Tag: federal spending

The Politics of Budget-Cutting

helicopterIn Washington, the symbolic almost always trumps the substantive.  Thus, legislators complain, for good reason, about pork and earmarks, which ran about $35 billion at their maximum, and ignore entitlements, which entail some $100 trillion in unfunded liabilities.

So it is with President Obama.  He continues the endless bailouts, which cumulatively now run around $13 trillion.  He proposed a $3.6 trillion budget and will leave us with a $1.4 trillion deficit next year–and nearly $5 trillion in additional debt on top of the massive deficits already projected over the coming decade.  But he asked his Cabinet officers to chop $100 million in administrative expenses.

And he says he doesn’t need a new helicopter.  Fiscal responsibility in action.

Alas, the helicopter, while costing billions, isn’t an easy budget target.

Reports the New York Times:

At a Washington conference on fiscal responsibility in February, President Obama tried to set the tone by saying he did not need the new costly presidential helicopters that had been ordered by the Bush administration.

“The helicopter I have now seems perfectly adequate to me,” he said to laughter. On a more serious note, he added, “I think it is an example of the procurement process gone amok. And we’re going to have to fix it.”

But the president is learning that in the world of defense contracting, frugality can be expensive. Some lawmakers and military experts warn that his effort to avoid wasting billions of dollars could end up doing just that.

The administration’s plan to halt the $13 billion helicopter program, announced this month, will leave the government with little to show for the $3.2 billion it has spent since the Bush administration set out to create a futuristic craft that could fend off terrorist attacks and resist the electromagnetic effects of a nuclear blast.

Critics say the Pentagon would also spend at least $200 million in termination fees and perhaps hundreds of millions to extend the life of today’s aging fleet. As a result, several influential lawmakers and defense analysts are now calling for a compromise that would salvage a simpler version of the helicopter that is already being tested.

They say it could be a more palatable alternative in tough economic times than seeking new bids for a more advanced craft, which has proved difficult to develop.

No wonder Washington is known as a place where everything about government is permanent.  Once you start spending money on a program, it becomes extremely hard to stop.  Part of that is the political dynamic of interest groups, the problem so well dissected by the Public Choice economists.  And part of it is legal and procedural.  Contracts are let, cancellation fees are due.  It’s bad to waste money on a gold-plated helicopter.  It seems even worse to waste money developing a gold-plated helicopter, and then getting nothing at all by canceling it.

There is, however, an amazingly simple solution, of which Congress and the president apparently are not aware.

Don’t spend the money in the first place.  Eschew new programs.  Say no to special interests.  Let taxpayers keep more of their own money.

This approach would seem to make sense at any time.  But especially today, with the federal government facing a deficit approaching $2 trillion in 2009.

Didn’t Nancy Reagan lecture us to “just say no”?  We should invite her back for a return tour of Washington, only she should talk about federal spending this time.

New at Cato, Tax Day Edition

tax-dayHere are a couple of dishes Cato Institute scholars cooked up for Tax Day:

  • Writing for National Review Online, Chris Edwards warns against the dangers of rapidly increasing government spending:

    When filling out your tax forms, you might want to think for a second about where all that money is going. After federal spending roughly doubled in the Bush years, it is growing by leaps and bounds under President Obama. What’s more, the federal government is increasing the scope of its activities — it is intervening in many areas that used to be left to state and local governments, businesses, charities, and individuals.

    There are now a staggering 1,804 subsidy programs in the federal budget. Hundreds of programs were added this decade, and the recent stimulus bill added even more. The result is that we are in the midst of the largest federal gold rush at taxpayer expense since the 1960s.

  • At Townhall, Dan Mitchell rails against the current tax code:

    Beginning as a simple two-page form in 1913, the internal revenue code has morphed into a complex nightmare that simultaneously hinders compliance by honest people and rewards cheating by Washington insiders and other dishonest people.

    But that is just the tip of the iceberg. The tax code also penalizes economic growth, distorts taxpayer behavior, undermines American competitiveness, invites corruption and promotes inefficiency.

  • At CNSNews.com, Edwards argues that policymakers should give Americans the low and simple tax code that they deserve.
  • Also, don’t miss the new Cato video that reveals how troubling the American tax system really is.

Stop the War, Stop the Spending

One of the great things about Ron Paul’s presidential campaign was its cross-ideological appeal. Libertarians, free-market conservatives, and antiwar young people all found his candidacy appealing. As someone who has despaired for years about the split between free-marketers and civil libertarians, who ought to be part of the same broad freedom movement, I looked forward to seeing that combination continue. So here’s a suggestion.

President Obama’s frightening tax-spend-and-take-over-private-businesses policies are re-energizing a free-enterprise constituency that had been depressed and dispirited by the reality of a Republican government giving us bigger, more expensive government for eight years. Cato’s full-page newspaper ads against the “stimulus” bill generated much enthusiasm and media discussion. CNBC’s Rick Santelli and South Carolina governor Mark Sanford have become folk heroes for speaking out against Obama’s economic policies. Now there are anti-tax “tea parties” planned in more than 300 cities. The growing resistance to Obama’s spending agenda is encouraging.

But meanwhile, where’s the antiwar movement? President Obama rose to power on the basis of his early opposition to the Iraq war and his promise to end it. Now he has doubled down on the war in Afghanistan and has promised to keep the war in Iraq going for another 19 months, after which we will have 50,000 American troops in Iraq for as far as the eye can see. If McCain had proposed this sort of minor tweaking of the Bush policy, I think we’d see antiwar rallies in 300 cities. Calling the antiwar movement!

So here’s my suggestion. Some libertarian group – which may or may exist already; the Internet makes it amazingly easy to organize a new group at a moment’s notice – should start a campaign to unite the antitax and antiwar constituencies with a simple message:

Stop the War, Stop the Spending

Or maybe it should be “Stop the Wars, Stop the Spending.” But it would pick up on Ron Paul’s appeal with his TV ads in which he said, “I’m the only presidential candidate who’ll bring our troops home from Iraq immediately and stop wasteful government spending.” Millions of Americans are tired of the war and worried about soaring federal spending. Somebody should give them a rallying point.

So Much for the Promise of Financial Transparency

President Barack Obama promised transparency and accountability for how the federal government spends the trillions – or is it quadrillions (I’ve lost count)? – in bail-out money, stimulus outlays, and expanded government programs.  Alas, his administration doesn’t seem interested in living up to his promises.

Reports ABC News:

The watchdog for the Troubled Asset Relief Program, the government’s financial rescue plan, said today that the Treasury Department has not been cooperating with oversight efforts up to this point.

“We do not seem to be a priority for the Treasury Department,” the Congressional Oversight Panel’s Elizabeth Warren told a Senate Finance Committee hearing today.

“We have sent letters. We have requested that there be someone named so that we can get technical information. And so far, we have not been a first priority,” Warren said. “We use what you give us, and we will exercise the leverage given to us by Congress. In part, that’s why I’m here today. I’m here to talk to you about what’s happened so far, what we have discovered so far, the inquiries that we have in mid-stream and for which we continue to await responses.”

Warren, visibly frustrated with a lack of cooperation from the administration, emphasized, “This problem starts with Treasury.”

Obviously, this isn’t the first time that a presidential commitment has gone aglimmering.  But given the extraordinary opportunity for pervasive waste, fraud, and abuse in the tsunami of new federal spending, few presidential commitments have been as important.

Science: The Final (Budget) Frontier

There are many people who think that little or no “science” will get done – at least “basic” science that has no evident, immediate, practical applications – unless the federal government pays for it. That is a dubious proposition, but it’s not what really alarms me right now. What really troubles me is that scientists, apparently, can conceive of no end to research worthy of your hard-earned dollars, and see things in Washington looking a lot friendlier to their exploring the final, spending frontier. This quote from an article in Inside Higher Ed today says it all:

Pressed by [Rep. Alan] Mollohan and others for how much money the government ought to be spending on science research and education,  [National Academy of Sciences President Ralph J.] Cicerone was clearly reluctant to throw out figures; danger loomed that he would look either greedy or unambitious in appearing to speak for the science establishment.

But he made clear that he would welcome a way of ensuring growth for federal spending on science, perhaps, he said, through a mechanism that tied spending to “the number of highly competitive proposals” agencies receive, to ensure that there is enough money to cover all research proposals that scientific peer review processes grade above a certain level.

When Mollohan asked what was the appropriate “end point” for growth in federal science funds, Cicerone said that “we are so far away from that level that it’s hard to say.”

So science can tell us a lot, but not how far we are from adequate science funding. I, however, can put it in a little perspective: In 2006 the federal government spent more than $31 billion on research at ”educational institutions.” If the funding end point is, say, Saturn, then to at least some scientists it seems we haven’t even gotten to the moon.

Get ready for scientists to blast off with your wallets anytime now.