Friday, March 21, 2003
IS IT REALLY GOING THIS WELL?
I find it hard to believe that the war against Saddam is going so well. It seems to me that at some point our troops are going to meet heavy resistance. I hope and pray I'm wrong.
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KRUGMAN’S ASSUMPTIONS
If Paul Krugman didn’t write for the New York Times, would anyone pay attention to him? Alas, he does write for the Times, so to speculate about it is a feeble intellectual exercise. And if you think that’s a not so subtle lead in to a takedown of his recent column, you’d be right.
Krugman comes back to a tired theme: Bush tax cut means the end of the world!
The Bush tax cuts, not the retirement programs, are the main reason why our fiscal future suddenly looks so bleak.
Huh? The last time the Congressional Budget Office estimated a surplus, it claimed that from 2002-2011 the federal government would have a cumulative surplus of $5.6 trillion. One of the largest estimates of the “cost” of the initial Bush tax cut was $2.1 trillion. That means that more than 60% of the disappeared surplus is due to something other than the tax cuts. Recession, sluggish economic recovery, extra spending due to the war? It seems that those factors have more to do with the fiscal outlook. Perhaps it depends on what the meaning of the word “main” is?
Naturally, Krugman starts his argument with Social Security and Medicare (getting your talking points from the DNC, Prof Krugman?):
Accountants estimate the "actuarial balance" of Social Security and Medicare the same way a private insurance company would: they calculate the present value of projected revenues and outlays, and find the difference. (The present value of a future expense is the amount you would have to invest today to have the money when the bill comes due. For example, if $1 invested in U.S. government bonds would be worth $2 by the year 2020, then the present value of $2 in 2020 is $1 today.) And both programs face shortfalls: the estimated actuarial deficit of Social Security over the next 75 years is $3.5 trillion, and that of Medicare is $6.2 trillion.
Doesn’t it seem a little odd that Krugman, who has routinely bashed private accounts as a solution for Social Security, uses an investment analogy in the context of a discussion of entitlements? After all, if one dollar invested in the stock market today would yield 3.5 dollars in the next 75 years, then $1 trillion invested today…well, you can do the math.
Anyway, to relate this to tax cuts, Krugman relies an old ally:
The new study, carried out by the Center on Budget and Policy Priorities, estimates the present value of the revenue that will be lost because of the Bush tax cuts — those that have already taken place, together with those that have been proposed — using the same economic assumptions that underlie those Medicare and Social Security projections. The total comes to $12 trillion to $14 trillion — more than the Social Security and Medicare shortfalls combined. What this means is that the revenue that will be sacrificed because of those tax cuts is not a minor concern. On the contrary, that revenue would have been more than enough to "top up" Social Security and Medicare, allowing them to operate without benefit cuts for the next 75 years.
The problem is that Kurgman doesn’t note how the study reached the $12 trillion to $14 trillion figure:
To measure the long-term cost of the Administration's tax cuts, we assemble estimates from the Congressional Joint Committee on Taxation and the Congressional Budget Office, as well as estimates based on the Urban Institute — Brookings Institution Tax Policy Center model. We assume that the cost of a tax cut will remain constant as a share of GDP after 2013, which is the standard approach that the Congressional Budget Office, the Office of Management and Budget, and the General Accounting Office use when preparing long-term fiscal projections.
Yet agencies like the CBO rely on the largely discredited method of “static analysis,” which assumes that tax cuts have no effect on economic behavior. It assumes that if the government cuts taxes by $1 million, it will cost the government exactly $1million.
The problem with static scoring is that people react to incentives. If they get to keep more of their income from activities like working and investing, then they will engage in more of those activities. The result will be a net increase in wealth, which will yield additional tax revenue.
I know that Kurgman isn’t exactly an adherent of supply-side economics, but the principle involved is a relatively simple one: You tax something more, you get less of it; you tax something less, you get more of it. Given that, the CBPP analysis surely overstates the amount of revenue lost due to the Bush tax cut. So Krugman bases his argument on a study that employs seriously flawed assumptions. Imagine that.
UPDATE: Check out Donald Luskin's new feature in the National Review Online. Also check out his blog. And more Krugman takedowns here and here.
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LET THE SCARE TACTICS BEGIN!
Taking at face value the propaganda of liberal fear-mongers like Ted Kennedy and Marian Wright Edelman, the Des Moines Register claimed that the Bush Administration is trying to balance the budget on the backs of children:
President Bush's 2004 budget will shortchange Iowa kids. A proposed cut of $400 million means Iowa would lose $2.2 million in after-school funding next year, according to a new report.
This is the trickle-down result of budget cuts. More than 32 Iowa communities risk losing programs that supervise more than 3,000 kids while their parents are working and give them a safe place to stay with academic support.
The program in question is called the 21st Century Community Learning Centers (CCLC) program which is designed to give “expanded academic enrichment opportunities for children attending low performing schools.” The statistics the Register cites come from a report from the After School Alliance (the Iowa section can be found here.)
While it is true that the Bush budget does cut the program by $400 million—down from $1 billion—the Des Moines Register apparently made no attempt to discover why. According to the Department of Education website the cut in CCLC’s budget
acknowledges that the program needs some time to address disappointing initial findings from a rigorous evaluation of the 21st Century Community Learning Centers program. The evaluation indicates that the centers funded in the program's first three years are not providing substantial academic content and do not appear to have a positive impact on student behavior.
The report that the DOE website refers to can be found here. The key findings are on pages xi to xii. Here’s a sample:
Limited Academic Impact. At the elementary school level, reading test scores and grades in most subjects were not higher for program participants than for similar students not attending the program. In addition, on average, programs had no impact on whether students completed their homework or completed assignments to their teacher’s satisfaction.
No Improvements in Safety and Behavior. Programs did not increase students’ feeling of safety after school. At the middle school level, participants were more likely to report that they had sold drugs “some” or “a lot” and somewhat more likely to report that they smoked marijuana “some” or “a lot” (although the incidence was low). Participants also were more likely to have had their property damaged. (Data on these items were not collected for elementary school students.) No impacts were found on other measures of behavior.
In short, the program sucks.
It’s also worth noting that while the After School Alliance portrays the program as being underfunded, the evaluation report notes that as “an after-school program, 21st-Century grew quickly from an appropriation of $40 million in fiscal year 1998 to $1 billion in fiscal year 2002.” By my math that’s an increase of about 2400%. I didn’t realize that there were 2400% more children in need of after school programs since 1998. Of course, a Republican has entered the White House in the intervening period, and we all know how our society heads straight for the crapper—more homelessness, more poverty, more AIDS victims, etc., etc.—whenever that happens. So it stands to reason that children would be in trouble too.
It didn’t take me more than 20 minutes of digging to find out why the Bush Administration is cutting the program. So why didn’t the Register editorialists? Because doing so would get in the way of their mission to mission that Republicans in general, and this Administration in particular, want to cut programs that help children:
President Bush has said the government "must restrain the growth in any spending and not directly associated with the physical security of the nation."
In other words, cuts to kids.
Does this make the Register editorialists liberal propagandists? Or just lackeys for them?
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Thursday, March 20, 2003
GODSPEED TO THE 389TH
My new column at the American Prowler.
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Wednesday, March 19, 2003
NCAA POOL CANCELLED
I’ve been hemming and hawing about this for over a week. I kept asking myself if it was okay to do something like this when the young men and women of our armed forces were being put in harms way. Last night I attended the send off for the 389th Engineering Division out of Burlington. That cinched it for me. There is no way I cannot feel guilty about enjoying the NCAA Tournament the way I usually do while the armed forces are fighting in this war. Thus, I’ve decided to cancel it. My apologies to the people who expressed interest. Godspeed to our troops.
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IS HUSSEIN 'RATIONAL'?
One of the arguments advanced by anti-war opponents is that we can contain Saddam Hussein because he is rational. More specifically, he can be contained because ultimately he is motivated by self-preservation. As this country is on the brink or war with Hussein, it worth revisiting this argument and examining why it is wrong.
Interestingly, the most coherent version of this argument hasn’t come from the left, but from the libertarian Cato Institute. This is not surprising however, as the Cato Institute carries on the libertarian tradition of being wary of most government exercises of power, including those by the military. Yet, as much as one might admire Cato’s work on issues like taxes and Social Security—and I do—the Institute is wrong on the issue of Iraq
In a study titled “Why the United States Should Not Attack Iraq,” the director of defense policy studies at Cato, Ivan Eland, and independent foreign policy analyst Bernard Gourley apply the “rational actor” theory (also called rational choice theory) to Hussein. By “rational”, Eland and Gourley do not mean the common definition of the word, that of “sane.” Rather they use “rational in the sense that economists and political scientists use the term,” that Hussein can conduct a cost-benefit analysis of his potential actions. They claim that Hussein “develops a perception of what the payoff will be for a given action, taking into account the expected response of other actors. From this he determines whether the reward for an action outweighs the costs and consequences of the action.”
The question immediately arises that if Hussein is in this sense “rational,” what accounts for his spectacular misjudgments like his invasion of Kuwait? Eland and Gourley concede that Hussein has a skewed worldview that “is caused by getting bad information from his small inner circle and by getting an unrealistic perception of the capabilities of his nation.” However, “some of Hussein’s miscalculations have been influenced by mixed messages from external actors.” This is apparently what happened with the decision to invade Kuwait. The authors quote political scientist Janice Gross Stein who claims that “the messages sent by the U.S. administrations were ‘ambiguous and contradictory’…at times members of the first Bush administration said that the United States had no particular commitment to assist Kuwait.” Thus, Hussein’s Kuwait disaster wasn’t due to an inability to do a cost-benefit analysis of an invasion, but because his analysis was based on poor information.
Given that Hussein is rational, Eland and Gourley contend that he can be deterred from giving weapons of mass destruction (WMDs) to terrorists to use against the United States. Such an action would endanger his principal goal of “physical and political survival.” Hussein would reason that “it would be hard for him to get away with such an action without being caught.” And “with the Bush administration looking for a good excuse to eliminate Hussein,” Hussein surely realizes that a WMD attack would result in the United States removing him from power. The proper policy course for the Bush administration, according to the authors, is that it should make it explicit to Hussein that this is exactly what will happen if he gives terrorists WMDs.
Yet the proposition that Hussein is rational is shaky at best. History suggests that Hussein’s ability to weigh costs and benefits has a tenuous connection to reality. While it is true that even the most rational person may overlook a potential consequence or a response from another actor in his calculation, Hussein overlooks ones that are staring him straight in the face.
Let’s consider Kuwait again. A rational actor would have realized that an invasion of Kuwait would be perceived by other nations as an attack on a relatively defenseless nation. He would also have to consider that most other nations in the Middle East would feel threatened by such an invasion, and would call on more powerful nations like the U.S. for protection. Finally, he would have to consider that the more powerful nations would respond given their reliance on the Middle East’s most plentiful resource, oil. Surely a rational actor would have anticipated these responses. But apparently Hussein did not.
It’s also worth considering Iraq’s 1993 attempted assassination of the first President Bush which, interestingly enough, Eland and Gourley never mention in their analysis. By 1993 Hussein had seen Baghdad bombed by American planes and his ground forces routed by American troops. Given what the U.S. was willing to do in response to his invasion of Kuwait, what did Hussein think we’d do if his assassination attempt on one of our former presidents had been successful? Apparently he didn’t consider that either.
For the rational actor theory to work (at least in the real world, not the academic one), it has to assume that the actor in question is willing to hear some information that he may not like. Hussein has a history of killing people who displease him, including his own family members. This almost certainly acts as a “shield” for Hussein through which undesirable information does not pass. The rational actor theory also does not work if the person in question is mentally unbalanced. It’s not clear to what extent this describes Hussein, but he is definitely paranoid and likely given to delusions of grandeur.
We see this happening now with Hussein’s apparent refusal to vacate Iraq. He is aware of what we did to his military last time. He must also be aware of what we recently did to the Taliban in Afghanistan. He likely knows that Bush’s ultimatum is serious. And this time it is not just his political but his physical survival at stake. But still he calculates that he will triumph over the American military and will keep his throne.
Looking at Hussein’s past actions, there is a very real possibility that he would easily miscalculate about giving WMDs to terrorists for an attack on America. We cannot believe that Hussein will be deterred from doing so on the basis that he is a rational actor. It is far too risky. Fortunately, President Bush has reached the same conclusion.
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Tuesday, March 18, 2003
JOIN MY NCAA POOL!
Yesterday I posted an announcement that I’m holding an NCAA pool, known as Hogberg’s Annual NCAA Pool—original, huh? So far, no one has emailed me about it. Come on friends. You will need some diversion in the anxious weeks (days?) ahead. The pool is cheap, and I run a fully honest show. You need to get your bracket in the mail to me by Wednesday, so email me very soon.
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KRUGMAN GETTIN' KOOKY
Paul Krugman has just about gone round the bend in his most recent column. There’s his usual penchant for getting things wrong:
What scares me most, however, is the home front. Look at how this war happened. There is a case for getting tough with Iraq; bear in mind that an exasperated Clinton administration considered a bombing campaign in 1998. But it's not a case that the Bush administration ever made. Instead we got assertions about a nuclear program that turned out to be based on flawed or faked evidence; we got assertions about a link to Al Qaeda that people inside the intelligence services regard as nonsense.
Paul might consider looking at all the things that the Bush Administration has said about Hussein’s violations of U.N. resolutions, the brutality of his regime, and his development of chemical and biological weapons. But no, Krugman follows his usual MO: focus on what is, arguably, the weak part of an opponents’ case and claim it is the whole case.
But it’s the final paragraph that is the real kicker:
So now the administration knows that it can make unsubstantiated claims, without paying a price when those claims prove false, and that saber rattling gains it votes and silences opposition. Maybe it will honorably refuse to act on this dangerous knowledge. But I can't help worrying that in domestic politics, as in foreign policy, this war will turn out to have been the shape of things to come.
I love that cryptic “shape of things to come.” Of course, Paul should worry. The jackbooted, Bush brown-shirts will be beating down the door to his Princeton office any day now.
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IS THE NY TIMES SERIOUS?
The New York Times’ editorialists are getting so desperate in their anti-war editorials that they no longer wait until the third or fourth paragraph to screw up. Now they do it in the first sentence:
The United States, nearly isolated, is about to wage a war in the name of the world community that opposes it.
“Nearly isolated”? Take a look at this map of Europe that shows the countries that support us. Does that look like the U.S. is “nearly isolated”? That phrase is a prime example of misleading rhetoric.
This page remains persuaded of the vital need to disarm Iraq. But it is a process that should go through the United Nations.
Those two sentences are contradictory. The last six months have shown that the U.N. will never be able to disarm Iraq using weapons inspectors. The last few weeks have shown that there are numerous obstacles in the U.N. to employing the one method that will: force. If the editorialists still believe in the U.N. as the solution, then they don’t really believe disarming Iraq is vital.
That is in the best interest both of the United States and of the U.N.
No, it’s in the best interest of France.
Next, note these two paragraphs:
President Jacques Chirac of France now says that he could accept a disarmament deadline of 30 days if the weapons inspectors agreed. That is progress, but he needs to be more forthcoming and place a resolution on the table that contains clear, tight deadlines, a direct threat of force and a reasonable mechanism for judging compliance. The French must find a role for themselves in ending the Iraqi threat that goes beyond threatening a veto.
Mr. Bush is right to insist that the choice between war and peace has been in the hands of Saddam Hussein. But it makes no sense to assert, as Vice President Dick Cheney did in television interviews yesterday, that there is really nothing Saddam Hussein can do short of resigning that would stave off attack. This is the kind of talk that has made so many so skeptical of this administration.
They are skeptical of Bush, but willing to give Chirac the benefit of the doubt. Uh-huh. There are many possible good outcomes of the coming war. One could be that no one takes the Times editorial page seriously again.
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GROOOOAN
Iowa House approves Trans Ova aid package
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Monday, March 17, 2003
TOURNAMENT TIME!!!
It’s that time of year again. Office pools, upsets, Cinderellas, etc, etc. If you don’t know what I’m talking about, you are a lower life form. I’ve got a pool going. If you’d like to join, email me, and I’ll send you the instructions and the rules. (Believe me it’s cheap!)
So come join the fun!
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THERE’S A SURPRISE
Boswell plans to break his 3-terms-only pledge
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IS THIS FUNNY?
Rekha Basu doesn’t much like the idea that Hooters—yes, that Hooters—now has an airline. Her column isn’t particularly well written, so I can’t really tell if she’s having fun or is serious. If it’s the former, then apparently this is her idea of a joke:
The timing sure is uncanny, what with those Mideast insurgents claiming a holy war over corrupt Western values. Thank you, Hooters Air, for playing right into their hands.
I don’t know about you, but in the wake of 9/11, that doesn’t seem very funny. One could also point out that the same Mideast insurgent want to keep women oppressed, and think that women in the West have too much power. Women writing columns for opinion pages play right into their hands.
I’ll bet Ms. Basu wouldn’t get a giggle out of that.
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PROFIT VS. AND NEEDS
The Des Moines Register editorial page really hits a lot of lefty themes is this editorial bemoaning the FDA’s decision to crackdown on American seniors who buy drugs at cheaper prices in Canada. Government is run by corporations, corporations screw the average person, and, most notably, profit is antithetical to meeting peoples’ needs:
The caving of the FDA is a disgrace. It's an example of government working for industry instead of for the people. It's an example of a government that's both reluctant to use its own power to help Americans afford health care while simultaneously shutting down any innovative avenues that would result in more affordable treatments.
It's the perfect example of why Americans must no longer sit idly by while the U.S. government continues to be strong-armed by industry. It's time to demand a health-care system in this country that's more concerned about the needs of people than the profits of corporations.
Many of the new wonder drugs produced by pharmaceutical companies have helped Americans live longer lives and cut health-care costs (see this piece). The pharmaceutical companies do it to make a profit. Limit their ability to make a profit, and we’ll see less “wonder drugs” produced.
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