Downsizing Blog

Voters who recognize the need to make major cuts to federal spending and think returning Republicans to power will accomplish this feat could be in for a big disappointment. Recent comments to the Washington Post made by former Senate majority leader Trent Lott (R-MS) make it clear that anti-spending candidates elected in November will be fighting against their own party – not just the Democrats. 

The following chart show federal spending over the past decade on a per-household basis, adjusted for inflation:

The economy remains weak and the administration’s stimulus has been a bust. To counter the growing unpopularity of his economic policies, the president is traveling around the country handing out government checks to anointed industries.

The Council of Economic Advisors’ latest analysis of the $862 billion stimulus bill figures that it created 2.5 to 3.6 million jobs. How good is this estimate? The same CEA told us that the stimulus bill would keep the unemployment rate below 8 percent. Almost a year and a half later unemployment is still above 9 percent. 

The Department of Housing and Urban Development is pushing legislation that would enable public housing projects to access private financing. Due to limits on how much of a tenant’s income can be used for rent, public housing authorities have been reliant on billions of dollars in annual federal operating and capital subsidies.

A recent paper by Veronique de Rugy examines how policymakers use various budgeting gimmicks to increase spending and obscure liabilities. One particularly abusive mechanism is the designation of supplemental spending as an “emergency.” The emergency designation makes it easier for policymakers to skirt budgetary rules, particularly “pay-as-you-go” (PAYGO) requirements.   

Republicans on the Senate Appropriations Committee have announced support for caps on the discretionary spending portion of the federal budget. According to press reports, discretionary spending under the cap for fiscal year 2011 would be approximately $20 billion less than what the president has proposed.

U.S. Postal Service management has repeatedly told Congress that it needs greater labor flexibility to reduce costs. Despite increased automation and workforce reductions, labor continues to account for 80 percent of the USPS’s cost structure.

Paul Krugman is dismissing concerns that the Obama administration’s fiscal and regulatory policies are fostering uncertainty in the business community, and thus inhibiting job growth and an economic recovery.

The Low-Income Home Energy Assistance program provides $5 billion annually to the states, which distribute the funds to businesses, nonprofits, and homeowners. Unfortunately, the states do a poor job making sure the money isn’t lost to fraud and abuse.