Tag Archives: spending

Research Grants and Overhead Caps

Posted on by
Reply

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”

Posted on by
Reply

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

Posted on by
Reply

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.

US Foreign Aid—Where Has It Gone?

Posted on by
Reply

The Wall Street Journal‘s lede lays out the general idea:

The US was the world’s largest funder of foreign aid for decades—propping up education, health services and human rights in developing countries and supporting the militaries of strategic allies.

And the next paragraph led with this:

Programs often associated with foreign aid, such as humanitarian assistance, made up a large slice of the total.

There are a lot of useful data in the article, but it’s incomplete.

Two questions the WSJ didn’t address: of all that foreign aid for “developing countries,” how much went directly to the nominally intended recipients in the target nation’s people? Of the foreign aid that went to the target nation’s government, how much of that flowed on through to the nominally intended recipients in the nation’s people?

It’s interesting, too, to see that of all the OECD nations, the US is last, in percent of GDP terms, in handing out foreign aid. It would be good to see the answers to those two questions for the other member nations.

Lots of Angst

Posted on by
Reply

DOGE personnel have been granted, by newly seated Treasury Secretary Scott Bessent, access to Treasury’s payment system that distributes trillions of dollars in entitlement benefits, grants and tax refunds. The bodice-ripping from the Left, from Progressive-Democratic Party Congressmen, and from too many Republicans is awesome in its loud anxiety. No small part of that hysteria centers on those personnel’s ability to cut off all payments to everyone—including Social Security payments! Except that the access is read only; there is no ability to change anything, only to see and then to report.

The need for the seeing and reporting centers on this: the payment system is one that is run by career civil servants. It’s certainly true that allowing an entity not itself subject to oversight except by the President is fraught with danger. More than the privacy aspect of the access, though, I suspect the danger primarily is to Party and those career civil servants’ prerogatives.

We’ve already seen the extent, depth, and expense in dollars and liberty the danger already realized from so much of Federal government being run by career civil servants, bureaucrats entrenched in their long-term incumbency. It’s useful to have a group not beholden to the Bureaucratic State take a hard look at the doings and spendings of Treasury’s payment system and the “career civil servants” running it.

Stipulate that the vast majority of those personnel are entirely on the up and up and do their work diligently and with honest dedication. It would only take a few to do vast damage through misspending or stealing funds. A Treasury inspection, or an inspection run by civil servants from elsewhere in the administration, leaves too much room for papering over gross mistakes, for covering up outright wrong-doing.

The gains from largely unaccountable DOGE personnel doing this inspection is worth the risks involved, especially given the size of the realized risk from current practice.