Wednesday, June 17, 2009

Tying a Gordian Knot

In Greek mythology, the Gordian Knot was infamous for being so complex that it was impossible to untie. (Alexander the Great "solved" the knotty problem by cutting it with a sword.)

Nowadays, our fearless leaders on Capitol Hill seem intent on creating their own masterpieces of knotty complexity that many conservatives fear will be impossible to undo once implemented, just like Medicare. But that's not stopping Congressional solons from trying, even if no constituent group wants their "cures". From The Hill:
The cost of [health care] reform and how to pay for it dominated the discussion Tuesday as Democrats were forced to respond to an unfavorable Congressional Budget Office (CBO) analysis of one incomplete part of an incomplete bill.

The CBO looked at one portion of a draft bill written by the Senate HELP Committee and found, among other things, that it would cost more than $1 trillion while providing a net decrease in the number of uninsured people of 16 million.

The CBO also threw cold water on a promise by a coalition of healthcare industry groups to reduce healthcare spending by $2 trillion over 10 years. Obama announced their promise to much fanfare, but the CBO found that while a few of the cost-cutting measures would save money, others would cost money. In sum, they would not have a big impact on federal spending, the CBO concluded.
Or consider the proposed financial regulation reform. Larry Kudlow writes at The Corner:

The Fed in Charge of Systemic Risk? What a Mess [Larry Kudlow]

The big winner of the Obama financial-regulation plan appears to be the Federal Reserve, which becomes the consolidated supervisor of large, systemically important banks.

This is like the fox guarding the henhouse. After all, the Fed’s overly loose money policies created the asset bubble — including housing, commodities, and energy — in the first place. Near-zero interest rates, huge money growth, and total disregard for the plunging dollar are what set up the housing boom and the unfortunate overleveraging by consumers, mortgage borrowers, and Wall Street securitizers.

It also set up the astronomical $150 oil shock, which came alongside the Fed’s overly tight money policies to offset the prior loose policies that would cause this credit crunch and deep recession. In fact, looking back to the last two bubbles — the tech bubble of 1999-2000 and the housing/energy bubble after that — it was the Fed’s pillar-to-post go-stop-go-stop lurches that deserve the principal blame for the economic messes that ensued.
If mismanaging economic policy doesn't make you nervous, how about the Waxman-Markey environmental legislation being written? From Steve Haywood at Planet Gore:

May the Farce Be With You [Steve Hayward]

While most of us are concentrating our fire on the costs and bureaucracy that Waxman-Markey entails, no one has noticed one salient political fact: Had the Bush administration and the GOP Congress proposed the current language back in, say, 2005, all of the leading green groups would have vehemently opposed it as an ineffective sellout to corporate interests. (See, for example, the latest estimate from the Breakthrough Institute that Waxman-Markey will only reduce GHG emissions by about 0.5 percent by 2020.) But the greens are so in-the-bag for Obama and Pelosi, and so desperate to pass something — anything — before Copenhagen in December, that they're willing to become shameless hypocrites.

And Paul Driessen warns in an IBD Editorial Op-Ed:

If the pending Waxman-Markey energy and climate bill (HR 2454) becomes law, utility bills will soar. Farm and business energy costs will skyrocket — and be passed on to consumers, or defrayed by layoffs. Everything Americans grow, make, buy and do will be far pricier. And bureaucrats will control our lives.

Compared to no cap-and-tax regime, Waxman-Markey would cost the United States a cumulative $9.6 trillion in real GDP losses by 2035, concludes a study by the Heritage Foundation's Center for Data Analysis. The bill would also cause an additional 1.1 million job losses each year, raise electricity rates 90% after adjusting for inflation, provoke a 74% hike in inflation-adjusted gasoline prices, and add $1,500 to the average family's annual energy bill, says Heritage.

[Heritage's report is here.]

Fortunately, some members of Congress are interested in untying some of the existing Federal Gordian Knot. Rep. Michele Bachmann (R-MN) blogs about the newly-formed Sunset Caucus:
The Sunset Caucus is designed to shrink our ballooning government budget by eliminating federal programs, offices, and agencies that are duplicative or obsolete.

As Ronald Reagan once said, “a government bureau is the nearest thing to eternal life we'll ever see on this earth.”

As a member of the Sunset Caucus, I will select some program or agency that has outlived its usefulness, duplicates other government programs or that Congress never had any business creating in the first place. The fight for the taxpayers has to start somewhere.

The average federal program duplicates five other programs. For example, there are about 60 separate welfare programs, approximately 160 job training programs, and over 300 economic development programs. When American families are struggling to make ends meet, Congress should be looking for ways to tighten the government’s belt too, and this is a good place to start.

If we can’t make the easy decision to cut this kind of wasteful spending, is it is any wonder the American people are doubtful of Washington’s intentions to make the so-called “difficult choices.”
Break out the swords!