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Number of VA Employees

Cato Op-Eds - Wed, 05/28/2014 - 14:23

Chris Edwards

After my blogpost yesterday about Department of Veterans Affairs spending, my research assistant Nick created the chart below on the number of VA employees. Wow, you don’t often see bureaucracies expand that rapidly! A 56 percent increase in just 13 years, from 219,000 to 341,000 employees. The VA has 100,000 new employees just since 2006.

The data is from this OPM website, which also provides a breakdown for agencies within departments. About 90 percent of VA employees are in the Veterans Health Administration, which is currently in the news for its horrendous mismanagement.   

Categories: Policy Institutes

Iran, Stable but Miserable

Cato Op-Eds - Wed, 05/28/2014 - 14:20

Steve H. Hanke

Since Hassan Rouhani assumed the presidency of the Islamic Republic of Iran in August of last year, the economic outlook for Iran has improved. When Rouhani took office, he promised three things: to curb the inflation which had become rampant under Mahmoud Ahmadinejad, to stabilize Iran’s currency (the Rial), and to start talks to potentially end the sanctions which have battered Iran since 2010. Rouhani has delivered on each of these promises. From this, one might assume that the Iranian economy, and the Iranian people, are headed towards better times.

Unfortunately, the Misery Index paints a different picture. The Misery Index is the sum of the inflation, interest, and unemployment rates, minus the annual percentage change in per capita GDP. It provides a clear picture of the economic conditions facing Iranians.

The accompanying Misery Index chart gives us both a snapshot of the Iranian misery levels spanning the past three administrations, as well as a forecast of Iran’s future misery levels. Over the past three administrations, Iran’s miserable state of economic affairs has been driven in large part by its unstable currency and high inflation. The most dramatic peak in the Misery Index occurred in October of 2012, when, under Ahmadinejad, Iran’s monthly inflation rate reached 69.6 percent – throwing Iran into a brief period of hyperinflation.

Rouhani’s administration has delivered on exactly what it promised, but now Rouhani is running into popular resistance to his administrations’ proposed cuts in fuel, electricity, and food subsidies – subsidies which were expanded greatly during the Ahmadinejad years.

And if the prospect of not being able to deliver on promised subsidy cuts and other economic reforms aren’t sobering enough, forecasts by the International Monetary Fund and The Economist Intelligence Unit indicate that Iran’s Misery Index will probably remain elevated for the next four years. Inflation, though stabilized since the 2012 hyperinflation episode, is predicted to remain above 20 percent in the next few years. Meanwhile, GDP growth is predicted to remain low, and unemployment and lending rates are predicted to remain high.

While Rouhani has been successful in pulling Iran out of its death spiral, the economy has settled into stagflation (high inflation coupled with low GDP growth). Projections of the Misery Index levels suggest that Iranians’ will remain, well, miserable, for some time.

Categories: Policy Institutes

Exploiting China’s Growing Frustration with North Korea

Cato Op-Eds - Wed, 05/28/2014 - 14:16

Ted Galen Carpenter

South Korean officials insist that China now agrees that North Korea’s nuclear program poses a serious security threat to the region.  If that interpretation is accurate, it is a strong indicator that Beijing’s patience with its troublesome ally is wearing very thin.  But as I point out in a new article in China-U.S. Focus, the United States and its East Asian allies have a long-standing tendency to overestimate China’s willingness, even its ability, to restrain Pyongyang without incurring excessive risks to its own national interests.

Rumors continue to swirl that North Korea plans to conduct yet another nuclear test.  China is apparently trying to dissuade its volatile ally from taking such a provocative step.  According to Reuters, Beijing has used various “diplomatic channels” to convey its wishes to Kim Jong-un’s regime.  But China adopted a similar stance with regard to Pyongyang’s last nuclear test, as well as the test of a long-range ballistic missile.  Unfortunately, Beijing’s latest expression of opposition is not likely to fare better than previous efforts. Both Kim and his father, Kim Jong-il, defied China’s wishes and conducted such tests.  If that weren’t enough, North Korea also attacked the South Korean naval vessel Cheonan and shelled a South Korean island.  Although Beijing was clearly unhappy about such incidents, it did not prevent Pyongyang’s dangerous, destabilizing conduct.

Because China provides North Korea with a majority of its food and energy supplies, Pyongyang would seem to be highly vulnerable to pressure from Beijing.  But a decision by China to employ maximum economic power to impose its will on the North Korean regime would also require a willingness to incur grave risks. Bringing such pressure to bear could cause the North Korean state to unravel. Not only would that development produce a massive refugee crisis (and possibly a civil war) on China’s border, but North Korea’s demise would obliterate a crucial geographic buffer between the Chinese homeland and the U.S. sphere of influence throughout the rest of Northeast Asia.  Few Chinese leaders want to risk that outcome.

If Washington and its East Asian allies want Beijing to become more assertive in leashing Pyongyang, they need to create far more appealing incentives. Perhaps the most important one would be to eliminate China’s worry that the fall of North Korea would lead to a U.S. alliance with a united Korea and the establishment of U.S. air and naval bases on the northern portion of the Peninsula. 

Offering the necessary reassurances would require a drastic change in U.S. policy, most notably abolishing the “mutual” defense treaty with Seoul.  If North Korea collapsed (or even if the hard-line communist regime was replaced by a non-aggressive, reform government) the ostensible rationale for the treaty would also disappear.  Retaining the alliance would then make Beijing extremely suspicious that the real purpose was to contain China.  Understandably, Beijing would not want to take action against Pyongyang, if that were the ultimate outcome.

Washington should instead make Chinese leaders an offer that might prove very tempting, given Beijing’s noticeably increased annoyance with the North Korean government. The Obama administration should prod China to use its considerable economic leverage to bring Pyongyang to heel, and offer an explicit assurance that if a significantly less threatening environment develops on the peninsula, Washington will phase-out its alliance with Seoul.  As an added incentive, U.S. officials should make it clear that under no circumstances would the United States station forces in the northern portion of a united Korea. 

Such an agreement might well be enough to soothe China’s worries about U.S. intentions and get Chinese leaders to take a firmer stance against the dangerous behavior of its client, despite the underlying risk that applying serious pressure might destabilize that client.  Since current U.S. policy clearly is not working, we have little to lose by making such an innovative offer to Beijing.

 

Categories: Policy Institutes

Executive Action on Immigration

Cato Op-Eds - Wed, 05/28/2014 - 12:41

Alex Nowrasteh

President Obama will likely take some executive action this fall to reduce deportations or legalize some unauthorized immigrants. He recently ordered Jeh Johnson, Secretary of Homeland Security, to delay the release of a review of current deportation policy until after the summer. 

A White House official revealed the reason for the delay: “[President Obama] believes there’s a window for the House to get immigration reform done this summer, and he asked the secretary to continue working on his review until that window has passed.”

President Obama has taken a much more conciliatory tone toward Republicans in his push for immigration reform. His 2014 State of the Union address asked Republicans to support reform without blaming them for obstructing it. The White House official’s statement that Obama will delay executive action until after the summer is consistent with that bipartisan tone. It also allows President Obama to appear to be working with Republicans on reform while leaving his policy options open prior to the 2014 elections. 

There is no doubt that President Obama’s attitude is better than blaming Republicans for all immigration problems and is more likely to motivate House Republicans to pass some kind of reform, but the mere mention of executive action only deepens the distrust that many Republicans have for the president – not to mention the many legal issues it raises.  Republicans are justifiably concerned that President Obama may not enforce any immigration law that is passed or may change it with executive actions. 

The Obama administration has consistently piled on more complex rules and regulations for the H-2A, H-2B, and H-1B work visas (with some exceptions that will actually liberalize the system) that make the legal migration system difficult to use.  A new guest worker visa program created by Congress could be similarly stymied by rules and regulations promulgated by executive agencies. Some Republicans also complain about the president’s deportation policy.  These are real concerns that are not mitigated by the president’s threats.   

Many of President Obama’s adjustments to immigration enforcement have been disappointing and haven’t legalized as many unlawful immigrants as they could have. The president’s record on enforcing our harsh immigration laws is strict in contrast to his rhetoric and the stated goals of his executive actions.

However, only legislation can create a guest worker visa program and expand legal immigration enough to channel future immigrants into the legal market. Whatever executive actions the president decides to take, they will deal with problems that have emerged due to our restrictive immigration system that makes it virtually impossible for low and mid-skilled workers to immigrate. Expanding the scale and scope of immigration while diminishing the intensive regulatory oversight role of the federal government is a long-term solution in contrast to an executive action that is temporary at worst and at best seeds legal uncertainty.

Categories: Policy Institutes

"Minnesota 'Unsession' Dumps 1,175 Obsolete, Silly Laws"

Cato Op-Eds - Wed, 05/28/2014 - 12:13

Walter Olson

Wow, more of this please [St. Paul Pioneer Press]:

It’s no longer a crime in Minnesota to carry fruit in an illegally sized container. The state’s telegraph regulations are gone. And it’s now legal to drive a car in neutral — if you can figure out how to do it.

Those were among the 1,175 obsolete, unnecessary and incomprehensible laws that Gov. Mark Dayton and the Legislature repealed this year as part of the governor’s “unsession” initiative. His goal was to make state government work better, faster and smarter….

In addition to getting rid of outdated laws, the project made taxes simpler, cut bureaucratic red tape, speeded up business permits and required state agencies to communicate in plain language.

If lawmakers in Minnesota could identify 1,175 worthless or outdated laws that could be rooted out with little real political resistance, imagine how many other worthless or outdated laws there are that are not so easy to uproot because they work to the benefit of one group or other.

Categories: Policy Institutes

Talking Taxes with Rep. Ralph Hall

Cato Op-Eds - Wed, 05/28/2014 - 10:43

Chris Edwards

Rep. Ralph Hall is in the news for losing to a primary challenger in his Texas district. I first met 91-year-old Hall just last week as we were on a Capitol Hill panel together organized by the Texas Association of Business (TAB). In the photo, that’s Hall to my right and Rep. Kevin Brady and TAB head Bill Hammond on my left. (Photo credit: Office of Rep. Hall).

One thing we discussed was how tax reform has stalled because the two parties see “reform” so differently. Rep. Brady noted that the Democrats keep insisting on tax increases as part of any tax reform. I noted that the Democrats have moved so far to left on economics in recent years that it makes 1986-style tax reform very difficult to achieve.

The 1986 Tax Reform Act was a major bipartisan success, with Democratic leaders such as Dick Gephardt and Bill Bradley playing key roles. This 1985 article in Cato Journal by Gephardt reads almost like it could have been written by a Cato scholar, so you can see how the tax deal was possible.

The gulf between that article by a leading Democrat in the 1980s and the relentless drive today by the Obama administration to raise taxes in the most anti-growth of ways is huge. I discussed Democratic tax policy then and now in this op-ed.

Rep. Hall himself reflects the changing party ideologies. He had been a Democrat for decades and always considered himself to be a conservative. But a decade ago he finally switched parties to better line up his beliefs with his affiliation. His loss to a Republican challenger apparently stemmed from the desire to see a fresh face in the district. And yet, when it comes to fresh faces, I sure hope I look as good as Hall does at 91.

Categories: Policy Institutes

Obama Administration Abuses Executive Power to Pursue Race-Based Government

Cato Op-Eds - Tue, 05/27/2014 - 19:42

Ilya Shapiro

The administration has apparently decided to combine the alarming developments I chronicled in my last two blogposts, which dealt with racial discrimination in Hawaii and President Obama’s abuse of executive power. In a classic Friday-afternoon news dump – and on the eve of a holiday weekend, no less – the Interior Department issued an advance notice of proposed rule-making (ANPR) to “solicit public comments on whether and how the Department of the Interior should facilitate the reestablishment of a government-to-government relationship with the Native Hawaiian community.” (Our friends at the Grassroot Institute of Hawaii broke the news; it helps that their weekend starts six hours after Washington’s!)

This would be an end-run around both Congress and the Constitution, marking the first step toward the creation of a race-based government in Hawaii. That is, with variations of the Akaka Bill stalled in Congress for over a decade – and Daniel Akaka no longer in the Senate, and congressional Democrats on their heels more generally – the administration has decided that this is yet another area where it can’t wait for the legislative branch. Even setting aside the Fourteenth/Fifteenth Amendment and policy problems with any proposed racial governing body, this brazen executive action raises serious separation-of-powers concerns.

As recently as September 2013, four members of the U.S. Civil Rights Commission wrote a letter to President Obama, urging him not to unilaterally push for a Native Hawaiian government. After extensive historic and legal analysis, the letter noted that “conferring tribal status on a racial group is itself a violation of the equal protection guarantees of the Constitution.” Moreover, “as beyond the scope of Congress’s powers as it would be for Congress to attempt to organize Native Hawaiians as a tribe, we believe it would be doubly so for you to attempt to do so by executive action.”

Quite so. I just wish that the next time the executive branch wanted to piggyback off my ideas, it would pick some reform proposals rather than mixing two blatantly illegal policies I’ve criticizing.

For more, see Roger Clegg at NRO and Grassroot’s continuing investigation

Categories: Policy Institutes

At West Point, Obama Seeks to Reassure Foreign Policy Elite

Cato Op-Eds - Tue, 05/27/2014 - 15:47

Justin Logan

Foreign policy in the United States is an elite sport. Unless there is a big Iraq- or 9/11-style disaster, the public mostly ignores foreign policy, because it can. The United States is extremely safe, but it runs an expansive, ambitious grand strategy that keeps elites busy and the public largely uninvolved. President Obama will give a speech tomorrow at West Point defending his foreign policy and answering elites who have begun to grow bored with it.

The president seems to view foreign policy mostly through a domestic political lens. While he opposed an Afghanistan surge, he ordered one anyway, likely for fear of the domestic political implications of defying the generals’ request for more time and more troops. Ideologically, Obama fancies himself a realist in the mold of Reinhold Niebuhr, although no actually-existing realists think his policies resemble realism. During the 2012 presidential campaign, Obama found himself particularly captivated by an essay from Robert Kagan—a neoconservative Romney adviser—that urged Americans to wade ever more deeply into world politics. If there were any doubt that the two political parties agree on U.S. foreign policy, Obama’s accord with Kagan should have demolished it.

But the president has begun to irritate both the right and left halves of the foreign policy establishment by declining to intervene more forcefully in Syria and in Eastern Europe. Obama will likely play to nationalist themes in his speech tomorrow, reassuring the foreign policy elite that he endorses their project and explaining to Americans that their special place and special responsibilities in the world necessitate a costly, globe-girdling grand strategy. News reports indicate the administration is contemplating sending anti-aircraft weapons to the Syrian opposition, and that the president will criticize Russian behavior in Ukraine during an upcoming trip to Europe. In addition, the foreign policy establishment has breathed a collective sigh of relief with the announcement that the president will keep nearly 10,000 U.S. troops in Afghanistan beyond his previously-announced 2014 withdrawal date.

Regular Americans should view the speech for what it is: a cynical sop to the insular clique of Beltway elites who view themselves as the vicars of liberalism on earth, and the rightful possessors of hundreds of billions of American tax dollars to do with what they will.

Categories: Policy Institutes

In Malawi, Beef Is the New Pork

Cato Op-Eds - Tue, 05/27/2014 - 15:21

David Boaz

Does giving voters goodies help to get their votes? In Malawi they think so:

Malawi’s President Joyce Banda is betting voters in her poor African nation will rank cows and corn flour ahead of economic tumult and corruption allegations in Tuesday’s elections….

To sweeten the deal for eight million registered voters, most of whom are poor farmers, she spent the past few months giving away hundreds of cows and thousands of 100-pound bags of corn flour at rallies across the country….

“This old-school electoral patronage, a-cow-for-every family, is effective with female voters especially,” said Anne Fruhauf, vice president at the risk-analysis firm Teneo Intelligence. “No one else is courting that half of the electorate.”

As it turns out, this may not have worked as well as observers expected. Banda, running behind in early returns, annulled the election and called another for 90 days later. But clearly she and many other people thought that the distribution of cows would help her chances.

Meanwhile, here in the United States, elected officials prefer to stick with the tried-and-true distribution of cash from the federal Treasury, as the Washington Post reports today:

One of [Sen. Mary] Landrieu’s television ads this spring stars shipbuilder Boysie Bollinger, a longtime GOP fundraiser and activist. As Bollinger walks through his shipyard in a hard hat, he says into the camera, “Louisiana can’t afford to lose Mary Landrieu,” adding that her energy committee post “means more boats, more jobs and more oil and gas. She does big things for Louisiana.”

Bollinger Shipyards, which employs 3,000 people in Lockport, has been a big beneficiary of Landrieu’s largesse. Last fall, she helped secure a $250 million federal contract for Bollinger to rebuild Coast Guard cutters.

It might be cheaper just to give away cows. But cows or contracts, politicians buy votes with taxpayers’ dollars.

 

Categories: Policy Institutes

Veterans Affairs in the Federal Budget

Cato Op-Eds - Tue, 05/27/2014 - 12:18

Chris Edwards

The Department of Veterans Affairs (VA) is the fifth largest agency measured by spending. Looking at estimated outlays for 2014, VA spending of $151 billion comes in behind the Department of Health and Human Services at $958 billion, the Social Security Administration at $914 billion, the Department of Defense at $593 billion, and the Department of Treasury (mainly interest costs) at $469 billion. See Table 4.1.

Figure 1 below shows that VA spending has tripled since 2000. Figure 2 shows the breakdown of VA spending by function. Interestingly, the largest function is not hospital and medical care, but income security. Within income security, the largest item is compensation paid to veterans for disabilities incurred in, or aggravated during, active military service. (Figure 2 based on calculations from database here).

The Obama administration’s most recent budget summary for the VA is here. It promises “high quality and timely health care services” and “improvements in efficiency and responsiveness.”

The Obama budget also notes: “The Nation has a solemn obligation to take care of its veterans and to honor them for their service and sacrifice on behalf of the United States.”

Further VA budget details are here and here.

Categories: Policy Institutes

This Time It'll Work...

Cato Op-Eds - Tue, 05/27/2014 - 11:42

Jim Harper

The Federal Trade Commission has unanimously recommended that Congress should pass a law regulating “data brokers.”

Congress passed a law regulating credit bureaus forty-plus years ago, and the results aren’t particularly impressive.

Categories: Policy Institutes

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