Reason Foundation

Senate Approves Lawmakers Insider Trading Ban. Whatever.

Posted on February 3, 2012, 11:01am | James Groth

After a “60 Minutes” report brought to the attention of the American public that Congress was capitalizing on non-public information, lawmakers quickly collaborated with one another and proposed two bills banning insider trading by members of Congress and their staff. One in the House and one in the Senate. The House bill had floated around for six years largely ignored until it was immediately embraced by 270 House members the week after the public became informed.  The Senate bill took about two weeks to craft following the “60 Minutes” report. Isn’t it amazing how quickly our representatives can act when the issue threatens their lives and jobs?

This whole hoopla over Congressional insider trading is a non-issue. I wrote an op-ed in the Washington Times about this bill being largely a public relations campaign, a sorry and despicable attempt by members of congress to regain America’s trust by drafting and passing a law that at first glance looks like our representatives protecting our interests, but in reality accomplishes next to nothing and may even disrupt existing insider trading laws.

Congress has a public approval rating below 15 percent, and this bill reeks of desperation.

One of the creators of the Senate bill, Sen. Scott Brown, Massachusetts Republican, had this to say:

"We can send the message to the American people that we're trying to re-establish the trust that seems to have been lost with them, and who knows, maybe we'll be in double figures in terms of the approval rating pretty soon."

Co-sponsor of the House bill, Rep. Tim Walz, Minnesota Democrat, had this to say:

"If this thing doesn't move and doesn't happen, hepatitis will be more popular than the U.S. Congress, I can guarantee you that.”

The only thing that was accomplished throughout this lawmaking process was media time for our representatives to return to the pulpit, clamor to regain our trust, and most importantly, waste our time while not devoting much needed attention to real issues like deficit reduction, tax reform, a slew of government housing issues, relentless money printing, and the list goes on.

At least some sense came from one Congressman who voted no to the legislation. Sen. Tom Coburn, Oklahoma Republican, had this to say:

“The assumption here is that some of our colleagues are doing insider trading on the stock market. Nothing could be further from the truth. The real insider trading is the horse-trading that goes on in this body that is not always in the best interest of the country.”

Well said.

Spike in City Costs Found in Denver

Posted on April 3, 2011, 4:46pm | Harris Kenny

Chuck Plunkett of The Denver Post recently broke a story entitled “Spike in City Costs Found in Denver”, which details rising costs and mismanagement by the city’s Public Works Department. The entire story is worth a read (available here), below are a few highlights:

While renovating offices that house the Denver Elections Division, the Public Works Department reached into its pockets a dozen times to cover unexpected costs, increasing payments to a contractor by 74%, from 1.6 million to $2.8 million…

The Denver Post found $14 million in costs brought on by ‘change orders’ during the past two years (which) is small in relation to the more than $300 million in contracts. But the costs came at a time when Denver’s budget has been hammered by the poor economy and a series of cost-cutting measures have reduced city services…

Of Public Works contracts in 2010, 26 required change orders. Their value grew by an average of almost 17% [emphasis added]... Those increases sound out of line to city officials in Aurora and Colorado Springs, who characterize change orders above 10% as too high.

The Denver Post also found that Public Works is not able to comprehensively track its change orders, though officials say they hope to install software that can do so this year. The department says a review of each file – page by page – remains necessary if officials wish to determine the extra cost that change orders represent…

Plunkett posted a follow-up post (available here), where he discusses using Colorado’s Open Records Act (CORA) to acquire and comb through the data for this story.

Reason Foundation supports using contracting, privatization and public-private partnerships to provide more cost-effective public service delivery, but doing so with appropriate oversight can be difficult. To see how other cities are using the aforementioned policy tools, and more, see Reason Foundation’s Annual Privatization Report 2010: Local Government Privatization section.

McCain Details Omnibus Pork on Senate Floor

Posted on December 15, 2010, 9:08pm | Adam Summers

There are many issues over which I disagree with Sen. John McCain (R-AZ), but one thing for which he is to be lauded is his staunch and consistent opposition to the insidious practice of inserting kickbacks to ceratin interest groups—otherwise known as earmarks—into federal legislation.  According to the Constitution, the public's money should be spent only on those things that benefit everyone (i.e., the "general welfare," a clause that has sadly been repeatedly ignored or conveniently misinterpreted), and should not be taken from taxpayers for the purpose of giving it to particular groups or narrow interests.

While, in the grand scheme of things, earmarks may not comprise a very significant portion of federal spending, they are one of the most maddening forms of government waste and abuse.  Moreover, if Congress cannot restrain itself from these relatively small—yet numerous—abuses, despite its repeated promises to do so, how can we have any faith that it will tackle the larger and more contentious spending issues that threaten to bankrupt the nation?

On the floor of the Senate on Tuesday, Sen. McCain, as he has many times in similar situations in the past, detailed some of the nearly 6,500 earmarks totaling approximately $8.3 billion contained in the omnibus appropriations bill currently being considered by Congress.  Below is an excerpt of his remarks.  (Note: I have added the boldfaced emphasis to the spending items.)

If only Sen. McCain would be as much of a budget hawk when it comes to military and entitlement spending as he is over earmarks we might be able to makes some progress in addressing the massive national debt.

Mr. President, according to my calculations, it has been 42 days since the people of this great Nation of ours spoke, and they spoke in a very strong fashion. It was described by the President of the United States as a "shellacking." It was described by others as a tsunami.

The House of Representatives, as we know, passed to Republican hands. In this body there were six additional Members from my side. I thought the message was pretty clear—that the American people said: Enough with the spending. Enough with the porkbarrel earmark spending. Enough of mortgaging our children and our grandchildren's futures.

[. . .]

At 12:15 today my office received this appropriations bill, 1,924 pages long, and containing funding for all 12 of the annual appropriations bills, for a grand total of $1.1 trillion. It is important to note of this 1,924 pages is only the legislative language and does not include the thousands of pages of report language which contains the details of the billions of dollars in earmarks, and I am sure major policy changes written without a hearing, written without scrutiny, written without the input of the majority of the Members of this body, written by a handful of Senators who happen to be members of the Appropriations Committee.

The American people said just 42 days ago: Enough. Are we tone-deaf? Are we stricken with amnesia? What is going on? We have just begun to look at this monstrosity, and we are beginning to uncover which earmarks the appropriators decided to fund.

Thanks to a new online data base, we at least know what earmarks were requested by Members and how much those projects would cost the American people if they were all funded. Organizations such as Taxpayers Against Earmarks, WashingtonWatch.com, and Taxpayers for Common Sense joined forces to create a database. According to the data they compiled for fiscal year 2011, Members requested over 39,000 earmarks totaling over $130 billion—those were requested.

I encourage every American to go to the Web site, EndingSpending.com, study it, and make yourselves aware of how your elected officials seek to spend your money.

In the short time I have had to review this massive piece of legislation, we have already identified approximately 6,488 earmarks totaling nearly $8.3 billion when we are running record deficits. When there is a $40,000 debt for every man, woman, and child in America, we are going to have 6,488 earmarks totaling nearly $8.3 billion. Here is a small sample: $277,000 for potato pest management in Wisconsin—you will notice there is a location for every one of these earmarks—$246,000 for bovine tuberculosis in Michigan and Minnesota; $522,000 for cranberry and blueberry disease and breeding in New Jersey; $500,000 for oyster safety in Florida.

One of my favorites that pops up all the time is $349,000 for swine waste management in North Carolina. Another one of my all-time favorites that is always in there, $413,000 for peanut research in Alabama; $247,000 for virus-free wine grapes in Washington; $208,000 for beaver management in North Carolina; $94,000 for blackbird management in Louisiana; $165,000 for maple syrup research in Vermont; $235,000 for noxious weed management in Nevada. That is another one that, when you total it up over the years, comes into millions.

One hundred thousand dollars for the Edgar Allen Poe Cottage Visitor's Center in New York. Another of my all-time favorites that is always on here every year, $300,000 for the Polynesian Voyaging Society in Hawaii. If some people are watching, you are thinking I am making this up. I am not making it up. Three hundred thousand dollars for the Polynesian Voyaging Society in Hawaii; $400,000 for solar parking canopies and plug-in electric stations in Kansas.

Additionally, the bill earmarks $720,000 to compensate ranchers in Wisconsin, Minnesota, and Michigan whenever endangered wolves eat their cattle. As my colleagues know, the U.S. Fish and Wildlife Grey Wolf Program is under intense scrutiny for wasting millions of taxpayers' dollars every year to "recover" endangered wolves that are now overpopulating the West and Midwest. My State of Arizona has a similar wolf program. But ranchers in my State are not getting $727,000 in this bill.

[. . .]

One thing is abundantly clear. The majority has not learned the lessons of last month's election. The American people could not have been more clear. They are tired of the wasteful spending. They are tired of big government. They are tired of sweetheart deals for special interests. They are tired of business as usual in Washington. And they are certainly are tired of massive bills, like this one, put together behind closed doors, and rammed through the Congress at the last minute, so that no one has the opportunity to read them and no one knows what kind of waste that is in them.

[. . .]

So it is with great regret that I again have to come to the floor, as I have for many years, and be critical of my colleagues who are good and honorable and decent Americans. But this process, this process of earmarking, which this is an example of, is not honorable behavior.

I yield the floor.

Sen. McCain's entire remarks are included in pages S9006-S9007 of the Congressional Record and can be found by searching the Library of Congress Web site for December 14, 2010.

Earmarks Banned

Posted on November 18, 2010, 2:30pm | Anthony Randazzo

Just like that, and the House has banned earmarks for the 112th Congress. The long sought after restriction on legislative excess was unanimously agreed to today by House Republicans to be applicable for all members of the next Congress. WSJ has the story:

The House measure was offered by Rep.-elect Sean Duffy, the Wisconsin Republican who won the House seat of retiring Democratic Rep. Dave Obey, who has been Appropriations Committee chairman.

While the vote is an obvious nod to the new Republicans, it’s also a big win for House Minority Leader John Boehner, the speaker-in-waiting, who has never requested an earmark and tried — unsuccessfully — for years to impose a ban.

“Earmarks have become a symbol of a Congress that has broken faith with the people,” Mr. Boehner said in a statement afterward. “This earmark ban shows the American people we are listening and we are dead serious about ending business as usual in Washington.

Okay, so the GOP has actually shocked the world and held to at least one of their pledges. And it was relatively painless. The only serious question is whether the House will accept Senate earmarks—or if the Senate Dems will get on board. Next issue? I think they get tougher from here.

Mercatus: Federal Income Taxes Would Have to More Than Double to Maintain Medicare, Social Security Benefits

Posted on July 31, 2010, 10:36pm | Adam Summers

Here is a sobering chart from the Mercatus Center at George Mason University. Mercatus Center Senior Research Fellow and Reason magazine contributor Veronique de Rugy (see an archive of her Reason articles here) used Congressional Budget Office data to calculate the hike in federal income tax rates that will be required to maintain the increasingly costly Social Security, Medicare, and Medicaid entitlement programs at current benefit levels.

According to de Rugy,

Even for the lowest tax bracket, annual federal income taxes will have to more than double to pay for current levels of Medicare, Medicaid and Social Security spending. These massive tax increases will be necessary in spite of the recently legislated changes to the healthcare system, which CBO has determined will increase costs over the next 20 years and will have indeterminate budget effects into the future.

In 2010, Medicare and Medicaid will cost a projected 5.0 percent of GDP and Social Security will cost a projected 4.8 percent of GDP. Combined, that is just under 10 percent of GDP. By 2020, the combined cost of these three programs is already projected to grow to 11.4 percent of GDP; extrapolating forward at constant growth rates, their cost will be at about 14.4 percent of GDP by 2030. To put this in context, total federal spending has averaged 18.5% of GDP over the last 40 years.

While things like "bridge to nowhere" earmarks grab a lot of the headlines—and, indeed, these are maddening abuses of taxpayer dollars—they represent only a minuscule portion of the federal budget. To truly make any headway in cutting the size and scope of the federal government down to a more reasonable, fiscally manageable, and individual freedom-friendly level, there must be serious reform of the entitlement programs, which make up the bulk of the budget (especially if you take out defense spending). Clearly, we are on an unsustainable trajectory and it is time to start asking fundamental questions like why government intrusions into the health care industry have led to higher costs, fewer choices for consumers, and oftentimes poorer quality of care; whether retirement planning should really be under government purview; or why individuals cannot at least opt out of the Social Security system and handle their own retirement investments and plans.

States Plunder 911 Funding

Posted on June 7, 2010, 2:14pm | Steven Titch

State governments are getting bolder about diverting funds intended to maintain and modernize 911 emergency calling systems for other uses.

As states face greater budget gaps spurred by reckless spending and unsustainable obligations to the public sector employees, legislatures have been turning everywhere for extra cash. The 911 surcharge that appears on most consumer phone bills is no exception.

Originally, 911 fees were supposed to be used exclusively to fund 911 calling centers and the training of operators, the primary rationale behind the decision to assess the fees on phone bills. Instead, 911 money is being funneled elsewhere, sometimes for other law enforcement needs like weapons, vehicles and uniforms; sometimes for cost and services that arguably should be funded from general revenues. In New York State, for instance, of the $600 million collected from 911 fees in the past 15 years, just $84 million—14 percent—was used for municipal 911 center operation, according to a Buffalo News report cited by Emergency Management magazine.

At the national level, Washington has penalties, such as cutting off federal funds, that are supposed to disincent states from diverting 911 fees, but that turns out to be a matter of nomenclature. A number of states, including New York, have simply voted to change the name of surcharge from “911 fee” to “protection fee” to evade any problems.

The recent issue of Emergency Management devotes an article to the sorry state of local 911 systems, laying some of the blame on the propensity of state and local governments to raid the funds.

“We have states out there that are diverting tens of millions of dollars from 911 funds to go into other pots, such as buying vehicles, guns, uniforms and equipment for first responders,” said NENA’s [the National Emergency Number Association’s president Craig] Whittington. “The funds were created to fund 911 centers; we have 911 centers out there with woefully outdated equipment and even the ones with the best equipment need to be preparing for next-generation 911.”

As of press time, NENA was preparing a letter for Congress asking for congressional intervention to stop states from diverting 911 funds, he said. The CTIA [the wireless industry association], NENA and APCO [Association of Public-Safety Communications Officials] come together when they hear that a governor might raid a state’s 911 fees. “In some cases we’ve been successful at getting them to back off, and I know that in Maryland the governor, after announcing intentions to raid, has not taken those funds,” [Brian Josef, director of regulatory affairs for CTIA] said. “But in other states, they need the money and really there’s nothing to sway them from that.”

Telephone taxes and surcharges, which include 911 fees, on average make the levy on phone service twice as high as the sales tax on other products. It’s worth noting that the FCC’s National Broadband Plan proposes a similar structure of fees to fund public safety communications, including a national emergency communications network, and has even raised the idea of taxing Internet service and content. Of course, that assumes states won’t plunder that funding, too. Given the level of tax burden, it’s more than reasonable to demand the fees fund the programs they were created for.

On the Very Idea of the Agricultural Committee

Posted on July 1, 2009, 9:00am | Carson Young

The Waxman-Markey cap and trade bill has turned into a feeding frenzy for special interests, as Reason’s Ron Bailey warned back in April.  Prominently elbowing its way to the public trough, as usual, is Big Agriculture:

Because they are the source of most carbon emissions, factories, power plants and oil refineries would all be covered by the caps and be required to buy the permits, or allowances, as they are called. The one major source that is not covered is the American farm….  But, for farmers, it wasn't enough to get a free pass on carbon emissions…. In the mind of the entitled American farmer, any increase in costs or reduction in revenue—whether from natural causes, market forces or government regulation—must be compensated for by the government.

This doesn’t come as a surprise, given the other boondoggles caused by the farm lobby’s disproportionate political influence (ethanol and the farm bill, to name a few).  One institutional reason for the farm lobby’s clout is Congress’s committee structure.  As Matt Yglesias explains,

One basic problem of democratic governance relates to concentrated interests versus diffuse ones. Organizing broad groups of people to advance the public interest in the face of entrenched opposition is difficult. And the committee structure is like it was designed to make this problem as bad as possible.

Ezra Klein proposes an obvious solution: get rid of agricultural committees.  Agriculture is the only industry that gets legislative committees all to itself (not to mention an entire executive department).  Maybe this made sense back in the 19th century, when the United States was still mostly an agrarian economy. But now that the agricultural sector employs only two percent of workers in the United States, agricultural committees have been reduced to serving as conduits between public funds and special interests, making already dreadful bills like Waxman-Markey even worse. Why do we need this problem?

Reason's Anthony Randazzo has more on the travesty that is Waxman-Markey here.

Jindal And The Debate Over Volcano Monitoring

Posted on March 4, 2009, 4:42am | Adrian Moore

The news and blogosphere is full of back and forth jabs and plenty of high horses over Gov. Jindal singling out volcano monitoring as an example of federal spending that maybe should not be a priority. A sample here.

"Does the governor have a volcano in his backyard?" asks the mayor of Vancouver, WA self rightiously. Well, no he does not. Which raises the question of why Louisianans, for example, should be paying for volcano monitoring in Washington state. In other words, why is that a necessary federal mission paid for by all taxpayers? Why should the people who live near volcanoes pay for volcano monitoring themselves? Ditto for those in earthquake or hurricane zones.

It amazes me that as I poked around the media and blog discussion of this, that question seems not to be raised. It’s all about whether volcano monitoring is good or bad, not about whether feds or state/locals should do it. Seems obvious to me that Gov. Jindal hit the nail on the head—this should not be a federal priority.