President Obama is proposing to give the states another $50 billion. However, that would amount to another bailout for state and local government employees and their unions. The president claims that more deficit spending is necessary to sustain the nascent economic recovery. But the only thing the money would sustain is the excessive wages and benefits government employees enjoy at the expense of the private sector.
President Obama has instructed federal agencies to come up with spending cuts equal to five percent of their discretionary budgets for fiscal year 2012. The 2012 fiscal year doesn’t begin until October 2011. Why wait ?
We argued in October that “regime uncertainty” was stifling the economy’s ability to recover. Businesses are more reluctant to invest or hire when Washington pursues a policy agenda that could be detrimental to their bottom lines. The phrase was coined by economist Robert Higgs who observed that FDR’s anti-business policies prolonged the Great Depression.
In the mid-1990s, Amtrak president Thomas Downs claimed that the perpetually taxpayer-dependent railroad was “on a glide path to profitability.” In reality, Amtrak was on a glide path to bankruptcy without continuing taxpayer subsidies.
Analysts across the ideological spectrum generally agree that the government’s regulatory bodies fail far too frequently. However, analysts seem to learn different lessons from this experience.
Paul Light, an expert on the federal bureaucracy, has written a thoughtful essay
in the Wall Street Journal
that examines several cost-cutting efforts the government should undertake. Light suggests saving hundreds of billions of dollars by trimming managerial fat, eliminating positions through attrition, and making government employees more productive. He also suggests eliminating duplicative functions and unproductive programs such as agriculture subsidies
Republican Whip Eric Cantor unveiled the GOP’s “YouCut” website
last week, which includes five possible spending cuts for citizens to vote on. The “winner” is then brought to the House floor for a vote. Although enlisting citizens to help Congress start cutting the bloated government is a good idea, the GOP’s cutting choices last week only amounted to 0.017 percent
from the $3.7 trillion federal budget.
In a slap to taxpayers present and future, the Senate recently voted down Sen. John McCain’s amendment to the financial reform bill passed yesterday that would have capped the cost of the Fannie Mae and Freddie Mac bailout. It would also have put them in the federal budget
in the near term and then wound down their operations. All Republicans voted for it, while all Democrats except Senators Russ Feingold (WI) and Evan Bayh (IN) voted against it.
A Cato essay on special-interest spending explains how many federal programs deliver subsidies to particular groups of individuals and businesses while harming taxpayers and damaging the overall economy. A major reason why spending has spun out of control in Washington is that thousands of special interest groups have secured a slice of the spending pie, and they fight tooth and nail to make sure policymakers keep baking.
In a Washington Post article on the U.S. Postal Service’s continuing problems, Ed O’Keefe calls the USPS “a quasi-government agency enshrined in the Constitution but required by law to act like a business.”
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