through elimination of Adult Daycare Centers. Their daytime services help not just the elderly, but their grown children who are then free to go to work.

Without such services, alternatives are bleak. Private elder care can cost upwards of $10,000 a month, and it's rarely covered by insurance. It's far cheaper for most people to quit their jobs to care for needy parents than to try to pay for assistance at market rates.

Those centers offer more than care for the elderly and more than positions for the people providing the care. They give other people the chance to pursue their own jobs, and we can hardly ask for a wiser form of government spending.

I'm not advocating a hand-out. I'm not suggesting that the government should provide everything we need.

But it should sure give people the chance to provide for themselves. If we cut back on people's opportunities, they'll end up in even greater need.

Funny how that works.

Next Monday's post will be on Who Laughs at the Laffer Curve?

Making Sense of Really Big Numbers

Pundits had laser-like criticism of Louisiana Gov. Bobby Jindal and his televised address on Tuesday.

They focused on his "folksy" style and his wobbly command of facts when criticizing parts of the stimulus bill, particularly those for 'volcano monitoring' and 'magnetic trains.' Of course, here in the Northwest, we don't find monitoring of volcanoes any more wasteful than a hurricane watch in the South, but much worse than Jindal's ridicule is his math.

$140 million for volcano monitoring is less than one tenth of one-percent of the spending bill. It doesn't deserve any greater portion of our attention.

Then what about the 'MagLev' train in Las Vegas? Its aim of linking working-class neighborhoods with jobs deserves better than Jindal's jibes, as you might expect given its support by the chairman of California's portion of the long rail line, Quentin Kopp.  Kopp, who served for years as San Francisco's most conservative council member, is whip-smart and one of my favorite politicians. He's been called a lot of things, including "biting," and "a force of nature," but he's never been accused of being a dreamy liberal.

And again, the best perspective of all comes from looking at the numbers. $8 billion for the train is just over 1% of the spending package.

When is the last time you saw any large project, public or private, that was more than 99% efficient?

Does Jindal really mean to imply that he agrees with nearly all of it? If not, why doesn't he address the big-number items?

I expect it's because it is hard to disagree with most of the stimulus package (whose components you can see clearly laid out in my earlier post, Components of the Stimulus.

Complaining about waste in 1% of the bill is like complaining about "pork" in politics. Yes, it's there, but only as a small fraction of the total (see my earlier post,  Where Do Taxes Go? ).

Let's call a spade a spade: $785 billion in stimulus is a lot of money, no doubt. But it's not too much to keep in proper perspective.

One Port in a Storm

Where do we run in a crisis?

Home, of course. Under fire, people fall back on beliefs they have long held, and that's exactly what they're doing in this economic crisis.

The same people who cried out for lower taxes three, five, and ten years ago say that's exactly what what we need now. And the same people who have long demanded more government entitlement programs say that's just what we need today.

They may or may not be good ideas in themselves, but that doesn't make them the right medicine for the current problem. There's a strong tendency to use a crisis in support of an agenda. As Mark Twain noted, 'To a man with a hammer, everything looks a nail.'

We're far more likely to get out of this mess if we focus on the actual, live problem in front of us, the collapse of consumer confidence and the resulting jobs lost.

We may never agree on who caused the crisis - subprime lenders? eager homeowners? profligate consumers?  greedy bankers?- but we'll know it's behind us once consumers buy without fear, allowing businesses to add the jobs that provide all goods and services.

That should be our aim, breaking the cycle of fearful retreat. From there we can move forward, toward whatever agenda we please.

Next Monday's post will be on Making Sense of Really Big Numbers.

The Smartest Spending of All

So why not boost spending with $2000 gift card for each American?

Here are the most common objections and questions I've received about my article in this weekend's Washington Post:

  - Didn't spending get us into this mess? We need jobs, not cash!

We do need jobs, and the gift card helps us get there, during the months that job programs get underway. This week and next, there's only one thing that keeps businesses from folding, and that's consumer demand.

To help in the short-term, the Senate has proposed nothing but tax cuts, and that's disingenuous. While some other problems may be averted with appropriate breaks, like expanding exemptions from the Alternative Minimum Tax, we shouldn't confuse those with immediate stimulus.

When your house is on fire, there are things to do before choosing a new sprinkler system. The 600,000 jobs lost last month represent only one sixth of the the total losses since the start of the recession. We need relief soon, while all other plans take root.

The $2,000 gift card isn't a full solution, but it's a strong tool we can put in the hands of every American right now, this week.

   - What if I just save the money?

Fine. If people save every penny of it, the program carries no cost: $2,000 goes to you, then back to the government years later. Even the interest goes to you and back. The Treasuries used to finance our debt are sold overwhelmingly to Americans. Despite the huge foreign reserves of Japan and China, we borrow mainly from ourselves.

But while rebate checks were saved at too high a rate to help boost the economy, the American Gift Card can do better, as it never sits in a bank. In our house, grapes get eaten a lot faster when they're out on a plate than when they sit in the bottom drawer of the 'fridge.

   - Won't the money just go to China?

Amazing at it seems, given that half the things on my desk were made in China, well over 80% of dollars are spent on domestic goods and services. Even without restrictions on the card, it really will help Americans.

   - Why not $2 million, so we're all rich?

$2000 is a good figure: $200 is too little and $20,000 is excessive. It's also the right amount to replace the $275 billion in proposed corporate and other tax cuts, some of which have merit but none of which have a stimulus effect with the promised speed.

$2000 per taxpayer provides a solid short-term stimulus while other programs begin, even though the mere issuing of a card doesn't create wealth. It is indeed money we're borrowing from ourselves, and for these next few months, that's a good thing. While there may be benefits to a higher rate of saving in America over the long term, the sudden drop in spending is causing substantial pain.

We can start cheering about reduced consumption after people stop losing their jobs.

- Can't we keep the government from telling us what to do or giving handouts?

Unlike other spending projects, the Gift Card program doesn't rely on the government to decide which business or industry should receive the money. You do.

There's no handout. Stores still have to attract your business if they want a boost in their bottom line. The difference between this an industry bailout is that you get to decide where the money goes.

And that's the smartest spending of all.

Boost the Economy, Today

Thanks for the many positive notes about my article in today's Washington Post, suggesting a short-term stimulus through a $2000 federal Gift Card.

It's a short-term boost, not a fix for all the long-term problems with the economy, nor to replace useful infrastructure spending or appropriate financial regulation.

Tax cuts can help avoid some problems, particularly if we wisely expand exemptions from the misguided Alternative Minimum Tax,  but we shouldn't confuse tax breaks with immediate stimulus.

The store on the corner struggles when there is a fall in consumer demand. That's true whether taxes are high or low, whether subprime lenders are spinning their evil ways, or whether or not the financial markets need more regulation.

And so do the store employees. The 600,000 jobs lost last month are most remarkable in that they represent only one sixth of the the total losses since the start of the recession. We need relief now, while all other plans take root.

The $2,000 gift card isn't a full solution and isn't meant to be. It's a tool we can put in the hands of every American, right now, this month.


On Monday, I'll post answers to the most common questions about the idea, plus a response to some objections. Or you can read hundreds of differing opinions on the idea at several blogs including that of MadDogMedia, Reddit, Scott Loftesness, and The Washington Post comment board.

Components of the $825 billion stimulus package

Item                                                 Amt ($billion)

Tax Cuts                                        275

  $500/person, plus expansion of business loss writeoffs

Aid to States 119

   $87bn Medicaid, $25bn public safety, $7bn law enforcement

Education                                 117

   $41bn low-income support, $39bn secondary, $22bn college

Unemployment Aid                  106

  $43bn  jobless benefits extension, $39bn health coverage

Infrastructure                                                                  90

  $30bn highways, $31bn building repair, $19bn water, $10bn transit

Energy Investments                     54

$32bn grid upgrade, $22bn housing weatherizing

Investments in Science and Technology 16

  $10bn research facilities, $6bn rural broadband Internet expansion

Other 48

You can see more detailed figures in the actual proposal (.pdf document hosted by the Wall Street Journal).

Note how conservative this is - 'conservative' in the political sense. Tax cuts are not only the largest portion of the package, they're twice the size of the next largest item. More than twice the size.

And look at where the other big expenditures are: public safety, law enforcement, infrastructure. Even some of the liberal-sounding titles actually house conservative projects. 'Energy investments' isn't going toward solar-powered smiley buttons. It's primarily for upgrading the nation's electrical grid.

Good for President Obama for reaching across the aisle. Let's see how it works.

Where do Taxes Go?

Here's where your tax money goes:

Item ('07 unless noted)         Amt ($billion)

Social Security Payments       586

Defense (minus Iraq, Afghan.) 548

Medicare      395

Unemployment          294

Interest on nat'l debt '08        244

Medicaid '08        202

Iraq and Afghan wars                186

Stimulus rebates '08 168

Foreign tax loophole discovered Sept '08              100

Education                      89

Transportation                                77

Veterans benefits        73

Justice Dept                                   44

Food Stamps         39

Foreign Affairs                             32

NASA                                  17

Earmarks '08                                                                  16

National Parks                       2

What does this tell us?

Three things. First, the media attention given to issues doesn't accurately reflect their real size in the budget. There are headlines over every wasteful 'bridge to nowhere' pork project, and while they're awful, they're also a small part of the budget.  In fact, a tax loophole the IRS just announced is more than eight times the size of all 'pork' projects combined. We aren't going to balance the budget just by trimming pork.

Second, our National Parks are being shamefully squeezed. We could quadruple its budget and it would still be one of the smallest  national programs. Ditto for NASA. If you think the money we spend on NASA would be better spent on schools, you're looking at the wrong source. NASA is small (half the size it was in 1965, by inflation adjusted dollars), and it's the big items we need to debate.

Third, if we want to balance the budget, it's going to be through defense cuts or tax hikes.

Yes, Social Security, Medicare, and Medicaid are big parts of the budget, but they also have their own tax sources. Social Security is currently in surplus, and while that will change, that's a topic for another time. For now, the items funded by your general income taxes are dominated by defense spending.

Take every other program in this chart - education, transportation, food stamps, and yes, NASA - and add them together. That's less than we spend on defense and the wars in Iraq and Afghanistan. Throw in unemployment expenses. It's still less.

I believe in a strong national defense, but I also believe in fiscal responsibility, and if we don't want higher taxes, we're going to need to rein in spending where it counts. Trimming the National Parks program won't balance the budget, but a careful look at defense just might.

The Bailouts Compared to the Cost of War

Figures in the hundreds of billions of dollars become mind-boggling and difficult to envision. How big are they really?

Here's a useful chart:

Item  Size ($ trillion)     % GDP

U.S. GDP  14.2   100

National debt   5.4   38

Annual gov’t spending   3   21

Revenue   2.5   18

Historical avg revenue   -   17 to 20

Bailout so far   1.6   11

Wars in Iraq and Afghanistan   0.8/yr   3 / yr.

What does this tell us?

First, America has a big economy. We produce nearly $15 trillion worth of goods and services each year. The national debt is big, too - more than the annual federal budget - but it doesn't need to be repaid all at once.

In one sense, the bailout is huge. It's more than half of what the government spends in a year. On the other hand, if people were really worried about debt, they'd be asking every day if we're getting our money's worth from the wars in Afghanistan and Iraq.

There are other ways to shrink the deficit. We could raise taxes slightly, since we're at the low end of the historical average, but that alone won't do it. Nor will cutting spending from the traditional budget, unless the cuts were huge - far deeper than is likely to be politically possible. A ten percent cut wouldn't do it, nor would twenty percent, if we include interest due on the bonds issued.

But there is a way. The gap between spending and revenue is about 3% of GDP, which is also the size of our spending on the wars in Iraq and Afghanistan. Without those, we're in far better shape, with many more financial tools to help our own economy.

We've spent nearly twice on those wars so far than on the entire financial bailout. Another way to think of that is to imagine how much economic stimulus we would have if we spent that money here at home, instead of wasting hundreds of billions on graft and poorly supervised projects abroad.

How you feel about the war is a political issue, of course. But if you care about national finances, it should be an economic one, too.

What Science Offers Politics

Can science help us make decisions?

While science does not tell us what we should do, it can help us gauge the impact of our choices by looking at existing data. But it can do so only if we understand how science works, and too few Americans do.

Sadly, author Michael Crichton is not one of them. After his death earlier this month,  the Wall Street Journal offered an excerpt of his speech("Aliens Cause Global Warming") about the "hoax" of global warming, the premise of one of his final books.

In it, Crichton fails to understand how science deals with uncertainty. To him, any admission of uncertainty is tantamount to "mere guesswork," and research filled with uncertainty, like the search for extraterrestrial life, is "unquestionably religion."

He may be a doctor, but he's no scientist.

The kind of "proof" he seeks isn't available to science at all. Proof is reserved for the rarefied world of mathematics, and the best we can ask for in science is evidence.

Is there evidence for global warming? Sure, but that's not the point. If he wanted to argue against the evidence, fine. He could say, for instance, that deep-sea temperature data isn't reliable, or we need to include additional data from such-and-such a source. But to say that because we can't prove a link between cause and effect is to misunderstand the nature of science. Toss it away, and we lose an invaluable tool.

This affects our world in important ways, every day. Here are a couple of rulings that affect what you can buy and the land you live on.

On December 21, 2004, the U.S.  Department of Health and Human Services recommended against allowing the import of prescription drugs from Canada because it  “could not be sure” that the imported drugs would be safe.

The next day, the Forest Service eliminated its policy for preparing Environmental Impact Statements, as well as the requirement for logging to protect all viable species in the National Forests, since such statements could not say "with certainty" what sort of harm would follow logging and development.

The above observations, from a brilliant  paper by Freudenberg, Gramling, and Davidson,  reflect opposing uses of scientific uncertainty for political ends. In the first case, uncertainty prohibited an action that couldn't be proven safe and on the other one that couldn't be proven unsafe.

Science doesn't offer proof. Neither does politics, and to ignore the science altogether is to suggest that politicians and interest groups can make decisions with certainty even when scientists cannot.

What science offers us is evidence, and it can help us answer questions like "If the earth were warming significantly, what would we see?" and "Given our current understanding, which stars in the sky are most likely to have planets in orbit, and which planets are best suited to retaining an atmosphere?" Science can tell us, "These drugs can be easily checked for safety, and these cannot. These drugs are easy to counterfeit and these are not." Science can tell us if you allow x amount of pollutant to a river, y fish are likely to survive.

Science won't decide what is right or wrong. But it can ensure that when we make our choices, we aren't doing it on the basis of "mere guesswork."

Will Obama Gut Defense?

That's the headline to a grossly misleading column by Bret Stephens, in the Wall Street Journal.

He's taken the old Republican premise that Clinton slashed military spending and therefore left us trembling and vulnerable. But while his rant isn't useful, his chart is.

Note that for the last 30 years, defense spending has been about 5% of GDP. It was up to about 6% under Reagan and down to 4% under Clinton, but there hasn't been a lot of variation since the end of the Vietnam War.

What has changed is the planet. There isn't a Soviet Union anymore, which matters a great deal. Yes, there are still enemies to defeat, but none with two million tanks threatening to overrun Europe. That's how many there were in East Germany alone at the height of the Cold War, not to mention the significant buildup in warheads, tactical field nukes, and ground forces.

We still need planes, and ours should be the best in the world. And we need precision missiles and enough troops to flatten the Taliban. But there's a fundamental difference between today's world and the one of the Cold War, and shouldn't our budget reflect it?

Even if you bought the dubious premise that as an economy grows, it needs to continue spending a proportional percentage on defense (once a country is twice as rich, does it need twice as many warheads to be safe?), you can believe Stephens' own chart: we're still spending quite a bit on defense, and that hasn't changed in 30 years.