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First Time The MSM Has Ever Ignored Warren Buffett: The press accounts I've read have wildly underplayed Obama supporter Warren Buffet's criticism of the President on CNBC today. It's fairly pointed, and Buffett comes back to it, suggesting he has a message he's trying to deliver. [E.A.]:
BUFFETT: ...And, Joe, it--if you're in a war, and we really are on an economic war, there's a obligation to the majority to behave in ways that don't go around inflaming the minority. If on December 8th when--maybe it's December 7th, when Roosevelt convened Congress to have a vote on the war, he didn't say, `I'm throwing in about 10 of my pet projects ... [snip] ...
JOE: Yeah, but you might--might not have fixed...
BUFFETT: But I say...
JOE: You might not--you might not have fixed global warming the day after--the day after D-Day, Warren.
BUFFETT: Absolutely. And I think that the--I think that the Republicans have an obligation to regard this as an economic war and to realize you need one leader and, in general, support of that. But I think that the--I think that the Democrats--and I voted for Obama and I strongly support him, and I think he's the right guy--but I think they should not use this--when they're calling for unity on a question this important, they should not use it to roll the Republicans all.
JOE: Hm.
BUFFETT: I think--I think a lot of things should be--job one is to win the war, job--the economic war, job two is to win the economic war, and job three. And you can't expect people to unite behind you if you're trying to jam a whole bunch of things down their throat. So I would--I would absolutely say for the--for the interim, till we get this one solved, I would not be pushing a lot of things that are--you know are contentious, and I also--I also would do no finger-pointing whatsoever. I would--you know, I would not say, you know, `George'--`the previous administration got us into this.' Forget it. I mean, you know, the Navy made a mistake at Pearl Harbor and had too many ships there. But the idea that we'd spend our time after that, you know, pointing fingers at the Navy, we needed the Navy. So I would--I would--I would--no finger-pointing, no vengeance, none of that stuff. Just look forward. ..[snip] ...
BUFFETT: Well, I was going to mention to Joe that you've heard this comment recently from some Democrats recently that a `crisis is a terrible thing to waste.'
BECKY: Yeah.
BUFFETT: Now, just rephrase that and since it's, in my view, it's an economic war, and--I don't think anybody on December 7th would have said a `war is a terrible thing to waste, and therefore we're going to try and ram through a whole bunch of things and--but we expect to--expect the other party to unite behind us on the--on the big problem.' It's just a mistake, I think, when you've got one overriding objective, to try and muddle it up with a bunch of other things.
P.S.: He's against "card check." ("I think the secret ballot's pretty important in the country.") ... 7:19 P.M.
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Least convincing editorial ever?** WaPo's ed board admits 1) earmarks aren't the problem 2) the "omnibus" spending bill now before Congress would mean a "significant jump in domestic spending" of either 6 or 8 percent 3) this increase will be "built into the annual baseline" and as a practical matter, set the floor for future spending; 4) if you add in the already-passed stimulus, the "overall increase in domestic spending is a staggering 80 percent;" 5) Obama's 2010 budget "appears to envision another increase in excess of 6 percent in this category."
Yet the Post endorses the omnibus bill. It argues the only alterntive is the GOP's spending freeze. Huh? Why not block the bill, cut the increase in across-the-board spending on existing agencies in half, and substitute equivalent spending on stimulus programs that actually are reversible once the economy recovers? A Third Way! It's the sort of thing a presidential veto might accomplish, if there were a president around. ... [via Corner]
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** Harmless bloggy hyperbole. But it's a pretty strange editorial. ... 6:19 P.M.
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Those worried about whether the Dem stimulus plus Obama's budget will produce an irreversible, costly, increase in the size of government--potentially crowding out future expensive Democratic initiatives such as universal health insurance--won't be cheered by this Washington Post story. Estimates of the additional federal workers soon to be hired range from 100,000 (from Prof. Paul Light) to 260,000 (from the Heritage Foundation). For example:
Officials at the Department of Veterans Affairs ... said they expect to hire more than 17,000 new employees by the end of the year, many at hospitals and other facilities to fulfill Obama's pledge to expand veterans' access to health care. The agency -- whose budget will grow by 11 percent, to $56 billion, under Obama's plan -- will add about 7,900 nurses, 3,300 doctors, 3,800 clerks and 2,400 practical nurses, spokeswoman Josephine Schuda said.
That's just one agency. ... And what if in the future we decide to shrink the veterans' health system in order to save money and beef up the system for the rest of the population? Good luck. My impression is that the average citizen has no idea how difficult it is to get rid of federal workers once they have been hired. Here are the relevant rules for federal "reductions in force," or RIFs, complete with elaborate rights of employees with seniority to "bump" lower level employees, causing a chaotic cascade of job switches. Ronald Reagan came into office with a huge head of steam to cut the bureaucracy. He succeeded in RIFing the equivalent of fewer than 80,000 full-time non-defense workers--105,000 counting all part-timers--a reduction that didn't last long. (Here's a Heritage report on the subject.)
Couldn't a future administration, faced with budget deficits, just freeze hiring and let attrition reduce the work force? Sure, if you want the best people to leave and the worst (i.e., the least likely to get private sector jobs) to stay. What about contracting out? Contractors can always be terminated, after all, without the complications of civil service rules. And contracting out was certainly the option favored by recent administrations, including Clinton's. Alas, the Post notes
Obama's insistence that he would scale back the use of private-sector contractors.
AFSCME will be happy. No wonder Washington, D.C. real estate is already starting to come back.** ...
P.S.: This generalized federal bloat, and not "earmarks," looms as the real disaster of Obama's first budgets. If an Alaska senator sticks in an earmark for the Bridge to Nowhere, at least the taxpayers are likely to get a Bridge to Nowhere. If we increase the Department of Transportation budget and they hire a new Human Resources coordinator, what does that get us? ...
P.P.S.: Here's a not-atypical argument for hiring new civil servants:
Colleen M. Kelley, president of the National Treasury Employees Union, which represents workers in 31 federal agencies, said the administration appears to be "rebuilding workforces that have not been properly maintained and supported."
At the Internal Revenue Service, she said, "there are hundreds of thousands more taxpayers today than there were 10 years ago, and there are 27,000 fewer employees." [E.A.]
Too bad there were no increases in computing power during those 10 years that, in every other industry in America, allowed fewer white collar employees to process more paperwork! ... Seriously, imagine someone at G.E. or PayPal making this argument. "Help! We're handling more paperwork now with fewer people than a decade ago!" They'd be laughed at, if not RIFfed. ...
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**--This sentence originally said "Washington, D.C. real estate isn't suffering." While D.C. apparently did relatively well in the real estate bust compared with other cities, and has emerged in better shape, prices have still dropped sharply and continuously since 2006. ... The forecast for the D.C. labor market is also substantially better than for other regions of the country. ... [Thanks to reader J.S. for the correction.] 8:01 P.M.
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Did Dr. Sanjay Gupta really say he opted out of the Surgeon General's job to 'spend more time with his family'? ("He has removed himself from consideration to focus more on his medical career and his family.") Doesn't he know the phrase is a punch line, not an explanation? ... And won't he be spending pretty much the same amount of time with his family, since he's, you know, not changing his job? ... 7:59 P.M.
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Has L.A. Mayor Villaraigosa accidentally revealed the real reason why politicians are worried about the decline of the MSM?
I have press conferences where reporters don't show up anymore - it's just (TV) cameras. It's scary....A regular day would be six, seven cameras ... (Now) you get five on a great day ... [E.A.]
And what if the cameras go away too? It would be tragic if Villaraigosa had to figure out a way to govern other than by feeding the MSM a diet of staged events. ... 7:54 P.M.
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Starving Stuffing the Beast: Ross Douthat thinks he knows what Obama is up to--he's pursuing the opposite of Bush's "starve the beast" policy, which sought to limit future spending by denying government revenues. Obama, the theory goes, is trying to cram as much spending as possible into the budget, knowing full well it's not paid for:
Obama's spending proposals would ... create new spending commitments and run up large deficits, in the hopes that the dollars poured into health care and education will create a new baseline for government's obligations, which in turn will create the political space for tax increases on the middle class. Like the starve-the-beast approach, the Obama strategy puts off the hard part till tomorrow: Give them tax cuts today, conservatives said, and they'll swallow spending cuts tomorrow; give them universal health care, universal pre-K, subsidies for green industry and all the rest of it today, liberals seem to be thinking, and they'll be willing to pay for it tomorrow. ...
[I]f you can change the baseline of social spending that Americans expect from their government before that day of hard choices arrive - and once created, government programs are awfully hard to get rid of, whether they're actually effective or not - then you've tilted the landscape of negotiation in liberalism's favor, and ensured that a post-Obama entitlement compromise will look a lot more like social democracy than a pre-Obama compromise would have.
What would be wrong with a "stuff the beast" strategy? It's disingenuous--but what of that, if the end result is progress? And if the result of Obama's strategy would be only a) universal health care, unversal pre-K, and green industries and b) higher taxes to pay for them, maybe near-unalloyed progress is what it would bring. But there are three obvious questions for the beast-stuffers:
1) What parts of government are expanded--the effective parts or the BS parts? If you read the MSM or commentators like Jon Chait, you get the impression that long-suppressed Dem "priorities" are satisfied by mindlessly in a Congress-pleasing manner expanding all agencies of government by, say, 15%. That certainly seems to be the animating philosophy of the just-passed stimulus and about-to-pass "omnibus" spending bills. There was, for example, this chilling sentence in a recent WaPo piece on the stimulus:
Processing the rush of money is complicated by requirements unique to the stimulus act. The Department of Housing and Urban Development is getting $1.5 billion for "homelessness prevention," a task in which it has never explicitly engaged.
Do you have any confidence that HUD, an agency that has done more to destroy American cities than crack cocaine, will spend this $1.5 billion, without toxic side effects, in a way that significanty reduces homelessness--as opposed to sustains myriad HUD grantees, and community organizations, and (of course) bureaucrats? True, all spending is stimulative--and those grantees will in turn be spending the $1.5 billion somewhere. But if you were actually prioritizing government programs, as opposed to giving every agency its due, is this $1.5 billion you'd budget? I doubt it. It's not "waste," exactly. It's just inefficient and ineffective (at best). Mulitiply this problem across the Veteran's Administration and the Agriculture Department and the Labor Department and you get the picture.
2) If the spending isn't effective, is the spending at least reversible? Tax cuts may be less stimulative than direct spending, as Paul Krugman and others argue (in part because taxpayers may save the cuts instead of spending them). But tax cuts have one obvious virtue--unlike spending, they are relatively easy to reverse when the economy recovers and Keynes-style stimulus isn't needed. Indeed, Obama is in the process of rescinding a bunch of tax cuts--Bush's--now. Actually cutting spending on specific programs, once it's been incorporated into the budget, is excruciatingly difficult at best. In particular cases it may be possible. But a large across the board reduction over time at the federal level has basically never been accomplished. Not even by Reagan.
There were probably several ways to make the "stimulus" spending reversible. Obama could have started up special, new free-standing programs, as FDR did with the WPA, designating them explicitly as temporary. Then you could kill them before they accreted a big constituency. Or, Robert Samuelson argues, it would have been better if Congress had done most of its spending through "large, temporary block grants to states and localities and letting them decide how to spend the money." Block grants can be cut--in this context they'd be akin to revenue sharing, a Nixon-era program that, unlike HUD, has disappeared.
But that's not what Obama and Pelosi did, Samuelson notes:
Instead, the stimulus provides most funds through specific programs. There's $90 billion more for Medicaid, $12 billion for special education, $2.8 billion for various policing programs. ... "Temporary" spending increases for specific programs, as opposed to block grants, will be harder to undo, worsening the long-term budget outlook.
So a good chunk of the spending increases will be permanent. Why should liberals care? Because they desperately need to make room for necessary new programs like universal health care. Does Obama think he can spend a couple of percentages of GDP on generalized Congressionally-directed federal bloat and then build a huge national health care structure on top of that? At some point, you run out of GDP, no? Every bilion dollars of low-priority government that Obama cements into the federal structure is a billion dollars he won't be able to spend on health care (and Social Security, and supplemental pensions) unless he raises taxes to pay for it. And there are limits, political and economic, to how much taxes can be raised. We don't want to reach them.
3) Does the spending serve the ends of liberalism? Reihan Salam flags a chart posted by Matthew Yglesias showing that other nations have reduced economic inequality more through their spending than through taxation, however progressive. Netherlands cut .1 off the Gini coefficient of inequality! Finland cut .15! If your idea of the goal of liberalism is reducing money inequality, these achievements will be very exciting for you, as they apparently are for Yglesias. But we'll never get rid of money inequality. Democrats probably won't even succeed in reversing the decades-long trend to greater money inequality in the U.S. Is money equality all that liberals are trying for? I've argued no, that economic inequality is only an interstitial goal in liberals' overarching drive to prevent income differences from creating invidious social differences--i.e. the goal of achieving social equality despite money inequality.
If that's the goal, it gives us another reason to think that all federal "spending"--even relatively effective, non-"wasteful" spending--is not alike. I happen to believe there will be a huge social equality payoff if the vast majority of Americans are in the same health care system. Any such system that provides good care--a necessity if the affluent are going to buy into it--will be very expensive. But it will be worth it. The equivalent spending on the Commerce Department or Community Development Block Grants or HUD or the Veteran's Administration or farm subsidies--well, not such a big social equality payoff, even though there might be a money equality payoff in Yglesias' chart. Even valued check-mailing programs like Social Security, beyond a certain point, don't do much for social equality. The checks are a good thing. They even reinforce the common value of work. But they don't erase invidious economic differences the way actually sitting around in the same hospital waiting room does.
Stuff the beast? OK. But I can't help but feel that Obama's been stuffing it with a lot of non-nutritious filler.
[I reserve the right ro revise and extend, including tinkering with tricky beast-digestion metaphor.]
Backfill--Beast on Beast Action: Matt Miller had the basic reverse-beast-starve mechanism pegged a week ago, but tragically called it "Feed the Beauty." (He approves of it.) ... 6:05 P.M.
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E.J. Dionne on Obama's budget:
The central issue in American politics now is whether the country should reverse a three-decade long trend of rising inequality in incomes and wealth.
Hmm. Does Dionne think Obama's budget will "reverse a three-decade long trend of rising inequality in incomes and wealth"? As opposed to making the trend slightly less inegalitarian than it would otherwise be? I'd like to see the calculation.
A "reverse" in the decades-long inequality trend would be an impressive feat for what is only a rise of 4.6% in the top tax rate (from 35% to 39.6 percent) plus a modest rise in the capital gains rate and some reduced deductions. Isn't it more likely that whether inequality rises will still depend on trends in before-tax incomes--i.e. the underlying economy--which tend to swamp modest shifts in how those incomes are taxed? And if economic health returns, why would we expect the rich to stop getting as rich, before taxes, as they've been getting?
Maybe Obama's biggest feat of salesmanship** will have been convincing starry-eyed Money Liberals like Dionne that he's grandly reversing the inequality trend, when he's really doing something much more modest and realistic (e.g., funding some important new benefits by raising some taxes on top earners). ...
**--Obama's helped here, of course, by the alarmist right, which also has an interest in exaggerating the distributive impact of his budget. ... 2:17 A.M.
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