How Incompetent Are The Mainstream Media?

On Tuesday last week the government (Census Bureau) came out with new 2015 numbers for income and poverty in the United States; and on Wednesday morning, as I discussed in this post that day, the Census release was the lead story on the front pages of both the New York Times and Wall Street Journal.  The Census Bureau numbers were obviously and transparently fake.  Supposedly, in a year when GDP increased by a meager 2.4%, median household income had jumped more than 5%, and the number of people "in poverty" had declined almost 10%.  The reported changes in income and poverty could not possibly be real if the GDP numbers were also real, and could only have resulted from a methodological change that was carefully buried.  No remotely competent economic journalist could fail to spot something so obvious.  Nonetheless, both the NYT and WSJ fell for it hook, line and sinker.

(As I noted in an update to Wednesday's post, John Crudele of the New York Post promptly spotted the methodological revisions that were likely to have driven the income and poverty changes.  In my view the new methodology, while still terrible, is actually preferable to the old.  In the old numbers, income was greatly understated and poverty greatly overstated.  Now, income is somewhat less greatly understated, and poverty somewhat less greatly overstated.  But meanwhile, the reported "changes" to income and poverty in 2015 have next-to-nothing to do with real changes, and derive substantially if not entirely from the changed methodology.)

So then yesterday I received my weekly copy of The Economist magazine.  (Actually, they call themselves a "newspaper.")  Surely they are the high end of sophisticated economic journalism.  Here is their article on the Census income/poverty release.  And yes, they also fell for the Census release hook, line and sinker:

THE median real household income grew by a whacking 5.2%, or $2,800, in 2015, according to figures released on September 13th. . . .  Bucking recent trends, the wallets of the poor and least-educated swelled the most. Income at the twentieth percentile (meaning the level at which exactly one-fifth of the population earns less) grew by over 6%. . . .  That also helps to explain a fall in the poverty rate from 14.8% to 13.5%—the largest annual percentage-point drop in poverty since 1999.

The article contains no skepticism at all as to how this could be consistent with 2.4% GDP growth, and zero curiosity as to whether methodology was changed to obtain convenient numbers for an election.

Seeing that The Economist too could be so easily duped, my curiosity was piqued to look around the web at some other major sources.  Sure enough, with the exception of Crudele at the NY Post and John HInderaker at PowerLine, all the major sources got duped.  For example, see the Washington Post, with headline "Middle class incomes had their fastest growth on record last year":

Real median household income was $56,500 in 2015, the bureau reported, up from $53,700 in 2014. That 5.2 percent increase was the largest, in percentage terms, recorded by the bureau since it began tracking median income statistics in the 1960s.  In addition, the poverty rate fell by 1.2 percentage points, the steepest decline since 1968. There were 43.1 million Americans in poverty on the year, 3.5 million fewer than in 2014.

Or try Bloomberg News, "Four Charts Show How Much Poverty and Income Have Improved in the U.S.":

According to new data from the U.S. Census Bureau, last year saw poverty in the U.S. decline the most in 16 years.  The report released on Tuesday morning shows the official poverty rate in the United States declined to 13.5 percent in 2015, a 1.2 percentage drop from 2014. That is the largest drop seen on a year-over-year basis since 1998 and 1999. 

CNN?  Their headline is "The middle class gets a big raise . . . finally!"

Median household income rose to $56,516 in 2015, up 5.2% from a year earlier, according to data released by the U.S. Census Bureau Tuesday. It marks the first increase in median income since 2007, the year before the Great Recession started.  Also, the poverty rate ticked down to 13.5% in 2015, from 14.8% a year earlier.

Hook, line, and sinker.  They all just regurgitate the Census press release without a hint of critical thinking.  The only real question is, are they just that dumb, or are they all part of the Hillary campaign?  Or, it could be both.

Keepin' 'Em Down On The Reservation

Yesterday I attended a presentation by Naomi Schaefer Riley on the subject of her new book, "The New Trail Of Tears."  The topic of the book is the deplorable conditions and extreme poverty that exist on Indian reservations in the United States today.  Riley traveled in both the Eastern and Western U.S. and spent considerable time on several of the larger reservations as part of her research.  She came back with plenty of stories -- of unemployment, idleness, extreme levels of alcoholism and drug abuse, and of violence.  Yet all of this is in the face of high levels of spending by the Bureau of Indian Affairs and other federal bureaucracies, not to mention that some tribes run casinos that generate large monthly checks for every tribal member.  How then could conditions be so bad?  

Riley's fundamental diagnosis is that the problems of the reservation-based Indians stem from lack of property rights.  By federal law, reservation land is held "in trust" for tribe members.  That means that nobody owns anything, which in turn means that tribe members have nothing to sell, and nothing to use as security to borrow.  Starting businesses becomes virtually impossible.  There's nothing to do but sit idle and live off the handouts.  It's a little microcosm of socialist utopia.

To me, the most fascinating (if tragic) part of the story is the complete lack of comprehension, among the people who set up these systems, of what makes for a successful human community, whether economically or otherwise.  Allow people to own things and to trade them freely (a system sometimes going by the name of "capitalism"), and before you know it you get New York, with very little need for input by government functionaries and busybodies.  Prevent people from owning things or trading them, and you get the Pine Ridge Indian Reservation.  So a massive and well-funded government bureaucracy, tasked with "helping" the Indians, sets up Pine Ridge (and many others like it), and keeps it the way it is, completely resistant to change, for decade after decade.  How could they possibly be so unobservant and so ignorant?  (Let alone, so overcome with loathing for the American enterprise system and everything that it stands for.)  By the way, also complicit are the Congress (also, as to many if not most of its members, filled with dislike for the American enterprise system, as well as with the hubris that they can devise something so much better directed by themselves), and also the leadership of most of the Indian tribes (who are only too happy to get the control over the economic resources that goes to the leaders under a socialist model).

Well, fortunately, back here in New York, we are the capital of capitalism.  We have the success of the enterprise system all around us, right in front of our eyes, so we can observe how it works at close range and apply the lessons of its success to quickly eliminate our remaining pockets of poverty.  Right???  Hah!!  What we actually have is a political class that hates capitalism and enterprise as much or more than do the BIA bureaucrats and the Indian tribal leaders.  Bashing banks, "Wall Street," and/or some other successful business (ExxonMobil anyone?) is the sure route to the top in New York politics.  And to "help" the remaining poor?  We have our own little analogs of the Indian reservations, otherwise known as the New York City Housing Authority and all the new "affordable housing" initiatives.

NYCHA and the new "affordable housing" really could not be more like the Indian reservations.  You are granted your apartment by the grace of the authorities, and you can live there for life; but you can't own it.  Therefore, you can't sell it, and you can't borrow against it.  The incentives, once you're in, to stay in place and live off the handouts, are enormously powerful.  And thus we find in the NYCHA projects a poverty rate exceeding 50% (even in the midst of Manhattan, the wealthiest county in the country!) and an average tenure exceeding 20 years.

But here at the Manhattan Contrarian, I have been advocating for several years for getting rid of the socialist NYCHA model and giving the public housing away to the residents.  Thus will they get meaningful property rights, and the remaining poverty will quickly decline and disappear.  Surely, someone is listening?  No, actually, what is occurring is that just yesterday the City Council approved a massive new socialist-model "affordable housing" complex to be built in the South Bronx.  

View fullsize

Rendering of New "Affordable Housing" Project, Melrose, The Bronx

Yikes!  This soon-to-be-built new project even looks like the projects of old.  It's close to 1000 units.

So, for those of you who were hoping that there was some chance for this part of the South Bronx to start to move up in the world, get over it.  Our City Council is doing everything in its power to assure that this area will remain a permanent slum, and the residents permanently in poverty -- the better to be loyal supplicants for the continuation of their handouts.

Should You Trust Any Numbers Coming Out Of The U.S. Government?

The big economic news today comes from the release yesterday by the Census Bureau of its annual report on Income and Poverty in the United States.  Data in the report are the basis for today's lead front page articles in both the New York Times ("Incomes In U.S. Are Up Sharply; Poor Gain Most") and the Wall Street Journal ("Family Incomes Rise After Lull").  

And the news -- if you believe it -- is indeed remarkably good.  Median household income is reported to have risen $2,798, or 5.2%, from $53,718 in 2014 to $56,516 in 2015..  The official "poverty rate," is reported to have declined from 14.8% in 2014 to 13.5% in 2015.  That's a full 1.3%, and represents some 3.5 million fewer people "in poverty" in 2015 compared to 2014.  And the biggest gains in income were at the lowest income levels: real household incomes are reported to have risen 7.9% for households at the 10th percentile of the income distribution, and 6.3% for those at the 20th percentile.

Of course, the report emerges in the heat of the presidential election campaign, where it cannot fail to be interpreted to support the candidacy of the candidate of party of the incumbent President.  From the Times:

The data was [sic] released into a heated presidential race, where Democrats seized on the statistics to promote Hillary Clinton's candidacy and undercut Donald J. Trump's dark assessment of the nation's well-being.

And President Obama himself took the opportunity to take credit at a speech in Philadelphia:

"We lifted three and a half million people out of poverty, the largest one-year drop in poverty since 1968," President Obama said on Tuesday at a rally in Philadelphia for Mrs. Clinton.  "The uninsured rate is the lowest since they began keeping records.  The pay gap between men and women shrank to the lowest level on record," he said, adding, "Thanks, Obama."

So is there any reason to be suspicious?

Well, start with this.  Any possible idea you might have that the bureaucrats at the Census Bureau are just neutral experts reporting the data fairly and accurately will be completely shattered if only you look into the matter of the "poverty rate" and how it is compiled and reported.  I have written about this too many times to count, and will not go into all the details here.  For more background and links, try this post, or this one.  But here's the summary:  The definitions and categories that underlie the "poverty rate" have been intentionally manipulated and gerrymandered to support the ongoing growth of failed government "anti-poverty" efforts and of government staff and budgets.  Over many years, definitions have been set to exclude most government benefits from the measure of poverty in order to keep the "poverty" figures high so that they can be used to advocate for yet more spending -- spending that then again will not be counted when "poverty" is measured.  And the blame for this cynical game can only be placed on the Census Bureau itself, which sets the definitions and parameters for collecting and reporting the data.  So, without a doubt, the Census Bureau is suspect.  It puts out numbers which are clearly and obviously manipulated to support advocacy for more and bigger government programs, and that support political candidates who will support and advocate for the same.

So now to today's numbers.  Median household income up 5.2%?  So, how did GDP do?  Real GDP was up 2.4% in 2015 over 2014, according to BEA here.  So, supposedly, median household income increased by more than double the increase in GDP?  That seems to stretch the limits of plausibility.

The Census report that came out yesterday compared 2015 data to 2014.  Let's take a look at the comparable Census report that came out at this time last year, comparing 2014 data to 2013.  Here it is.  As further background, the increase in GDP from 2013 to 2014 was reported to be exactly the same as the increase from 2014 to 2015 -- 2.4%, according to Forbes here.  And how did that 2.4% increase in GDP in 2014 get reflected in median household income and poverty?  According to last year's Census report:

• Median household income was reported to be $53,657 in 2014, which was actually down from $54,462 in 2013.  (They do claim that the decrease was "not statistically significant.")
• "In 2014, the official poverty rate was 14.8 percent. There were 46.7 million people in poverty. Neither the poverty rate nor the number of people in poverty were statistically different from the 2013 estimates."   

So, in summary, from 2013 to 2014, as reported in 2015, GDP went up 2.4%, and that translated into a small decrease in median household income, and no change at all the the poverty rate or number of people in poverty.  From 2014 to 2015, as reported yesterday, GDP went up the same 2.4%, and that translated into a 5.2% increase in median household income, and a nearly 10% decrease in the poverty rate and number of people in "poverty."  Do you believe it?  The critical difference between the two years is, of course, that in 2015 the administration needed low numbers for income and high numbers for poverty in order to advocate before Congress and the people for more government spending and programs, while in 2016 the administration needed higher numbers for income and lower numbers for poverty in order to support the candidacy of Hillary for President.

While I'm at this, I should remind you of a few other relevant things.  The Census Bureau has long been a part of the Department of Commerce.  In 2009, after being elected President, and in preparation for the 2010 decennial census, Obama caused the Census Bureau to change its reporting to report to the White House directly.  Many at the time (e.g., John Fund here) were critical of that move as undermining the "independence" of the Census Bureau (although I was dubious that they ever had any real independence).  Fast forward to today, and I can't say what the practical reporting lines of the Census Bureau may be, whether to the Secretary of Commerce or to the White House directly.  However, the Secretary of Commerce is one Penny Pritzker.  She made her fortune selling your confidential personal information without your permission as head of the Trans Union credit bureau, and followed that by serving as finance chair of Obama's campaigns.  So really, is there any conceivable reason why you would trust anything coming out of the Census Bureau?  By the way, both the Times and the Journal report yesterday's numbers without the slightest trace of skepticism.  Hey, it's the government!  Of course they are the fair and neutral experts!

UPDATE, September 15:  John Crudele of the New York Post -- a long time critic of the Census Bureau -- has gone through the methodology, and thinks he has discovered how they came up with this year's numbers:

Census moved the goal posts. Starting in 2013 with a partial phase-in, which was fully implemented in 2014, Census changed the questions and the methods in calculating household income.  For example, Census, starting in 2014, began to “collect the value of assets that generate income if the respondent is unsure of the income generated.”  Also, the government started to use “income ranges” as a follow-up for “don’t know” or “refused” answers on income-amount questions.  There are plenty of other changes — but with just these two, income levels reported could be noticeably higher, say 5.2 percent higher, without the actual income being 5.2 percent higher.  In the fine print, Census admits the change. “The data for 2013 and beyond reflect the implementation of the redesigned income questions.”  Americans, in their guts, know the 5.2 percent gain in median household incomes isn’t true.  Now they know why they should follow their gut.

Now, when Census cooked up these methodology changes just in time for their pre-election income and poverty report, did they know that the changes would drive a nice apparent income increase and poverty decrease?  Of course they did.  Unfortunately, there is nothing honest about this.

The New York Times Does Connecticut Schools

A few days ago I wrote a post commenting on the recent and preposterous court decision in Connecticut, where the judge made a King Canute-like order to Connecticut's government to behave "rationally" and thereby fix its failing schools.  Yesterday, the New York Times decided to weigh in on the same subject, with a front page article ("In Connecticut, Wealth Gulf Divides Schools") as well as a lead editorial ("A Holistic Ruling on Broken Schools").  You won't be surprised to learn that their editorial take on the situation is more or less the opposite of mine.  ("[Connecticut] should welcome the judge's invitation to think more broadly about the problem of educational inequality.")  But what's more significant is that the Times's "news" article promotes a completely false narrative about poor districts getting systematically deprived of resources, while the article provides none of the relevant and easily-available data that totally disprove that narrative.  I guess you won't be surprised to learn that either. 

To illustrate the "wealth gulf" supposedly dividing Connecticut's schools, the Times picks two adjacent districts for its focus:  Bridgeport and Fairfield.  Bridgeport is Connecticut's largest city, located about 50 miles Northeast of New York City, and known for its poor and largely black student population.  Fairfield is the town adjacent to Bridgeport on the West (closer to New York City) and is a wealthy suburban district.  

With the exception of a couple of tidbits about per student spending, the Times article is devoid of statistics or other hard information.  (The tidbits of hard information are that (1) "In the 2014-15 school year, Bridgeport spent about $14,000 per student while Fairfield spent nearly $16,000," and (2) "[S]everal [Connecticut] districts spend more than $25,000 per student.")  For the rest, instead of hard information on actual available resources, the article gives a forum to various government functionaries interested in pleading for more money for themselves despite their manifest failures.  Thus we get quotes from people like Bridgeport's "interim superintendent of schools" Frances Rabinowitz, and an assistant superintendent, Aresta Johnson.  We get fed things like the following:

Ms. Rabinowitz started in Bridgeport as a teacher, then left the city 14 years ago for positions elsewhere, including a job as an associate commissioner for education for the state. When she returned to the district in 2014, she said, it was in even worse shape than when she left.  “The stripping of resources was amazing to me,” she said.

Or this:

In the morning, school buses line the circular driveway of Fairfield Ludlowe High School, dispatching a stream of students into the sandy-brick building buffered by an expansive, tree-lined lawn.  At Bridgeport’s Warren Harding High School, there is no line of buses. As Judge Moukawsher noted, the city cannot afford them for its high school students.

Or this:

Because schools are heavily supported by local property taxes, as the judge pointed out, a property-poor town like Bridgeport has less money for its schools, even while taxing its residents at higher rates. And when funds fall short — for things as basic as paper, as they sometimes do — there is no way to make it up.

Now, can we kindly get some real information?  Fortunately, the Connecticut Department of Education puts out good amounts of data on school enrollment and spending, including some historical data.  Here is a chart of total and per student spending by town for the 2014/15 school year.  Here is a link to download an Excel spreadsheet that contains data for the period 2006 - 15 by year on such things as total spending by town, and percent of revenue for each district coming from local, state and federal sources.  What do we learn?

• Looking at the chart of 2014-15 per student spending by town, you really can't find any kind of systematic gulf between spending in wealthy and poor towns, or indeed much of a difference at all.  Super-poor Hartford is actually at the higher end of spending at $19,362 per student, which is more even than super-wealthy New Canaan ($19,171).  While Bridgeport ($13,923) does indeed spend a little less than Fairfield ($15,920) per student, Hartford, New Haven ($17,194), and Stamford ($17,409) all spend more than Fairfield.  (Obviously the Times did not select Bridgeport randomly for its article.  Are you surprised?)  And literally every place in Connecticut spends well more than the national average spending of about $11,000 per student.
• Those evil districts that the Times identifies (without naming any) as spending $25,000 and up per student turn out to be predominantly in the very-sparsely-populated Northwest corner of the state.  The highest spending town on a per student basis is Cornwall ($30,364), which only has 111 students in the K-12 grades.  Clearly, if you need to have a teacher for 10 and fewer students in each grade, it's going to cost more per student.  The districts in question have a tiny fraction of the state's population, and get almost no state aid to fund their schools.
• The data on sources of revenue provide a breathtaking picture of the degree to which Connecticut, and to some extent the federal government, already allocate resources massively toward the poorer districts, while leaving the wealthier districts almost completely on their own.  Thus Fairfield gets 93.7% of its operating revenue from local sources, and only 4.7% from the state, and 1.5% federal.  In Bridgeport it's 20.6% local, 69.8% state, and 7.9% federal.  (Do you think the Times might have mentioned this vast disparity when they said there is "no way to make it up" for Bridgeport when local property taxes fall short in providing revenue?)  The same vast disparity holds for all of the poor versus wealthy towns.  Examples of 2014-15 revenue sources for poor towns and cities: Hartford -- state 68.6%, local 21.9%, federal 6.3%; New Haven -- state 61.1%, local 24.5%, federal 12.8%; New London -- state 59.0%, local 30.3%, federal 6.8%; Waterbury -- state 57.1%, local 35.9%, federal 6.1%.  Examples of wealthy towns:  Darien -- state 4.6%, local 94.0%, federal 1.3%; Greenwich -- state 2.5%, local 95.3%, federal 1.6%; New Canaan -- state 2.6%, local 95.9%, federal 1.1%. 
• The line from the Bridgeport school superintendent about "stripping of resources" from the Bridgeport schools is not supported by the data.  In 2006-07, Bridgeport got $170.4 million for its schools from the state, and provided $61.6 million from local sources.  By 2014-15, the local contribution had remained almost constant at $62.4 million, while the state contribution had gone up almost 25% to $211.7 million.  A far more accurate characterization than Ms. Rabinowitz's would be that every year the state throws more and more money at Bridgeport for its continued failure.

For anyone willing to look at the data, Connecticut's experience with school funding provides the perfect disproof of the proposition that more money can fix failing schools.  You will never find that out from the Times, which systematically suppresses all of the real information, while lazily handing a forum to failing functionaries who seek more money to expand their staffs and budgets and their failing empires.   

As commenter Steve Walsh said at the prior post on this subject, Connecticut's current system of school finance rewards failure.  As long as they continue to reward failure, they will continue to fail.  

What Is The Federal Government's Most Disastrous Program?

I know you are thinking that the question is impossible to answer because there are just too many to choose from.  So I'll give you some criteria:  to be considered as the "most disastrous program," a program must (1) cost a staggering amount of money, (2) accomplish next to nothing, and (3) be permeated by vast amounts of fraud.  On these criteria, the winner by thousands of miles has to be Medicaid.  Of course, given that the socialist/progressive response to failure is always to double down, we are in the midst of a huge expansion of Medicaid as part of Obamacare.

The staggering cost of Medicaid is undeniable.  Final 2016 spending numbers are not yet in, but the federal Medicaid budget for 2016 was about $345 billion.   Throw in a couple of hundred bil  for the state share of Medicaid spending, and you get to around $550 billion total.  That's enough to notice!  And spending on this program continues to explode, as it has exploded more or less continuously since inception in 1965.  As recently as 2014, total spending on Medicaid (federal + state) was only $476 billion, per the Kaiser Family Foundation.   First year expenditures in 1965 were about $1 billion.  OK, in inflation-adjusted dollars that would be more like $8 billion.  It's still more than six doublings of spending over 49 years, for a compound annual growth rate in constant dollars of around 9%.  Whew!

But surely, Medicaid accomplishes something -- doesn't it?  That depends what you are measuring, and how you measure.  I would suggest that there are two appropriate criteria to consider as to whether Medicaid accomplishes anything:  improvement in numbers of people in poverty, and improvement in health outcomes.  On those criteria, Medicaid is a spectacular disaster.

Consider the effect of Medicaid on numbers of people in poverty.  That is a highly appropriate criterion to consider, because Medicaid is billed as an "anti-poverty" program.  Indeed, Medicaid is far and away the largest "anti-poverty" program, consuming about half, or a little more, of the $1+ trillion of total federal + state + local anti-poverty spending in the U.S. each year.  It would be rather ridiculous, wouldn't it, to have a massive trillion-dollar annual budget for alleviating poverty, and spend fully half of it on a program that doesn't reduce poverty at all?  Yes, it would be completely ridiculous.  And of course, that's exactly what we do.  In the official measurement of "poverty," in-kind spending like Medicaid does not count.  The Census number crunchers measure "poverty" only based on what they call "cash income," and nothing about Medicaid counts as cash income.  Thus, Medicaid does not reduce the number of people in official "poverty" by a single soul.

If you think that's ridiculous, I have something even more so.  Recognizing the vulnerability of Medicaid to the criticism made here, some defenders of the program a few years ago felt a need to do a study to show that Medicaid actually does reduce poverty.  So in 2013, researchers named Sommers and Oellerich did a big study published in the Journal of Health Economics purporting to apply a sophisticated new methodology to evaluate whether Medicaid actually reduced poverty.  Of course the first thing their new methodology had to do was to avoid use of the regular Census methodology for measuring poverty, because it's a given that Medicaid does not and cannot reduce poverty under that definition.  (Instead they used the "new Coke" Supplemental Poverty measurement that Census had just come up with.  This is the definition of "poverty" now used by all good progressive advocates whenever the traditional measure gives the wrong answer.)  I won't go through all of Sommers & Oellerich's methodology (you can find a more detailed description at the link), but I'll cut to the breathless answer:  "Medicaid kept at least 2.6 million Americans out of poverty in 2010."  Exciting!  The result gets cited repeatedly in the progressive world, for example here by the Center for Budget and Policy Priorities in 2015.  

Really???  $400 billion (approximate 2010 spending level) to keep 2.6 million people out of poverty?  That's around $160,000 of spending per person relieved from poverty!  And this in a world where the official "poverty level" is under $12,000 for an individual, and around $6000 per person in larger families.  If the goal here, or any part of it, is to reduce poverty, it would be literally impossible to design a less cost-effective method even if you set out intentionally to do just that.  Medicaid is the perfect illustration of progressives treating the federal government as the infinite source of free money, without any concept of real costs or trade-offs.

But at least Medicaid must improve health outcomes, right?  Don't bet on it.  For decades literally everybody just assumed that having healthcare "coverage" must somehow improve health outcomes.  Then came the randomized study out of Oregon, published in the New England Journal of Medicine in 2013.  Result:

This randomized, controlled study showed that Medicaid coverage generated no significant improvements in measured physical health outcomes in the first 2 years, but it did increase use of health care services, raise rates of diabetes detection and management, lower rates of depression, and reduce financial strain.   

After this, the best the defenders of Medicaid could say was basically, two years of data are not enough.  (But if heart attacks, or strokes, or diabetes, or other such things were actually going untreated among the uninsured, why wouldn't that turn up as at least somewhat increased mortality within two years?) Anyway, Oren Cass, in an article for the Manhattan Institute in June, points out that now longer term data are available, and the results haven't changed:

Critics of the [Oregon] study claim that two years isn't long enough for positive effects to materialize. But a longer-term statistical analysis published earlier this year found no significant correlation between health-care access and life expectancy for low-income households across different geographies.

So, on what measures is it even possible to try to defend the staggering expenditures on Medicaid?  Well, here's an article from the Huffington Post from July 27, written by Edwin Park of CBPP.  Park gives 10 reasons why Medicaid, supposedly, "works."  Not one of them has anything to do with either reducing poverty or improving health outcomes!  So what the hell are they?  Number one is "provid[ing] quality health coverage."  Number two is "cut[ting] dramatically the number of Americans without health insurance."  (Aren't those two the same thing?)  Number three is "Medicaid participation is high."  (Same thing again!)  Number four is "Medicaid has improved access to care . . . ."  (Same thing yet again!)  And so forth.  You get the idea:  "coverage" is the Holy Grail, even if it costs a bloody fortune without achieving any measurable improvements in either poverty or health outcomes.  Maybe this would make a little sense if the cost was $10 billion per year, or even $50 billion, or maybe even $100 billion.  But $550 billion per year???  

Oh, and let's not forget about the fraud.  Kevin Williamson has a post up on this subject at National Review Online, titled "The Facts about Medicaid Fraud."  I'm not sure he's got his facts perfect, but here is the key quote:

In September, the Department of Health and Human Services sent out a warning that improper payments under Medicaid have become so common that they will account this year for almost 12 percent of total Medicaid spending — just shy of $140 billion.

The $140 billion would be more like 25% of Medicaid spending than 12%, so I'm assuming that he must  be including Medicare as well.  Whatever.  Even at half the $140 billion level, the number is breathtaking.  And this is what the government admits to.  You could not go wrong betting that the real number is far higher than what they admit.

Medicaid is just the classic case of designing a program by feel-gooderism without any consideration of cost-effectiveness.  Once in place, it grows on auto-pilot, without anybody looking at it or considering whether the tens of billions of dollars of added spending every year are accomplishing anything meaningful.  Entrenched interests grow rich, while alternative uses of the money -- whether alternative government spending or returning the money to the private sector through tax cuts -- get pushed off the agenda.  

Have you noticed any mention by either side of the presidential campaign of the need to look at Medicaid for cost-effectiveness?  Neither have I.   

Connecticut Goes Completely Insane

You don't read all that much about Connecticut in the national news because it's a small state, and often overshadowed by its bigger neighbors to the West and North.  Its "big cities" (Hartford, New Haven, Bridgeport, Stamford) only have around 150,000 +/- people each.  But the state deserves attention, at least from those interested in effective public policy, because it is a poster child for the dead end of "blue model" state governance.  It's one of the wealthiest states (number four in per capita income according to this list on Wikipedia), but its cities are among the poorest in the country, and in recent years it has been losing population and high income taxpayers to outmigration.  As is typical for deep blue states, the proposed solutions to social problems are always more taxes and higher government spending.  After many rounds of that, somehow the problems never get better.

A couple of developments this past week in Connecticut illustrate the blind alley into which the state has backed itself.  One is a big decision handed down by the state Superior Court in Hartford in the latest school funding litigation, Connecticut Coalition for Justice in Education Funding v. Rell.  The second is an enforcement action taken by the State Elections Enforcement Commission against two (Republican) state senators for the sin of mentioning the name of the (Democratic) governor unflatteringly in their campaign advertisements.

The CCJEF case is the latest in the endless series of constitutional litigations brought by various activist groups around the country challenging state methods for funding the government schools.  Connecticut has many of the usual circumstances for these cases: the major cities are relatively poor, the schools in the major cities have student populations with heavy majorities of blacks, and those schools are failing the students miserably.  In many of the cases around the country over the last several decades, the activists have succeeded in getting courts to order remedies in such circumstances that have included either simply more money for the poor urban districts, or new funding formulas that reallocate funding from wealthier to poorer districts.  (The famous seminal case was Serrano v. Priest, decided by the California Supreme Court in 1971.)  So why not try another run at this in Connecticut today?

Actually CCJEF started this case in November 2005, now almost 11 years ago.  Of course the initiators were the usual suspects from the Yale Law School, who rounded up a bunch of school kids to serve as plaintiffs.  In 2010 the case reached the Connecticut Supreme Court, which declined to dismiss it as without basis, and instead remanded the case to the Superior Court on the vaguest of standards as to what the state constitution of Connecticut requires of the government schools.  The case then ended up in the courtroom of Superior Court Judge Thomas Moukawsher for a "trial" that started in January this year and ran into August.  The good judge rendered his 90-page decision on September 7.

The best that can be said about the opinion is that it's a total mess; but, to be fair to the judge, he was put to an impossible task.  Here's the governing clause of the state constitution:

There shall always be free public elementary and secondary schools in the state.  The general assembly shall implement this principle by appropriate legislation.    

OK, take it from there, Tom!  Needless to say, what the plaintiffs wanted was lots more money for the poorer districts, which they were happy to see taken away from places like Greenwich and Darien for the sinful conduct of getting rich.  But here was the rub:  Connecticut already had one of these constitutional school funding cases, back in the seventies in the wake of Serrano v. Priest.  And that case, Horton v. Meskill, decided in 1977, had already forced the reallocation of state spending such that the poorer districts got lots more money out of the state than the richer ones, and the overall level of per pupil spending was as high or higher in the poorer districts than in the richer ones.   And now, just since 2012, the state legislature had added one handout after another to try to improve things in the poorer and failing schools: $400 million in new money for the state's 30 lowest performing schools under the "Alliance Districts" program; "additional resources," including $13 million in 2015 alone, for 14 failing schools under the "Commissioner's Network" program; $4 million in new "school improvement grants" for 30 high needs schools; etc., etc., etc.  

So, how about a few more programs?  You can't even name one they don't already have!

State and federal programs also beef up needy school districts by providing students breakfast, lunch, and many times food to take home.  Schools in some districts feed students even in the summer.  After-school programs instruct and care for kids.  Parents are invited into schools to share in learning.  Homeless children are sought out and their needs tended.  There are programs to prevent sexually-transmitted diseases, young parents programs, pregnant student supports, and mental health programs.

And yet the urban and heavily black schools continue to fail.  So what is the "solution" demanded by the geniuses from the Yale Law School to finally bring success to Connecticut urban education after decades of failure?  You guessed it!  More money for everything:

The plaintiffs claim that all of these programs are under-effective because they are under-funded.

What is a judge to do?  And here's where the whole thing goes completely off the rails.  After recognizing that lack of programs and money can't possibly be the problem, the judge claims to have now finally discovered the problem that nobody else previously noticed:  the allocation and spending of the state education money have been "irrational."  The legislature came up with a spending formula without "explain[ing] how it was chosen," and then they failed to follow it.  They have no explanation for how current levels of spending have been decided.  (Suggestion: political horse trading?)  They spent money on buildings "without rhyme or reason."  The teacher training and evaluation system is completely irrational.  The use of money for special education makes no sense at all.  It's just chaos!  And what we need to straighten this all out is so obvious: "a rational plan."

Or to put it another way, the functionaries have been failing to execute socialism properly.  Now, they will be ordered to execute correctly!  Anybody who believes this can actually work has to be completely insane.  But hey, what else was the judge to do with the mandate handed him by the Supreme Court?  Anyway, the decision contains no orders for remedies, but rather directs the state to "develop" and submit "rational policies" in each of the areas of irrationality that have been identified in his opinion.  Connecticut is now in for decades of judicial meddling in K-12 education.  The chance that the court can do a much better job than the bureaucrats who have been running things so far is probably about zero; but then again, he probably can't do much worse either.

And in another area where Connecticut decided that it could achieve a more perfect world through more government spending, we find that they are one of a minority of states that have adopted a so-called "clean campaign" system for public funding of political campaigns.  Here is a write-up from Restoring Liberty on September 3.  Collect enough "very small donations" of $5 or less from constituents, and you will get a "near fully-funded campaign" courtesy of Connecticut's taxpayers.  Thus we will "get money out of politics."  Enforcement is entrusted to something called the State Elections Enforcement Commission.  What could go wrong?

Well, next thing you know the SEEC started an enforcement proceeding against 16 Republican state senators.  (Of course it's Republicans.  The Democrats control the governorship and both houses of the legislature.)  What did the evil Republicans do?

The state’s sanction against the legislative candidates was for mentioning Connecticut Gov. Dan Malloy, a Democrat, by name in mailings that referenced “Malloy’s bad policies” and “Malloy’s tax hike” for their own races in 2014, when Malloy was also on the ballot.

Well, obviously we can't have criticism of our governor or of high taxes in a political campaign!  Fourteen of the accused promptly settled.  But two -- Joe Markley and Rob Sampson -- have chosen to fight.  A hearing is scheduled for later this month.

Really, why haven't these guys thought of the idea of creating a "foundation" and collecting a few hundred mil from Wall Street banks and mid-East petro-states before the campaign officially gets under way?