Bloggy Bits

Tired of the Doublespeak of "Cutting the Deficit"

Aug 19, 2012   [permalink]

When I hear Republicans talk about "Cutting the Deficit" and look into what they really mean by that, it appears (to me, as an independent voter) that they mean "Delete government programs that don't fit our Republican political platform." (The Democrats do this to some extent too, but not as much.)

That is, it's not the deficit per se they appear to be worried about. Rather, they're twisting the catch-phrase, "cut the deficit" to be about something other than fiscal policy, presumably because they think the phrase will trick people who are concerned about fiscal policy into going along with them.

They also often use the "If this were a household budget" analogy... which, well, doesn't match up. A household budget doesn't operate in the same global economic web of interconnected economies, it doesn't have to pay for all the "common good" functions that the government provides (including defense, social safety net programs, etc.), and, perhaps most importantly, a household doesn't have the ability to print additional money — whereas all sovereign governments do, and thus the US government has to coordinate and respond to what other governments do. (Which includes using the power to print money — which, over time, reduces the value of the debt held by others; other countries are and will do this too.)

So, all in all, the "household budget" analogy is a false one at a major level. It is, again, employed seemingly as a trick to get people to go along with "cutting the budget", i.e., taking money away from the projects they don't like.

If, indeed, one was serious about trimming the US budget for the actual sake of trimming the budget, and not as doublespeak for "cutting the programs we don't like while leaving alone the ones we do," then one would seek to spread the cuts more or less evenly across the board.

If you think of the budget as a list of items with costs, then the cuts would be Horizontal rather than Vertical, as it were. That is, one would seek to improve the efficiency and reduce the waste/corruption within the existing programs, without making them less effective.

It seems to me that most projects have a certain amount of fat in them, at the level of the small contracts. In other words, bids to manufacture specific missile parts, or to paint the stripes on a given mile of highway, all those little line items that together make up the big dollar budgets, all have some inefficiency in them: They might not go to the best bidder (but perhaps to friends who donated campaign funding and bid the project higher).

I know in our neighborhood, just as a concrete example of what I'm talking about, we have a park that is maintained by a park & rec. district. Said district has money problems, and wouldn't paint the bathroom structure in our park. We said we'd share the cost, just to get it done. They agreed. They then said the cost was $X. We looked at the cost and said, "Really? That seems high. We had some similar painting done and it only cost 1/2 X." They said, "If you can get a lower bid, that's great." So — we did. We found a contractor who did the exact same work for half the cost.

If the park & rec district — and governments in general — put that extra bit of effort into finding unbiased bids (not from cozy friends, or "people we've used in the past" who up the costs knowing they can expect repeat business), then we could trim a good chunk of money from the federal budget, without cutting any services.

We could provide all the same common-good services and projects, just at a lower cost.

That's assuming the "cut the budget" people really were serious about the budget cutting aspect, instead of the political aspect. Sadly, that isn't so.

What I'm suggesting would bring market forces to bear on the problem (more competitive bidding from truly neutral bidders), and remove what is now an impediment to market forces. (I.e., not getting enough truly competitive bids.) To be clear, I'm not talking about "pork" projects per se. That's a vertical type of problem. I'm saying, you can't award projects to friends who bid a bit higher than others. Get more real bids. You might find a company out there doing good work who's more efficient and able to take a lower profit.

This does mean less money flows to businesses, i.e., some company has to do the work for less money than they might have earned if they could get a padded, less efficient bid. Assuming one holds them accountable for doing a quality job of it (multi-year warranties and such), then it likely means the profit margin is lower. Not that there isn't profit, but that it's a lower margin. (This is thus a net reduction in transfer of money to the wealthy.)

Okay, I won't put that in parentheses: More efficient contracts, thus lower profit margins, means less money goes into the pockets of the wealthy. The same job gets done, but the rich don't get as much richer. They get a little richer (because nobody should be bidding a job where they lose money or make no profit at all); but with more competitive bidding, the profit isn't as fat.

Given the gap between the rich and poor, that's probably a good thing. (I'm not against people getting rich. Aspiring to wealth is a good motivator. But it needs to be done in a "rising tide floats all boats" manner where everyone ultimately benefits. We've gotten out of whack on that.)

All of which isn't what politicians want.

(The Democrats would, ultimately, prefer to add programs, raise taxes, and still permit the inefficiency/waste/corruption.)

But we are in a financial bog at the moment, so perhaps we need to tell them that's what we want: Less corruption.

There are a number of other things we need too: Company executives need confidence in the economy so they can hire people and start projects (i.e., grow the economy), which requires a sound economic plan and bi-partisan buy-in. Reducing the debt load requires either inflation or growth in tax revenues, from some combination of higher tax rates or from higher collections because of economic growth — and so we're back to confidence.

Confidence that both parties agree we're on the right track would be the single biggest boost. This will require both parties to work together for the common good, not to cut each other down. This will require Presidential leadership, charisma, deal-building, etc. The things that inspire confidence.

At any rate, I'm really sick of hearing "cut the budget" used as doublespeak for "cut the programs my party dislikes." That only exacerbates the problems.

Bah.

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