Tuesday, November 23, 2010

Living within our means: How I solved the budget (Spending Cuts, part I)

As I mentioned last post, the New York Times has a neat budget puzzle game on their website. This time we'll examine the spending cuts my phantom administration would have enacted (or, depending on the vicissitudes of fate, the cuts my future administration will enact). I will review the options in the same sections found in the NYT puzzle. Today we look at Domestic Programs and Foreign Aid. Please note that financial figures are set in the following format (savings in 2015/savings in 2030).

Domestic Programs and Foreign Aid


Cut pay of civilian federal workers by 5% (14b/17b): It's not that I hate government employees, far from it. But the federal workforce is huge and, although nobody gets rich in the civil service, the benefits and job security are competitive with or superior to that in the private sector. So I figured that while it is a bit of a hardship, ultimately this was one cut that could be endured.

Reduce the federal workforce by 10% (12b/15b): Reducing the size of the federal government is more of a polemic than anything else these days, as people don't seem to realize that shrinking the workforce will not affect how much the government does, just the speed at which it manages to accomplish it. A slower, slightly less responsive government is the cost of a smaller workforce, but ultimately I feel it is an acceptable loss.

Cut 250,000 government contractors (17b/17b): Government contractors provide a range of services, sometimes with lower cost to the tax payer, but often times at the same or even higher rates. Where the contracted work is of a particular and specialized nature with either a limited duration or fairly infrequent application, it makes sense to obtain contractors. But as a supplement or replacement for ordinary federal employees, contractors seem like a bad deal. They get the axe.


Foreign Aid (17b/17b): I elected not to cut Foreign Aid by 50%. Foreign Aid is a popular whipping boy, especially among teabaggers and the conservative press, but it is really some of our best spent money. As any basic textbook on diplomacy can tell you, power comes in two different kinds; hard and soft. Foreign Aid represents a particularly useful form of softer hard power. It is a way to reward friends, punish enemies (by its absence), induce or promote change, and remedy the effects of disasters, wars, and inhumane conditions. For a relatively minuscule portion of the federal budget, we basically purchase a stake, and there for a say, in the fate of other nations. To say nothing of providing humanitarian assistance to those in need. Especially in a post-Iraq War, where the limits of military power have been clearly demonstrated, Foreign Aid offers a cheap and persistent form of influence.

Earmarks (14b/14b): I decided to keep Earmarks, even though I believe their projected cost is inaccurate, as it fails to take into account the likely fact that they will probably cost more in 2015 and 2030 than they do now. That being said, Earmarks are another kind of federal spending that has received a lot of ill-informed criticism. While many Earmarks are poorly conceived, unnecessary, or the product of simple old fashioned corruption, painting them all with that brush is unfair. In many cases individual members of Congress are aware of a particular need in his or her district, and the Earmark represents a relatively easy method (within the context of the legislative process) to address the issue. Furthermore, Earmarks are one form of federal spending that genuinely does help stimulate local economies, and in that regard they are one of the more effective stimulus methods available to the federal government (remember that even once we are out of this period of general economic hardship, there will always be areas and regions with slower growth). While Earmarks should probably be subject to great scrutiny, and the outright boondoggles should be prevented, as a whole I find them an acceptable, and even at times useful, evil.

Eliminate Farm Subsidies (14b/14b): This was a hard cut not to make, as the majority of Farm Subsidies go to big corporations and stymie free trade by keeping US agricultural prices artificially low. With that being said, cutting the subsidies are likely to cause food prices to rise somewhat, and the burden of that increase will fall disproportionately on the poor. Thus, even though the money goes to the rich, cutting it hurts the people we are trying to protect. Additionally, while the majority of the subsidies flow to huge agricultural conglomerates, small and family farms also benefit.

Other cuts to the federal government (30b/30b): This miscellaneous option proposed cutting funding for smaller agencies, educational and research expenditures, and other ancillary government endeavors. I elected to keep them because federal funding for research, development, and education are already woefully inadequate. Reducing the money available for national parks or the Smithsonian, which are already a tiny fraction of the federal budget, will reduce the quality of services available to the public.

Cut aid to states by 5% (29b/42b): Currently many of the states are in dire fiscal straits. My home state of California usually seems to be the one making headlines in this regard, but we are hardly alone. While there is truth in the claim that the individual states did it to themselves, that is neither of much comfort, nor particularly helpful. Aid to states primarily helps fund social programs. Cutting it would disproportionately impact the poor without solving the structural issues that put the states into the red in the first place. That's punishing Peter to scold Paul.

Well, that's it. Tune in tomorrow (or whenever) for Part II of my spending cuts.

Monday, November 22, 2010

Budget Czar for the Day

The New York Times has a really interesting feature on their website right now. Called the Budget Puzzle, it puts you in the position of determining exactly how, through a mix of spending cuts and tax raises, to balance the federal budget out to the years 2015 and 2030. Although the model is no doubt incredibly simplified, it puts into stark terms our national financial realities. It is also, though this may be more an indication of a personal psychosis than anything else, sort of fun.

You can see my plan here. Tomorrow (or when I get around to it) I'll post an explanation as to why I made the spending cuts I did, leaving tax hikes for a third post. I'm sure you're waiting with baited breath.