Dog bites man

by Russ Roberts on May 7, 2009

in Politics

The Washington Post headline:

Obama's Budget Knife Yields Modest Trims

Shocking, isn't it? I was so confident they'd cut a lot. The opening of the story:

President Obama has said for weeks that his staff is scouring the
federal budget, "line by line," for savings. Today, they will release
the results: a plan to trim 121 programs by $17 billion, a tiny
fraction of next year's $3.4 trillion budget.

I guess that's the only fat in the $3.4 trillion. The rest of it is just too essential.

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The Dirty Mac May 7, 2009 at 8:45 am

I trust that the "cuts" are reductions in proposed increases anyway. While one can debate the extent to which Obama et. al. were given a mandate, its clear that the demand for free money from the government is pretty much insatiable.

adyan May 7, 2009 at 9:16 am

just like obama, the budget's got abs of steel baby!

Ike May 7, 2009 at 9:45 am

It is essential.

To buying votes.

Borrow massive amounts on the backs of producers, prop up programs to benefit non-producers, and see which way the votes flow for a few years.

yet another Dave May 7, 2009 at 9:51 am

What a joke – 0.5% of the ridiculously bloated federal budget after weeks of scouring the federal budget "line by line" for savings!!!

And the report says it will be a tough sell!!?!??!?!?!!?

indiana jim May 7, 2009 at 10:21 am

"line by line", no. What they have done is more aptly characterized as "lie by lie". Cutting $17 billion sounds like a lot and it is a lot of money except in proper context. They believe that the percentage of people who will put it in the context of the $3.4 trillion budget as Russ has done is politically insignificant (especially in light the fact that, as mentioned above, much of the the $3.4 trillion minus the $17 billion will be used to "buy votes"). They may be correct in their political calculus, but Russ and Don are doing their best to change the odds in favor or American liberty by persistently putting issue by issue into rational context and posting it for all who have wit to see.

Thank you Russ and Don; thank you.

vidyohs May 7, 2009 at 10:25 am

Yawn! Same old same old.

They hand you indignation smothered in outrage sauced with contempt served up on "in your face sucka", you bear stoically with fearful patience in hopes of a magic wand change to the future.

YOU AIN'T GETTING A DIFFERENT FUTURE, suckas. You're getting what you deserve because you didn't fight hard enough to make a difference when it counted.

When being in the streets counted, when making an effort counted, when speaking back to power counted, where were the crowds that turned out for the teaparties? Sitting at home, wandering lost in the wasteland of TV, maybe?

Methinks May 7, 2009 at 10:50 am

Hey, Obama just said (and this is hot off the teleprompter): "we can no longer afford to spend like deficits don't matter and waste is not our problem."

I'm sure that since he says he's going to be all fiscally responsible and stuff that he will be! Sort of like since Bush claimed to be a supporter of free markets, he was. PRESTO.

Obama also said he's working overtime to get our economy moving again. He left out which direction he's moving it, comrades.

Morgan May 7, 2009 at 11:34 am

Total government spending (federal, state, and local) for 2009 will be $6.383 trillion according to USGovernmentSpending.com. That's:

- $21,200 per capita (assuming 300 million people).

- $45,305 per employed person (based on CPS estimate of total employment of 140,887,000).

- $56,156 per full-time worker (based on CPS estimate of 113,665,000 full-time workers).

- $56,204 per household (based on US Census projected 113,568,000 households in 2009).

- 44.66% of projected GDP of 14.297 trillion.

I believe we have reached the point at which government entities in the U.S. spend more, per capita, on both PPP and exchange-rate bases, than government entities in any other country in the world.

Are there any Americans left?

SarcasticA$$ May 7, 2009 at 12:16 pm

Sarcasm and ridicule is on:

But he is trying his best…Obama was left with so many problems, nothing could be his doing. Did I say he is trying?

Tim May 7, 2009 at 12:24 pm

My favorite item in the WSJ story was the Department of Education's Columbus Grants with a budget of $1 million a year and 80% overhead. Evidently cutting that may entail significant backlash – I wonder from whom?

Combine that with the last two sentences in the piece, "About 40% of the programs Mr. Obama has targeted for elimination or consolidation come directly off a similar list proposed by Mr. Bush over the past two budget seasons on Capitol Hill. Congress largely ignored those proposed cuts."

Rich Berger May 7, 2009 at 12:58 pm

How can someone (at the WaPo) write these stories without laughing hysterically?

Honestly, you have to disable your sense of humor to report this stuff.

Greg Ransom May 7, 2009 at 12:59 pm

"essential" — essential for re-election, you mean.

This guy is bought and paid for — and his voters are bought and paid for in return. Using my money.

"The rest of it just too essential."

indiana jim May 7, 2009 at 1:59 pm

Obama quote: "But these savings, large and small, add up." He said of the $17 billion total in projected savings, "Even by Washington standards, that should be considered real money."

Again, $17 billion is a large amount of money ignoring context. This is obviously the planned spin: keep saying "Obama cut $17 billion" over and over again, and LOUDER and L O U D E R until . . . (wait for it) . . . the $3.4 trillion total gets lost in the commotion over the debates about the $17 billion.

Forget the $17 billion, FORGETABOUTIT!

The $3.4 trillion is the number that, going forward, is relevant.

Methinks May 7, 2009 at 2:05 pm

Obama quote: "But these savings, large and small, add up."

Yep. Know what adds up faster? Trillions of dollars. It's a math thing. The teachers who voted for Obama are working overtime to make sure none of their students will graduate knowing enough math to figure that out. Oh no, not on THEIR watch.

indiana jim May 7, 2009 at 2:29 pm

Obama quote: "We can no longer afford to leave the hard choices for the next budget, the next administration — or the next generation."

No, no, no, "he" (not "we"; I don't like him speaking for me, do you?) cannot risk letting future generations have the liberty to make their own choices about housing, banking, health care, and automobiles. No, no, no, "he" wants to decide for them NOW, because there is a risk that the "next generation" might not choose: banks that empathize with borrowers with bad credit; "universal" health care that you literally die waiting for; and automobiles that sacrifice safety for the false promise of a cooler planet. No, no, no; let Obama and his crew make all these choices and more for the next generation. They can't vote, so what the hell.

mjh May 7, 2009 at 2:38 pm

One of the things I do as a volunteer at my church is called "Money Map Coaching". It's a ministry in which I, and other volunteer coaches, look at the details of participants finances. Most of the time the people who come for this service are in dire financial straights and need some help trying to figure out how to get out of the problem that they're in.

It's usually not a very complicated thing to solve. Income – Spending >= 0. Not that difficult. But it is *amazing* to me how many people think that they simply *must* have premium cable TV services, and can't find any other place to cut their spending. Or their unwillingness to sell a valuable car to pay off the loan and recover a lot of income. Then either share transportation in their spouses car, buy an inexpensive used car, or take public transportation. I am frequently set back by the things to which spendthrifts will say, "Oh, I can't cut that".

It would appear that this is a universal problem that does not get solved by being elected.

Mark T May 7, 2009 at 2:40 pm

There is a federal website called"expectmore.gov" that OMB runs to tell us whether federal govt programs are effective. Here is what it says:

Number of Programs Assessed 1,015
Effective 193
Moderately Effective 326
Adequate 297
Ineffective 26
Results Not Demonstrated 173

Note that it doesn't say "cost-effective".

K Ackermann May 7, 2009 at 2:42 pm

Has anyone noticed we are escalating in the Mid East?

Isn't their some axiom about never starting a land war in Asia?

Cheers May 7, 2009 at 2:43 pm

I wonder what would happen if my response to the present economic situation was to request a budget increase of 16%, then reduce it by 0.5%, present it to the board and describe it as absolutely essential after being scoured line by line, and treat it as some momentous victory.

No wait, I don't. I know exactly what would happen. I would be dragged in, along with a copy of the budget, and told to justify dollar for dollar, line for line exactly what the expected outcomes for each investment were, and what method I used to come to those conclusions. Then, if I wasn't able to answer each question with a high degree of accuracy, I would then be dragged through all of the spending that continued from previous years and justify that.

Yea, free market's got it all wrong. Government's where it's at. /sarcasm

K Ackermann May 7, 2009 at 2:43 pm

Stupid me. That's what I get for blogging after a 16-hour shift.

TrUmPiT May 7, 2009 at 3:01 pm

I think the cuts made were token cuts to appease libertarians and other right-wingers. Throw the dog a bone kind of thing. Deficit spending is sometimes the way to go during a depression according to some Keynesian thinkers. Indeed, it might be contradictory and counter-productive to reduce government spending, wasteful or otherwise, and at the same time pass a stimulus package funded by more borrowing. Politics is a matter of appearances as much as anything else, and to cut nothing from the budget would gift fuel to the Right. Mustn't do that; that would be a free lunch to munch for conservatives to make political hay out of.

Andrew_M_Garland May 7, 2009 at 3:48 pm

Here is a link that adds some scale to the numbers. Show it to anyone who doesn't have a feel for the enormous quantities involved.

This graphic at PageTutor.com shows
what the current National Debt of $11 trillion would look like stacked in $100 bills
. $11 trillion is $11,000 billion, or $11,000,000 million.

Government spending for 2010 will be about $3.5 trillion ($3,500 billion). That is about one-third of that $11 trillion graphic. Obama has asked his administration to find $100 million in savings within that one-third of the pile. That is one cube within the graphic, a single shipping pallet stacked with $100 bills.

$17 Billion is 170 of the small cubes, about 3 1/2 LINES of cubes from the front of the structure, which is 50 cubes wide and 100 cubes deep.

Notice the figure of a man in the lower-left corner, which gives the graphic some scale. Here is a link to the entire presentation

indiana jim May 7, 2009 at 3:57 pm

Ackermann wrote: "That's what I get for blogging after a 16-hour shift."

Perfectly understandable; no problemo. (How's that for courtesy?)

:>)

diz May 7, 2009 at 4:06 pm

I guess this marks the end of Democrats blaming Bush for irresponsible spending.

They had the chance to undo everything Bush spent on and essentially found nothing that wasn't worth doing. Just more spending to do.

Methinks May 7, 2009 at 4:35 pm

I guess this marks the end of Democrats blaming Bush for irresponsible spending.

Comedy!

In his seemingly hourly press conferences, Obama never fails to remind us that he inherited this deficit despite the fact that he outspent Bush within 60 days of his inauguration. It's only "Irresponsible spending" when the other party is doing it. Of course, Bush had a Democrat congress passing all of his porkulus plans.

indiana jim May 7, 2009 at 5:23 pm

Methinks,

If Obama's Bills are "porkulus", the owing to their miniature size Bush's are only "pigletus". We liberty lovers thought we had is bad under W, but now that Obama supersized pigletus into porkulus, we might pine for the "good ole days".

Methinks May 7, 2009 at 5:40 pm

Indeed, IJ. Be careful what you wish for, eh?

Ike May 7, 2009 at 6:07 pm

Guys… I'll say it again, and maybe it will stick:

Keynesian stimulus spending is like prescribing leeches to a hemophiliac.

Lee Kelly May 7, 2009 at 6:14 pm

Mark T,

Of course it doesn't say "cost-effective", because without real prices its impossible to test whether anything is really cost-effective.

Dr. T May 7, 2009 at 7:33 pm

TrUmPiT said: "I think the cuts made were token cuts to appease libertarians and other right-wingers."

Please do not call Libertarians right-wingers. We do not support most of the items on the Republican Party platform. It has been decades since Republicans actively supported small government, personal liberties, and federalism. Republicans and libertarians have few areas of overlap.

Andrew_M_Garland May 7, 2009 at 9:21 pm

(This is a re-post to display the provided links)

This graphic at PageTutor.com shows
what the current National Debt of $11 trillion would look like stacked in $100 bills
. $11 trillion is $11,000 billion, or $11,000,000 million.

Notice the figure of a man in the lower-left corner, which gives the graphic some scale. Here is a link to the entire presentation

Andrew_M_Garland May 7, 2009 at 9:23 pm

Sorry, the links in my original post seem to be OK. But, they only showed up (to me) after I did the repost.

GIl May 8, 2009 at 2:03 am

Sure you can be call a right-winger. Not all righties support Republicans just as not all lefties support Democrats. After all, Left-Libertarians are primarily concerned as to the legality of drugs.

Randy May 8, 2009 at 5:00 am

Great post, Morgan. When I think of it in terms of the effect on my family, I just focus on that 44.66% of GDP. I figure that's the percentage of what I earn that the government takes, one way or another. That is, much of what I pay in taxes is in the form of hidden sales taxes. So, are the "services" I receive from government worth 45% of what I earn? Ha. Not even close. 10% maybe.

SaulOhio May 8, 2009 at 6:51 am

$3.4 trillion minus $17 billion is still $3.4 trillion.

Michael Smith May 8, 2009 at 6:56 am

The looter-in-Chief Obama and his power-lusting administration obviously think the American people are really, REALLY STUPID if it believes we will fall for this alleged "budget cutting" effort or be impressed by the recent boast that Obama will "cut the deficit in half".

We can only hope that enough Americans are awake to deliver a serious knee-capping to this gang of thieves in the mid-term elections. Otherwise, our goose is cooked. We can't survive four full years of this level of looting and destruction.

gappy May 8, 2009 at 8:32 am

This is one of increasingly many posts by Russ and Don about . I am not objecting to their message, but their economic content is often nil. Their goal is not to make you indignant, not to challenge you with concepts from public policy, catallaxis, or whatnot. The replies usually are raucous and have no content whatsoever. Nothing wrong with it, but then the moderators should be aware that they are catering to the angry mob. They shouldn't object to foul language and the endless, pointless diatribes between Muirgeo and the rest of the world. I would happier with a sparser Cafe Hayek, but with longer, more thoughtful posts.

indiana jim May 8, 2009 at 8:42 am

Michael,

Yes I hope for the same thing that the American people will await from what the public choice people call "rational ignorance" and cast vote that toss the Obama-enablers out of the Congress. It would be a great day for liberty if the likes of Reid and Specter were ousted. BTW, consider my characterization of Arlen:

Specter is to Pennsylvania as Dracula was to Transylvania: A cunning ancient menace seducing the locals and roaming abroad to exploit those beyond his borders of the resources to sustain his crumbling empire.

Voila: Count Arlen (Dracula) Specter

indiana jim May 8, 2009 at 8:53 am

gappy,

Damn right I'm angry (my liberty is more at risk now than it has been in my 53 years as an American), but I'd be angrier if I did not have a constructive way to channel it. I post frequently here, often with economic insights and references, sometime with sarcasm, sometimes just for fun, sometimes to thank Don and Russ, sometimes to engage disagree with grumpy gappy that this is an "angry mob". On the contrary sir we are patriot. BTW, since you like content, do you know that George Washington's army drank rum in tremendous quantities; thank God they were an angry and "fired up" bunch, don't you agree?

indiana jim May 8, 2009 at 10:06 am

Sorry about the typos above: my comparative advantage is not in typing. (gappy: there is content in this apology, i.e., "comparative advantage".)

:>)

dsm May 8, 2009 at 10:20 am

The way I've blogged about this is to just normalize the numbers around the figure being cut. This puts it in a perspective that normal people understand:

Budget:      $3,400
Prj Deficit: $1,380
Budget Cuts:    $17

* All figures in $1,000,000,000

That tells you everything you need to know without the irrelevant marketing that the word "billions" provides the administration.

vidyohs May 8, 2009 at 10:34 am

Gappy,

In a world where some sick people dreamed up socialism long ago, how does one talk about economics, markets, labor, or trade and not talk about politics in the same breath?

It's all politics.

Reach Upward May 8, 2009 at 11:44 am

Yes, and the current administration is cutting almost everyone's taxes, too. (Just don't look down the road too far or you'll see open and broad tax increases — "sacrifice" — and hidden tax increases in the form of inflation.)

It makes this administration appear conservative in comparison to the likes of Rep. Tom DeLay (R-TX) who was reported in the 9/14/05 edition of the Washington Post to have said that there is simply no more fat to be cut from the federal budget.

Uncontrolled power and unbridled spending is one of the truly bipartisan things about national politics.

indiana jim May 8, 2009 at 12:33 pm

Reach Upward wrote:"Uncontrolled power and unbridled spending is one of the truly bipartisan things about national politics."

Yes, but, as Deirdre McCloskey keeps making clear, SIZE matters. The Reps. we now see are pikers in comparison to the Dems.

That is the Reps. are less bad by an order of magnitude that is not to be glossed over they way that your post might be read.

Again, Deirdre is correct.

gappy May 8, 2009 at 1:46 pm

vidyohs and others, there is nothing wrong in being indignant against the obvious hypocrisies of the Left (although they are not the monopoly of the Left). But indignation in the long run is boring and is unpersuasive. Sometimes, reading the comments at Cafe Hayek reminds of being in a pub with friends and too much beer, ranting against the government. That's fun once in a while. But in the real-world one has to be more careful with his judgments. Is running a large deficit necessarily the worst option available? There is no consensus on that, and there are *pretty* deep arguments on both sides. As a right-wing liberal (NOT a conservative), I THINK they are a bad thing, but I base my beliefs on very provisional truths. But doubt and possibility seem unwelcome visitors here.

I think Russ is more nuanced in real life, but could not tell from many of his posts on Cafe Hayek. I just think he's more insightful at EconTalk. My point however is that there is nothing wrong in inspiring raucous comments. And there is not wrong in venting. But then, he and Don should not complain (as they occasionally do) about the tone of these same comments. In many ways, the quality of a blog is the quality of its readers.

indiana jim May 8, 2009 at 3:17 pm

gappy wrote: "Is running a large deficit necessarily the worst option available? There is no consensus on that, and there are *pretty* deep arguments on both sides."

The question you raise is too broad to answer rationally. Are deficits good or bad? It depends on many things. For one, it depends upon what the money borrowed is spent on. Historically, this nation has borrowed during wars. For example, there was a lot of borrowing during WWII; the war was won, so ex post these deficits appear to have had a positive impact upon the wealth of this nation (few will argue that we would have been better off not to defeat the Nazis).

On the other hand, borrowing to finance bailouts (ostensibly to prevent bankruptcies) only to see bankruptcies occur anyway will be judged by most to have been examples of wasteful deficits.

But the general idea that the government can make decisions that on average create more wealth than the private sector is at odds with the broad sweep of human history and US business history in particular.

If you want a good book that makes this point I recommend: "The Myth of the Robber Barons" by Burton Folson

The super-large deficits now being called for, given the proposed usages of the funds, are not easily confused with the deficits that funded WWII and are quite easily related to those that prolonged Japan's malaise and the Great Depression in the USA.

When in doubt apply Occam's razor:

http://en.wikipedia.org/wiki/Occam%27s_Razor

gappy May 8, 2009 at 3:58 pm

I heard about the book on robber barons. I am interested, since I went to a university founded by one of them.

indiana jim May 8, 2009 at 7:26 pm

gappy,

Interesting isn't it how these people who were supposedly "robber barons" were so altruistic. The myth is propogated by public school teachers who were trained primarily in public universities which are populated primarily by people whose understanding of economic history is indistinguishably close to zero.

vidyohs May 8, 2009 at 10:24 pm

"Is running a large deficit necessarily the worst option available? There is no consensus on that, and there are *pretty* deep arguments on both sides.
Posted by: gappy | May 8, 2009 1:46:14 PM"

There is no consensus on that, yep you're right.

But, wow, what a surprise!

How could there be when you have roughly half of the Congress that embraces stealing from the wealth creators. Kind of hard to get a consensus on theft when thieves debate victims.

Alex Fabijanic May 9, 2009 at 11:47 am

Smoke and mirrors business as usual – here's a debunk alongside with a good visualization:

I mean, you know how bad it is when not even Krugman is buying it

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