Archive for December, 2009

High Front End Costs, Back End Benefits

Sunday, December 27th, 2009

“The welfare of the people in particular has always been the alibi of tyrants, and it provides the further advantage of giving the servants of tyranny a good conscience.” Albert Camus.

While individual and private collective charity is noble and common, welfare payments  viewed as charity financed by taxes have never been particularly popular. This is the reason why social welfare programs like Social Security and Medicare, despite of the fact that they largely represent transfer payments with clear winners and losers, are depicted as social insurance not welfare. People are persuaded that they are participating in a large pension program, where they contribute now and receive benefits at retirement as if money were stored is some specific account for them. Moreover, at the start of these programs, there were few beneficiaries so the costs and pain were low. Long-term sustainability was not an issue.Correctly or incorrectly, there is a sense of underlying justice to the transaction. That is why seniors remain so defensive about these programs. They feel entitled on the basis of their previous payments, even if those payments are in no way actually related to the benefits. This is the political genius underpinning the social welfare state — and why Democrats may have overstepped on the current“health care reform.”

It is impossible to predict the final state of the health care bill once it leaves conference committee. However, in order to make the bill financially palatable, the goal was to have a program that is deficit neutral. One can argue about whether the economic assumptions provided the Congressional Budget Office for the forecasts were realistic. However,  here is no question that in order to maintain plan deficit neutrality over the first decade, the taxes start for the first few year before the benefits commence in earnest. The pain is front loaded while the benefits come along the back end, the exact opposite of traditional strategies for extending social welfare programs. In the longer term, no one seriously believes that the program is financially balanced.

The strategy of the Left should be to get as many people dependent upon the benefits, to feel a sense of entitlement, before the costs come tumbling in. There is a precedent for a social program that did not work out because the costs were too obvious and the benefits less so. In 1987, Congress passed a catastrophic health care program for seniors. The idea was to limit the out-of-pocket expenses for seniors will chronic long-term health expenses. The goal may have been laudable, but it was largely paid for by middle class seniors, many of whom had difficulty affording the additional premiums (really taxes).  Seniors largely did not feel that they were benefiting from the new social contract. Two years later, the program was ended as frustrated seniors marshaled their ample political power against Congress. We shall see whether the health care changes suffer the same fate.

Compromising the Education of the Poor

Sunday, December 20th, 2009

The cost  is not even a rounding error in the national budget, but the Congressionally-funded Washington DC voucher program is highly symbolic and therefore a conspicuous target for those fearful of giving parents — particularly poor parents —  choices in the education of their children.  The average spending per pupil in the country is a about $9000, at least $4000 less than what is spent per pupil in the District of Columbia. Others have made the same calculation for DC public schools and compute a much higher value for per pupil expenditure. In any case, this amount if properly used, would seem sufficient to create at least a competent educational program. Nonetheless, DC public schools continue to rank at or near the bottom when compared to other systems.

The children of the affluent in the District of Columbia have no shortage of private schools to choose from. Indeed, President Barack Obama has availed himself of this option by sending his two daughters to Sidwell Friends at about $30K a piece. It, therefore, seems somewhat parsimonious for the President to a minor extent and more specifically for Democrats in Congress to end this scholarship program in the Omnibus Spending bill just pasted. The program offered a $7500 scholarship to offset tuition at a private or charter school to 3000 disadvantaged children, This enable the children of  poor parents to opt out of (some might say escape) local failing schools.  The long waiting list for the program attests to its popularity, or at least to disrepute of public schools.

The program is not expensive and the cost of any program has not seemed to be a deterrent for spending for the present government. The problem is that the success of non-public run schools represents an embarrassing indictment of DC public schools and of the teacher unions that are dependent upon them. Public school teacher unions would hate to see the idea gain popularity an provide unwanted competition. The termination of the program in the District of Columbia is a simple payback to the teacher’s unions. No one in the government has suggested that scholarships be part of the stimulus package. I suppose the money is better spent saving jobs in non-existent Congressional districts.

It is often said, “politics isn’t bean bag.” To the victor go the spoils. Teachers unions have received a good return on their political investments. However, in this case it would seem that the current government could avoid making the desperate children in DC public schools educational collateral damage.

The Just War Speech

Sunday, December 13th, 2009

In 1933, a period when Great Britain was still staggering and exhausted by the human loss of World War I, the Oxford Union Debating Society considered the proposition, “That this House will in no circumstances fight for its King and Country.” Even given the extremely categorical nature of the resolution, it passed overwhelmingly 275-153. It is amusing at this distance in history to see those in favor of the resolution unselfconsciously arguing, “It is no mere coincidence that the only country fighting for the cause of peace, Soviet Russia, is the country that has rid itself of the war-mongering clique.” The prevalent attitude  then in Great Britain, as evidenced by  the outcome of the debate, is part of the reason that in the words of President John Kennedy, “England slept” as European Fascism grew in power.

Ultimately, the consummate evil of the Nazi Regime and the ensuing war after a period of shameful appeasement woke England and the rest of the world from the pleasant dream of a world ruled by pacifist sentiments.  It was a lesson that should be hard to forget, but the peace in Europe for decades — a peace secured by  World War II — has largely erased the memory of the terrible necessity of war. The Europeans have enjoyed a generation where disputes in Europe are resolved by politics and committees. Wars as a means of resolving disputes seem barbaric and unnecessary.

In this context,  the Nobel Peace Prize Committee awarded President Barack Obama the its prize. President George Bush represented an America that sometimes found it necessary to its security to wage war. Obama was not Bush and ran for election on a policy that was largely critical of Bush’s war efforts. To his credit President  Obama and the the chagrin of his hosts recently stepped up to his duty to lecture the European elites, especially those on the Nobel Committee, on Just War Theory:

“But as a head of state sworn to protect and defend my nation, I cannot be guided by their examples alone. I face the world as it is, and cannot stand idle in the face of threats to the American people. For make no mistake: Evil does exist in the world. A non-violent movement could not have halted Hitler’s armies. Negotiations cannot convince al Qaeda’s leaders to lay down their arms. To say that force may sometimes be necessary is not a call to cynicism — it is a recognition of history; the imperfections of man and the limits of reason.”

Even if Obama appreciated Just War Theory long ago, we can be certain that his appreciation of its importance has grown given his responsibilities as President. It is a reminder of just how far European elites have fallen from this understanding, that Obama’s elucidation of the possibility of a just war took his hosts in Norway by surprise. The paragraph above represents words that could have been delivered by any elected leader and particularly by any American president. The Nobel Committee may have been disappointed.

Yes We Can

Sunday, December 6th, 2009

It is easy to forget how new a face President Barack Obama is. Obama first came to national public notice we he delivered a rousing keynote address at the 2004 Democratic National Convention that nominated Senator John Kerry for President. Kerry lost to President Bush, but Obama won his election as US Senator. Almost immediately afters he started running for president. Running for president was perhaps his most notable qualification for president. During one election cycle, Obama was an unknown Illinois State Senator and a little more than four years later, he is President of the United States.

There has never been even the smallest doubt about Obama’s rhetorical skills and charisma. Despite the fact, that he started out as a long shot to the obvious next Democratic nominee Senator Hillary Clinton, he never wavered in his personal confidence. He was manifestly capable of emotionally motivating young campaign workers and other supporters with the buoyant chants of “Yes We Can… Yes We Can…”

Obama never betrayed any doubts about his ultimate victory. He never publicly hedged in his personal conviction. Whether he harbored an personal doubts, he certainly knew that it would deflate supporters if he expressed an hesitancy. Obama never said that he would be committed to running to a particular point in the primaries and then he would reassess. Obama instinctively knew that confidence breeds more confidence and increases the likelihood of ultimate victory. Why then is Obama so tentative in his ambitions in Afghanistan?

Given the fact that Al Qaeda under the protection of the Taliban in Afghanistan planned and executed the September 11, 2001 attacks, it appears foolish to allow the Taliban to return to their previous status. When running for president, Obama called the War in Afghanistan the “necessary war.” Was this a conviction, or simply a rhetorical club with which to bludgeon the Bush Administration for its decision to fight in Iraq? In any case, one does not win either an optional or a “necessary” war with tentativeness an equivocation.

This last week, Obama gave a professorial speech to the cadets at West Point matter-of-factly explaining that it was important to keep the Taliban from returning to power. He would increase troops levels almost to the point originally requested by his hand-picked General Stanley McChrystal,  for 18 months and then would reassess. He would perhaps begin to bring troops home at that time. There was no talk of victory, no talk of overwhelming force, no mention of the previous success of a similar strategy in Iraq, no emotional rallying of the troops to face those who threaten the United States.

In this West Point speech, Obama could not marshal the same enthusiasm to encourage the troops as he did for his campaign workers in the 2008 election. The most charitable interpretation is that as gifted a speaker as Obama is, he has not yet fully embraced his leadership role as Commander-in-Chief. He displays none of the trademark Obama confidence about sending young men and women off to war. There is a more cynical interpretation: He would settle for nothing less than victory in his presidential run, while in the case of Afghanistan he would just like disengage as soon as possible.

For now, Obama has made the correct decision with regard to Afghanistan, though he has perhaps followed the former Secretary of Defense Don Rumsfeld strategy of being a bit too parsimonious with troop numbers. His tentative speech delivered in far too measured tones undermined the chances for victory there. You ought not send off troops halfheartedly to war. Why has Obama not embraced the General  Colin Powell Doctrine of once committing to conflict, use overwhelming force?