2011 - %3, March

Waste, Fraud, and Sen. Coburn

| Wed Mar. 2, 2011 3:15 PM EST

I'll get back to highlighting a few of the results from the GAO's report on streamlining government later today, but first I want to highlight this nugget from Reuters columnist James Pethokoukis:

OK, so the U.S. government’s auditor has found duplication and overlap that may be wasting $100 billion or more a year, according to the Republican senator who commissioned the study. How can anyone argue for higher taxes as long as Washington is so inefficient?....For instance, the auditor found 82 separate federal programs to improve teacher quality ($4 billion a year), and 20 distinct programs to deal with homelessness ($2.9 billion a year).

Let's settle down a bit here. First of all, note that the GAO didn't say its recommendations could save $100 billion per year. That's what Republican senator James Inhofe says, and it's basically just a number he pulled out of his hat to make the government look as wasteful as possible. Pethokoukis then goes along with the gag by kinda sorta implying that the GAO found $4 billion a year of waste in teacher programs and $2.9 billion in homelessness programs.

They didn't. That's just the total amount of money spent by these programs, and GAO thinks the administrative portion of this might be reduced if those programs were better coordinated. And maybe so. But most of the money in those programs isn't spent on administration, it's spent on improving teacher quality and dealing with homelessness. Administrative expenses probably amount to no more than 10-20% of their budgets, and streamlining administration would probably save 10-20% of that. That's worth doing, but even in the best case it would most likely save a hundred million or so, not several billion. We're not going to come within a light year of closing the budget deficit by streamlining duplicative programs, and no one who suggests otherwise should be taken seriously.

That brings up two other points that are worth keeping in mind. First, keep your eye out for attempts to turn the GAO report into a fight not over waste, but over the actual programs themselves. Perhaps federal homelessness programs really could be run better, but my guess is that what Coburn and a lot of his allies really want is simply to slash funding for homelessness programs. Exaggerated accusations of waste and duplication are a convenient cudgel in that fight, but that's all they are.

Second, it's worth keeping in mind that sometimes it's useful to have multiple small programs instead of one big coordinated program because small programs can experiment with different approaches to see what works best instead of being stifled by a single big bureaucracy. It's also the case that sometimes it's actually more efficient to have multiple programs. A homelessness program aimed at helping municipal governments is probably best run out of an agency that already deals with municipal governments and doesn't have to reinvent the wheel just to figure out who the players are and how to do outreach. Ditto for programs aimed at church groups, nonprofits, law enforcement, etc.

Streamlining is a worthwhile goal, but it's wise not to get too caught up in box-drawing exercises. They're the favorite solution of management consultants and CEOs with no better ideas at hand, but it's rare that reporting structure is really the key problem in an organization. If you have 20 different programs that provide assistance to 20 different kinds of clients, it's simply not obvious whether you should organize things by program type or by client type. On a more general level, sometimes centralization is good, sometimes decentralization is good, and sometimes it's good just to shake things up. But the real problems usually lie elsewhere.

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Missouri Jumps on the Anti-Sharia Bandwagon

| Wed Mar. 2, 2011 2:28 PM EST

Courtesy of Rep. Paul CurtmanCourtesy of Rep. Paul CurtmanTime to update the map. On Tuesday, Missouri became the 16th state (by our count) to consider a ban on the enforcement of Islamic Sharia law in state courts. The proposed law is nearly identical to the sample legislation drafted by David Yerushalmi, the Arizona-based attorney whose racist views and militant attitude toward Muslims I reported on yesterday. Via PoliticMo, here's the bill's sponsor, Republican state Rep. Paul Curtman:

"I don't have the specifics with me right now but if you go to—the web address kind of escapes my mind right now. Any Google search on international law used in the state courts in the U.S. is going to turn up some cases for you."

Later Tuesday afternoon, Tilley sent out a statement citing a single case in New Jersey. There, a Muslim man apparently sexually assaulted his wife. The judge did not cite Sharia law, instead citing first amendment religious concerns in his ruling, which was overturned by a higher court.

Who brings supporting evidence to a press conference, anyway? It's worth emphasizing that the New Jersey case, which is cited over and over and over as evidence of creeping Sharia in the United States, not only ignored existing state law, but also totally misinterpreted Islamic law. As Sharia expert Abed Awad told Justin Elliott, " Islamic law...prohibits spousal abuse, including nonconsensual sexual relations."

Hijab in the U.S.A.

| Wed Mar. 2, 2011 2:00 PM EST
A model wearing hijab.

The last time she was called a terrorist, Eman* was drinking coffee in a to-go cup and waiting for the train at the Powell Street BART Station in San Francisco. It was rush hour, and dozens of morning commuters stood near the Mission High School senior from Yemen.

She froze in fear when an older commuter in a suit and tie started yelling at her for wearing hijab and drinking coffee. "Why do you drink this? This is not your culture," she recalls him saying first. "Eat your own food if you want to wear the scarf!" The anti-Islam insults worsened, continuing until the train came, she says. Not one adult near her said anything to the man in the suit.

"Maybe they didn't hear it?" I ask Eman, who today is wearing a light blue headscarf with silver stitching around the edges. "They heard it," she assures me. "The man was yelling, and most people were looking at me. One person was even smiling."

What Do Republicans Really Want?

| Wed Mar. 2, 2011 1:38 PM EST

What do Republicans really care about? Cutting the deficit, or cutting taxes on rich people? The AP reports, you decide:

The IRS has dramatically increased its pursuit of tax cheats in the past decade: Audits are up, property liens are up and asset seizures are way up. President Barack Obama and Democrats in Congress see stepped up enforcement as a good way to narrow the nation's staggering budget deficit without raising tax rates or cutting popular spending programs.

....IRS Commissioner Doug Shulman told the committee Tuesday that the $600 million cut in this year's budget would result in the IRS collecting $4 billion less through tax enforcement programs. The Democrat-controlled Senate is unlikely to pass a budget cut that big. But given the political climate on Capitol Hill, Obama's plan to increase IRS spending is unlikely to pass, either.

That $600 million cut is part of the Republican budget plan, and even if we assume that Shulman is talking his book, it's a dead certainty that cutting the auditing budget will be a net loser for the deficit. However, it's also a dead certainty that cutting the auditing budget will primarily benefit rich people who are cheating on their taxes.

The AP dispatch also reports that Republicans are planning a retro-style blast from the past: a reenactment of the infamous Roth hearings of the 90s, in which IRS agents were portrayed as jackbooted thugs who waved guns around and extorted money out of innocent, hardworking small businessmen. Virtually none of it turned out to be true, but it didn't matter: the Roth hearings led to budget cuts that crippled the IRS's auditing capability for years. The rich cheered then, and they're cheering now too.

But the budget deficit? That's a worry for another day.

British Court to Anti-Gay Couple: No Foster Kids

| Wed Mar. 2, 2011 1:30 PM EST

Recently, a British royal court denied foster care rights to a married couple because they disapprove of homosexuality. Owen and Eunice Johns, who are Pentecostal Christians, fostered children in the 1990s without trouble. But things changed after the passage of a sexual orientation non-discrimination provision in Great Britian's Equality Act 2006: When the Johns applied in 2007, a social worker barred them because they wanted the right to teach kids that a gay lifestyle is immoral. So, they filed a legal challenge based on religious discrimination.

The Equality Act extension also prevented Christian adoption agencies from turning away gay couples in the United Kingdom, which allows civil unions but not same-sex marriage. Pope Benedict urged British Catholics last year to resist the legislation with "missionary zeal" to defend religious freedom, but nearly all of the UK's Catholic adoption agencies chose to close their doors or break ties with the church to comply with the change in law. In the eyes of the church, Monday's ruling is a fresh attack on its beliefs.

But if a similar law existed in the US, it may have helped protect gay foster kids like Kenneth Jones. Passed around in a system that condones foster parents' anti-gay views, Jones routinely endured harassment at home because of his sexual orientation. (And when it comes to gay people adopting and providing foster care, American law is in a state of flux: Mississippi and Utah prevent same-sex couples from adopting, whereas state circuit courts in Arkansas and Florida recently declared similar bans unconstitutional.)

For now, religious conservatives in the US are still delaying same-sex marriage rights by claiming that gays are inadequate parents. Needless to say, those claims aren't backed up by any significant science. But that probably won't stop likely GOP presidential candidate Rick Santorum from arguing against gay marriage and adoption, nor Newt Gingrich from pointing to the British court's ruling as further evidence that "gay and secular fascism" is on the march.

Sen. Barrosso's Climate Plan: Don't Prevent, Don't Adapt

| Wed Mar. 2, 2011 1:10 PM EST

Sen. John Barrasso (R-Wy.) is continuing his quest to expunge climate change from all aspects of federal rule-making and planning—including the work federal agencies are undertaking to prepare for climatic shifts. As Energy & Environment Daily reported Tuesday, Barrasso sent a seven-page letter to White House Council on Environmental Quality Chairwoman Nancy Sutley asking for a detailed analysis of proposals for climate adaptation.

His letter targets the Climate Change Adaptation Task Force, an interagency effort that the Obama administration created to make recommendations about how to prepare for climate change. The task force released its list of suggested actions last October. Barrasso's letter accused the administration of using the task force's report to "implement job killing cap and trade policies through backdoor rules and regulations."

But as E&E points out:

The report, which was released on Oct. 5, 2010, does not deal with greenhouse gas mitigation either through cap and trade or by any other means. Instead, it recommends that federal agencies consider future climate change in their decisionmaking on everything from managing the nation's highways to providing aid to developing nations. It calls on agencies to develop adaptation plans and share information with states, tribes and local governments.

Barrasso argues in the letter that these efforts would "kill jobs, weaken our energy security and decrease economic growth." Barrasso is also the sponsor of a bill that would block the EPA from enforcing any existing federal laws to deal with climate change—by far the most expansive of a slew of bills designed to handicap the agency.

The combination of this most recent letter and the EPA bill make it clear that Barrasso's plan is block efforts to slow climate change as well as efforts to prepare for it. That sure sounds like a good security and economic plan.

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PA Gov. Axes Health Care for Poor, Lets Big Business Off Easy

| Wed Mar. 2, 2011 12:39 PM EST

Republicans in Washington have begun hatching plans to undermine Medicaid, as I reported today. And on the state level, legislators squeezed by budget crunches are already taking a hatchet to health care for the poor. In Pennsylvania, newly elected GOP Gov. Tom Corbett has shut down a state-subsidized program providing health care for more than 41,000 working poor "in one of the largest disenrollments in recent memory," according to The New York Times. Though the economic downturn has created skyrocketing demand for the health-care program, adultBasic, Corbett took an axe to the program, The New York Times explains:

Mr. Corbett, a Republican elected in November, has said the program he inherited is not sustainable with Pennsylvania facing a $4 billion budget shortfall… Former Gov. Tom Ridge, a Republican, started Pennsylvania’s adultBasic program in 2001 to cover those who earned too much to qualify for Medicaid but too little to afford private insurance…

The program’s revenue streams have never met more than a fraction of its demand, which has soared in the economic downturn. When the program closed, 505,000 people were on its waiting list, nearly seven times as many as in early 2007.

Other governors have made similar cuts to benefits and coverage for the poor in both red and blue states, with Arizona's Jan Brewer and Washington's Christine Gregoire throwing thousands off the rolls. Corbett is also taking aim at local school districts, who are expected to face state budget cuts of 20 percent.

But though Corbett has taken the hatchet to social services for children and the poor, he's unwilling to make big business pay the same price. To help ease the brunt of drastic budget cuts on needy residents, Democratic legislators in Pennsylvania have proposed a tax on natural gas companies that would yield an estimated $245 million in revenue in its first year. Corbett, however, has flat-out rejected the natural gas tax, having campaigned on a vow not to increase taxes. So when Corbett releases his budget next week, others will have to feel the pain. 

Chart of the Day: Corporate Non-Taxes

| Wed Mar. 2, 2011 12:21 PM EST

From CBPP, the chart below shows how much American corporations have paid out in taxes over the past 60 years. It's hovering around 1% of GDP these days. As Chuck Marr says, "Although the top statutory corporate tax rate is high, the average tax rate — that is, the share of profits that companies actually pay in taxes — is substantially lower because of the tax code’s many preferences." Needless to say, this is despite the fact that corporate profits have been quite robust in the United States over the past few decades.

Marr has some suggestions for reforming the corporate tax code, while I remain willing to do away with corporate taxes entirely and replace them with something else. In the meantime, though, keep this chart in mind whenever corporate titans start whining about how monstrous their tax load is. They're lying.

We're Still at War: Photo of the Day for March 2, 2011

Wed Mar. 2, 2011 6:30 AM EST

U.S. Army Sgt. Robert Streeter of Newton Iowa, and Soldier with Troop B, 1st Squadron, 113th Cavalry Regiment, Task Force Redhorse, scans a nearby hilltop during a search of the Qual-e Jala village, here Feb. 21. Photo by U.S. Army Staff Sgt. Ashlee Lolkus, Task Force Red Bulls Public Affairs

Cutting Costs with Cheaper Drugs

| Wed Mar. 2, 2011 12:50 AM EST

Here's another tidbit from today's GAO report on reducing costs by eliminating duplicative efforts:

The Department of Veterans Affairs (VA) and the Department of Defense (DOD) spent about $11.4 billion on prescription drugs for beneficiaries in fiscal year 2009.  Since the early 1980s, Congress has urged the departments to achieve greater efficiencies through increased collaboration. Therefore, VA and DOD have attempted to restrain pharmacy costs by jointly contracting for some drugs to obtain discounts from drug manufacturers.

....VA and DOD spending on joint national contracts increased from $183 million on 76 contracts in fiscal year 2002 to $560 million on 84 contracts in fiscal year 2005, it decreased by fiscal year 2009 to $214 million on 67 contracts....VA and DOD have attributed significant cost avoidance 3 to their joint contracting efforts; for example, VA estimated about $666 million in cost avoidance in fiscal year 2005 alone. These cost avoidance estimates have declined significantly as joint contract spending has decreased.

OK then. In 2005, joint spending on prescription drugs amounted to $560 million, which saved $666 million. Not all of that "cost avoidance" was due to joint contracts, but if you figure that even a quarter of it was then VA and DOD could easily save upwards of $2 billion or so if they jointly procured, say, 80% of their drug purchases. This is especially true since the joint contracts to date have mostly been for cheaper generic drugs. Why? GAO reports that the VA and DOD have had problems agreeing on joint purchases of more expensive name brand drugs, partly for reasons of bureaucracy and partly for reasons of statute law.

But I'll bet these problems could be overcome if Congress pushed a wee bit harder. It's true that they've apparently been pushing since 1982 and don't have much to show for it, which just goes to show how hard it is to reduce spending even on something that no right thinking person really opposes. That is, no right thinking person other than pharmaceutical lobbyists and VA/DOD bureaucrats who enjoy fighting turf battles over joint formularies.