February 21, 2013

Sequester This!

Google the phrase "federal debt crisis" and you will get a slew of articles, some of which will insist there is no debt crisis and, in fact, urge the government to spend more, while other articles will warn in grave tones that the national debt threatens to swallow the country whole. Daniel Patrick Moynihan, the late, great senator from New York, cautioned that "Everyone is entitled to his own opinion, but not to his own facts." I guess a lot of the pundits and politicians in Washington still haven't gotten that memo.

So which is it? A real crisis or just another Washington clusterf*k? Probably both. Yes, Virginia, there is such a thing as too much debt. Are we there yet? Doubtful, but certainly it can't hurt to every once in  a while prune the budget, the way a nurseryman prunes a tree to encourage more fruiting. The problem is that Congress is a blunt instrument, hence the sequester, which mandates across-the-board cuts to the federal budget.

One of the difficulties in understanding all this is that you can't analogize federal debt to state debt or household debt. When we, the people, run out of money, we cut back on whatever we choose. Federal agencies can't do that. They receive their marching orders from Congress in the form of laws. Ignoring those laws is, well, against the law. As for state budgets, the myth of state balanced budgets is just that, a myth. But that's another story.

Think of the federal budget this way. The president of the National Sheep Dip Association convinces a friendly congressman from Montana to slip a small provision into the USDA's appropriation bill that will order USDA to spend $100,000 a year to promote research into beneficial uses of sheep dip and to report their findings once a year to Congress. Henceforth and forever more, USDA is stuck with that item in its budget until it can convince Congress to drop it. The federal budget is the net result of tens of thousands of such congressional actions, big and small, over many decades.

So the budget grows piece by piece until it is out of control. Unwinding all those individual choices made over so many decades is not easily done. Just finding them all is a daunting task. And once it gets wind of an attempt to cut research on sheep dip, The National Sheep Dip Association will fight that measure tooth and nail, as will every other institution or business that benefits from a given slice of the budget pie.

The only way Congress can cut the budget without the inconvenience of actually having to make choices is to shrink the whole pie. But this has its own consequences.

When a business is faced with declining profits, they can eliminate the least profitable lines and let those workers go. In the federal government, programs are rarely eliminated, so staffing must be maintained, which means keeping everyone but cutting their hours. That's why furlough is everyone's new favorite buzzword.

A furlough falls equally on good workers and poor workers, useful activities and wasteful pork barrel projects. Everything gets cut back, but nothing ever gets eliminated. Federal workers end up doing more with less, and as their reward, they get to be vilified as worthless drones who couldn't get a job in the real world. Hello bitter, party of one. Your table is ready.

As has been noted many times before, until Congress is willing to cut defense spending and re-size entitlements such as Social Security and Medicare, the federal debt will not be significantly reduced. Only when that happens will you see change you can believe in. But in truth, there is not a working majority in Washington willing to make that happen. So the goal becomes finding a way to kick the can down the road while making the other guy give up more. As has also been noted in this space many times before, it's a hell of way to run a railroad.

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