Audacious Theater

by Don Boudreaux on April 21, 2009

in Politics

Here’s a letter that I sent last night to U.S. News & World Report:

You report that President Obama today “challenged” his cabinet to “cut the budget by $100 million” (“Obama to Cabinet: Cut $100 Million from Budget,” April 20).  What courage.  A President who proclaims the importance of making “hard choices” calls upon his government to trim away a whopping one thirty-six-thousandth of its projected expenditures for the year – or, alternatively reckoned, one twelve-thousandth of its projected budget deficit.

To put this budget “cut” in perspective, suppose that the typical American family, earning $50,000 annually, plans this year to run a budget deficit proportionate to the deficit that Uncle Sam will run.  Such a family would plan to spend $75,000.  Now suppose that this family, seeking to signal its faux-commitment to financial prudence, promises spending cuts equal, in proportion to its budget, to the cuts announced today by Mr. Obama.

This family would declare – surely with much fanfare – that it will reduce its planned expenditures for the year by $2.08!  Perhaps it might promise to survive the year with one less gallon of gasoline or with one less cup of coffee.

Who would take such a gesture to be anything other than audaciously insulting sarcasm by the chronically irresponsible?

Sincerely,
Donald J. Boudreaux

Update: I like this breakdown to the minute by BloodyMaryBreakfast.

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{ 50 comments }

Ike April 21, 2009 at 9:32 am

Don't sniff at $2.08 –

That and five quarters will buy you a cup of latte.

Randy April 21, 2009 at 9:35 am

I noticed that too. I was wondering if he's counting on some sort of psychological effect. Like maybe somehow people will think that "3" trillion is insignificant while "100" million is significant.

Don Boudreaux April 21, 2009 at 9:40 am

That so very many politicians, regardless of party, routinely stage these insulting bits of theater is one of several reasons why I detest them. If my son ever announces to me that he's pursuing political office beyond the local level, I'd hang my head in shame — shame at him for being so unprincipled, and shame at myself for failing to instill in him any decency.

Christopher A April 21, 2009 at 9:43 am

But Don, what if your son is finally the man that can get into office and fix everything that has gone wrong with government? Surely he could be the Cincinnatus of our times? Heh, I'm sure Mencken has a quote for this. Or a few hundred.

DAVE April 21, 2009 at 9:48 am

This tells us more about the citizens of this republic than it does anything else.

That's why it's so insulting.

Lee Kelly April 21, 2009 at 9:53 am

In a more civilised world these people would be dragged onto the streets and hung.

indiana jim April 21, 2009 at 10:15 am

Don,

Maybe Obama is like Pelosi and doesn't know the difference between a million and a billion? Since 100,000,000,000 divided by 100,000,000 is obviously 1000, then in your household example, it would have the family with the $25,000 deficit cutting spending by $2,080.00. This would still not even be a 10% cut. So even if Obama, like Pelosi, can't keep billions vs. millions straight when not reading from a teleprompter, he would still be pimping the public by his fallacious proclamation of fiscal restraint.

Douglas April 21, 2009 at 10:32 am

Of course the administration knows all this full well, but it is consistent with Obamanomics thus far: the number itself doesn't matter. Who knows what a million is? A billion? A trillion? They're all just different names for big numbers, right? A hundred million will sound big to most people, so why propose a hundred billion if a hundred million sounds big enough?

This is why that mope Robert Gibbs can actually sneer and say "only in Washington would someone say a hundred million is a small number." Check it out here:
http://www.realclearpolitics.com/video/2009/04/20/ap_tapper_confront_obama_admin_over_100_million.html

Bill April 21, 2009 at 10:38 am

Greg Mankiw made a similar point in his blog yesterday
http://gregmankiw.blogspot.com/2009/04/fiscal-responsibility.html

Douglas April 21, 2009 at 10:44 am

BTW, the NYT and the Washington Post (along with thousands of fellow traveler papers) are playing nice with the $100 million. Remind me again, why someone would use a major daily or a network television broadcast as their information source?

I_am_a_lead_pencil April 21, 2009 at 10:48 am

It is like taking your kids to Toys"R"Us and buying everything in the entire store….only to scold them for picking up a pack of gum at the checkout. It is beyond absurd.

I_am_a_lead_pencil April 21, 2009 at 11:00 am

From the AP:

Yet the red ink in the annual budget is currently in the hundreds of billions. He was asked if the efficiency saving isn't just "a drop in the bucket".

"It is," he replied. "None of these things alone are going to make a difference. But cumulatively, they make an extraordinary difference because they start setting a tone … $100 million there, $100 million here — pretty soon, even here in Washington, it adds up to real money."

His own Keynesian solutions argue against the desirability of it adding up to "real money".

If it actually did (say adding up to 500 Billion in "real money") it would counteract the "stimulative efforts" of his previous spending binge. Any "savings" has to be small. He is stuck in a logical trap.

Euler April 21, 2009 at 11:02 am

I thought the Keynesian multiplier was 1.5 according to his economics team. So for every dollar of government spending he is cutting, he is actually costing America 1.5 dollars in growth. Why does Obama hate America?

muirgeo April 21, 2009 at 11:04 am

Wow it's like Fox News here. Obama pushes to cut the budget and he still gets criticizes.

Now do a fair comparison and figure out what percent of the budget for the cabinet a $100,000,000 million dollars cut represents and figure that across the whole budget of the country or of the hypothetical family you used in your misleading explanation.

And for those who care about context here it is. Pay particular attention to the last few sentences.

If all government agencies cut the equivalent of what he is asking his cabinet to cut we would see some real progress.

Bill April 21, 2009 at 11:15 am

muirgeo, … "figure out what percent of the budget for the cabinet a $100,000,000 million (SIC) dollars cut represents and figure that across the whole budget of the country" Isn't that what Don's and Greg Mankiw's calculations do?

Daniel Kuehn April 21, 2009 at 11:15 am

Ugh – I was so glad during the campaign Obama spoke seriously to McCain about how minor "waste" was as a real economic problem. Seems to be falling into that old political line himself now.

Now that I'm against cutting out waste! By all means, ferret out those $100 million! But you have the right approach, Don – it's pocket change.

As far as your family example goes – imagine the family is purchasing a $25,000 car on credit for a total of $75,000 in "spending" that year, which is paid off bit by bit each month. That's essentially what the administration's current deficit is – and when you think about it in terms of a car purchase and car payments of that magnitude, it is clearly not the "chronically irresponsible" family that you're suggesting it is analagous to at all. It's a very responsible level of borrowing – there's nothing about it that threatens our ability to pay it off.

Don and the Cafe Hayek crowd may not think the family (the U.S.) needs the car (stimulus package) in the first place. That is definitely a reasonable thing to debate. And you're also right that the $2.08 equivalent cut is a joke. But I think you're wrong to suggest that the borrowing that this charade is meant to address is itself "chronically irresponsible".

On a side note – it's funny to me that the people who point out the insignificance of these $100 million cuts are the same people that thought a couple million dollars of "pork" here and there were damning when it came to the stimulus package… more politics – oh well.

I_am_a_lead_pencil April 21, 2009 at 11:22 am

If all government agencies cut the equivalent of what he is asking his cabinet to cut we would see some real progress.

This is intellectually dishonest for two reasons.

1. Overall spending is the only meaningful point. If I tell my kids to cut back their spending and (as a percentage of their allowance) they dramatically do, what relevance is that to the family budget when my wife and I just finished maxing out all of our credit cards.

2. See my comment above regarding his logical trap. What "real progress" would you be referring to? – from the Presidents perspective.

Bob D April 21, 2009 at 11:25 am

Every journey begins with one step! However once you have gone over the cliff and are cascading towards pending impact, taking your watch off does little to lessen the brunt!

Julie April 21, 2009 at 11:37 am

What percent of the total federal budget expenditures is represented by expenditures for programs administered by the President's cabinet?

John Galt April 21, 2009 at 11:42 am

Like tightening your belt .001 inches.

I saw someone say $100,000,000 pays the interest on the national debt for two hours and eight minutes. I think Limbaugh said it would pay the interest on the stimulus for about a day. If you assume 24/7 government, this is 15 minutes' worth of spending (imagine, he needs to give his cabinet 90-days to figure out which 15 minutes not to spend). Since government is more like 40-hrs/wk than it is 24/7, a hundred million is really just 5 minutes of spending.

Not sure about that idiot who sees the cabinet as just a sample of the government. Doesn't pretty much everything roll up into the cabinet in one way or another? Asking the cabinet to cut $100M doesn't leave out much government.

This is a pathetic PR maneuver. If anyone tells you it's significant, you know you're talking to a useful idiot who voted for this clown.

mark April 21, 2009 at 12:49 pm

Unfortunately, I think the theater works. As other posters have commented on, $100 million sounds like a ton of money (it just FEELS big), while for some reason most people seem pretty numb to the billions and trillions that are thrown around.

Kevin S. April 21, 2009 at 12:53 pm

"If it actually did (say adding up to 500 Billion in "real money")"…..he would have to announce a $100 million cut more than 3 times a day until the end of his first term to add up to "real money."

Steve April 21, 2009 at 12:59 pm

The cost of rebudgeting probably exceeds $100 million. They should cut the re-budgeting process then declare victory.

$100 million saved!

yet another Dave April 21, 2009 at 1:07 pm

This is an example of something that's bugged me for a long time (kind of like promises to cut the deficit in half in 5 or 10 years). It's an insignificant percentage. Don't get me wrong – it goes in the right direction, but it's a joke even as a "good start". I see this as an attempt to distract people and fool them into thinking that the administration is fiscally responsible.

A real good start would be an across the board 25% budget cut for every single federal government entity. Then we could start looking for real budget reductions.

If they were serious about cutting spending, they could balance the federal budget in an afternoon and have time to go home early. All they need to do is reign the government back into its constitutional limits. Then they’d have so much revenue they could drastically cut taxes and still have plenty for debt payments. Unfortunately, the politics of it will never allow that to happen.

John Galt April 21, 2009 at 1:40 pm

All they need to do is reign the government back into its constitutional limits.

Presumes that these people believe the Constitution defines limits.

John Galt April 21, 2009 at 1:41 pm

All they need to do is reign the government back into its constitutional limits.

Presumes that these people believe the Constitution defines limits.

Healthy Markup April 21, 2009 at 1:51 pm

Stories like this baffle me because I can't figure out the target. Are there really that many voters who don't know that $1.0 EXP 8 is nothing to the feds? It's like the way that the minority in the senate always claims that the filibuster is as sacred as Mary's womb when they were threatening nuclear options (or whatever) when they were in the majority six days before. Who are the idiot voters who don't know this trick and why are they not outnumbered by voters who find it off-putting?

Methinks April 21, 2009 at 2:14 pm

figure out what percent of the budget for the cabinet a $100,000,000 million dollars cut represents – Muirdiot

$100,000,000 Million? I'd love to see that cut.

Yes, Randy, I think there's a psychological effect and there are pretty clearly very stupid people in this country who don't know the difference between their nostrils and a trillion. I'll just go ahead and keep "criticizes" The One.

BoscoH April 21, 2009 at 2:22 pm

@Healthy Markup, did you see George's post above. He's the target audience.

Crusader April 21, 2009 at 2:33 pm

What are the Constitutional limits of government? Can anyone define that?

Douglas April 21, 2009 at 2:53 pm

Folks, give up on the "not much but it's a start" thing. It's not a start; it's the opposite. The administration asked itself what is the minimum cut it could make to satisfy the public grumbling. It went something like "tell 'em a hundred million and the rubes will think that's something." In other words the spending cut wasn't even meant to cut–it was meant to trip up those calling for a cut.

BoscoH April 21, 2009 at 3:01 pm

There's another possibility here, and that possibility is that Obama really stepped in it this time. Perhaps we can't figure out who this is supposed to appease because it appeases basically nobody. A quick scan of Drudge shows many mainstream media outlets calling BS on this one. So maybe the letters to right aren't pointing out how meaningless this is, because that's preaching to the choir. How about pointing out the money we could save by abolishing the FDA or the Department of Energy?

Healthy Markup April 21, 2009 at 3:05 pm

BoscoH,

I just assumed those posts were the output of some highschooler's AI project. No way it was going to pass a Turing Test. Seriously, that's a real person?

Crusader,

There are no limits because they have all the guns, the central bank/counterfeiter, the courts, world-class BS artists, a domesticated population, and the best Portuguese water-dog ever.

muirgeo April 21, 2009 at 3:33 pm

Perhaps we can't figure out who this is supposed to appease because it appeases basically nobody.

Posted by: BoscoH

No it appeases rational people who understand that $100 million of maybe $10 billion is a good start.

Irrational people suffering from ODS ( Obama Derangement Syndrome). Will look at the $100 million and compare it to the entire budget and note how small it is and assume they've made a good point.

TrUmPiT April 21, 2009 at 3:35 pm

I'd like to know what program he's planning on cutting $100,000,000 out of. Wouldn't you? If it's the budget of the econ department at GMU then I'd say hurray. I imagine that quite a few of your students get federal grants to study there. The government is giving money to students to learn that the government is totally evil and must be thwarted by offshore tax havens or whatever you thing will do it in. Were federal funds used to build GMU? Frankly, you should be fired in spite of your tenured position at the university. Teaching your students to bite the hand that feeds them is the height of insolence, ingratitude, hyperbole, denigration, etc., etc. And you'd tell your own child that he'd have no decency if he became a politician beyond the dogcatcher level. I hope your children pay you only superficial heed in matters of economics and politics. I don't believe in disrespecting one's parents except in extreme cases of indoctrination or physical abuse. You fit the bill in spades. What about education tyranny of being a indecent professor with belligerent ideas about dissolving our democracy and installing a pro-rich, hayekian, corporitist, anarchistic free-for-all, social darwinian, puppet state? Yes, you should be fired and chased across the Virginia border all the way to Squeezepenny, Texas.

Randy April 21, 2009 at 3:40 pm

You could be onto something there, M. For those who believe that out of a $3 trillion dollar budget only $10 billion is wasted, I suppose that $100 million seems like a pretty substantial waste reduction effort. Personally, I figure that about $2+ trillion is wasted, so I see the $100 million as nothing but propaganda. Certainly they're not going to give it back. It will just be spent somewhere else.

Ted April 21, 2009 at 4:00 pm

TrUmPiT,

Very poetic. So you are basically advocating a system where everyone marches to the beat of the financier's drum? That's asking for corruption of the largest scale.

If you really want to make a point, cut the inflammatory language, break your argument into readable pieces (and sentences), and do a little more reading.

MnM April 21, 2009 at 4:08 pm

Ted, DNFT.

S Andrews April 21, 2009 at 4:11 pm

For the rational Muirgeo, I am moving a part of my comment from a thread posted a couple of days ago:

I "know" you "weigh" both sides of the argument. If that is the case, you must have some points of agreement with the Cafe on matters relating to economics. List a few of those. If you can't come up with it, I would have to call your bluff: I will have to conclude that you have a prejudiced mind, your mind is made up and is not open to any new ideas or thoughts. Let's take it from there.

TrUmPiT April 21, 2009 at 4:12 pm

I agree that Dr. Beaudreux should cut the inflammatory anti-politician and anti-government rhetoric. It's gotten to be over the top. No one should take him seriously, let alone respond to him. He's free to continue to post here as long as he maintains a modicum of decorum and avoids libelous, defamatory remarks. His slanderous remarks about politicians and our democracy are likely protected because he is attacking public figures and institutions. He took law classes, so he should know something about that. But I'm not so sure because he took econ classes along the way, as well, and he took the wrong lessons from them obviously

S Andrews April 21, 2009 at 4:20 pm

Trumpit is an agent of the big brother.

Methinks April 21, 2009 at 4:23 pm

I agree that Dr. Beaudreux should cut the inflammatory anti-politician and anti-government rhetoric. It's gotten to be over the top. No one should take him seriously, let alone respond to him.

Feel free to STFU anytime.

Methinks April 21, 2009 at 4:26 pm

No it appeases rational people who understand that $100 million of maybe $10 billion is a good start.

irrational people …Will look at the $100 million and compare it to the entire budget and note how small it is and assume they've made a good point.

So help me, I can't stop laughing.

Yep, BoscoH. We've found the target audience.

MnM April 21, 2009 at 4:35 pm

DNFT, please?

indiana jim April 21, 2009 at 4:55 pm

Daniel writes: "it's funny to me that the people who point out the insignificance of these $100 million cuts are the same people that thought a couple million dollars of "pork" here and there were damning when it came to the stimulus package… more politics – oh well."

Daniel I see no inconsistency here. Of course every couple million dollars of pork (money taken from citizens and wasted by government) is a cause to decry, every time. By what logic should criticism of government waste of couples of millions be above criticism? Similarly, because pork comprises so much more than the $100 m. in Obama-challenge-cuts, this too is an occasion for criticism. It is the waste by government of money taken from the citizens that is the primary, so reducing a trivial proportion of an ocean of waste (at citizens' expense) and then donning a mantel of fiscal responsibility is, of course, cause for criticism.

TrUmPiT April 21, 2009 at 4:58 pm

Ted,

If I were a poor student who was getting 1,000's of dollars in federal and state aid to attend school, and the teacher started to rant about the government as the root of all evil, I'd be quite disturbed by that.

Foxwood April 21, 2009 at 5:20 pm

Obama is counting on our public school indoctrination. After all, it's really hard to think.

S Andrews April 21, 2009 at 5:24 pm

If I were a poor student

You are

who was getting 1,000's of dollars in federal and state aid to attend school, and the teacher started to rant about the government as the root of all evil, I'd be quite disturbed by that.

Sure, freeloader. you should be looking to drop out of college and start cleaning toilets for a living. Somebody gotta do it, who better than a poor student wasting his life in college on OPM.

indiana jim April 21, 2009 at 5:25 pm

Trumpit wrote: "I agree that Dr. Beaudreux should cut the inflammatory anti-politician and anti-government rhetoric."

As Barry Goldwater put it: "I would remind you that extremism in the defense of liberty is no vice! And let me remind you also that moderation in the pursuit of justice is no virtue."

The HUGE expansion of the scale and scope of government interference with the liberty of American citizens taking place under, and being pursued by, Obama and Co. will naturally evoke a HUGE push-back by those who love liberty.

Don's posts are virtuous; your suggestions that they are "inflammatory", etc. are a thinly veiled attempt to try to stifle free speech and expression (you even raise the specter of defamation, libel, and slander; how dare you!). Have you no confidence in the force of your ideas relative to Don's? That you would stoop to defaming the vigorous defense of liberty is at best shameful.

indiana jim April 21, 2009 at 5:52 pm

Don's question remains unanswered by his detractors above:

"Who would take such a gesture to be anything other than audaciously insulting sarcasm by the chronically irresponsible?"

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