Tuesday, September 25, 2012

A Swing and a Miss With Ross Douthat

Ross Douthat gives himself a set-up that's a bit like T-ball - he's targeting the excesses of lobbying, politicians as pigs at the trough, how can he go wrong? Here's the swing:
Whence comes this wealth? Mostly from Washington’s one major industry: the federal government. Not from direct federal employment, which has risen only modestly of late, but from the growing armies of lobbyists and lawyers, contractors and consultants, who make their living advising and influencing and facilitating the public sector’s work.

This growth is a bipartisan affair. It’s been driven by the contracting-out of government services under both Bill Clinton and George W. Bush....

If you don’t mind congested roads and insanely competitive child rearing, all this growth is good news for those of us inside the Beltway bubble. But is it good for America? After all, like the ruthless Capital in “The Hunger Games,” the wealth of Washington is ultimately extracted from taxpayers more than it is earned. And over the last five years especially, D.C.’s gains have coincided with the country’s losses.
Strike one:
The state of life inside the Beltway also points to the broader story of our spending problem, which has less to do with how much we spend on the poor than how much we lavish on subsidies for highly inefficient economic sectors, from health care to higher education, and on entitlements for people who aren’t supposed to need a safety net — affluent retirees, well-heeled homeowners, agribusiness owners, and so on.
Let's take a look at actual expenditures on lobbying by sector. As Dean Baker points out, an incredible amount of lobbying expenditure is directed not at increased government spending, but (in my words, not Baker's) at creating barriers to competition and rent seeking.

Douthat implicitly brings up Social Security and Medicare ("entitlements for... affluent retirees"), presumably because they fit with his thesis about out-of-control spending, but makes no effort to argue that an appreciable portion of the massive investment in lobbying is directed at maintaining those programs. If he looks at his political party of choice, he will find that a tremendous amount of lobbyist money is directed at weakening those programs through privatization, voucherization and the like.

It's true that Social Security pays out without regard to whether a recipient can get by without the money, but that was the design of the program. It's true that Medicare also provides benefits to seniors who can afford to pay for more of their own care, but darn few seniors can afford to go without health insurance and Medicare came into being in no small part because of a private sector failure. If Douthat believes those programs should be means tested, as he knows, there are special interests who agree with him, and who are presently trying to convince Congress to do exactly that.

Strike two:
There’s a case that this president’s policies have made these problems worse, sluicing more borrowed dollars into programs that need structural reform, and privileging favored industries and constituencies over the common good.

But this story is one that Romney and his party seem incapable of telling. Instead, many conservatives prefer to refight the welfare battles of the 1990s, and insist that our spending problem is all about an excess of “dependency” among the non-income-tax-paying 47 percent.
Yes, the fact that business carries on as usual is a story that the Republican Party could tell if it were not, in fact, intent upon stuffing it snout right back in the trough. Mitt Romney standing up to the billionaires who are funding his campaign? Who own the back yard golf courses he adores, the NASCAR teams he doesn't watch? Are you kidding me?

Does Douthat understand that without the successful lobbying for and exploitation of tax loopholes, many of the investments made by Bain Capital would not have occurred - they would have lost money? Does he understand that Romney's exceedingly low tax rate results from the same type of lobbying for and exploitation of tax loopholes? Perhaps he hopes that Romney, if elected, will pull the ladder up after himself - close the loopholes that made him phenomenally rich and continue to expand his fortune in his present state of "unemployment". But, no, that's not going to happen.

Strike three:
In reality, our government isn’t running trillion-dollar deficits because we’re letting the working class get away with not paying its fair share. We’re running those deficits because too many powerful interest groups have a stake in making sure the party doesn’t stop.
During the brief period when we had a budget surplus, no doubt many lobbyists saw green, and no doubt (as Douthat puts it) they love a good party - but they were indifferent to the budget deficit then, just as they are now. Baker argues that the roots of the deficit lie in the collapse of the housing bubble - true in no small part, but let's not forget two unfunded wars, the Bush tax cuts, Medicare Part D.... Take away the bubble and we would still have a deficit.

On reflection, there's enough substance there, that I'll call it a foul and keep Douthat's count at two strikes. He is correct that the size of the deficit is not the result of insufficient taxation of the working class. (Even if he's too young to remember there was an age when taking people off of the tax rolls made Republicans proud.) Also, as Baker reminds us, it's fair to describe Washingtion as an "economy of exploitation [where] highly paid lobbyists thrive on efforts to manipulate government policy to advance their interests".

Two strikes, sure, but it remains an easy set-up.... Here's to hoping he does better in his next column.

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