Bring on the Draconian Cuts

by Kevin D. Williamson

Hark, unless mine eyes are cheated, it appears that the House has passed a bill — on energy and water development — that would spend less money than we spent last year. Indeed, that is the case: The $30.4 billion bill is $2.9 billion less than was appropriated for 2013. If my always-suspect English-major math is correct, that $2.9 billion represents a full 0.08 percent of 2012 federal outlays.

The White House has threated to veto these “draconian cuts.” Seriously — OMB put out a statement calling these “draconian cuts.” Does anybody over there know what “draconian” means?

Among the prize pigs being slaughtered by our beady-eyed Republican friends is a multimillion-dollar national propaganda campaign on behalf of alternative-energy interests, which went down thanks to Representative Tim Walberg of Michigan. It is bad enough that the federal government subsidizes these politically connected energy firms — spending millions of dollars of taxpayers’ money to push their wares as well is a bit much to stomach.

Representative Mike Burgess (R., Texas) offered an amendment that would block federal regulation of refrigerators and incandescent light bulbs, while Representative Marsha Blackburn (R., Tenn.) took aim at ceiling-fan regulations. ARPA-E, the Department of Energy’s answer to DARPA, would see its funding cut by $215 million — that’s millions with an “m,” there, out of a budget in the trillions — and various other programs would be trimmed and consolidated.

Draconian cuts. Indeed.

This is all very good, and it deserves to become law. But it also offers a dramatic illustration of how difficult it is to cut spending without cutting the areas where the spending actually happens. This may be a minuscule cut in terms of overall federal spending, but it’s an 81 percent cut for ARPA-E, and a 50 percent cut for the newly consolidated delivery/reliability/efficiency/renewables program. The people who receive grants and other financial benefits under those programs will howl, and — more important — those who earn their living staffing those programs will fight to the death to avoid the hunt for productive employment in the real economy. That is why spending reductions on those kinds of programs are never really enough: You have to eliminate the program entirely. Conservative populists sometimes get mocked for promising to cut entire cabinet agencies, but, in the long term, that is the most promising model for achieving a healthy fiscal balance.

Obligatory reminder: None of this matters very much without entitlement reform and controls on defense spending. Non-defense discretionary spending, i.e. the stuff everybody promises to cut or cap, is a small part of federal spending.

The Department of Energy, which like the Department of Education is a creature of the Carter administration, does some useful things: For historical reasons, it is entrusted with maintenance of the country’s nuclear arsenal, and it sponsors some worthwhile research. None of which justifies having a cabinet agency to tell us what kind of light bulbs to use. The best course of action would be to turn the department’s defense functions over to Defense and its research functions over to the National Science Foundation and to zero out most of the rest. That’s what real fiscal reform would look like.

Instead, we’ll probably be treated to a veto and drawn-out fight over a minuscule reduction in federal outlays simply because every dollar of federal spending eventually lands in the pocket of somebody with a powerful interest in receiving it. None of that is helped by the Obama administration’s apparent ideological commitment to maximizing the federal government’s control over the U.S. economy and its resources, a project that it pursues relentlessly while wondering why its more excitable critics describe its agenda as socialism.

Yesterday, I wrote about “Obamaphones for millionaires,” the federal program under which telephone companies serving Maui beach developments and Scottsdale golf communities receive subsidies amounting to thousands of dollars per year for every line they install. The comments were predictable: Self-identified conservatives wrote in to assure me that, while they agree that federal spending is out of control, these programs — just these — are really, truly necessary, and that the telecoms receiving those billions of dollars a year in subsidies are totally deserving. Every dollar in spending creates its own constituency, whether it produces cash in hand or a government-funded national ad campaign for your business. Representatives Walberg, Burgess, et al. will have worked a minor miracle if they can make the trivial reductions they have proposed a reality.

— Kevin D. Williamson is a roving correspondent for National Review and author of the newly published The End Is Near and It’s Going to Be Awesome.

Today in Fiscal Foolishness

by Kevin D. Williamson

On the Corner: Delaware considers a bailout for casinos.

Texas plans to spend millions of dollars to replace thousands of new computers (via Pratt on Texas). 

Hey, let’s all have a big fight about a highly speculative forecast involving 3 percent of the federal deficit ten years hence!

Florida county pays $144,000 for phantom signage — but tips room service generously.

Quebec is worried about wasteful spending. Solution: Spending $500,000 on a committee to study wasteful spending.

Detroit Defaults

by Kevin D. Williamson

The City of Detroit has defaulted on a portion of its bonds, specifically on payments to unsecured creditors. Those who invested in bonds with dedicated revenue streams attached have been spared, for the moment, but the reorganization plan drawn up by emergency manager Kevyn Orr envisions a great deal of “shared sacrifice,” which apparently is what they’re calling it these days.

Typically, bondholders in the past have lost interest due them, but not their principals. That is not going to be the case in Detroit. Specifically, Detroit is expecting its creditors to take less than 10 cents on the dollar for having been foolish enough to lend money to the collection of misfits, miscreants, and criminals who govern that poor city. That’s step one. Step two is . . . borrowing more money, in order to pay for a program meant to rebuild the city’s institutions, reinvigorate its economy, and improve basic services. Who, I wonder, would be foolish enough to lend Detroit money hot on the heels of a default? The answer is likely to include the unwilling taxpayers of Michigan and those of the United States.

Detroit’s tax revenues are declining, and the city already is at or near the legal limit for the various taxes it imposes. It has a city income tax, but that will not do it a tremendous amount of good: In 2000, Detroit had 353,813 employed persons; today it has only 279,960. In 2000, it had an unemployment rate of 7.3 percent; today, it has an unemployment rate of 18.6 percent. It is a blighted and crime-ridden city — now the second-most-dangerous city in the country, according to the FBI, with nearby Flint leading the pack — which in addition to being a broader social problem is specifically a tax problem: Property values, and hence property-tax collections, are declining. 

Kevyn Orr has also made it clear that reductions in pensions and health-care benefits for city retirees are a necessary part of any long-term solution for Detroit, which of course they must be: The city currently spends 40 percent of its revenue on so-called legacy costs, mostly retiree benefits.

That 40 percent number jumped out at me: Under current Congressional Budget Office projections, the federal government’s spending on its legacy costs (Social Security, Medicare, and interest on the debt) will be more than 50 percent of revenue in ten years. And, though the total impact will be small, you probably can add to those federal totals a little bit to account for the fact that Detroit plans to get out from under its health-care costs in part by dumping its liabilities onto Medicare and Obamacare. Thanks, Detroit!

As has been discussed at some length here, it is not entirely clear that Detroit, to say nothing of fiscally moribund states such as California or Illinois, legally can reduce its pensions and retiree benefits. In Michigan as in most states, those payments are protected by statute and/or constitutional provision. Orr is making it clear that he believes Detroit can reduce those payments — it simply does not have the money to make them and cannot raise sufficient funds through taxes. There are federal bankruptcy protections available to cities, though Detroit apparently plans to try to reorganize without a formal bankruptcy — Orr says there is a 50/50 chance that the city will not enter formal bankruptcy. But there are no such bankruptcy protections for states, and, unless the public-sector unions agree to a haircut for retirees (stop laughing) the pension mess probably is headed for the Supreme Court.

Detroit already is looking for federal assistance. For example, it is planning on spinning off the city water authority as a quasi-autonomous entity in the hopes that it will generate a nice revenue stream. It will be looking for federal loans to help make that happen. It will be looking for more federal funds to address its blight problems, to fix up the Coleman A. Young airport, to help fund services through grants, etc. It will be looking for money from the state of Michigan, too.

The problem is that the same political leadership that brought Detroit to this sorry pass remains in power. There probably is not much that can be done about that, and very little, short of mass seppuku in front of the Spirit of Detroit statue, that would convince me that they have mended their ways. Detroit cannot be trusted with its own money, it cannot be trusted with its creditors’ money, and it certainly cannot be trusted with federal taxpayers’ money.

— Kevin D. Williamson is a roving correspondent for National Review and author of the newly published The End Is Near and It’s Going to Be Awesome.



Killing Pollyanna

by Kevin D. Williamson

There has been an unfortunate outbreak of deficit naivety in the past few weeks. Ezra Klein declared the deficit “pretty much solved, at least for the next 10 years or so,” Daniel Gross greeted the news as a “bombshell,” and others have echoed that sentiment. He cites a recent Congressional Budget Office report on the subject, but the report itself is considerably less cheery, as is CBO director Doug Elmendorf, who has been bracingly honest in his dismissal of the happy talk that we can get the deficit under control without either cutting the benefits collected by middle-class Americans or raising their taxes.

That deficit that is “pretty much solved” for the next decade is the primary federal budget deficit, the Baby Deficit that adds to the Baby Debt, i.e., the official federal debt, which excludes the trillions upon trillions of dollars in unfunded liabilities related to Social Security, Medicare, and other entitlements. The deficit does look relatively small — only a few hundred billion dollars! — if you don’t count the real liabilities.

And if you take only the short-term view. The current reductions in the deficit are partly the result of unexpectedly large payments from Fannie Mae and Freddie Mac, which cannot be counted on to continue. They are also the result of recent tax increases and the modest brake on spending imposed by the sequester. Which is why Elmendorf is not dancing with Pollyanna, instead saying:

Federal debt held by the public is projected to remain historically high relative to the size of the economy for the next decade. . . . Such high and rising debt would have serious negative consequences: When interest rates rose to more normal levels, federal spending on interest payments would increase substantially. Moreover, because federal borrowing reduces national saving, the capital stock would be smaller and total wages would be lower than they would be if the debt was reduced. In addition, lawmakers would have less flexibility than they might ordinarily to use tax and spending policies to respond to unexpected challenges. Finally, such a large debt would increase the risk of a fiscal crisis, during which investors would lose so much confidence in the government’s ability to manage its budget that the government would be unable to borrow at affordable rates.

So the takeaway is not “Problem solved!” or even “pretty much solved.” What are the lessons to be learned?

1. Austerity works. Our little experiment with the most modest kind of austerity — small tax increases, the sequester — has produced the desired results, also modest. (Our approach has been so modest, I’m not even sure I’d call it “austerity,” though I like the sound of the word.) The enduring claim by some on the right that the negative economic effects of tax increases undercut their value as a tool of deficit reduction does not seem to be borne out. Conservatives do not like tax increases, but conservatives also do not like defense cuts or deficits. You can prioritize that list however you like, but your chances of avoiding all three are pretty slim. So far as I can tell, the only people really complaining about the sequester are a platoon of federal lifers and a handful of defense contractors in Virginia. They’re all nice people, I’m sure, but if it’s their interests or the national interest, my preference is that they start looking for a paycheck not financed by taxpayers. Can we afford more defense cuts? I suppose that depends on how you feel about a war with Syria. Can we afford real cuts in non-defense spending? Of course. But neither of those is going to get it done until everybody admits that . . .

2. Entitlement reform is not optional. Social Security and (especially) Medicare will be the major drivers of debt going forward. Left unreformed, those programs will, simply put, consume the federal budget and destroy the American economy.

3. We can’t forget about cities and states. Last week I had a conversation about matters budgetary with some congressional budget leaders (I gave them the short version of The End Is Near And It’s Going to Be Awesome), which was encouraging to me but would have been discouraging to California and Illinois if they had been listening in, and a few other states, too. California and Illinois are badly upside-down when it comes to retiree pensions and other obligations, and there is no obvious way for them to get out of the hole they have dug for themselves — save one. Members of Congress already are girding themselves for the bailout requests they expect to receive from insolvent states, and the answer they are preparing to give is: “No,” possibly “Hell, no!” Their people may elect jackasses, but the Port of Los Angeles, Silicon Valley, and Chicago are big pieces of the American economic picture. If something is not done about our worst states, and done soon, they will make the federal picture that much worse — not because Washington is likely to bail them out, but because . . .

4. Growth matters. A lot. The Obama administration has, unsurprisingly, failed to deliver a robust and sustained recovery from the 2009 recession. There are many reasons for this, and scholarly tomes will be written about the sorry economic history of the Obama years. The relevant fact for deficit hawks is that slow growth means fewer jobs, which means fewer people paying taxes and more people supported by them. It is a national scandal that work real employment rate — the labor-force-participation rate — is down to levels not seen since the Carter years. I remain skeptical of dessert-first conservatives who think we can grow our way out of this mess without serious spending cuts, entitlement reform, and changes in tax policy, but better growth does have to be a part of the solution: a necessary but not sufficient condition for the restoration of fiscal sanity.

I am pleased that CBO is forecasting deficits that will be measured in the middle hundreds of billions of dollars range than in the low trillions range, but if you think that this is an occasion for breaking out the Veuve Clicquot and the 23-carat-gold-dusted chocolate-covered bacon (how do you celebrate?), consider this via Kyle Wingfield: On our current trajectory, spending on health care will double by 2023 to nearly $2 trillion per year; Medicare spending will double; Obamacare subsidies will cost $1 trillion; Social Security will nearly double; interest on the debt will double, meaning that it will be the third-largest item on the budget, behind health care and Social Security.

So, unless you intend to spend the next ten years pretty much solving your problems by emigrating to Switzerland or Singapore, there is little if any cause for celebration.

Kevin D. Williamson is a roving correspondent for National Review and author of the newly published The End Is Near and It’s Going to Be Awesome.

The One Number You Need to Know in O’s Budget

by Kevin D. Williamson

Here’s the number to keep in mind: $763 billion.

If enacted, Barack Obama’s latest budget would mean that in just ten years, interest payments alone on the national debt would begin pushing the trillion-dollar mark: $763 billion a year by 2023. That may be a rosy estimate: It assumes that interest rates, currently near historic lows, do not rise a great deal over the next ten years as the Treasury continues to pile up new debt. If interest rates do climb a bit higher — not even to their historical average, but higher than they have been of late — then those interest payments easily could be more than $1 trillion a year.

But let’s stay with that $763 billion a year for now. How much money is that? It is more money than the federal government spent on anything in 2011: The largest single spending item in 2011, Social Security, amounted to only $725 billion. Department of Defense spending was only (only!) $700 billion, and all nondefense discretionary spending combined amounted to only $646 billion. If you believe the welfare state is too expensive now, or that we spend too much money on the military, consider that President Obama proposes to spend more than that merely making interest payments on all the debt his budget would help pile up. How much debt? How about $8.5 trillion in new debt over the next decade, for a total of more than $25 trillion in national debt. At 6 percent interest, it would cost us $1.5 trillion a year to service that debt: about the size of President Clinton’s entire proposed budget for 1995.

Under Obama’s budget, in 2020 interest payments alone would amount to more than national-defense spending in that year. By 2023, interest payments alone would amount to more than all nondefense discretionary spending in that year.

As it is, interest payments on the national debt already amount to about 7 percent of all federal spending—that’s hundreds of billions of dollars a year spent on nothing but paying the price of failing to pay off previous spending, robbing today’s taxpayers to pay yesterday’s beneficiaries of government largesse.

That kind of spending on interest payments is not politically sustainable, and probably is not economically sustainable, either. American taxpayers are going to be none too eager to keep blowing a Pentagon-plus-sized hole in the budget, year in and year out, just to accommodate past spending.

Barack Obama has the luxury of knowing that there is not one person in Congress who takes an Obama budget proposal seriously. Put to the test, Senate Democrats have voted unanimously against an earlier Obama budget, and Democrats in both houses already have written off this latest fanciful proposal.

It does not stand a chance of being ratified into law, but it is worth noting the fact that the president of the United States has just proposed a budget that amounts to a national economic suicide pact. And he couldn’t even be bothered to do that on time. There may be a political case for his having done so, but as national economic leadership, this budget is grossly irresponsible.

— Kevin D. Williamson is a roving correspondent for National ReviewHis newest book, The End Is Near and It’s Going to Be Awesome, will be published in May. 

The Revelries of Baucus

by Kevin D. Williamson

The New York Times on Sunday carried a heavy breathing report alerting the diminished newspaper-reading public to the fact that Senator Max Baucus (D., Mont.), who chairs the committee that shapes corporate-tax law, has many connections to corporations that would like to see the tax code shaped in ways that benefit them. Angels and ministers of grace, defend us! Reports the Times:

Restaurant chains like McDonald’s want to keep their lucrative tax credit for hiring veterans. Altria, the tobacco giant, wants to cut the corporate tax rate. And Sapphire Energy, a small alternative energy company, is determined to protect a tax incentive it believes could turn algae into a popular motor fuel.

To make their case as Congress prepares to debate a rewrite of the nation’s tax code, this diverse set of businesses has at least one strategy in common: they have retained firms that employ lobbyists who are former aides to Max Baucus, the chairman of the Senate Finance Committee, which will have a crucial role in shaping any legislation.

No other lawmaker on Capitol Hill has such a sizable constellation of former aides working as tax lobbyists, representing blue-chip clients that include telecommunications businesses, oil companies, retailers and financial firms, according to an analysis by LegiStorm, an online database that tracks Congressional staff members and lobbying. At least 28 aides who have worked for Mr. Baucus, Democrat of Montana, since he became the committee chairman in 2001 have lobbied on tax issues during the Obama administration — more than any other current member of Congress, according to the analysis of lobbying filings performed for The New York Times.

. . . Mr. Baucus is viewed as an important ally when it comes to including corporate tax priorities into legislation. Last year, he introduced a plan — most of which was eventually passed into law as part of the fiscal cliff deal in January — that contained more than a dozen tax breaks, some of them pushed by clients who had retained Washington lobbying firms that employ his former aides or political advisers. Shannon Finley, who served as a political consultant and fund-raiser for Mr. Baucus before joining a lobbying firm in Washington, was hired in late 2011 by Beam, the liquor industry giant, to protect a federal tax break that it gets a cut of for producing its Cruzan rum in the United States Virgin Islands. Despite protests from fiscal conservatives that it was a giveaway, the provision was included in Mr. Baucus’s package, costing $222 million over the coming decade. Ms. Finley declined to comment.

First of all: Thanks to Eric Lipton of the Times for an unusually forthright report, one that at least acknowledges exactly who it is — “fiscal conservatives” — standing in opposition to things like the great rum subsidy.

The Times has been maddeningly hit-and-miss on the subject, but in fairness, hit-and-miss is a 100 percent improvement for the Times, which is miss-and-miss on most important issues. For example, in a March editorial headlined “The Real Spending Problem,” the Times correctly identified the fact that special subsidies and giveaways written into the tax code are, as a ledger issue, fiscally indistinguishable from simply writing checks to favored interest groups. But the Times being the Times, it went on to argue for the repeal of three tax policies that collectively amount to basically nothing, and which are not targeted subsidies of the type it decries: the carried-interest treatment of certain private-equity investments, IRA rules that allow some investors to amass very large tax-deferred retirement accounts, and “like kind” exchange rules for farmers. Even if we accept the argument that the carried-interest rule is an unfair giveaway to Wall Street (and I do not), the revenue lost from that arrangement is chump change: less than $2 billion a year, as the Times acknowledges. The farm rule adds up to about $3 billion a year in forgone revenue. (There is no good estimate on the IRA rule, to my knowledge.)

Meanwhile, the fiscally significant tax giveaways find a stalwart defender in the editorial page of the New York Times. The deductibility of state and local taxes — a direct subsidy to tax-and-spend governments on the familiar blue-state model — costs the Treasury between $40 billion and $50 billion a year — 20 to 25 times the cost of the carried-interest exemption. Like the benefits assigned to investment income, this tax break primarily benefits higher-income people. Not coincidentally, they disproportionately benefit higher-income people in New York Times country: New York, Connecticut, New Jersey, and other high-tax states. Maintaining that tax giveaway is not bad fiscal policy, according to the Times, but rather a moral imperative.

The mortgage-interest deduction cost the Treasury some $76 billion in 2011, but do not expect that tax subsidy to knock carried interest off the top of the Times’s most-wanted list. The tax exemption granted to municipal bonds is a direct subsidy to big-spending states and cities, too, at a cost of some $30 billion a year.

Those three tax subsidies alone account for between $100 billion and $150 billion in forgone revenue annually, but the New York Times is worried about picayune billion-here, billion-there deductions. (Don’t get me wrong: I’d repeal those farm giveaways, too.) It is, as usual, a question of who is being subsidized at the expense of whom.

And keep in mind, the New York Times is the head varsity cheerleader for the Obama administration, which is a veritable factory of special-interest tax-credit proposals. Those McDonald’s credits mentioned in the Times story? The Obama administration proposes to make them permanent. Politically favored energy interests, certain small businesses, renewables, politically connected automobile companies: Obama’s economic strategy has a tax credit for everybody . . . everybody who fits into the administration’s political agenda, at least.

The corporate tax is not a very large source of federal revenue (about 10 percent) but it is a very large source of corporate welfare, conferring benefits on the favored at the expense of the unconnected. It should be repealed. Corporate revenues have only so many ways of hitting the pockets of investors, executives, and employees; ideally, they would be taxed at that point, as personal income, with all sources of income taxed in the same way, whether from salaries, bonuses, capital gains, dividends, or inheritances. If we did so, the New York Times, and the conventional wisdom it represents, would have a lot less to worry about when it comes to the career paths of Senator Baucus’s former aides. And the tax code could go back to being a revenue source rather than a favor factory. 

Today In Government Spending

Public Health and Public Trust

by Kevin D. Williamson

Congratulations to Texas and the Aggies on becoming the home of a new federally backed center for emergency vaccines. The $91 million project, a joint effort by Texas A&M University, the federal government, and GlaxoSmithKline, will be responsible for the development and manufacture of vaccines during pandemics and other emergencies. Governor Rick Perry is of course very excited about this: The project will mean as many as 7,000 new jobs in Texas, and billions in expenditures, largely from out-of-state private and public sources.

Is this good news or not?

There are two ways of looking at this. Government spending is rarely welcomed here at Exchequer, and that $91 million is another $91 million we’re down in the hole. And while Texas and the Perry administration deserve great credit for making the state remarkably attractive to a variety of enterprises and investors, it is no secret that Texas is not above sweetening the pot for potential investors, that its methods for doing so are not immune from politics, or that the state’s leaders have a talent for keeping federal money pouring into the state for sometimes questionable projects. Practically every state and a large number of cities have economic-development funds similar to Texas’s; my impression is that Perry & Co. are no more impure than any other state administration when it comes to goosing the free(ish) market with tax dollars — they’re just a little bit better at it.

On the other hand, when government spends money, it should spend money on public goods. “Public good” is a term with a fixed meaning in economics, and it is not synonymous with “stuff that is good for the public” or “stuff the public likes.” Most of what the federal government spends money on (entitlements) is clearly not within the category of public goods, while a few things (missile defense, border patrol) clearly are. Some things, such as the federal highway system, are in a grey area, and might be considered public or non-public goods, depending on your interpretation.

Some public-health measures, such as mosquito-eradication programs in malarial areas, are clearly within the definition of public good, and it seems to me that things like the Centers for Disease Control and the  Aggies’ new pandemic-vaccine center are, too. And at the risk of sounding like a home-state cheerleader for Texas, if that $91 million center performs as advertised, then that is a relatively small price to pay for a measure of insurance against otherwise unmanageable, unforeseeable infectious epidemics, which are on my list of underrated threats. And that $91 million is not only a good investment in the event of a sudden epidemic; it is a good investment even if such an event never comes to pass, for the same reason that accident insurance is a good investment even if you never get in a wreck: Risk mitigation is inherently valuable, even if the trauma you are insuring yourself against never materializes.

But that all points to the unending challenge of trying to get government to behave: Even if  we concede that such a center is a good investment and well within the purview of federal action, we still have to worry about a great many variables: Will the project be managed effectively and efficiently? Will Glaxo’s lobbying arm turn it into yet another opening on the corporate-welfare trough? Will the project overgrow its original mandate through the inevitable mission creep associated with such undertakings? Is it a better use of resources than all the others to which we might have dedicated those funds?

Amity Shlaes’s much-admired new book on Calvin Coolidge deserves all the praise that has been heaped upon it, not least because her Silent Cal is not merely a prudent and admirable figure but an inspiring one: President Coolidge, hunched over the federal accounts with his budget generals, is not just a penny-pinching puritan (though the world could do with a good deal many more penny-pinching puritans): He is a man expending every effort to ensure that Americans enjoy a government that is reliable and honest, a worthy steward of the wealth with which it has been entrusted. Self-government works well only when the people trust their institutions.

Progressives often complain that the contemporary Right is increasingly anti-government in both its rhetoric and its policy preferences; some moderate Republican types, such as David Frum, echo that criticism. But one possible reason that conservatives have arrived at a greater distrust of the government is that the government has become less trustworthy. The self-dealing and the friends-and-family appropriations that we now regard as business as usual in Washington may be entirely legal, but they are nonetheless wrong — not just ill-advised but immoral — and it is not surprising that Americans’ trust in public institutions (and many private institutions, such as Wall Street firms) is pretty low. This is a critical problem for a self-governing republic. Even when it comes to such core governmental functions as national defense and law enforcement, it is difficult to believe that all (or even most) of every $1 appropriated to the relevant agencies is used for the purpose intended.

It leaves us with a kind of double suspicion: We suspect that the federal government will often invest our resources in doing things that are none of its business, and we also suspect that it will manage to do a great deal wrong even when it is performing tasks that are appropriate to it. Progressives believe that our politics would be less toxic if conservatives were not so hostile to the public sector; conservatives believe that our politics would be less toxic if the public sector were less deserving of our hostility.

While Texas likes to boast of its economic performance in recent years, it has also made some important advances in the intangible area of public trust, for instance by making detailed information about government outlays easily available to the public. The state’s controller, Susan Combs, is something of a crusader when it comes to openness and transparency in government. And while the libertarian tendency is currently on the ascent among Republicans, rolling back government is only one part of the conservative agenda: Making sure that government operates with a sufficient probity and thrift is an important part, too, especially for conservatives who seek an active role in government. We’d like a smaller government, sure, but we also would like a government we can trust. That is something that has to be put to the test every day, whether there is $1 at stake or $91 million.

 Kevin D. Williamson is National Review’s roving correspondent. His newest book, The End Is Near and It’s Going to Be Awesome, will be published in May.