As David Jensen explains in the Sacramento Bee, California’s government stem cell agency, the California Institute of Regenerative Medicine (CIRM) is spending another $30 million “to dramatically speed approval of stem cell therapies and establish the Golden State globally in the much-heralded regenerative medicine field.” Down lower in the piece, in paragraph six, readers get some background:
“California voters created the state’s stem cell agency in 2004 following a ballot initiative in which voters were told that stem cell cures were nearly at hand.” Then readers they get the real news. “The agency has yet to finance research that has produced a therapy that is available for widespread use.” That is putting it mildly.
As we noted, California’s $3 billion Stem Cell Research and Cures Act, Proposition 71, promised life-saving cures and therapies for a host of afflictions including heart disease, diabetes, Alzheimer’s and Parkinson’s. Celebrity promoters included Christopher Reeve, Michael J. Fox and Arnold Schwarzenegger. Real estate tycoon Robert Klein cleverly wrote Prop. 71 to install himself as the institute’s chairman, and Klein protected CIRM from almost all legislative oversight by requiring a 70 percent supermajority of both houses to make any structural or policy changes. He awarded huge salaries to CIRM bosses such as Alan Trounson, who bagged $490,000 a year courtesy of California taxpayers. Despite all the spending, after 12 years a ballpark figure for the number of promised life-saving cures and therapies is zero.
In 2020 CIRM’s funding “is scheduled to run out,” Jensen explains at the end, and “no additional source of funding has been secured.” This is a pitch to politicians, right before an election, for more money. CIRM should not get another dime. The California Institute of Regenerative Medicine is a complete bust, a classic example of false promises, government waste, and abuse of taxpayers.
With the revelations of the past weeks, the third presidential debate is sure to be one of the best shows in Las Vegas. Many observers have already had enough of the Clinton-Trump spectacle, but there are still some important things to look for.
Observers might examine the candidates’ statements for some sense of the cost of government, for some challenge to the statist superstition that there’s always money for everything. That applies to Mr. Trump’s promise to rebuild the military, always an expensive proposition. Sometimes politicians recommend expensive items the military doesn’t want, such as more M-1 Abrams tanks. See if either candidate can put a figure on what the Pentagon spends every day, and how effective that spending is.
See if either candidate can cost out the nation’s “Intelligence Community.” See if either can explain why, despite massive surveillance, its 16 agencies were unable to prevent terrorists based in Afghan caves from flying civilian airliners into buildings in New York and Washington. Maybe they will give a figure on how much more we need to spend to keep us safe.
See if Mrs. Clinton, a former First Lady, senator, and Secretary of State, has any clue about how much the national debt has increased over the past eight years. As Elvis said in Viva Las Vegas, get those stakes up higher. Keep your calculator ready, and see if she can cost out all those nanny-state programs, bearing in mind that they are all for children. On the other hand, maybe one of the candidates will come out for free hors d’oeuvres in every bar.
See if either candidate has any clue about the extent of government waste. See if either is aware that, as we noted, it is possible to work for the EPA for years, claim to be simultaneously working for the CIA, perform no work for either agency, and bilk taxpayers for $1 million. And how about $1.5 million in Social Security payments to Nazi war criminals? How’s that for accountability?
While looking for answers by all means enjoy the show. As the late George Carlin said, you can find 37 kinds of breakfast cereal, but when it comes to political parties we are pretty much down to two.
In 2016, the U.S. government’s annual budget deficit stopped falling for the first time in four years and swung sharply into reverse, increasing to $587 billion, which is 34% higher than 2015’s budget deficit.
Nearly all of that increase was due to “mandatory” spending on entitlements, the part of the federal government’s expenditures that goes to programs such as Social Security, Medicare, Medicaid, and the Affordable Care Act. The Manhattan Institute’s Charles Blahous, who is also one of the Social Security program’s trustees, describes the growing fiscal problem created by the inadequately controlled growth of spending for these entitlement programs:
Entitlement programs are those automatically authorized to continue to spend funds, often in increasing amounts, without further legislative action. Some of the biggest examples include Social Security, Medicare and Medicaid. Figure 1 shows how over time, automatic growth in such programs has precipitated a corresponding relative decline in discretionary/appropriated spending. (Interest costs are grouped with entitlements here because they are also mandatory spending; their inclusion does not affect the qualitative trend). Figure 2 shows that under current projections mandatory spending will continue to absorb an ever greater share of budget resources. In sum, unless and until the laws governing mandatory entitlement programs are changed, lawmakers will only exert annual control over a shrinking fraction of the budget.
Here are the figures to which Blahous refers:
The fastest growing part of that spending is that for Medicaid, whose spending growth was sharply escalated by the Affordable Care Act. Dan Mitchell of the Center for Freedom and Prosperity Foundation observes:
The main culprits are the so-called mandatory programs. Entitlements such as Social Security, Medicare, Food Stamps, and Obamacare that automatically dispense money to various constituencies are consuming an ever-larger chunk of the economy’s output.
And if you want to be even more specific, the fastest-growing entitlement program is Medicaid, which was originally supposed to be a very small program to subsidize health care for poor people but has now metastasized into a budget-gobbling fiscal disaster. Arguably, it’s the entitlement program most in need of reform.
Getting control over that spending growth needs to be the primary objective of federal lawmakers.
Several proposals to achieve that result have been offered. One of the more promising approaches would take a page out of the playbook for the welfare reform enacted during President Bill Clinton’s tenure in the Oval Office: block grants to the states. Dan Mitchell explains how that reform might work in the following video:
On his blog Downsizing the Federal Government, Chris Edwards estimates how much a block grant approach to funding the Medicaid could save, which would also require eliminating the Affordable Care Act.
Policymakers should repeal the 2010 Affordable Care Act (ACA). That would reduce spending on Medicaid and end spending on the exchange subsidies. In addition, policymakers should convert Medicaid from an open-ended matching grant to a block grant, while giving state governments more program flexibility. That was the successful approach used for welfare reform in 1996, which encouraged state innovation. Changing Medicaid to a block grant and capping annual spending growth at 2 percent would save about $128 billion annually by 2026.
There would still be challenges to setting up a block grant program for the states. John Holahan and Matthew Buettgens of the Urban Institute identify one key issue that would need to be addressed by Congress in establishing such a program:
Block grants and per capita caps have been proposed as mechanisms for controlling Medicaid expenditures. Block grants would allocate money to states based on current overall spending levels in each state, and per capita caps would allocate funds based on current spending per enrollee. In this brief we show that federal spending (adjusted for the size of each state’s low income population) varies across states by more than 5 to 1 and spending per enrollee varies on the order of 2 to 1. In general, high income states will get larger block grants and higher spending per enrollee caps because they spend more today. These disparities would be locked in under these kinds of proposals.
Congress would do well to improve a block grant program by basing its initial allocation of grants not on how much each state spends today, but rather on the size of a state’s low-income population, and then setting up a mechanism to revisit federal allocation every 10 years following each Census to account for changes in the U.S. population.
Steps like implementing block grants to fund health care for low-income Americans will be essential to restraining the future growth of the federal government’s mandatory entitlement expenditures. The sooner these steps are taken, the more stable our nation’s fiscal future.
Just over five years ago, the U.S. Congress passed the Budget Control Act of 2011, which President Obama signed into law on August 2, 2011. The law represented an attempt to arrest the phenomenal spending growth that led to the explosion of the national debt during President Obama’s first two years in office.
The most remarkable thing about the Budget Control Act is that it actually worked. The U.S. government’s spending fell, and when combined with a long delayed economic recovery that boosted tax revenues, the federal budget deficits began to fall. And they fell each year through 2015.
And then, in 2016, the annual budget deficits stopped falling and began growing again.
Reuters’ Lindsay Dunsmuir reports:
The U.S. budget deficit widened to $587 billion for the fiscal year 2016 on slower-than-expected revenues and higher spending for programs including Social Security and Medicare, the Treasury Department said on Friday.
The 2016 deficit increased to 3.2 percent of gross domestic product.
It was the first time the deficit increased in relation to economic output since 2009, according to figures from the Congressional Budget Office. That year, the deficit peaked at $1.4 trillion amid the financial crisis.
From 2015 to 2016, the U.S. budget deficit increased by $148 billion, or by 33.7%. The increase in the deficit was caused by a 5% increase in the federal government’s year-over-year spending, particularly for the mandatory expenditures of net interest on the national debt, Social Security, Medicare, Medicaid and the Affordable Care Act.
At the same time, the government’s tax collections only increased by 1%, which was less than what had been expected. Saleha Mohsin of Bloomberg reports:
“The slowdown in tax collections suggests some cooling in labor market activity,” said Gennadiy Goldberg, a strategist at TD Securities LLC in New York. He sees the higher budget deficits implying more borrowing needs by Treasury.
The rising deficit also comes amid warnings from the International Monetary Fund last week of the risks of increasing debt loads, which it says complicates the task for policy makers who have pledged to use fiscal policy to give the global economy a fillip.
Debt levels are seen rising under both U.S. election candidates.
Under current law, the mandatory expenditures that caused the increase in 2016’s budget deficit will continue to increase on autopilot and add to the government’s deficits and the national debt indefinitely, unless the U.S. Congress acts to regain control over them.
Whether and how they might actually go about doing that is something of an open question.
As we noted back in 2013, when 8,000 government employees rallied at California’s capitol, Service Employees International Union boss Yvonne Walker proclaimed “We’re letting them know this is our house!” The SEIU and other massive government unions were clamoring for a pay hike at the time.
In 2015 we noted two costly bills that would ban the University of California from outsourcing jobs and restrict state agencies and the courts from contracting for services that could be performed by state employees. The Sacramento Bee called the measures a “sop” to the American Federation of State, County and Municipal Employees (AFSCME), and a “valentine” to the SEIU, which always wants more, whatever the condition of state finances.
As Adam Ashton notes in the Sacramento Bee, Yvonne Walker is “not satisfied with the state’s offer of a contract that would raise salaries by 2.96 percent this year and by 12 percent over four years.” They want more, and are prepared to authorize a strike vote. The odds are that they will get what they want from Governor Jerry Brown (D-SEIU), who authorized collective bargaining for state employees back in the 1970s and shows no regrets.
“We’ve done our part,” one state employee proclaimed at the 2013 rally. That is, they have blocked common-sense reforms such as outsourcing and done the heavy lifting to elect big-government, tax-hiking politicians. Government employee unions back ballot measures to raise taxes and spending, such as Proposition 55, which would extend the 2012 Proposition 30 tax hikes that politicians pitched as temporary. They do all that, and more, yet the government union bosses themselves will not be on the ballot in November and never need to face the voters. That’s why California’s taxpayers can’t exactly say the capitol is “our house.”
A couple of weeks ago, comedian John Oliver discussed the topic of police accountability on his show Last Week Tonight with John Oliver. As part of that discussion, he focused on the specific issue of “gypsy cops”, where officers who have engaged in misconduct are allowed to resign and to relocate to other divisions or police departments to evade accountability for their actions, which benefits both themselves and the police bureaucracy, but not the communities they serve. That part of the discussion begins at the 9:20 mark in the following video.
This is an aspect of how the institutionalization of corruption within a bureaucracy works to conceal the degree to which that misconduct within their institutions exists from the public, which is a practice that is not limited to police departments. By shuffling their worst employees out of the places where their misconduct has become evident, government bureaucrats are frequently able to evade accountability for the actions of their “bad apples”, but at the cost of allowing similar misconduct to continue – often by the same badly behaving bureaucrat where the only thing that really changed was the address of their work location.
The Daily Caller News Foundations‘ Luke Rosiak describes how that corrupt practice was applied at the Department of Veterans Affairs:
Phoenix Department of Veterans Affairs (VA) officials hired a woman this year who was recently fired from another VA facility for abusing patients and lying, giving her preference over veterans and other applicants who applied for the job, The Daily Caller News Foundation has learned.
Deloris Judd was fired from the North Chicago VA for numerous incidents of patient abuse. Her union tried to block the firing, but arbitrators found that she also lied during her appeal, and seconded the dismissal in March 2016.
Three months later, she was hired by the Phoenix VA, which claims that, since a major 2014 scandal involving employees lying about patient wait-times, it has turned things around and has no tolerance for such behavior.
The Arizona VA facility hired Judd even though the state of Illinois put a lien on her for unpaid taxes in 2015. And thanks to a union contract and federal hiring policy that favors former federal employees over the public when hiring, the fired ex-fed appears to have been vaulted to the front of the line in front of veterans who wanted the job.
Phoenix put Judd to work on the Choice Card program, TheDCNF learned, an initiative intended by Congress to let VA patients escape long wait-times by going to private doctors. Judd had no experience in the area, and her department is now the worst-performing at Phoenix, trapping patients for months and improperly managing waiting lists.
The VA’s practice of placing either incompetent or corrupt individuals at its other divisions after scandals involving them have been exposed even extends to the new leader of the Phoenix VA. The Arizona Republic‘s opinion columnist Laurie Roberts describes RimaAnn Nelson’s career path before she became the seventh director of the scandal-plagued Phoenix branch of the VA in the last 3 years, picking up from her leadership of the St. Louis branch of the VA.
Nelson was running the joint when 1,812 St. Louis patients faced possible exposure to hepatitis and HIV from an unsanitary VA dental clinic. She was there when operating rooms had to be closed—twice—given serious medical safety issues such as rusty surgical trays, according to the Daily Caller. And when an audit found that only half of the facility’s 27 nurses had the required documentation of their competency in their personnel files.
And here’s something that might sound familiar. According to the Daily Caller, nurses reported they were retaliated against when they tried to report problems ... like say, veterans left to sit in their own feces for days.
Under her management, the St. Louis hospital had the lowest patient satisfaction rating of any VA hospital in the nation. Dead last, out of 126.
The VA lauded Nelson for cleaning up the messes – the ones that occurred on her watch. Then they packed her off to oversee a tiny clinic in Manila, where she managed to hang on to her $160,000 salary.
Roberts tries to send a message to the senior leadership of the VA’s bureaucracy at the conclusion of her column.
Attn. VA brass (and Obama): The type of leadership we need in Phoenix is someone who has demonstrated that he or she can run a big VA operation and run it well. A person who can provide consistent leadership to ensure that veterans quickly get the help they need. The help we owe them.
Don’t send us your pariahs who have somehow managed to hang on to their VA jobs, the ones who arrive with a bushel basket full of scandal.
I know it’s almost impossible to fire anyone in the VA, so you pass around the trash. But surely there is someone inside the VA with a record of accomplishment, someone who can stay long enough for the paint to at least dry on their personal parking space.
What did Arizona’s veterans do to deserve this?
What indeed? Other than to be the place where the VA’s worst practices were first exposed to national attention?
The practice of shuffling bad acting “gypsy bureaucrats” to different government offices to evade real accountability for their misconduct only succeeds in expanding the number of places where their misconduct becomes tolerated. Better oversight and more effective accountability need to be established in order to reverse the institutionalization of corruption within the government agencies where they have become endemic.
Or else what is continuing to happen at the Phoenix VA will become commonplace at all branches of the VA. Or for that matter, across the entire federal government bureaucracy.
President Obama has signed the United States Appreciation for Olympians and Paralympians Act, which “eliminates a tax penalty imposed by the Internal Revenue Service on medals or other prizes awarded to Team USA athletes during the Olympic and Paralympic Games,” according to a press release from Bob Dold (R-IL). Olympic athletes with adjusted gross incomes of more than $1 million will still be subject to the “victory tax,” so members of the USA men’s basketball team get no relief for winning the gold medal in Rio.
The sole opposing vote in the House came from Connecticut Democrat Jim Hines, who told reporters the act “makes an unpaid-for carve out, is most likely to benefit the richest athletes and further complicates an already complex tax code.” Supporters contended that the athletes make considerable sacrifices and that eliminating the victory tax would help them defray expenses. Taxpayers may find that instructive.
By allowing athletes to avoid the victory tax, the government does not thereby give them anything. They simply retain more of what they earned, but athletes are not the only ones who make sacrifices. Parents also do that in the course of raising a family, but still face punitive taxes. The harder they work and the more they earn, the more the government takes from them, while calling the tax system “progressive.” Worse, the government gets workers’ money before they do in the form of withholding from their paychecks, a system that dates from World War II and was supposed to be temporary. With an election approaching, no candidate wants the workers to have the money they earned before the government gets it.
Politicians and candidates may talk of eliminating the IRS and installing a flat tax, but none has dared to make the attempt. Government remains like Auric Goldfinger, played by Gert Frobe in the 1964 James Bond film. Goldfinger supported any enterprise that would increase his stock of gold. Government may allow some Olympic athletes to avoid taxes on their gold medals, but government still grabs as much as possible from the workers. As this column shows, they proceed to waste the money in countless ways and leave fathomless debt for generations to come.
If you added up the cost of all the regulations that the U.S. government has added to the Federal Register since 1980, how much would it be?
Bentley Coffey, Patrick A. McLaughlin, and Pietro Peretto of the Mercatus Center researched that question for all the years from 1981 through 2012 and found that the continual drip-drip-drip accumulation of regulations has cost the economy about 0.8% of its GDP per year.
Economic growth has been reduced by an average of 0.8 percent per year from 1980 to 2012 due to regulatory accumulation. Regulations force companies to invest less in activities that enhance productivity and growth, such as research and development, as companies must divert resources into regulatory compliance and similar activities. While 0.8 percent may seem small, economic growth is an exponential process—next year’s growth depends on this year’s growth, which depends on last year’s, and that means the gap between what the economy could be and what it is grows over time at an increasing rate.
Compared to a scenario where regulations are held constant at levels observed in 1980, the study finds that the difference between the economy we are in and a hypothetical economy where regulatory accumulation halted in 1980 is approximately $4 trillion.
Put one way, the accumulating regulatory burden on the U.S. economy cost it $4 billion in its Gross Domestic Product by 2012, where if no new regulations had been added since 1980, would have meant the U.S. economy would have been nearly 25% larger than it actually was in 2012.
Put another way, if all the money that Americans had been required to put toward paying to comply with U.S. federal regulations had instead been allowed to be put toward productive economic activity, and that productive activity represented the output of an entire nation, that national economy would have been the fourth largest in the world in 2012.
In 2012, the U.S. government’s total public debt outstanding totaled $15.99 trillion, or nearly 99% of the nation’s GDP of $16.155 trillion in that year. If the nation’s GDP were $4 trillion larger and assuming no difference in the national debt, the nation’s debt-to-income ratio would have been just 79%.
That’s an important difference because other research indicates that once national debt levels exceed 90% of a nation’s GDP, the overhang of that debt is associated with significantly slower economic growth over prolonged periods of time.
The combination of an ever increasing regulatory burden with an excessive national debt then represents a double whammy to economic growth. No wonder other nations like Japan, Greece and Italy, which rank near the bottom for economic growth, also rank near the top for either excessive national debt or regulation.
And ever increasingly, the United States. Escaping such stagnation calls for smarter policies for dealing with both federal regulation and the nation’s debt.
Finding a job in California is difficult but government makes it tougher still, according to Jobs For Californians: Strategies to Ease Occupational Licensing Barriers, a new report from the state’s Little Hoover Commission. “One out of every five Californians must receive permission from the government to work,” Commission Chair and former assemblyman Pedro Nava explains, down from one in 20 sixty years ago. This government barrier wields particular impact on those educated and trained outside of California, on veterans and on military spouses.
In California, the report notes, manicurists must complete at least 400 hours of classwork and training then take written and practical exams offered only in the cities of Fairfield and Glendale. The licensing board assigns the dates and if candidates can’t make it that day, “their candidacy is terminated, they lose their application fee and they must begin the application process all over again.”
As Nava explains, “when government limits the supply of providers, the cost of services goes up,” and those of “limited means” have a harder time accessing those services. Therefore “occupational licensing hurts those at the bottom of the economic ladder twice,” by imposing “significant costs on them should they try to enter a licensed occupation” and by “pricing the services provided by licensed professionals out of reach.” As Jobs for Californians explains, it’s actually worse.
Occupational regulations amount to “rent-seeking,” an attempt to gain influence “without contributing to productivity.” The licensing rules “serve to keep competitors out of the industry.” The rules also keep government employees in highly paid but essentially useless jobs. That is why, as the report notes, “when the Legislature eliminated the Board of Barbering and Cosmetology in 1997, Senator Richard Polanco resurrected it with legislation in 2002.” This board, one of the largest in the country, now boasts 94 employees and a budget of more than $17 million. Taxpayers should count that as pure waste.
“Getting government out of the way of people finding good jobs is a bipartisan issue,” Pedro Nava told Adam Ashton of the Sacramento Bee. Good luck with that. On all fronts, California legislators want to keep government in the way.
The southern part of California’s capital city of Sacramento is home to many Asian immigrants, and during the past year, according to news reports, violent criminals have been preying on innocent residents. Muggings, robberies and home invasions have victimized 300-400 Chinese immigrants and prompted some to sell their home at a loss and move out of the city. As Richard Chang noted in the Sacramento Bee, Asians have been “terrorized,” and now “are afraid to go out after dark.” In the typical pattern, the attacks come as people exit their cars, at their residence or in a parking lot.
For the embattled residents, police response did not keep pace with the threat, and they demanded action from the city council. The crime wave continued, however, and has spiked in recent months. The south Sacramento residents, including waitresses, construction workers and store owners, began forming civilian volunteer patrols to protect themselves and their property. The local authorities, however, had a problem with that.
A former sheriff told reporters the volunteer patrols could be “an absolute recipe for disaster.” So far they have not been, but the volunteers have averted several robberies.
Outgoing mayor Kevin Johnson set a better example at a recent community event, when an Occupy Wall Street re-enactor snuck up behind Johnson and struck him in the face with a pie. Johnson, a former NBA star, tackled the assailant and punched him out. As he explained, “When somebody comes up from behind you and slugs you – and in my case you didn’t know what it was at the time and thought it was a punch – you have a right to defend yourself.”
The embattled Asian immigrants agree. As one told reporters, “In America, everyone should have the ability to protect oneself.” Politically correct, anti-gun politicians would rather leave everyone vulnerable to violent crime. If that is not abuse it’s hard to know what to call it.
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