Programs Which Soar in Cost: Crop Insurance

A difference between farm programs (i.e., direct payments or counter-cyclical) and crop insurance is significant for budget purposes. Typically the basis for payment for the farm programs is set by law, and won't change until the next farm bill. For crop insurance, if I understand correctly, the basis for payment is updated each year.  So when commodity prices soar, the cost of crop insurance to the taxpayer will also rise.

When you look at other government insurance programs, like social security or unemployment insurance, the basis for payment also rises as the insuree's salary rises.  The difference here is commodity prices can rise abruptly, as in the last year, while salaries don't rise abruptly across the board.

Why So Many Different Government Programs--Tom Davis

From a Government Executive piece on a hearing of the House Oversight and Government Reform Committee, Tom Davis, who for a short while represented me in the House testified:

But the committee's former chairman added Congress itself deserves much of the blame for redundant programs. He noted that the need for a particular service often arises out of jurisdictional greed.
For example, if a member of the Education and Workforce Committee wants to enact a job training program, he or she will write the legislation to ensure it falls under an agency in that committee's purview, Davis said. The same philosophy could then hold true for members of Veterans Affairs and Financial Services committees, who establish similar programs under the jurisdiction of their own panels.
"Under this arrangement, they are all funded differently, measured differently and administered differently," Davis said. "Common sense suggests they should be combined to take advantage of economies of scale, or even just to make it easier for citizens to know these programs exist. We can blame the bureaucracy, but in many ways Congress created the many-headed monster we bemoan in an attempt to protect its jurisdictional prerogatives."

See my earlier post.

E. Klein Funny Sentence

In the first paragraph of a post explaining why he won't see The Adjustment Bureau:
"But I can't believe in guys in suits with the ability to plan things."

The whole piece is worth reading, although it's mostly focused on Congress and the President, not the bureaucracy.

Why So Many Different Government Programs?

GAO has a report out this week outlining duplication in programs among different government agencies.  They find lots of duplication.  I seem to remember similar concerns back in the Nixon and Reagan administrations; one of the reasons for replacing programs with block grants, which Reagan tried to do, was to eliminate such duplication. 

Why do we have such duplication?  There's no doubt good and necessary reasons for the programs, but I'd suggest one reason is human ego.  Consider a politician, a Congressperson politician. Consider an activist.  Now imagine a " need" for government action, and ask the activist to work for such action and the politician to pass a law implementing such action.  I put "need" in quotes to recognize the word is just a placeholder for different categorizations according to the political philosophy of the onlooker.

The activist and politician face an immediate strategic choice:

• do they identify the existing government program and agency which is most closely related to the "need" and try to modify and enhance the program and agency accordingly?
• do they create a new program to be assigned to an existing agency?
• do they create a new agency to handle the new program?

Now consider the incentives they face. If they go with the new program, they can design from scratch, without having to research what lessons may have been learned by the existing bureaucrats running the existing program. Research takes time and energy; any self-respecting "need" requires immediate action.  Furthermore, there are likely other politicians, activists, and bureaucrats already associated with the existing programs who may not like the idea of "Johnny-come-latelies" trying to modify something they're proud of.  And remember money.  More money will be required for the additional government action.

All things considered, it will be easier for the activist and the politician to go with a separate program, preferably labeled in honor of the pol.  Politicians don't campaign on improving existing programs; they campaign on creating new ones or shutting old ones down. That's the way our government works.

US as Scapegoat

We seem to be fulfilling our destiny: every nation has a destiny and ours is to become a scapegoat whenever dueling parties within a country (i.e., Muslim pols and secular pols) amp up the heat.  That's my takeaway from this study.  Remembering the  politics of what we used to call the "Third World", I can well believe it.  Nehru and Sukarno, the leaders of the third world, used to beat up on the U.S. regularly.

Afghanistan

I recommend this article in the Post focused on the now deceased son of Lt. Gen. Kelly.

Reducing Payment Acreage

This bit from Farm Policy raises a possibility I missed earlier: reducing payment acreage.

“Congress may also wish to consider reducing the portion of a farm’s acres eligible for direct payments. In 2009, GAO reported that reducing the portion of eligible acres to 80 percent from 83.3 percent might save millions of dollars annually. Further reducing the portion of eligible acres to 75 percent could save millions more each year. Such an across-the­ board reduction would affect all recipients. Moreover, Congress may wish to consider terminating the payments. Some agriculture organizations, including the National Farmers Union and the Iowa Farm Bureau, have recommended phasing out or terminating the payments altogether and using the savings to bolster other farm programs.”

This would perpetuate a device Congress first use way back in history: achieving budget savings by reducing the payment acreage and/or payment yield formulas.  Instead of being obvious what they're doing, they do it the sneaky way.  Never underestimate the capacity of a politician to be sneaky.
 

401k for Governments

The Times has an article on states looking to 401K type defined contribution plans [employee kicks in a percentage of pay, employer may match part or all of it, retiree gets back the results of investing the contributions, good or bad]. I assumed, as usual wrongly, that most states had gone to defined contribution plans decades ago.

Reagan's breaking of the air traffic controllers union is widely remembered.  What's less remembered is the redo of the federal retirement system.  Old timers, like me, are under the Civil Service retirement system, a defined benefit system [annuities are based on length of service and salary] with no social security.  During Reagan's time (1986) new employees were put on a three level system: social security, a smallish federal defined benefit annuity, and a 401K type investment plan, with matching from the government. Unlike social security, the government doesn't have a pension fund to cover my civil service annuity or the FERS annuity; those payments come out of the yearly budget. As it turns out, what I first wrote was wrong. I decided to do a little more research before posting and found this link, which explains the unfunded government liability for CSR annuities will rise to about 850 billion dollars in 2030. But the actuaries say that's okay.

The change was better for the government and employees got more flexibility through the 401k/TSP plan, though they assumed some risk.

From the Times article it seems many states are still where the Feds were before 1986.  I'm not clear whether the state pensions are indexed for inflation, which the CSR annuities. 

Pigford Is an Urban Legend?

Snopes.com has a post on Pigford, linking to the Congressional Research Service's report.

Army Chow Has Changed Since 1966

Matt Yglesias passes on a Slate piece on the military's food program.  Turns out today's recruits have choices
in what they eat. The modern generation is spoiled, spoiled, spoiled.