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Back to the Future to Cut Federal Spending

Leonard Gilroy
April 28, 2009, 6:54pm

In a new Bacon's Rebellion column, John Palatiello is underwhelmed by President Obama's recent call for $100 million in federal spending cuts and suggests that policymakers look to history as a guide for how to ramp up the cost-cutting:

Harvard economics professor Greg Mankiw puts Obama’s call for $100 million in Cabinet cuts into perspective: $100 million represents .003 percent of $3.5 trillion. “Imagine that the head of a household with annual spending of $100,000 called everyone in the family together to deal with a $34,000 budget shortfall. How much would he or she announce that spending had to be cut? By $3 over the course of the year–approximately the cost of one latte at Starbucks. The other $33,997? We can put that on the family credit card and worry about it next year.”

The anger expressed by hundreds of thousands of tea party protesters on April 15 is a call for action over the government’s profligate ways.

The current growth of government is reminiscent of what was experienced in the 1930s and 1940s - coming out of the double whammy of the Great Depression and World War II. The New Deal and war effort left America with a bloated an unneeded national government. What Congress and the President did at that time is a model for what should be done today.

Read the whole thing, as he goes on to suggest that policymakers pull a page from the past and create a congessional Committee on the Reduction of Non-essential Federal Expenditures and another Hoover Commission. To my mind, if you throw a BRAC-style commission on top of that to vote up or down on packages of recommended cuts, then you'd really have something.

Speaking of President Obama's call for $100 million in cuts, it is indeed the proverbial drop-in-the-bucket, as this humorous Washington Post piece by Philip Rucker points out. I thought Brian Reidl at Heritage hit the nail on the head when he described the $100 million in cuts as "the rounding error of a rounding error" in the context of $4 trillion in federal spending this year.

To be fair though, President Obama used his weekly address to highlight that there will be more cuts to come in advance of what's projected to be a deficit far in excess of $1 trillion. Let's hope that the adminstration delivers on more substantive cost-cutting proposals, and let's also hope that they reverse course on their apparent push to neuter federal contracting, one of the most effective cost-cutting tools available to policymakers.


Leonard Gilroy is Director of Government Reform


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