Paul M. Jones

Washington will spend $31,406 per household in 2010 - the highest level in American history (adjusted for inflation). It will collect $18,276 per household in taxes. The remaining $13,130 represents this year's staggering budget deficit per household ...

Washington will spend this $31,406 per household as follows:

Social Security/Medicare: $9,949.

Defense: $6,071.

Antipoverty programs: $5,466.

Unemployment benefits: $1,640.

Interest on the federal debt: $1,585.

Veterans' benefits: $1,052.

Federal employee retirement benefits: $1,018.

Education: $914.

Highways/mass transit: $613.

Health research/regulation: $550.

Mortgage Credit: $470.

The remaining $2,078 is allocated to all other federal programs, including justice, international affairs, natural resources, the environment, regional development, farm subsidies, social services, space exploration, air transportation and energy.

Read the whole thing; there are important notes for each of the line items. Via Washington will spend $31,406 per household this year - St. Petersburg Times.

Waxman and his colleagues in Congress can't possibly understand the health care market well enough to fix it. But what's more striking is that Waxman's outraged reaction revealed that they don't even understand their own area of responsibility - regulation -- well enough to predict the effect of changes in legislation.

In drafting the Obamacare bill they tried to time things for maximum political advantage, only to be tripped up by the complexities of the regulatory environment they had already created. It's like a second-order Knowledge Problem.

Possibly this is simply because Waxman and his colleagues are dumb, and God knows there's plenty of evidence that Congress isn't a repository of rocket scientists. But it's just as likely that adding 30 or 40 IQ points to the average congressman wouldn't make much difference.

The United States Code -- containing federal statutory law -- is more than 50,000 pages long and comprises 40 volumes. The Code of Federal Regulations, which indexes administrative rules, is 161,117pages long and composes 226 volumes.

No one on Earth understands them all, and the potential interaction among all the different rules would choke a supercomputer. This means, of course, that when Congress changes the law, it not only can't be aware of all the real-world complications it's producing, it can't even understand the legal and regulatory implications of what it's doing.

via Glenn Harlan Reynolds: Progressives can't get past the Knowledge Problem | Washington Examiner.

There's a good followup at http://www.cato-at-liberty.org/2010/04/04/regulation-and-the-knowledge-problem/.

Why yes, yes it does.

Crappy, death-march projects are routine in software development. Projects begin with unrealistic expectations, concrete commitments are made based on estimates and information that is far from concrete. And when things inevitably go pear-shaped developers cop the brunt of the fallout. We are forced to shortcut our process and compromise on quality and when that is not enough, well we just work longer and longer to make up the shortfall. At the end everybody is stressed and tired, but sometimes the gargantuan efforts are enough to get the project (or what’s left of it) into production. When that happens, we crack open the champagne and hail the project as a miracle of modern software development. Everyone shakes their heads and marvels at how the team was able to do the impossible. Awards and praises are handed out and everyone is too happy to notice that the project was actually a year late and millions of dollars over budget. I lie, everybody is well aware of the fact that the project was a complete debacle, but with so many people patting each other on the back, it just doesn’t seem politic to say anything. You would agree that this is the ultimate in positive reinforcement.

(All emphasis in original.)

And then managers wonder why the developers are unsatisfied with their work -- or why they quit after a death march project. Via Does Software Development Have A Culture Of Rewarding Failure.

A very insightful essay from Reason magazine. The concluding paragraph:

We often focus on the size of government, as measured in percentage of GDP taxed and spent by the government, which is an important and measurable concept. But our real concern is power. What kind of power does the government wield over the people? Powerful state institutions tend to be large, but that doesn't mean that a larger state is necessarily exercising more power. Imagine a small town that adds two officers to its police force. Now it has more police officers, and that costs more money; the government is "larger." But if the officers now do a better job of arresting violent criminals and protecting the lives and property of the people--and refrain from arresting or hassling non-criminals--then the government has not expanded its power. Indeed, better eight officers protecting lives and property than six officers enforcing drug laws and blue laws. We should focus on what is actually important--the exercise of arbitrary power over others. And in that regard slavery and conscription, among other things that marred parts of our American past, loom very large.

via Up from Slavery - Reason Magazine.

This piece is about Malthusian panics, with special reference to climate-change panic, but there is a beautiful general-purpose gem of a paragraph buried in the essay:

Perhaps one way to think of humanity is to think of a vast parallel processing computer network. Our species is constantly receiving vast quantities of data and constantly changing our behavior in response to it. When a big problem emerges, affecting us all over a country or the world, millions and billions of us start making changes in our behavior, trying new strategies and dealing with it in various ways. We are constantly monitoring one another as well; when somebody’s coping strategy is working, other people pick it up. When something is failing, we let it go. From moment to moment, all over the world, human beings are processing information, shifting behavior, collecting feedback and rethinking their behavior. A lot of this isn’t conscious; just as baseball pitchers can throw a curve ball without necessarily being able to understand the math that could describe the ball’s flight, so people who have no education or training in formal logic are able to process real world information and make good decisions.

That's why I like market solutions over government solutions. Via Doing What Comes Naturally - Walter Russell Mead's Blog - The American Interest.

Tax cuts enacted in the past decade have been generous to wealthy taxpayers, too, making them a target for President Barack Obama and Democrats in Congress. Less noticed were tax cuts for low- and middle-income families, which were expanded when Obama signed the massive economic recovery package last year.

The result is a tax system that exempts almost half the country from paying for programs that benefit everyone, including national defense, public safety, infrastructure and education. It is a system in which the top 10 percent of earners -- households making an average of $366,400 in 2006 -- paid about 73 percent of the income taxes collected by the federal government.

The bottom 40 percent, on average, make a profit from the federal income tax, meaning they get more money in tax credits than they would otherwise owe in taxes. For those people, the government sends them a payment.

"We have 50 percent of people who are getting something for nothing," said Curtis Dubay, senior tax policy analyst at the Heritage Foundation.

(All emphasis mine.) Man, it must be nice to get stuff for free, with the burden of actually paying for things shouldered by others. And they all get to vote, too; I wonder, do people who get free stuff vote for more free stuff? And when they outnumber the people who have to pay, what then?

Via Nearly half of US households escape fed income tax - Yahoo! Finance.

That is, a value-added tax. This is a tax applied to every transfer of goods and services between businesses, and between businesses and consumers.

Charles Krauthammer predicted it on Fri 26 Mar:

As the night follows the day, VAT follows health-care reform.

With the passage of Obamacare, creating a vast new middle-class entitlement, a national sales tax of the kind near-universal in Europe is inevitable.

We are now $8 trillion in debt. The Congressional Budget Office projects that $12 trillion will be added over the next decade. Obamacare, when stripped of its budgetary gimmicks — the unfunded $200 billion-plus “doctor fix,” the double counting of Medicare cuts, the 10-6 sleight-of-hand (counting 10 years of revenue and only six years of outflows) — is at minimum a $2 trillion new entitlement.

Paul Volcker, former Fed chief and now advisor to President Obama, helps show Krauthammer’s prediction is accurate:

The United States should consider raising taxes to help bring deficits under control and may need to consider a European-style value-added tax, White House adviser Paul Volcker said on Tuesday.

…

… he said getting entitlement costs and the U.S. budget deficit under control may require such moves. “If at the end of the day we need to raise taxes, we should raise taxes,” he said.

James Pethokoukis agrees on its inevitability:

Now that America has gone French (and German and British) with universal healthcare, expect Washington to eventually propose a European-style, value-added consumption tax to pay for it -- as well as the rest of the historic rise in federal spending.

…

For Washington insiders, it’s a matter of “when” not “if.” Politicians and economists I chat with from the White House to Capitol Hill to the Federal Reserve think a VAT inevitable. Healthcare reform has only hardened that consensus. Spending cuts to pay for expanded coverage may not happen. Either way, the budget numbers scream for action. Annual federal spending as a share of GDP will likely outpace revenue by at least six percentage points for years to come. Trillion-dollar deficits the norm.
…

VAT proponents assume political intransigence without a financial crisis to spur action, just as market chaos helped get the $700 billion bank rescue passed in 2008.

Now that we have the so-called health care reform, deficits are going to expand enormously, and will stay permanently higher.

When the next financial crisis hits, whether related to the so-called health care reform or related to the uncorrected fundamentals that caused the current recession, the VAT will be posed as the fiscally responsible thing to do so “we” can pay for “our” spending. It will be in addition to the income tax, not in place of the income tax. The VAT code will subject to gaming by politicians on behalf of their preferred corporations and industries, made possible in part by the opaqueness of the VAT to voters.

Over the last year or so, I have attempted to show that for free traders to win the “great trade debate,” they must rethink their current, data-driven approach. This means that before getting into all of the fancy charts and historical lessons, free traders first must demonstrate that trade is foremost a moral issue, and that free traders, not protectionists, are on the “right side.” This is done simply by showing how anti-traders seek to forcibly thwart voluntary, mutually-beneficial cross-border transactions in order to transfer wealth from politically-underrepresented groups (i.e., individual consumers, service-providers, and downstream manufacturers) to other, politically-favored classes (typically heavy manufacturers or agribusiness). It is reinforced by showing how protectionism is an invisible and regressive tax that disproportionately punishes low-income American families by forcing them to expend more of their paychecks to buy protected (and more expensive) food, clothing and shelter. In short, protectionism is classic beltway politics, where special tax breaks, sweetheart deals and secretive earmarks rule the day.

via Scott Lincicome: Scoring the Great Trade Debate.

But now, for the first time in our history, we are becoming just another European nation, with bigger government, higher taxes, more regulation of almost everything, and the basic public-policy preference that the government, not we the people, should be in charge of the nation's choices.

So America has indeed changed, perhaps forever, as the White House and brazen congressional leadership nationalized 17% of our economy, replacing individual choices with governmental regulation. The sunset of the American belief in economic growth and individual choice and responsibility is now with us. If we do not change our course, that will be a shame.

via Welcome to Europe - WSJ.com.

Government already plays such a large role in health care that it may be hard to understand what "separation of health and state" means. Let me be clear: In my ideal world, we wouldn't just abolish Obamacare. We'd abolish Medicare, Medicaid, regulation of health insurance, medical licensing, and the Food and Drug Administration... for starters. Unlike many opponents of the latest legislation, I'm not saying, "Keep your government hands off my Medicare."

Needless to say, my position is unpopular.

via My Opening Statement, Bryan Caplan | EconLog | Library of Economics and Liberty.