A Thousand Cuts

October 1, 2010

That’s the title of a recent paper from the liberal Center for American Progress, which attempts to demonstrate “what reducing the federal budget deficit through large spending cuts could really look like.” 

The authors, Michael Ettlinger and Michael Linden, issue a challenge that I whole-heartedly embrace: 

By showing sets of specific spending cuts we hope to deepen the discussion of where deficit reduction is going to come from. The challenge we issue is this: If you think all or most of the deficit problem should be dealt with on the spending side, are you then willing to own the cuts we outline? If not, then it’s time to go public with what your cuts are, with at least the same level of precision we do—no gimmicks, “sunsets,” or other games. No infomercial claims that you’ve got a magic elixir that gets the same results for half the money. 
My colleague Chris Edwards anticipated this challenge with his 2005 book Downsizing the Federal Government. The book led to the creation of Cato’s Downsizing Government website, which is going department by department to outline specific – and substantial – spending cut recommendations.
The CAP authors lay out specific spending cuts of $255 billion in fiscal year 2015, which is the projected figure necessary to achieve a balanced “primary budget” in that year. (The primary budget is total spending minus outlays for servicing the federal debt). The White House’s most recent projections show “primary” spending of $3.8 trillion in FY2015, so we’re talking about an overall reduction of about 7 percent.
Ettlinger and Linden acknowledge that their proposed spending cuts will invite criticism. For instance, the authors only conjure up $57 billion in spending cuts from “entitlement” programs, which are the chief drivers of our unsustainable fiscal direction. More than 40 percent of the cuts come from defense. While many conservatives will have a problem with defense cuts, it’s definitely something Cato supports. In fact, the proposed cuts match up well with defense cuts proposed in a new policy analysis written by my colleagues Ben Friedman and Chris Preble.
Where we part ways with the authors of the paper is the presumption that “most spending cuts are painful, and in some ways, harmful.” There are two sides to the spending coin. As the Downsizing website repeatedly demonstrates, government spending not only inflicts pain on those who are forced to pay for it, but it also has harmful effects on the economy and even those that it purportedly helps.  
Ettlinger and Linden also make a claim that is both subjective and obvious: “The truth is that, contrary to popular wisdom, most federal government dollars go to good and popular things.”
Even if one accepts, for the sake of argument, that most federal spending goes to “good things,” there’s still the tiny little question of whether the government should undertake the spending. What about the possibility – we’d say reality – that there are superior private and voluntary alternatives to the federal government assuming responsibility for doing “good things”?
From a moral perspective, it’s important to remember that everything “good” the government does necessarily comes with a “bad” given that government forcibly takes from one to give to another.
The authors claim that federal dollars go to “popular things.” Of course, subsidies are always popular with the recipients. Farm subsidies are popular with farmers, weapons programs are popular with defense contractors, and subsidized student loans are popular with students. As Frederic Bastiat so succinctly put it, “The state is the great fictitious entity by which everyone seeks to live at the expense of everyone else.”
Regardless, Ettlinger and Linden deserve credit for moving the ball in the direction of a serious debate on which government programs can be cut. As they correctly note, the position that all we need is “just a little belt-tightening and reductions in wasteful government spending” is “nonsense.”


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