Federal Budgets are Meaningless

Federal Budgets are Meaningless

02/14/2018Jeff Deist

Reactions to presidential budget proposals generally run along predictable party lines: the party occupying the White House lauds it as a sober and responsible reflection of the nation's priorities, while the opposition party insists it will kill babies and bring about the general downfall of the nation. We might expect this political grandstanding to grow more intense in the Trump era, and so it has: the administration's new 2019 budget proposal has been met with howls of disapproval from many corners. 

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 We alternatively are told Trump's budget fights repeals Obamacare, mandates a border wall, swells defense spending, privatizes space travel, "reforms" student loans and food stamps, fights the opioid crisis, creates huge deficits, and somehow manages to expand federal expenditures 13% while simultaneously slashing critical programs. It's a starvation budget! It's a bloated pork-barrel giveaway! It even threatens Meals on Wheels! The average American, tribally inclined to believe one side's hype over the other, hears all of these things and wonders whether they're true.

But they are not true. Trump's budget, like all presidential budgets, is a meaningless document full of trial balloons that serve current political purposes rather than determining future spending priorities. Budgets have no bearing on future actions by Congress or the president, they don't change substantive law in any area, and they don't create deterministic deficits in the future. They are political documents, and should be understood as such.

A few points bear mentioning: 

  • Presidents have no constitutional role in the budget process, other than signing or vetoing a budget bill crafted by Congress alone.
    Unfortunately, the lawless and relentless rise of presidential power during the 20th century did not spare the budget process. But the Constitution plainly and unequivocally grants sole authority over the power of the purse to Congress in Article I, section 9, clause 7. Presidents are charged with executing the spending priorities of Congress, not setting them in the Oval Office.

    The more modern "tradition" whereby administrations propose an annual budget to Congress in early February is entirely extra-constitutional: the legally dubious Budget and Accounting Act of 1921 created the Office of Management and Budget under the auspices of the president, when it fact such an office should fall under congressional control (as the later-created Congressional Budget Office does). It is a mistake to further entrench the harmful idea that presidents have any say whatsoever over the federal budget.
     
  • Budgets have nothing to do with taxes and spending.
    Congress funds all of the federal departments, agencies, and programs through the annual appropriations process. Technically there are 12 annual appropriations bills, one for each Congressional subcommittee with jurisdiction over particular funding areas (e.g. defense, transportation, agriculture). House and Senate committees each pass their version, then in theory they hammer out an agreement known as a conference report that both bodies pass and send to the President. This process has broken down mightily in the last 15 years, because the poisoned political atmosphere makes agreement on 12 huge bills (all full of tucked-away language from swarming but friendly lobbyists) nearly impossible. So in recent years Congress has passed overarching "omnibus" bills that fund everything, or packaged "minibus" bills that combine two or more appropriations bills.

    But nobody gives a moment's thought to the already-passed fiscal year budget during the summer appropriations process. The budget is like an old newspaper, a story that is utterly irrelevant to the appropriations process. The only numbers that matters are last year's appropriations spending; those numbers form the "baseline" from which the committees begin-- not those suggested in the White House budget. The priorities and initiatives outlined in the administration's budget proposal are never considered for a moment. 

    Tax bills similarly make their way through committees in the House and Senate, though they must originate in the House. Unlike appropriations bill, tax legislation is not particular to a single fiscal year, and remains in effect unless later revoked, amended, or subject to sunset periods. Tax proposals and revenue projections contained in the budget again are irrelevant and never considered by Congress. 

    So how much Congress spends each year, and how much the Treasury collects in taxes, is wholly a function of the appropriations and tax bills passed by Congress (again, save for a presidential veto). 
     
  • Budgets have no binding effect on Congress or the president in future years.
    All of the spending and revenue projections contained in the administration's budget will be utterly forgotten in a month or two. Even if passed into law, the budget bill has no legally binding effect whatsoever on future years, future Congresses, or future presidents. Nor does it have any institutional effect. Nobody in Congress ever says. "Gee, remember that budget we passed back in 2010? We projected spending only $15 billion every year for NASA. I guess we'd better stick to it since we promised... Sorry NASA."

    Nobody knows, or can know what Congress will spend down the road-- just look at "emergency supplemental" bills passed during the Bush and Obama administrations to fund the wars in Iraq and Afghanistan. They were passed without regard to presidential budgets, and completely apart from the existing appropriations/omnibus/minibus bills already voted on. What exactly is the point of a budget, if Congress simply can pass additional spending bills whenever it chooses? So when the New York Times breathlessly announces Trump's budget creates huge deficits in the future or increases poverty, it displays a profound ignorance of the two points above. The administration has no budget, and it doesn't ultimately control spending and tax bills. 

We all would benefit from jettisoning the presidential budget charade. It only creates more meaningless political theater, and diverts our attention from what really matters: the total amount Congress spends and the total amount it takes from the private economy in taxes.

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A Reminder that the Police have No Obligation to Protect You

1 hour agoTho Bishop

The Broward County Sheriff's office announced this afternoon that Deputy Scot Peterson resigned after being suspended for not engaging the shooter at Marjory Stoneman Douglas High School. He had been making over $75,000 a year as the school's Student Resource Office, a position he had held since 2009.

While the report of Deputy Peterson's inaction has understandable resulted in public outrage and disgust, it's important to note that the Supreme Court has found that government police officers are under no obligation to actually protect the public. 

This is why, as Chris Calton noted in an article earlier this year, it's useful to recognize that "law enforcement" is really not synonymous with "security:"

The problems we find in the institution of the police, then, stem from two different areas. The first is the one that typically gets acknowledged, and that’s the government policies in running the police. The negative incentives that attract dangerous people, the lack of consequences for mistakes and abuses of authority, and the low criteria for earning a badge. Many libertarians argue for the privatization of the police as a way of reversing these incentives so that they have a positive effect. The recent string of sexual harassment allegations demonstrates the different levels of accountability between private individuals and those in government positions.

But when libertarians advocate privatizing the police – a position I’ll admit that I share – they are usually advocating the privatization of security. The motto of the police is “To Protect and Serve.” This is the motto of a security industry. But despite continuing to fly this banner, the police today hardly constitute a “security” service. In fact, the security industry is already privatized, and there are more private security guards employed in the United States and other countries than there are police officers.

The synonymous term for “police” is “law enforcement,” and this is a distinction worth remembering. The role of police is not, and has never been, to keep people safe; it has always only been to enforce the law.

When a public police force was first created, the idea of “law enforcement” and “public safety” almost went hand-in-hand. Most laws were actually designed to protect the person and property of private citizens (with exceptions, of course). So even if a public police force was less efficient than a private alternative, its job was still, for the most part, to keep people safe by enforcing the laws designed to protect them from violent criminals.

But as government has grown into the leviathan we know today, the law has expanded well beyond a small criminal code designed to protect life, liberty, and property. But the police, true to their role as law enforcement officers, are just as obligated to enforce these laws – the ones prohibiting marijuana use, lemonade stands, and collecting rainwater, to name only a few oft-cited legal absurdities – as they are to enforce laws protecting people from violent criminals. In fact, if we factor in the negative incentives police departments have guiding the allocation of their resources, it’s reasonable to conclude that an officer is more obligated to enforce the laws against non-violent criminals than the laws against violent ones.

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AUDIO: School Security and More

4 hours agoRyan McMaken

With "Radio Rothbard" I'll be doing short podcasts highlighting some of our columns and authors, while also providing audio versions of my own columns. But, I'll also add just a little extra commentary and also read it the way I'd want it to sound in your head. This week's edition is an audio version of "Security Works at Disney — But Can't Work at a Public School?" [Length: 9:55]

Security Works at Disney — But Can't Work at a Public School?

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The War on Cash: Sweden Stares into the Abyss—and the Abyss Stares Back

The Swedish government and its central bank have long been in the vanguard of the war on cash.  Now they are suddenly having second thoughts about its potential outcome.   The value of notes and coins in circulation has crashed to its lowest level since 1990 and now stands at 40% below its level in 2007.  “No cash” signs are popping up everywhere in restaurants and retail establishments and even museums throughout Sweden.  The rapid disappearance of cash is making the government very nervous.  A parliamentary committee charged with reviewing central bank legislation is now preparing a special report on the situation to be released this summer.  The head of the committee, Mats Dillen, was refreshingly candid in revealing the general concern of the committee:

One may get into a negative spiral which can threaten the cash infrastructure.  It’s those types of issues we are looking more closely at.

In other words, many Swedes, especially the elderly, do not hold money that can be accessed and transferred electronically to make payments.  These people are finding their exchange opportunities severely diminished in an increasingly cashless society.

The Riksbank, Sweden’s central bank, is also concerned about instability that may result from a transition to a completely cashless society.  It is contemplating a proposal to introduce a digital currency, the e-krona, to complement, not displace, physical cash.  Stefan Ingves, the Governor of the Riksbank, has even encouraged the government to consider legally compelling banks to pay out cash to customers.  This is a far cry from the Rikbank’s attitude at the beginning of this decade when its deputy governor gloated  that cash will survive “like the crocodile, even though it may be forced to see its habitat gradually cut back.”

In any case, Swedish policymakers' second thoughts about the war on cash is good news for anyone who values the right to financial privacy and the right of depositors to drive fractional-reserve banks out business as soon as they lose confidence in them.   

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Rubio: Send 18 Years Olds to War, but Don’t Let them own a Rifle at Home

8 hours agoTho Bishop

Prior to the 2016 election, Ryan McMaken noted that voting Republican has proven to be the best way to grow government. At the time, he was referring to the growth of government spending under four of the past five administrations. Of course one of the Trump administrations first legislative “achievements” of the year was passing the largest spending increase since 2009.

The last 24 hours serve as a great reminder that the GOP can’t even be trusted on gun rights. During last night’s town hall on gun violence, Senator Marco Rubio said he now supports raising the age required to buy a rifle or shotgun, as well possibly banning larger gun magazine. Donald Trump tweeted support for similar matters this morning.

This is another great illustration of the intellectual incoherence of “conservatism”, with Rubio’s backtracking particularly striking. After all, Rubio has regularly advocated for great user of the American military on the international stage. To Republicans like Rubio, an 18 year old isn’t mature enough to own a rifle in America – but is perfectly equipped to be armed and deployed throughout the world.  

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The Cure for Catalonian Secession Is Even More Secession

Some regions of Catalonia have signaled they wish to remain united with the Kingdom of Spain, and do not wish to be held to any secessionist votes conducted by Catalan separatists. For instance, in December 2017 regional elections, Ciudadanos, a pro Spanish Constitution and center-left party, was the most votes in many divisions of Barcelona and Tarragona provinces, and in Aran Valley as well

Moreover, where the Catalan secession movement to reach the critical phase, there is a high likelihood that Aranese citizens would opt for splitting from an independent Catalonia and remaining in Spain, either as a new autonomous community or joining any other province (maybe Huesca). It should be pointed that in that region, close to the Pyrenees, where James II of Aragon granted autonomy in 1313, an Occitan dialect is often spoken.

Meanwhile, after Christmas Day in 2017, some critics of Catalan secession suggested the idea of of creating a new autonomous community named “Tabarnia”, which would include those Barcelona and Tarragona sub-divisions where there is more support to remaining in Spain. Many of the comments were put forward satirically, but were nonetheless intended in a spirit of opposition against Catalan secessionist and nationalist movement. 

But that “joke” is only becoming more relevant. 

In 2015 activists launched a platform to turn Barcelona province into the 18th autonomous community, separating the city from Catalonia as a whole. The objectives were the following: improving relationships with the rest of Spain, and avoiding fiscal discrimination on financing.

The movement was fueled by the fact that Catalan independence is not well-supported in many areas of Catalonia itself, and is specific only to certain portions of the region. In other words, there are a division in that region between nationalists and secessionists in rural areas, and supporters of remaining in Spain in many urban areas.

Once said that, from my standpoint, "Tabarnia" citizens ought to have the right to self-determination as well. As Mises taught us that issue has nothing to do with nations, as Catalan nationalists suggest. As in the "division" between conservative New California and progressive California, secession may be considered by Tabarnia citizens as an opportunity.

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"New California" Seeks Two-State Solution to Too-Big California

02/21/2018Ryan McMaken

For people who have spent little time in California, the metropolitan areas all look pretty much the same. Sure, they know that there are some rural areas of California that are unabashedly right-leaning, but the rest is all pretty much just like San Francisco. But, that's not quite true, though. As recently, as 2008, we saw that California isn't quite the uniform place many outsiders assume it to be. When we look at the voting patterns on Proposition 8 ( the gay-marriage ban) for example, we find some real regional differences:

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With the exception of very wealthy Santa Barbara County, a majority of voters in every county in Southern California voted for the ban. Opposition to the ban was heavily concentrated in northern counties with high-income populations, with many of them in the tech industry. 

In other words, Silicon Valley and San Francisco are not Orange County or Riverside County or even San Diego County. True enough, none of those latter places are "right wing bastions" in the style of a South Carolina military town. But they're not exactly Nancy Pelosi country either. 

So, it's not surprising that the latest effort at breaking up California into smaller pieces, is focused on separating out just the portion of California that is most closely allied ideologically with the Northern California ruling class in the state. Here's the map (the blue parts are "New California"):

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The San Diego Union-Tribune reports:

“New California is a new state in development by egregiously aggrieved Californians exercising our Constitutional right to form a new state separate from the tyranny and lawlessness of the state of California,” the group’s Facebook Page says.

The new state, as envisioned, would exclude parts of California along the coastline from Orange north to Napa counties; New California would include all other parts of California, including San Diego County, leaving the coastal stretch as California.

Little is likely to come of this in the short terms, of course. But, if California continues to move toward greater independence from Washington, the stakes will become higher and higher for those regions of the state that object to the current ideological zeitgeist in Sacramento. 

Certainly, the fact that California is seeking to separate itself, at least informally, from Washington's edicts hangs over the whole affair. As we've noted here at mises.org, the answer to secession in many cases is even more secession:

[S]ecession already brings with it a solution to the problem. That is, the problems caused by one secession are solved by more secession. 

As I've explained herehere, and here, a larger number of states is preferable to a smaller number. A larger number of small states provides more practical choices to taxpayers and citizens in choosing a place to live under a governments that more closely match their personal values. 

Thus, in considering the problems of an independent California, we find that the primary problem faced by taxpayers and productive residents in California is that the state is simply too large and contains too diverse a population within its boundaries. 

As noted by numerous commentators over the years — including supporters of the Six Californias initiative— California's population is quite politically and culturally diverse, although it has been dominated for decades by a hard-left coalition of voters based around the Bay Area. Compared to these voters, Southern California residents appear downright centrist, but one would not know this by looking at statewide politics because Northern California is so adept at throwing its weight around. 

The solution to this, problem lies in breaking up California into still smaller pieces. We can see many of these political lines ripe for decentralization in the voting patterns revealed by statewide votes such as those for Propsition 187 and Proposition 8. We can see it in the map of legislative districts. Nor is this just a matter of metropolitan areas versus rural areas. Many suburban areas within the metroplexes of California are quite right-of-center in their own rights, and would surely benefit from further political decentralization.

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More Gun Violence: Let’s Look Beyond Politics

02/21/2018Ron Paul

Another terrible school shooting took place in Parkland, Florida last week and unfortunately many politicians and pundits have used the tragedy – as they often do – to push their own agenda. Many will use the tragedy to argue that Americans should be prohibited from owning guns. As if anti-gun laws would dissuade a disturbed or violent individual intent on causing harm. Those intent on mass murder don’t obey gun laws.

For example, why do those calling for more gun control remain silent when armed federal agents raid Amish farms to stop them from selling raw milk? This shows the hypocrisy of those who call for restrictions on private firearms ownership while supporting the use of government violence as a means of controlling our lives.

Unfortunately there are many key questions lost in the race to score political points from the shooting.

Why does it always seem that the shooter in these mass killings has been on some kind of psychotropic drugs? As the New American magazine pointed out this week, at least ten high profile mass shootings have been committed by individuals who “were either on — or just recently coming off of — psychiatric medications.” The young killer in Florida was no different. According to his aunt, he had been on these medications to treat mental problems.

Why is no one questioning these medications – all of which come with labels warning of horrific side effects? Perhaps one reason they are ignored is that the pharmaceutical industry spends billions of dollars lobbying Congress.

Also, how is it possible that the FBI once again missed so many obvious clues that a violent person intent on causing massive harm to others was about to strike? Is the FBI actually this incompetent, or perhaps its focus was in other areas — like meddling in our own elections by presenting “evidence” they knew was flawed to the FISA court to get permission to spy on the Trump campaign?

We’ve heard many stories of how alert FBI field agents tried to alert their bosses before 9/11 that foreigners were taking flight lessons but were not interested in learning how to land the planes.

Is giving the federal government more power to spy on us – as they demand – the answer to stop these terrible crimes? Hardly!

Those who think that giving federal authorities greater surveillance powers might prevent mass shootings should consider that the FBI has been alerted that the latest school shooter had made Facebook posts and YouTube comments talking about his intention to be, as he put it, “a professional school shooter.” But the Bureau failed to properly investigate the tips. If the FBI fails to stop someone who openly boasts about their intentions on social media why should we believe that giving them the power to snoop on every American would increase our safety?

We cannot stop tragedies like this by banning guns. We need to look seriously into the psychotropic drugs that more and more Americans are being prescribed. We need to demand that our elected Representatives demand a real day of reckoning at the FBI. We need to keep focused and ignore those who politicize such events.

Reprinted with permission. 

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The Economics of Peace and Abundance

02/21/2018Mark Thornton

From the "Living outside the Matrix" podcast: "Dr Mark Thornton helps bring some clarity to a subject shrouded in jargon and obfuscation. He illustrates the differences between mainstream (Keynesian) economics and the Austrian school."

Economics of peace and abundance with Mark Thornton - Living Outside the Matrix podcast episode 31

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SCOTUS Is Right to Not Overturn California's Gun Waiting Period

02/20/2018Ryan McMaken

The Hill today reports that the US Supreme Court is refusing to hear a case challenging a California law prescribing a waiting period for gun purchases. In other words, the SCOTUS is allowing the California law to stand:

The Supreme Court on Tuesday refused to hear a challenge to a California law that requires there be a 10-day waiting period after all gun sales, even if the person is already a registered gun owner.

California’s "cooling off period" is the second longest in the country, according to court documents, and was enacted to give state authorities time to run a background check and give individuals who might want the firearm to harm themselves or others an opportunity to calm down.

Only eight other states and the District of Columbia have any kind of waiting period.

Two California residents, Jeff Silvester and Brandon Combs, who already own guns legally, challenged the application of law along with two nonprofits: The Calguns Foundation Inc. and The Second Amendment Foundation Inc.

They argued the waiting period is unconstitutional when it’s applied to "subsequent purchasers" — individuals who already own a firearm according to California’s AFS database or have a valid concealed-carry license and individuals who clear a background check in less than 10 days.

The 9th Circuit Court of Appeals disagreed. It said the 10-day waiting period is a reasonable safety precaution for all purchasers of firearms and need not be suspended once a purchaser has been approved.

Now, I am not supporter of laws such as these. On the other hand, I also am opposed to the federal government stepping in to overturn state laws. 

State autonomy in this matter is important from a decentralist and pro-federalism position. But it is also important from a legal position, because as Brion McClanahan has made clear in his work on the Constitution and the Bill of Rights, the Second Amendment does not apply to the states. 

Many gun-ownership advocates wrongly claim that the Second Amendment applies to the states, but this is not the case. In other words, they accept the legal doctrine of "incorporation" invented in the late 19th century which applies the Bill of Rights to state governments.

McClanahan notes, however, that not only is "incorporation" a faulty legal doctrine, but it was never applied to the Second Amendment until very recently. 

In this podcast [beginning around12:00] with McClanahon, he examines the historical realities surrounding the adoption of the Bill of Rights, and it is clear that the provisions of the Bill of Rights were intended as "restricting clauses on the general government" and that "these amendments were to apply only to the general government." 

There is a reason, after all, that nerly all state constitutions contain some provisions guaranteeing a right to bear arms. This was seen as the domain of the state governments. 

Federalism, properly understood, puts gun regulation in the hands of the state government. And while I am generally laissez faire on this issue, I agree with McClanahan that the federal government ought not to be the agency to which gun advocates appeal for protections of gun-ownership rights. 

More: Decentralize the Gun Laws by Ryan McMaken

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Minimum Wage Advocates Set to Blame Lack of Results on Enforcement

02/20/2018Ryan McMaken

Minimum wage laws hurt the most unskilled and least experienced workers in society. They cut off the lower rungs of the ladder to that it becomes far more difficult to enter the workforce without substantial experience. After all, how many employers are willing to take the risk of hiring a workers at 8 dollars an hour when that workers has no references and no experience? Some would. But many more would be willing to do it for 5 dollars per hour. 

In practice, fewer than 3 percent of workers earn the minimum wage because as soon as most workers prove they can learn on the job and show up for work, they move above the minimum wage. But, it's that crucial opportunity to get the foot in the door and get a little experience that is hurt by minimum wage laws. Given that 97% of workers are already working above the minimum wage, this illustrates the key importance of allowing wages to be flexible for those not already in the 97%.

Entry into that 97% of workers making above-minimum wage is only hurt by minimum wages because the mandate erases opportunities for workers to prove themselves, even when they have zero experience. Thus, those who are the least promising prospects simply have no chance of getting their foot in the door because they are perceived as being too much of a risk when the employer must pay a minimum wage far above the worker's apparent value. 

Were wages more flexible, brining on an unskilled workers would be a far less risky proposition for employers. 

As a result of the minimum wage, however, unemployment rises among the least skilled, and income inequality grows. 

As we learn in Politico this week, however, supporters of the minimum wage have a ready scapegoat for the minimum wage's failure to bring the most vulnerable workers up to higher wage levels. They'll blame a lack of enforcement by government agencies:

This failure to enforce both the minimum hourly wage — $7.25 under federal law — and rules requiring higher pay for overtime distorts the economy, giving advantages to employers who break the law. It allows long-term patterns of abuse to take root in certain service industries, especially restaurants, landscaping and cleaning. Advocates for lowest-wage workers describe families facing eviction and experiencing hunger for lack of money that’s owed them. And, nationally, the failure to enforce wage laws exacerbates a level of income inequality that, by many measures, is higher than it’s been for the past century.

“Low-income workers are already in this fragile balance,” said Victor Narro of the UCLA Labor Center. “One paycheck of not being able to get the wages they’re owed can cause them to lose everything.”

Minimum wage laws increase income inequality by discriminating most against those "in the fragile balance," but when we fail to see that the least skilled workers are getting work, we will just blame enforcement instead.

This, it seems, is a variationon the "socialism has never been tried!" argument, in which if we just do socialism "harder," this time it will work. This appears to be the mentality in Venezuela right now. When we find that minimum wages don't actually put unskilled workers on the path toward high wages, we'll say "the minimum wage has never truly been tried" and we'll fix it by ramping up enforcement. 

In truth, these loophole through which many of these employers - mostly small businesses and other low-capital operations - are passing, are all that's keeping these workers employed at all. If forced to compete with workers at more reliable and highly capitalized operation, they may very well find themselves completely unemployed. Moreover, the small businesses that we're told are cruelly withholding wages are often not paying wages because they're missing payroll due to low revenues. Properly enforcing the laws will just drive these companies out of business. We might say "serves them right" when that happens, but the outcome will also be that all the workers lose their jobs. 

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