Getting Specific on Spending

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Riddle:  When is profligate government spending not a crime against the American public?


Answer: When it's done in a GOP freshman's district.

Ron Nixon of The New York Times catches some alleged spending-hawks in a fine bit of hypocrisy, trying to funnel money to projects in their district, even as they decry wasteful government:

They have pushed for dozens of projects in their districts, including military programs opposed by the president, replenishing beach sand lost to erosion, a $700 million bridge in Minnesota and a harbor dredging project in Charleston, S.C. Some of their projects were once earmarks, political shorthand for pet projects penciled into spending bills, which Republicans banned when they took over the House.

An examination of spending bills, news releases and communications with federal agencies obtained under the Freedom of Information Act shows that nearly two dozen freshmen have sought money for projects that could ultimately cost billions of dollars, while calling for less spending and banning pork projects.

It's tempting to use this example to rail against the hypocrisy of the politicians involved, and please, go ahead.  But I think there's actually an important point buried in here: if you want to cut spending, you need to be against it in the specific, rather than just the aggregate.


Lots of folks want to cut spending, and when it's pointed out that this would be painful, they retort that there's plenty of money for debt service, military payrolls, Social Security, Medicare, and Medicaid, and that therefore, people like me are just scaremongering about the consequences of refusal to raise the ceiling.  I put up this graph last week, because I don't think people are really thinking this true.  They've got this big "spending" basket in their head, but they're not focusing on the line items.

US Spending Breakdown.png

Let's say that we refuse to raise the ceiling.  Does the prioritization listed above mean that we don't need to cut politically untouchable programs?


No.  Let's think through what would happen if we tried to use this plan:

  • You just cut the IRS and all the accountants at Treasury, which means that the actual revenue you have to spend is $0.
  • The nation's nuclear arsenal is no longer being watched or maintained
  • The doors of federal prisons have been thrown open, because none of the guards will work without being paid, and the vendors will not deliver food, medical supplies, electricity,etc.
  • The border control stations are entirely unmanned, so anyone who can buy a plane ticket, or stroll across the Mexican border, is entering the country.  All the illegal immigrants currently in detention are released, since we don't have the money to put them on a plane, and we cannot actually simply leave them in a cell without electricity, sanitation, or food to see what happens.
  • All of our troops stationed abroad quickly run out of electricity or fuel.  Many of them are sitting in a desert with billions worth of equipment, and no way to get themselves or their equipment back to the US.
  • Our embassies are no longer operating, which will make things difficult for foreign travellers
  • No federal emergency assistance, or help fighting things like wildfires or floods. Sorry, tornado people!  Sorry, wildfire victims!  Try to live in the northeast next time!
  • Housing projects shut down, and Section 8 vouchers are not paid. Families hit the streets.
  • The money your local school district was expecting at the October 1 commencement of the 2012 fiscal year does not materialize, making it unclear who's going to be teaching your kids without a special property tax assessment.
  • The market for guaranteed student loans plunges into chaos. Hope your kid wasn't going to college this year!
  • The mortgage market evaporates. Hope you didn't need to buy or sell a house!
  • The FDIC and the PBGC suddenly don't have a government backstop for their funds, which has all sorts of interesting implications for your bank account.
  • The TSA shuts down. Yay! But don't worry about terrorist attacks, you TSA-lovers, because air traffic control shut down too.  Hope you don't have a vacation planned in August, much less any work travel.
  • Unemployment money is no longer going to the states, which means that pretty soon, it won't be going to the unemployed people.
These are just the very immediate, very theatrical outcomes.  Obviously, over any longer term, you'd have issues from bankrupt vendors stopping work funded with federal highway money, forgone maintenance on things like levees and government buildings, and so forth.  Averting any of these things would require at least small cuts in Social Security, Medicare/Medicaid spending, or military payrolls.

Now, maybe you look forward to these outcomes.  There are certainly some on this list that I would be okay with.  But because I am not delusional, and I did not fall off of a turnip truck last night, I recognize that the American public does not agree with me, and that if any of these things happen, they will freak out and besiege their local representatives.  And as we can see from the examples in the New York Times article, when faced with demanding constituents, the new face of the GOP is not quite as steely-minded on the subject of spending as we have been told.

Nor, realistically, can they be: as I've said before, if they did hold out, the only thing that would happen is that they would be unelected in 2012.  The tea party is not a majority.  If you piss off every single other constituency in the United States, they will gang up against you, and they will win.  Welcome to representative democracy.

One of the areas where the hard-liners and I depart is that they do not consider cuts from the future baseline to be "real" spending cuts; they want absolute cuts, or at the very least, per-capita cuts.  I do not think that this is realistic--and not because I think that it would be somehow impossible to have a smaller government.  We could certainly do less, and I agree that we should.  But we cannot do it instantly.  It is not politically possible, and it is not even fiscally possible.  It would, for example, be eminently possible to have a private air-traffic control system.  But we cannot privatize the system by August 3rd.  Similarly, I think we could use a Singapore or Chilean style private accounts system to save for retirement, but we cannot arrange for today's Baby Boomers to have started saving in 1972--at least not without some fairly massive government spending on time-travel research.

Over the next ten years, the Baby Boomers are putting huge upward pressure on budgets.  Just holding the line--or even giving a minimum of ground--on spending is a huge victory for the GOP.  It would be nice if we hadn't made these promises but we have, and it is too late to simply renege on them.

Over and over I am beseiged with people saying, "So, what, are we just supposed to give in", as if convincing me of the moral righteousness of their plain will somehow produce a political coalition that can deliver what they want. But the universe is not here to please us.  Being right in some metaphysical moral sense will not make the government any smaller unless you can also deliver the votes.

The much derided baseline cuts are, unfortunately, the best hope for long-term smaller government.  Throwing away because you think you ought to be able to eliminate the Department of Education does not make sense to me on any level, moral or practical.

The failure to think specifically applies to taxation, incidentally.  I know a very large number of east coast progressives who are outraged when they suddenly discover that middle-class ol' them, who doesn't even have enough money to repair the cracks in the ceiling after property taxes and school bills and one not-very-nice vacation to Nova Scotia, are technically "the rich" for the purpose of assessing taxes.  They, too, are not thinking specifically about where the money is.  They're just thinking it would be nice for Rupert Murdoch and Bill Gates to have less stuff, while people living in housing projects have more.  But there, as with cuts to the nebulous cloud of "spending", the math doesn't work.  If you want to raise more tax revenues, stop thinking about corporate jets and the carried interest, and start thinking about eliminating the mortgage interest tax deduction for all earners, and allowing the AMT to kick in on the upper end of "middle class" incomes.  In other words, start thinking about taxing New York Times reporters, not a very small class of rich people.
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Megan McArdle is a columnist at Bloomberg View and a former senior editor at The Atlantic. Her new book is The Up Side of Down.

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