Here's to Austerity: Last Day Until Sequestration
Well, here's to "austerity." Although, I wish the cuts to government spending were significant. The CBO reported that the actual sequestration cuts amount to about $44 billion dollars, which is 1-2% of total federal spending. It's a drop in the bucket. However, according to President Obama, these cuts will layoff teachers, cause planes to fall from the sky, and "set back medical science for a generation." So, what equates to a rounding error in budgeting analysis spells certain doom for America's economic health?
Hans Bader of the Competitive Enterprise Institute wrote on February 25 that these cuts are good.
The Cato Institute describes why most of these cuts are a good thing on their own merits as well (and not just for the macroeconomic reasons we gave). For example:
- Why the Department of Defense should be downsized.
- Why unemployment benefits should be cut and the unemployment insurance system reformed.
- Why Head Start and other Department of Health and Human Services subsidy programs should be cut.
- Why subsidized loans from the Small Business Administration should be cut.
- Why federal subsidies to firefighters should be cut.
- Why community development programs at the Department of Housing and Urban Development should be cut.
- Why HUD public housing and rental subsidies should be cut.
- Why federal employee pay should be cut.
- Why the Army Corps of Engineers should be cut.
- Why federal subsidies to state and local government should be cut.
Cato’s Neal McCluskey explains why Obama’s State of the Union proposal to expand taxpayer-funded pre-Kindergarten programs makes no sense, because neither Head Start nor Early Head Start works. (Some liberals say Head Start doesn’t work because it doesn’t start early enough, but Early Head Start, which starts earlier, doesn’t work either.) Head Start has already wasted $180 billion, and Obama has increased spending on it, but it has no effect on students’ long-term achievement at all. So any cuts in Head Start due to the sequestration are long overdue.
Earlier spending cuts helped the economy. The U.S. experienced an “economic boom” after government spending was slashed in 1946, and Canada’s economy grew after it slashed government spending in the 1990s. Congress needs to cut skyrocketing welfare spending,eliminateagriculturalsubsidies, andreducewastefuleducation spending. It also can cut military spending significantlywithout harming national security.
Bader added that "It is proliferating regulations, not budget cuts, that threaten our economy...the Dodd-Frank Act has also wiped out jobs and driven other jobs overseas. Costly, harmful new employment rules have been imposed on American manufacturers. Democratic businessman Steve Wynn called Obama 'the greatest wet blanket to business and progress and job creation in my lifetime.”
Nick Gillespie also noted for Reason.TV that some of the cuts highlighted are for nonexistent programs, like the National Drug Intelligence Center, which – hypothetically – was set to see $2 million cut from of its $20 million dollar budget. The problem is that the Center was closed in June of 2012.
As George Will aptly mentioned, amongst other things, on ABC's This Week last Sunday, the spending cuts in sequestration represent half of what was spent to bailout AIG, and to say that this is a "meat cleaver approach" to the economy is laughable.