Tag Archives: spending

A Simple Enough Solution

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Even if it isn’t necessarily politically easy to implement. But the political impediment is merely a lack of political courage in the same politicians who natter on about how expensive and abused is the system in question. I’m writing here about our nation’s Medicaid system.

Medicaid is broken, and Republicans in Washington and in state capitals have an opportunity to fix it. President Trump has pledged to protect the program, in part by cutting waste, fraud and abuse. The House budget target would reduce the growth of federal Medicaid payments over the next decade from $2 trillion to $1.2 trillion. That is a good start. Medicaid wastes enormous amounts of taxpayer money as states use it to reward politically powerful healthcare providers.

Instead of making this sort of namby-pamby tweaks around the edges, and masquerading putative reductions in growth as cuts, the simple enough solution is this.

Take the Medicaid-centered Federal transfers to each State in the current year as the baseline, and convert that amount to a block grant with no strings attached, other than the State must spend the block money on its Medicaid program. Then, each subsequent year transfer the Medicaid block grant, similarly without strings, reduced further each year by 10% of that baseline amount. In a short few years (I’ll leave the third grade arithmetic to the reader, rather than insult his intelligence), the block grants will reach $0.00, and the Federal government will, quite properly, be out of this aspect of the State’s business.

Notice that this solution also does not touch the heart of our nation’s Medicaid system, which is each State’s responsibility. On the contrary, it moves the system entirely into the States’ individual purviews, giving each State complete control over its own Medicaid program, free of Federal touching.

What Makes a Match?

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In a Wall Street Journal article centered on the possibility of Germany acquiring its own nuclear weapons, the news writer had this remark:

[W]ith warheads in the low hundreds, neither the British nor the French arsenals are a match for Russia’s nearly 6,000 warheads.

This comparison is silly. How many targets does Russia face? How many targets in Russia do the UK or France, or potentially Germany, face, whether individually or together?

The match is whether the Europeans have enough warheads and delivery systems to survive an initial Russian attack targeted on those systems, to launch against targets in Russia (and Belorussia and Kaliningrad, since Russia has deployed tactical nuclear weapons there), to relaunch against targets necessitated by systems failures, and to launch again against additional targets in successive waves. Especially that last, since Russian doctrine, inherited from Soviet doctrine, specifies that nuclear war is winnable and that it will be won by successive waves of nuclear attacks rather than a single spasm of everything launched.

It may be that low hundreds are insufficient for that, but it’s unlikely that 6,000 are necessary.

Research Grants and Overhead Caps

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Two letter writers to The Wall Street Journal‘s Wednesday Letters section disputed Harvard Professor’s Maya Sen’s “defense” of Harvard’s 69% “overhead” cut of any Federal research grant sent Harvard’s way. One noted that Sen had chosen to elide any actual facts regarding

the [overhead] costs that the reimbursement was intended to cover to support her claim that the 15% rate is insufficient.

He noted Sen’s disingenuousness in her expectation that we taxpayers should just trust the school’s managers to do the right thing. His view was that, in light of this attitude, research grants should be discontinued altogether.

The other letter writer cited Yale’s condition as a typical case:

Yale has a $6 billion annual budget with 8% coming from tuition and room and board, and 20% from grants and contract income. It has a $41 billion endowment and pays little in tax.

As he put it, this is Yale crying wolf.

No to Sen, almost entirely yes to the letter writers.

There’s no reason to believe the amount of money for research in a grant would fall as a result of lowered caps for grant overhead. The only thing that would be limited is that overhead; the money in the research part of the grant isn’t affected in the slightest—except by university managers who confiscate that research money for their overhead chimera.

I don’t entirely disagree with the first letter writer’s position regarding ceasing grants altogether, but I think it would be sufficient, instead of capping the overhead cut at 15%, to cap it at 0.00%, and the schools can accept that or get no grant at all. They can take their claimed overhead costs out of their endowments or jack their tuition further. Instead of us taxpayers paying for these confiscations, let the schools’ investors/donors or their students (parents) pay for them.

For those schools that have such puny endowments or that have properly low tuitions that they truly can’t hack the overhead costs on their own—rather than viewing the whole grant as income the way Sen confessed Harvard does—the relevant State government can make up the shortfall. The State’s taxpayers should be the only ones paying the costs of the schools in their State. That would magnify the voice of those taxpayers and perhaps lead to tightening up on school managers’ fraud, waste, and abuse.

“Austerity”

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I do not think this means what some news writers think it means. In a Wall Street Journal article, the news writer used the term this way:

A budget deficit contributes…by injecting more demand into the economy via spending than it subtracts via taxes.
…
But deliberately shrinking the budget deficit, via fiscal austerity, or expanding it, via fiscal stimulus….

What he’s talking about here is reducing government spending as austerity. Government spending is one component of the overall spending that is the demand component of GDP; the other component of demand at the GDP level is consumption spending by us citizens. But reducing government spending, while reducing that overall component of demand, isn’t austerity. That reduction simply reduces the level of competition between government on the one hand and us citizens and our private enterprises on the other hand for the same goods and services. That reduction in the government’s side of that competition at the very least reduces upward pressure on the price we citizens and our businesses face for those same goods and services, even eliminates pricing pressure in some areas, and in some few areas, allows prices to fall.

That’s not austerity, that’s an early step in prosperity.

The news writer again misused the term:

Fiscal austerity does the job with much less collateral damage than tariffs. Inflation goes down instead of up. Trading partners don’t retaliate. There’s no special-interest lobbying or corrosive uncertainty over who gets hit with tariffs for how long.
Austerity’s main drawback is that it slows growth.

Reducing government spending isn’t the only path to private prosperity, and done by itself can be decidedly reductive of that. Taxes directly take money away from both us citizens and our private enterprises. Some taxation is necessary for our government to do the things we hire it to do—pay our national debt, see to a defense capability adequate to the threats we face, and satisfy our nation’s general welfare in the ways delineated in our Constitution. Leaving taxes alone—or raising them—whether in isolation or in order to fund spending unrelated to those three purposes takes money away from us and our businesses that we’re better situated to allocate to our actual needs and wants.

Those taxes are the source of austerity inflicted on us by government. Reducing those taxes to the more minimal level needed to satisfy those three Constitutional requirements reduces austerity far more directly than reducing spending: every dollar left in our and our businesses’ pocketbooks and not taken by government is a dollar we can allocate more efficiently than government is capable of doing.

Reducing government spending—the news writer’s definition of austerity—actually indirectly facilitates prosperity if not actually increases it, and reducing taxation—not addressed at all by the news writer—directly increases prosperity by reducing real austerity, the taking of money from private coffers and putting it in government coffers. Doing both in concert with each other—that’s the far opposite of austerity.

Yapping vs Action

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Republican Congressmen are starting to push back, ever so gently, against President Donald Trump’s (R) DOGE initiative and agency. They want more control, for themselves and for the several Department and Agency heads, over spending and Federal job cuts.

The calls come as some GOP lawmakers have pushed back against job cuts and characterized moves as haphazard, even as they largely agree with the broader goal of reducing government costs and inefficiencies.

That’s the difference between yapping and action. It’s necessary to be specific, to name programs and to name names, if actual action—cuts—are to be made. Republicans are exposing themselves now.

The House, with its alleged Republican majority, has passed its budget outline proposal, and already it does not include an aggregated ceiling for spending cuts that’s high enough to have room for all of the ones the DOGE effort is suggesting.

Certainly, it’s useful to not make cuts as sweeping as those on offer from DOGE and from Trump all at once; business and especially State budgets need time to adjust to the sharply reduced inflow of Federal dollars and outflow of ex-Federal employees, but that’s easily enough accommodated over a period of two years, so all the cuts proposed could be accomplished within a single Congressional session.

Just as certainly, the several constituencies of the several Republican Representatives have differing imperatives and needs—Congresswoman Nicole Malliotakis’ (R, NY) constituents have different views of appropriate levels of cuts and where to make them than do Congressman Thomas Massie’s (R, KY), but in the Federal Congress, these Congressmen have national level constituents in addition to their local ones.

But, as ralflongwalker passed along to me:

You want to gore my ox? Oh, no!

Pick one, guys. Either you’re for spending cuts and reductions in the bloated Federal bureaucracy labor force, or you’re like a bunch of spendthrift Progressive-Democrats, just yapping differently.