Tuesday, March 21, 2006

Another Backyard Brawl

It's an oft-repeated challenge from liberals. To Conservatives that claim to be fiscally sound but want to keep Bush's Tax Cuts, they ask "what would you cut?" Kevin Drum issues this challenge to Andrew Sullivan yesterday:

Discretionary spending in 2005 was roughly $1 trillion. About half of that was for defense and national security, which Sullivan doesn't want to cut. That leaves $500 billion, which funds the entire rest of the federal government.

The federal deficit for 2005 was over $400 billion.

So: if you support the tax cuts, and you don't want to cut defense spending, and you want a balanced budget, you need to slice about $400 billion out of the $500 billion that's left.

These are round numbers, but you get the idea. Cutting a few agricultural subsidies and eliminating Amtrak isn't going to do the trick. Even taking an axe to social welfare programs wouldn't do it. You'd need to eliminate about 80% of the federal government outside the Defense Department. So if Sullivan wants to be taken seriously, he needs to tell us just which 80% he wants to get rid of. The FBI? Prisons? EPA? The federal courts? Housing assistance? Highways? The National Institutes of Health?

Well, Sullivan was more than prepared to answer, and not with a bunch of cookie-cutter bullshit. Instead, he went with some weapons out of the Libertarian and Economist cabinets.

my back-of-the-envelope wish-list is that I'd repeal the Medicare drug entitlement, abolish ear-marks, institute a line-item veto, pass a balanced budget amendment, means-test social security benefits, index them to prices rather than wages, extend the retirement age to 72 (and have it regularly extended as life-spans lengthen), abolish agricultural subsidies, end corporate welfare, legalize marijuana and tax it, and eliminate all tax loopholes and deductions, including the mortgage deduction, (I'd keep the charitable deduction). For good measure, I'd get rid of the NEA and the Education Department. I'm not an economist, so I do not know whether this would do the trick entirely, and I'm open to debate on any of the particulars. But you get my drift.

Sullivan also later linked to a Cato study that's pretty detailed, and as a Small Government Liberal, I can concur with many of the ideas in it. Drum responded, and in many ways entirely missed the point of Sullivan's original post. Drum, like many liberals who pretend to know the fiscal game, is na-naing the situation. He wants to sidestep everything by taking Medicare and Social Security out of the equation because right now they're not contributing to the deficit. Sullivan puts them in because he knows shortly (especially with Medicare), they certainly WILL BE. And much of the OMB and CBO estimates of deficits ten years out take into account the problems that will shortly develop from it. Drum also completely ignores the savings that would happen from downsizing the Department of Justice if Marijuana was legalized (I'm guessing that's a big ticket).

Drum wants to know why Sullivan isn't focusing fighting the current deficit and is obsessed with future ones. That's a little like wanting to know why you're not fighting the recon troops when you're focusing on the invading horde behind them. This is the first problem with liberals who want to engage in budget and fiscal talk: it's all static. They really don't want to acknowledge the problems down the road because it means only one thing: dramatically higher taxes or entitlement reform. Higher taxes confirms everyone's worst nightmares of them and entitlement reform concedes a small point of the argument to conservatives. Not that C-Plus Augustus' fans are any better, who want to completely ignore the static picture in favor of some ideal that in the future they'll be saved by a supereconomy just waiting to emerge and wipe out the deficit.

But there's another flaw in Drum's argument. The idea that we've somehow got rid of most waste. Or the idea that cutting every government program across the board (including Defense) would actually harm the performance or impact of any of these programs. The answer is it probably wouldn't. You only need to work in the federal government for a few months (or less if you're like me and in charge of actually spending the money) to see the incredulously large amount of poor resource allocation decisions. If we did an across the board cut to every discretionary spending program, including defense, we would more than eliminate the deficit. Maybe not this year, but in a few years. And if we want to talk about getting rid of the waste factories that are HUD and Education, well that'll be even better.