How lucky we are to have Barack Obama as president. He's already come up
with a revolutionary idea that escaped his predecessors : He's going to
scour the budget for ... "waste and inefficiency"! "... go line by line
through the federal budget in order to eliminate wasteful and
It's astonishing that no one has thought of this before. Who knew
programs could actually be eliminated just because they don't work and
waste taxpayers' money?
And he's making progress.
"[W]e have already identified $2 trillion in savings over the next
How will he do it? Here's an example: "Agriculture Secretary Vilsack is
saving nearly $20 million with reforms to modernize programs and
Amazing! "Modernize and streamline." It is indeed a new day.
Though he says he wants better not bigger government, Obama plans to
spend a lot more money on medical reform, education, energy, etc. He
also promises to halve the deficit by the end of his term.
(Presumptuously he says, "first term.")
This is dangerous nonsense. Obama's budget numbers are laden with
politically driven assumptions about a rosy future in which robust
economic growth pays for record-breaking government.
Unfortunately, Obama is simultaneously working hard to delay recovery by
imposing new taxes on the rich, toadying up to unions and trial lawyers,
being ambiguous about trade and threatening all sorts of "activist"
government that makes the future even more unpredictable. The new taxes
are not just the direct assault on wealthy taxpayers, but indirect
punishments, like his cap-and-trade plan for carbon emissions. His gifts
to unions go beyond the outrageous "card-check" rule to the requirement
that stimulus spending go to union workers who must be paid artificially
high Davis-Bacon wages. All this will frighten off private capital and
suffocate economic recovery.
Obama's budget also creates a $634-billion "reserve fund" for medical
reform but only $318 billion is to come from higher taxes. Where will
the rest come from? Where else? Savings squeezed out of Medicare,
Medicaid and other medical programs.
Give me a break.
It is hard to take seriously his claim that he will cut old spending to
make way for new spending and a lower deficit. As The Wall Street
Journal points out, "[T]he 2009 budget
deficit is estimated to be an eye-popping 12.7 percent of GDP, which
once again dwarfs anything we've seen in the postwar era. The White
House blueprint predicts that this will fall back down to 3.5 percent as
soon as 2012, but this is based on assumptions about Washington that
aren't going to happen."
One of the most absurd assumptions is that the new stimulus spending
will be temporary.
Higher stimulus spending in the current budget becomes the new baseline
for future budgets. Any cuts below that line will be condemned as
Every president promises to save money by eliminating waste and fraud.
But the savings never materialize.
In Washington, one person's waste is another person's pork. Every dime
spent by the federal government has well-connected advocates who swear
the money is vital to the national interest. They line up to testify.
Even if they didn't grease the palms of lobbyists and congressmen, their
cries would be hard to resist. "This program will keep this poor woman,
your constituent, alive! Would you be so cold as to deny her that?"
Congress appropriates the money, and then the permanent bureaucracy
fights forever to preserve it. After all, its very life depends on it.
It's not that people in government aren't as good or competent as those
in the private sector (though that may be true). The difference lies in
the incentives and feedback they face. Bureaucracies have little check
on what they do, no bottom line, no market prices for their "output."
What they do have is an incentive to spend all the money budgeted or
risk getting less next year.
As Milton Friedman used to say, no one spends other people's money as
carefully as he spends his own. It is absurd to think the humongous
constellation of federal bureaucracies is going to identify and root out
"waste" in any significant way. It's just not in the nature of the