Block Grants

Posted on 2008-03-06 by David

When I read The Coming Crisis of Big Government I gained a measure of hope that there might be some possibility left for averting the crisis of our soon-to-balloon costs for social security and Medicare. One of the central examples in the article relate to the use of block grants to restructure some of the programs.

Ferrara emphasizes the shocking success of the 1996 reforms of the old Aid to Families with Dependent Children (AFDC) welfare program. Based on concepts developed by my long-time friend and Reagan welfare guru, the late Robert Carleson, AFDC was “block granted” back to the states. This means the share of Federal spending on the program was sent back to each state to be used for a new welfare program designed by each state based upon required work for the able bodied.

The key is that the Federal block grant for each state is finite and does not vary depending on how much the state spends. If the state welfare program costs more the state must pay for the extra expense. If the state welfare program costs less then the state keeps the savings.

The required work for the able bodied has been powerful in moving people off the welfare rolls. But even more powerful have been the new incentives for state bureaucrats resulting from the finite block grants. Under the old system, where Federal funds were increased to match whatever the state spent, signing up new welfare recipients at the state level meant bringing more Federal funds to the state. But with the state itself paying for any extra expenses, or keeping any savings, state bureaucrats moved aggressively to get welfare recipients into jobs.

I agree that matching funds methods of financing federal programs only encourages program growth – the states have great incentive to stretch their budgets by putting everything they can think of toward 2 for 1 programs (for every state dollar they spend they have two dollars to spend because of federal matching – at least for 1 to 1 matching programs). The block grant method was apparently useful for welfare, but states are naturally going to balk at the idea of having their budgets limited when their needs feel unlimited.

I also wonder how well block grants will work with other programs such as transportation funding? Here in the Wasatch front we are keenly aware of the need for more funding for roads and transit. Would block grants encourage the state to spend their money on the best solutions, or would they simply shortchange our burgeoning needs?

So here’s the question – do you think that block grants are a widely applicable tool to control the growth of government spending, or do we need to come up with more tools in order to close the lid again on this Pandora’s box?

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Secular Theocracy

Posted on 2008-03-05 by David

Sometimes the truth stings – and Jeremy nailed it:

“We’ll soon have a new law (because you know that our big-government-loving governor will sign it) that will make us feel good, will give us a new source of revenue via law enforcement, and will give the finger-waggers another reason to rag on parents.”

Its not just the governor…it is all of our Republicans. These jokers stick us with more and more nanny government year in and year out yet Utahns keep going back to them.

Sorry Reach but any Republican who complains about too much paternalism in our government isn’t assigning the guy in the mirror enough of the blame. We need more libertarian minded leaders in both parties.

It used to be that I would hear people suggest that Utah is a theocracy and I would think they were just bitter because Utah is so politically resistant to secularism. Tonight I have concluded that what we have would qualify as a theocracy. It’s not a theocracy dictated by the LDS church as many would suggest (that’s what made me resist the idea for so long). Instead it is a theocracy based on an informal secular religion focused on enforcing kid- and family-friendly laws lest anyone face the possibility of making a wrong choice. While it is not dictated by the dominant faith of the state it is very palatable to many followers of that faith.

As I have watched our big-government Republican legislature I have clung to the notion that the state Republican party was out of touch with the residents of Utah and that they stayed in power because the state Democrats were too closely tied to the DNC to approach the majority of Utah citizens on some crucial issues. My new theory is that I am out of touch with the majority of Utah citizens and that most of them actually want the kind of government we have here – one that will do anything possible to “prevent” anyone from making any really bad choices (especially where children are involved), one that will solve our health care crisis since the LDS governor of Massachusetts has shown that it can be done, and one that will lead the way in fixing the global warming crisis so that they can drive everywhere they go knowing that the crisis has been averted by their wonderful government regulations.

  • RJ: That is an S.U.V; Humans ride in them because they are slowly losing their ability to walk.
  • Penny: Jeepers, its so big!
  • Lou: How many humans fit in there?
  • RJ: Usually, one.

(from Over the Hedge)

Posted in culture, State | Tagged , , , , | 6 Comments

Political Wrap-Around

Posted on 2008-03-04 by David

I found Libertarians for Obama very interesting. I don’t consider myself to be a libertarian, though I have libertarian tendencies, but the points that were cited as places that Obama could score among libertarians are positions I generally agree with and I thought it was ironic that “the most liberal member of the Senate” could hold some positions that would resonate with the “anarchists” in the libertarian section of the political map.

This should serve as a reminder (as if we needed one) that the political spectrum is much more complex than a simple right/left, red/blue, republican/democrat, conservative/liberal line.

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The Easy Way

Posted on 2008-03-03 by David

I couldn’t pass up the insights of Jim Harper in his post Learned Helplessness

On several occasions recently, I have noted able-bodied Senate staff taking advantage of this convenience. Though they could open the doors themselves and enter more quickly, they press the button and pause a moment as the doors slowly open.

There is a lesson here for policymakers (including those Senate staff): Offered help, people of all abilities will accept it, whether they need it or not. Over time, their abilities to help themselves may atrophy.

I have often watched this same process with my children – they take time to look for the blue button before they enter a door in many buildings. For them there is the novelty of having the door do its own work and also that fact that some of those doors are too heavy for them at their young ages. Still, if I’m going to spend my time at a door I would much prefer that I did so holding the door open for other people to help more people get through the entrance than standing there – holding up the flow of traffic – waiting for the door to open itself. In fact, many times when my kids push the button I open the door for them so they don’t have to wait for those motors. That motor is to help people who need the help when able-bodied people (such as myself) are not around to offer more personalized assistance.

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Connecting Clinton with Romney

Posted on 2008-02-26 by David

I’m sure that title sounds like a kind of heresy here in Utah, but I can’t help noticing in the last week that the supporters of Hillary Clinton are sounding very much like the supporters of Mitt Romney were sounding after the Florida primary (myself included). Unless they turn out to be less mistaken about the upcoming primaries than I was about February 5th they will soon have to adjust to the new reality in the Democratic party.

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Another Year-Round Idea

Posted on 2008-02-25 by David

The Spectrum did a good job in Year-round Advantages of listing pluses and minuses to the idea of year-round school. Though the title says this is about the advantages they are good enough to acknowledge the well-known drawbacks. I also found the comments of stgeorgeteacher interesting in highlighting the difficulties that teachers can face with this kind of schedule.

As I read the article I began to think that while we are considering major changes to the structure of our education we might as well go all out and consider all the possibilities. What if we not only changed the schedule to have four separate blocks of classes each year but also changed the classes so that we have a higher degree of granularity in our grade levels. What if we replaced grades k – 6 with grades A – Z and students would have the chance to advance one grade during each block of classes. In one year a student could advance from grade D to grade H. There would be room for a student to be held back twice over 7 years and still get through all their grades before they arrive at middle school.

I leave it to readers to decide how serious I am about that particular proposal, but I’d like to know if there is any reason that we should not consider other proposals to change the system while we’re in the mood to discuss the issue of primary education.

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Buyers of Medical Services

Posted on 2008-02-23 by David

Reach Upward nails it again when he talks about Serving Medical Customers.

One of the primary rules of economics is that suppliers do their best to supply what buyers actually demand. Who are the real buyers of medical services? Not you. Unless you pay for everything yourself or have only catastrophic insurance, you are not the buyer. . . The real buyers — the real power entities in purchasing medical services —are the government (via Medicare) and insurance companies.

Since suppliers provide what buyers demand, let’s ask ourselves what the real buyers of medical services demand. Do they demand the best possible medical outcome for each patient? Nope. It’s not possible for them to do that. So they design systems that aspire to that lofty goal. These systems seek to demand proof that proper procedures are being followed and tightly control what procedures will be covered.

Of course, to administer these systems, the government and insurers spawn massive bureaucracies of paper pushers. Medical practitioners actually serve their buyers quite well, supplying the desired paperwork. They report procedures that will bring payment. . .

Electronic Health Records (EHRs) have been touted as a way to improve the medical system. But it turns out that EHRs do not improve actual medical outcomes. This is because they are only a more efficient way of pushing paper around through the bureaucracy.

Every time I read anything about our health care system I come to the same conclusion – the best kind of insurance we could have would be catastrophic insurance that has incentives built in to reward consumers who avail themselves of preventive care. With the current push in Utah to provide universal coverage we cannot emphasize this issue too much. If we want to make the system better we must attack at the actual systemic problems (the shifting of the buyer role from individuals to corporations and government entities) rather than simply trying to massage the current system to assuage some acute and visible symptoms of systemic problems (the cost of health care and insurance).

Posted in National, State | Tagged , | 9 Comments

Imports and Jobs

Posted on 2008-02-21 by David

I had asked whether our markets would be better served with a tit for tat approach to tariffs rather than a more dedicated insistence on free trade on imports. If I had any lingering doubts on the subject they were laid to rest after reading Why Politicians Are Wrong about Imports and Jobs. Unless the graph in that post is entirely fabricated the free markets are the beneficiaries if they import goods that have been subsidized by more closed markets at a lower price than they could produce themselves.

Admittedly the graph is a bit confusing with the vertical scale changing from the left side of the graph to the right, but the trend is that over the last 48 years imports have doubled while unemployment has been cut in half. While these imports might take specific jobs away from the country they do not reduce the total number of jobs. The turnover creates the added benefit of encouraging those in the workforce to keep improving themselves. The relative ease and complacency that would undoubtedly come from a static economy would guarantee that we would become less competitive in a global market.

Update 2/27/08: Thanks to the persistent questions of mackenzie I went back to look at the graph to see if I had missed anything. A more accurate reading of the graph (remember the confusion I talked about with the different vertical scales) shows that imports went from 4% to 16% of GDP (a four-fold increase, not double) and unemployment fell from 9% to 6% (it fell by one third rather than by one half). While the actual statistics have changed I think the conclusion remains that imports do not appear to adversely affect employment rates.

Posted in culture | Tagged | 27 Comments

Proud To Pay My Share

Posted on 2008-02-20 by David

I liked the sentiments expressed by Chad at UtahOpinions about paying a fair share for government. It’s easy to accuse those who advocate for smaller government of being stingy, selfish, or just not wanting to work for the best good of society, but many people feel like this:

Believe it or not I am proud to pay taxes to support our national interests (i.e. national security, immigration, roads, airports, etc.). But my pride ends there. . .

It is also a reminder to me why I joined the Republican party in the first place. As part of the Republican platform are these statements:

    • I BELIEVE government must practice fiscal responsibility and allow individuals to keep more of the money they earn.
    • I BELIEVE the proper role of government is to provide for the people only those critical functions that cannot be performed by individuals or private organizations and that the best government is that which governs least.
    • I BELIEVE the most effective, responsible and responsive government is government closest to the people.

Huh? You mean Republicans stand for these principles? Well, at least I know I do and I thought Republicans did.

Chad does a nice job of breaking down how much he’s paying in taxes for various government programs. Like Chad I’m proud to pay my fair share for government. I won’t go to any lengths to minimize my tax burden, I just take whatever deductions are simplest and that makes it easy for me to forget why most people find tax season such a headache – I do my taxes in a matter of two hours because I don’t do any financial contortions to reduce my tax burden.

That does not stop me from doing anything I can to remind my representatives that I’m looking for government to do as little for me as possible – I’d rather be responsible for my own success or failure without paying for a government safety net (with all it’s inflations of inefficiency) for everyone regardless of the legitimacy of their need.

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No Good Delegate Answer for DNC

Posted on 2008-02-20 by David

With the debate over the role of super-delegates and the delegates from Florida and Michigan in choosing their nominee, the Democratic Party finds itself in a no-win situation. Without the unpleasant idea that the super-delegates might have to publicly buck the democratic primary voters to give the nomination to Senator Clinton, we would not hear the Clinton Campaign calling to have the delegates in those states that she won (Clinton was the only major candidate on the ballot in Michigan) seated to make the race more level.

If the party chooses not to seat delegates from those states they open the door for Republicans to attack them for not backing up their “make every vote count” rhetoric.

If they do choose to seat delegates from Florida and Michigan they face a whole range of paths to bruise themselves. First – any delegate seating will undermine the authority of the party to affect the primary schedule (that power struggle is what started this whole mess). If they choose to accept that defeat they then have to choose how to seat the delegates. They can take the existing results and hear people cry fowl who chose not to vote, or who chose to vote in the Republican primary, based on the fact that their votes would not count in the selection of the Democratic nominee. If they chose to hold new primaries in those states they have to cover the costs or persuade the states to pay for a second election and they have to choose who to allow to participate. Michigan has open primaries so they run the risk of having people vote in their new primary who already voted in the Republican primary (the reverse of what Markos advocated as Michigan arrived). If they choose to limit their primaries in any way it can only be an arbitrary line.

Interestingly, if this same eternal nomination fight were happening in the GOP most of the problems outlined above would not exist because they chose to respond to the states that abandoned the party calendar by only stripping half their delegates so the original votes can stand and represent the votes taken without undermining party authority.

When I went searching for the Daily Kos link above, I thought it was funny to discover that Markos made many of the same arguments I just made on this issue. He recommends seating the delegates from both states and splitting them 50/50 between Obama and Clinton. Why don’t we just award an extra 200 delegates for each state that obeyed the party rules with the same 50/50 split condition while we’re at it? A 50/50 split is meaningless in deciding the nominee. It expands the pool of delegates, but adding 200 delegates to the delegate count of each candidate only means that there is a larger convention. Getting 1191 delegates to win the Republican nomination is just the same as getting 2025 delegates to win the Democratic nomination – the numbers may differ, but it all comes down to who gets 50% + 1. Besides that, the 50/50 split is unenforceable – either they have a choice, or they have no vote to cast. There’s no point in inflating the numbers to say “Welcome to the convention, check your seat for a number – odds vote for Clinton, evens vote for Obama.”

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