Correspondence

by | March 20, 2006

WELFARE'S WELFARE
YOUR EDITORIAL BIZARRELY ASSERTS that, of the $40 billion budget reconciliation bill, "the vast majority of cuts affect the poor" ("Standard and Poor," February 20). When did student loans ($12.6 billion), spectrum receipts ($7.4 billion), Medicare ($6.4 billion), corporate pension fees ($3.6 billion), or farm subsidies ($2.7 billion) become programs for the poor? Sure, Medicaid reforms ($4.7 billion, which will reduce the program's five-year growth rate from 45.5 percent to 44 percent) count as antipoverty reforms, but that is not the "vast majority" of $40 billion. The editorial's overall argument--that antipoverty spending has been slashed--is also incorrect. Antipoverty spending leaped by 39 percent from 2001 to 2005, thanks to large increases in food stamps (71 percent), Medicaid (40 percent), and refundable earned income tax credits and child tax credit subsidies (81 percent). Overall antipoverty spending reached a record 16.3 percent of the federal budget in 2004. Perhaps the editors should read the legislation and examine antipoverty spending trends before trotting out the heartless Republican budget-cutter stereotype.

BRIAN RIEDL
Fellow
The Heritage Foundation
Washington, D.C.

THE EDITORS RESPOND
Brian Riedl's numbers are highly misleading. Overall, federal poverty spending has increased because the number of poor Americans has grown. The statistic to consult here is real per capita spending on the poor--that is, what the average poor person receives in benefits. According to a recent report by the Center on Budget and Policy Priorities, that number has increased, on average, by a mere 1.9 percent per year under Bush. Once you further adjust for spiraling health care costs, the volume of services received by the average poor person shrinks even further than this number suggests.

RECOUNT
MARTIN PERETZ IS WRONG THAT "Perot took votes away from Bush 41 in 1992 and thereby gave the election to Clinton" ("Perotists," February 27). In fact, both exit poll data and survey research concerning the 1992 election indicate that, had Perot not been in the race, his supporters would have stayed home or voted in roughly equal numbers for George H.W. Bush and Bill Clinton. Even if Perot's candidacy were more detrimental to Bush than to Clinton in a few states, his absence would not have erased Clinton's margin in the Electoral College. Assuming a commensurate Electoral College gain, for Peretz's statement to be true, roughly 65 percent of the Perot vote would have had to go to Bush in an election in which Clinton's margin over Bush was 7 percent (53.5 percent to 46. 5 percent) in the two-party vote. Such a scenario is unlikely given that strong third-party candidates tend to appear in elections in which the incumbent administration is highly unpopular.

JOHN H. MCCORMICK 
Bethesda, Maryland

SCHOOL OF LIFE
NOAM SCHEIBER'S PIECE ON THE appointment of Kevin Warsh to the Board of Governors of the Federal Reserve System was way off the mark ("Force Fed," March 6). Warsh's achievements at a relatively young age (35) should be applauded rather than treated as a point of contention. Since when did THE NEW REPUBLIC believe in age discrimination? Regarding educational background, while a Ph.D. in economics is useful for Fed Board service, it's certainly not a critical requirement. Proof of intellectual ability is. Warsh's undergraduate degree from Stanford and law degree from Harvard are excellent academic credentials. Paul Volcker didn't have a Ph.D. in economics. William McChesney Martin, the longest-serving Fed chairman in history, was a Yale graduate in English and Latin. In terms of professional experience, the nearly seven years Warsh worked at Morgan Stanley learning the ropes of corporate finance and market behavior provide skills urgently needed by this particular Fed.

MANUEL H. JOHNSON
Former Vice Chairman
Federal Reserve Board
Washington, D.C.

NOAM SCHEIBER RESPONDS:
Proof of intellectual ability may be a necessary condition for appointment to the Fed Board, but it is not a sufficient one. Sufficient conditions include lots of relevant knowledge and experience, both of which Warsh lacks. As it happens, William McChesney Martin had these in droves. Martin, after all, had been president of the New York Stock Exchange, head of the U.S. ExportImport Bank, and assistant Treasury secretary for monetary affairs before joining the Fed. Warsh had at best been a mid-ranking employee at Morgan Stanley and a midlevel White House aide. I don't doubt that Warsh is a bright, hardworking guy. But, if that qualifies someone to be a Fed governor, then millions of people are qualified.

This article appeared in the March 20 & 27, 2006 issue of the magazine. 

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