With two Republican presidential candidates embracing a value-added tax (VAT), it is worth looking back at the original federal debate over that bad policy idea. Richard Nixon appears to have been the first U.S. leader to push for a VAT, which is not surprising given that he was perhaps the most statist GOP president of the 20th century. With a three-percent VAT in mind, Nixon called for new federal financing of local schools in his 1972 State of the Union address.
The U.S. Department of Education spends tens of billions of dollars a year on subsidies for higher education. Federal Pell grants are more than $30 billion a year, federal student loans are about $100 billion a year, and grants to colleges and universities are $2.5 billion a year.
My blog on a federal computer project that went six times overbudget prompted an expert on information technology (IT) to send me an interesting email. In this study on government failure and this study on cost overruns, I discussed some of the reasons why $100 million projects end up costing $200 million.
One measure of the government’s size is government spending as a share of gross domestic product. The OECD has released new data (Table 25) on this measure for 31 member countries, which I chart here for 2015. The spending includes all levels government: federal, state, and local.
Politics and bureaucratic mismanagement drive up costs and generate failure in the federal government. More evidence comes from a Washington Post report today on a botched computer project at the Department of Homeland Security
The Washington Post today discusses how presidential candidate Donald Trump is dismissing the need for major entitlement reforms. The paper noted, “… leading Republican presidential candidate Donald Trump railed against proposals to end or significantly change Medicare.”
Presidential candidates Ted Cruz and Rand Paul have proposed value-added taxes (VATs) as part of their tax reform plans. I critique these taxes in National Review today, arguing that they could become engines of big government growth.
The budget agreement between congressional leaders and the Obama administration would break prior budget caps and increase spending over the next two years by $80 billion. The Bipartisan Budget Act (BBA) of 2015 would theoretically offset that cost with savings down the road, but promises of future savings are worth little given that GOP leaders have shown they will break agreed-to restraints whenever the time comes. The Heritage Foundation is right that the deal is a “colossal step” in the wrong direction and “does nothing to reduce the size and scope of government.”
In researching an upcoming study on privatization, I came across an interesting illustration of the advantages of private science over government science. Private science focuses on efficiency and results, but government science maybe not so much.