Tuesday, March 5, 2013

Don't let Don Boudreaux or Thomas Sowell trick you on the sequester

Here and here.

As a hypothetical classroom exercise in public choice theory what they propose is totally fine. They ask, if an agency with responsibilities for (1.) building statues of Benedict Arnold, or (2.) providing medicine to children has to cut its budget, what will it cut first? The answer is the medicine because that will cause the public outrage to get the funding restored.

It's fine as a hypothetical, and the extent to which it describes real bureaucratic behavior is an empirical one (and a reasonable empirical question to look into), but don't let them trick you into misunderstanding what sequester does.

With very few exceptions, the administration has no latitude for shifting around what it cuts. In its report on sequester, the OMB writes:
"The percentage cuts in this report, and the identification of non-exempt accounts, reflect the requirements of the laws that the Administration is applying. With the single exception of military personnel accounts, the administration cannot choose which programs to exempt, or what percentage cuts to apply. These matters are dictated by a detailed statutory scheme. The Administration does not support these cuts, but unless Congress acts responsibly, there will be no choice but to implement them."
Later in the report they discuss the fact that the parliamentarian of the Senate agrees with this interpretation that there are no rules in the act allowing shifting of the burden across discretionary budget accounts (of which there are apparently over 1,200 that have to take the same hit).

If you skim the appendix and look through all the different accounts it's clear that the special exemption rules indeed apply to very feew accounts.

*****

Now, given these stupid policies is the administration making the stupidity of it all very public in the hope of doing something about it? Of course. That's what I'd do too. That's what I've done to a certain extent on this blog. But what they're not doing is deliberately cutting the most sensitive stuff to get a reaction. They have to by law.

It's bad enough that we have the sequester in the first place. I find it disgusting that economics professors are either distorting what's going on or even cheering it.

38 comments:

  1. This is just the extension of the freeze approach for a time of low inflation. The reason this is preferred is they can claim reduced responsibility for cuts while they can propose increases for favored programs in the next budget and take credit if successful.

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    1. Um, no. Sorry.

      I've seen a freeze for two years now. The sequester does not look anything like the pay freeze. In fact it looks like 80% of a pay freeze.

      Delete
  2. Daniel,

    May I make a suggestion. Could we take the discussion to a deeper level.

    1. People act according to their own incentives. Hence Boudreaux and Sowell offer as little as their hpyo--both are infected with incentive caused bias. I would call both Captain Obvious and move on.

    2. Obama couldn't lead or organize volunteer school crossing guards. That he lost the House is probably the worst job of governing, ever. The debacle of Detroit and our other great cities lies at the doorstep of the Democratic Party. In sum, if the shoe fits, we have to wear it. Democrats have been horrible at governance since LBJ. Rather than being so sanctimonious about Republicans, we should be looking at ourselves and figuring out our problems.

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    1. Musing on the half-century history of Democratic leadership is a little deeper than where my brain is today, sorry. But you are welcome to continue to muse on it.

      re: "Rather than being so sanctimonious about Republicans, we should be looking at ourselves and figuring out our problems."

      The most that can be said about me is that I am a Democrat by default. Granted, trends out of Richmond make me think I may even be able to vote Republican in the future. Point being, don't think your sense of us and them is the same as mine.

      Delete
    2. Todd Akin was my Congressman.

      He was the most sensible Republican from Missouri in local, state, or Federal Government.

      You ought to visit the website site and look at the list of bills set to be passed by the Republicans, who have veto proof majorities in the House and Senate.

      We are even going to have laws making it illegal for federal officers to do their jobs.

      Would be very interested in the trends you see in Richmond which are so favorable to Modernity.

      Delete
    3. Daniel,

      I wasn't clear---Missouri General Assembly website

      Dear Baker's: The Sequester Is President Obama's Fault is good enough Obama, although I place a lot more blame on the staff, Summers,etc.

      Delete
  3. I don't understand why you left out the part of Sowell's column that seems to directly undermine the point of your factual point and with that, your moral judgement of Sowell (and Boudreaux):

    "Republicans in the House of Representatives have offered to pass legislation giving President Obama the authority to pick and choose what gets cut -- anywhere in the trillions of dollars of federal spending -- rather than being hemmed in by the arbitrary provisions of the sequester.

    This would minimize the damage done by budget cuts concentrated in limited areas, such as the Defense Department. But it serves Obama's interest to maximize the damage and the public alarm, which he can direct against Republicans.

    President Obama has said that he would veto legislation to let him choose what to cut. That should tell us everything we need to know about the utter cynicism of this glib man.

    The sequester creates more visible damage and more public alarm than if the president were given the authority to trim a little here and a little there in the vast trillions of dollars spent by the government, in order to make a relatively small "cut" that still leaves total federal spending higher than last year."

    It seems highly relevant and to constitute an argument against your strong moral judgment of Sowell (and Boudreaux).

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    1. Don's post was limited to the point I discussed here. Perhaps I should have just linked to Don. My primary concern here is to keep people from being misled about exactly what is going on - that these things are being cut to scare us. They're being cut because it's the law that they be cut.

      That having been said, Sowell does expand on what Don discussed. I hardly see how it invalidates my point. It doesn't change the size of the sequester at all. In fact it would result in certain important spending (not Benedict Arnold statues) being cut even more than they're going to currently be cut, to spare other essential spending in defense! The Republican offer doesn't shift the cuts from childrens' medicine to Benedict Arnold statues - it says "relieve children's medicine program A and cut children's medicine program B even more vigorously to make up the difference". And it would still be a cut of children's medicine program B that is forced on the administration by an act of Congress (or, potentially, Congress would give the president some discretion about which children's medicine program to cut the deepest).

      This hardly refutes my point.

      It's also not clear to me whether it's even constitutional to give the president that kind of appropriations powers, but that's for a constitutional law scholar to answer.

      Delete
    2. whoops, sorry. I missed this part here:
      "In fact it would result in certain important spending (not Benedict Arnold statues) being cut even more than they're going to currently be cut, to spare other essential spending in defense! The Republican offer doesn't shift the cuts from childrens' medicine to Benedict Arnold statues - it says "relieve children's medicine program A and cut children's medicine program B even more vigorously to make up the difference"."
      Do we know this? Is this a fact?
      If so, then what you should have done in your initial post is argue that Sowell (and Boudreaux) could and should have known this or even that they did know this but chose to ignore it so as to mislead their readers. But you didn't do that. In your post you never acknowledge that Sowell even acknowledged that Obama doesn't right now have a choice, let alone that Sowell argued that Obama could have a choice if he really wanted to. if you had done that and then said 'But this is an incorrect and/or dishionest point because the Republican proposal is even worse [for the reasons mentioned in your comment]', then that would have been fine.

      "And it would still be a cut of children's medicine program B that is forced on the administration by an act of Congress (or, potentially, Congress would give the president some discretion about which children's medicine program to cut the deepest)."
      Okay, this is a good point if you're correct about the content of the Republican proposal.

      Delete
    3. "It's also not clear to me whether it's even constitutional to give the president that kind of appropriations powers, but that's for a constitutional law scholar to answer."

      Meh. With the power to kill, to detain people indefinitely, and to start wars at will, this is kind of a non-issue.

      Delete
  4. Did you read Sowell's article? The whole point was that, because the sequester is not discretionary, republicans should be in favor of it (as opposed to discretionary cuts).

    Sowell writes:

    "Republicans in the House of Representatives have offered to pass legislation giving President Obama the authority to pick and choose what gets cut -- anywhere in the trillions of dollars of federal spending -- rather than being hemmed in by the arbitrary provisions of the sequester....This would minimize the damage done by budget cuts concentrated in limited areas, such as the Defense Department. But it serves Obama's interest to maximize the damage and the public alarm, which he can direct against Republicans." (emphasis mine)

    Sowell's example is to demonstrate the downside of the Republican offer, not the sequester. Are you saying the offer cannot really circumvent a sequester?

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    1. See above on the specific goals of this post. Perhaps I should have just cited Don.

      Yes of course I read his article.

      None of this is about maximizing public alarm. It's a poison pill that Congress was supposed to be too smart to let get through. To use Sowell's terminology it cuts Benedict Arnold statues, children's health program A, and children's health program B indiscriminately. The Republicans historically like program A more and the Democrats historically like program B more. The Republicans are offering the President the chance to distribute some of the cuts from program B to Benedict Arnold statues and program A.

      Don't tell me that the president doesn't like the deal because he wants to maximize public alarm.

      The president doesn't like the deal because it's still a legally binding broad-based sequester that makes no sense whatsoever in this macroeconomic environment.

      Delete
    2. Daniel wrote: "The Republicans are offering the President the chance to distribute some of the cuts from program B to Benedict Arnold statues and program A.

      Don't tell me that the president doesn't like the deal because he wants to maximize public alarm.

      The president doesn't like the deal because it's still a legally binding broad-based sequester that makes no sense whatsoever in this macroeconomic environment."

      I find it kind of odd that you keep writing 'the president this' or 'the president that', let alone when you capitalize the word ('the President'). The guy's name is Barack Obama.

      By continually referring to him as 'the president' you sound like Wolf Blitzer or any other CNN anchor.

      Delete
  5. I guess I don't understand why they don't lower salaries rather than let people go. Are there statutes that would prevent that?

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    1. You don't know much about people, do you?

      What if you are A and fairly paid, working with B is is overpaid.

      The Gov't cuts your pay and keeps B.

      Anyone who thinks you can "cut pay," . . .

      Delete
  6. They may be cheering it for all I know, but from what you said, they are shifting blame away from Congress onto the bureaucrats.

    As for the classroom exercise, it depends upon the agency believing that they can influence the electorate, who in turn can influence the politicians. And within a short span of time. Dubious assumptions.

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  7. Trick you?

    So, what, they're being deceptive?

    I stopped reading your post at the title exactly because of the use of that term. Honestly.

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    1. If only you had stopped before the comment section...

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    2. Yes, one must never criticize the author of this blog. That will just not do.

      FYI: Krugman got pwned - http://reason.com/blog/2013/03/05/paul-krugman-on-his-policy-reversals-sin It was great to see Humpty Dumpty get knocked off his wall.

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    3. I take criticisms just fine. Don't confuse returned criticism of low quality comments with some kind of squeamishness about getting criticized.

      Haven't gotten a chance to see Krugman's video yet - maybe a chance to tomorrow. Saw his regrets last night though. Although it's odd - I also heard that Scarborough basically conceded the whole argument (he wants spending now and long run deficit reform later). So what happened - Scarborough conceded the whole argument and cited a few old lines out of context and Krugman wasn't expecting it so he didn't respond well?

      Meh - I hope it's more than just that. I'll see.

      Delete
    4. It wasn't a low quality comment. When you argument starts out that someone is trying to "trick" you're arguing that they're trying to deceive you. Are Boudreaux or Sowell trying to deceive anyone? No. So don't run away from the implications of the words that you use.

      Delete
  8. The point here is that these cuts are not being made to scare the public.

    They are being made because Congress passed - and the president signed - a dumbass law that makes them happen.

    What is going on here is bad policy, not public choice theory.

    There's no deeper strategy here in making the cuts that are being made, despite Boudreaux and Sowell's insinuations. The most you could say is that there's a strategy to trotting the department heads in front of the cameras. It's good that's being done. But the cuts are happening because they have to by law, not because there's some kind of strategic discretion being exercised.

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    1. Frankly we will not have a good grasp of the why fors and so forth of these events for perhaps a generation. Both the House Republicans and the President do appear though to be expecting one side or the other to blink so that either party can save face. These sorts of things happen all the time amongst human beings and they are to be expected. I'm sure the nation will muddle through in the mean time.

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    2. re: "These sorts of things happen all the time amongst human beings and they are to be expected. I'm sure the nation will muddle through in the mean time."

      Well of course but I hate this kind of argument.

      If I wore mittens around the house I'm sure I'd muddle through but it still seems like a dumb idea to put the mittens on, and if someone saw me with the mittens on and suggested "why don't you take the mittens off", it would be a very good suggestion. If I responded "no problem - I'll muddle through" people would be very confused.

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    3. And when I say it's dumb I mean from a macroeconomic perspective - the indirect costs.

      But we're doing this dumb thing and forcing real people to bear direct costs in addition to those indirect costs for no good reason.

      Delete
    4. Yes, but in this case one cannot take the mittens off. People may be noble in reason and infinite in faculty, but they're still animals with lots of limitations. And so far we kind of suck at creating "new people" (the new Soviet Man, etc.) as it were. Acknowledging this is what makes me some sort of conservative.

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    5. Wanting to not pass sequester is not comparable to wanting to make the New Soviet Man.

      Sorry.

      Try again.

      Men are not angels and we govern with that understanding, but that doesn't give you a trump card on criticism of every dumb thing government does.

      Delete
  9. Somehow my response to Daniel's response to my initial comment got lost. A brief redo below.

    Daniel wrote: "Don's post was limited to the point I discussed here."
    That doesn't make any sense. Sowell's article explicitly anticipated your point ('But Obama doesn't have a choice!'), responded to it ('He actually does have a choice, namely the choice to have a choice. The Republicans offered him the opportunity to cut what he wants to cut, and Obama said no.) but then you write a post blaming Sowell and Boudreaux for not even acknowledging your point, and leaving out the part where Sowell not only anticipated it, but also responded to it. Obviously Boudreaux couldn't quote Sowell's entire article, but the rest of Sowell's article is mainly and merely an elaboration and refinement of the part that Boudreaux did quote.

    "Perhaps I should have just linked to Don."
    No, you should have mentioned that Sowell actually anticiapted and responded to your point. After doing that, you could have gone on to make other points (for example, that the Republican proposal was pretty shitty and not a serious option for Obama and that not accepting it doesn't mean that he wants important stuff to be cut so as to scare the public)

    " My primary concern here is to keep people from being misled about exactly what is going on - that these things are being cut to scare us. They're being cut because it's the law that they be cut."
    And Sowell never denied that. He even explicitly acknowledged that, and then made an extra argument.

    "That having been said, Sowell does expand on what Don discussed. I hardly see how it invalidates my point."
    That's just bizarre to me. You blame Sowell and Boudreaux for not acknowledghing that the law makes it impossible for Obama to have much choice in what to cut, while Sowell not only explicitly says that but also provides an extra argument that he thinks shows that Obama in the end *does* have that choice.

    of course the fact that Sowell anticipates and responds to the argument that Obama's hands are tied by the law invalidates your point that he doesn't do that. I mean, gee...

    And no, it doesn't invalidate your point that the Republican proposal doesn't actually give Obama more choice and so that Obama rejecting the proposal doesn't mean that Obama wants important stuff to be cut.
    But that's no wonder because that wasn't your original point, the one you make in your blog post. This is a new, extra (albeit relevant) point that you only started making in the comments.

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    1. Narrator - if you read Don's initial post the GOP proposal doesn't even come into it. In subsequent posts on Cafe Hayek it doesn't come into it. I should have just linked to Don - I was linking to Sowell because Don did - just linking his citation.

      We could have gotten into an extended discussion of Sowell but I didn't think he made the argument any more persuasively so I didn't.

      What I lay at Boudreaux and Sowell's feet is a mischaracterization of the situation we are in. They are both wrong to frame it as some kind of public choice-based publicity stunt. What it is is a bad indiscriminate law (and yes, a bad indiscriminate alternative by the GOP) that the administration has no choice but to execute badly and indiscriminately because that's how the law (and the GOP alternative) are written.

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    2. DK wrote: "Narrator - if you read Don's initial post the GOP proposal doesn't even come into it. In subsequent posts on Cafe Hayek it doesn't come into it. I should have just linked to Don - I was linking to Sowell because Don did - just linking his citation."

      Again, you can't expect Boudreaux to quote the whole darn article. The part that he quoted was the essence ('Obama does this to scare the public'), the rest of the stuff was an elaboration ('It is true that he does't have much choice under the current rules, but that doesn't detract from this general point because the Republicans exactly offered to change the rules so that he *would* have more choice, but he said no to that.').


      DK wrote: "What I lay at Boudreaux and Sowell's feet is a mischaracterization of the situation we are in. They are both wrong to frame it as some kind of public choice-based publicity stunt."

      The answer as to whether it is or is not a publicity stunt may in part depend on just how bad the Republican plan is. That's an open, empirical question and you've given your arguments. I wonder what Sowell and/or Boudreaux or others would say when confronted with your assertions about the Republican plan. (and I in general wonder what the Republican plan is really like, whether it is as you say it is. It wouldn't surprise me at all (which is also what i wrote in my first response (the one that I realized later I had lost or otherwise didnt appear on the site) to your response to my comment but sadly but other than your assertions I've not seen any evidence)

      i guess the question whether they really are being dishonest depends on *that* issue, on whether they can make a good case for the Republican plan being a genuine non-shitty alternative if Obama truly wants to have more power to decide what to cut.

      and it's an open question at this point.

      Anyway, I think you really went too far or at the very least you were premature in calling their actions 'disgusting' (especially because you yourself really dislike people questioning your intellectual honesty)

      "What it is is a bad indiscriminate law (and yes, a bad indiscriminate alternative by the GOP) that the administration has no choice but to execute badly and indiscriminately because that's how the law (and the GOP alternative) are written."

      But, as Sowell says, the whole point is that Obama could *change* that bad law. That was Sowell's crucial elaboration that you initially ignored.

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  10. So, let me get this straight.... Daniel is saying that the President has to cut in a prescribed way, that he can't pick and choose. But, the Republicans have offered to pass a bill allowing the President to shift the costs around. So, the President's hands aren't really tied at all. So, the only thing Don Boudreaux is wrong about is the reason the President's hands aren't tied.

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    1. No, you don't have it straight - see responses to the other comments above. To borrow Sowell's analogy again, the Republican plan is to not allow any cuts in children's medicine program A and load it all up on children's medicine program B. It doesn't change the broad and stupid (by law) nature of these cuts.

      Keep in mind Don didn't even mention that plan and was just playing off the whole sequester as Obama's public choice strategizing for the public. I probably should have just linked to Don.

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    2. DK wrote: "Keep in mind Don didn't even mention that plan and was just playing off the whole sequester as Obama's public choice strategizing for the public. I probably should have just linked to Don."

      Again, you can't expect Boudreaux to quote the whole darn article. The part that he quoted was the essence ('Obama does this to scare the public'), the rest of the stuff was an elaboration ('It is true that he does't have much choice under the current rules, but that doesn't detract from this general point because the Republicans exactly offered to change the rules so that he *would* have more choice, but he said no to that.').

      To say that you found what Boudreaux and Sowell wrote 'disgusting' and then argue for that by leaving out exactly the part that anticipates and answers your criticism is problematic to say the least.

      Of course it is fine to then argue an additional point, namely that the Republican plan was so bad that it didn't present Obama with a real choice. But that was not the criticism you initially made, not the reason you found Boudreaux' and Sowell's actions 'disgusting' (strong words).

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  11. he's not even wrong about that because Sowell's article (the article Boudreaux quoted from) explicitly talks about the Republican proposal as the reason why Obama's hands aren't tied.

    whether Sowell's description of the Republican proposal and Obama's reasons for rejecting it is correct, is of course another question, and in the comments Daniel answers that no, it's not an accurate description.

    ReplyDelete
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  13. FWIW,

    http://reason.com/blog/2013/03/13/covered-at-reason-247-white-house-may-re

    "Covered at Reason 24/7: White House May Reverse Decision on Suspended Tours"
    Ed Krayewski|March 13, 2013 11:00 am

    Reason 24/7Remember the sequester? It’s in effect but the effects so far have been far from the dire scenarios predicted by President Obama and his administration. The largest outcry so far has been over the suspension of the White House’s self-guided tours (estimated savings: about $74,000 a week). The president may now apparently reverse his decision.

    From Fox News:

    In the face of a public outcry, President Obama opened the door in an interview broadcast Wednesday to resuming White House tours -- after they were suspended in a decision purportedly meant to save the Secret Service money while it deals with sequester cuts.

    The decision, announced earlier this month, was decried by Republican lawmakers as over-the-top and unnecessary. School groups and others who had planned to visit the White House got disappointing news when the tours ceased this past Saturday -- a group of sixth graders in Iowa even took to Facebook to vent their frustrations in a widely viewed web video.

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