Binyamin Applebaum on the sequester and government spending

by on February 27, 2013 at 7:32 am in Current Affairs, Economics | Permalink

It is a very good piece, and here are the parts citing me:

“People focus on the upfront cost and they don’t think through the whole timeline,” said Tyler Cowen, an economist at George Mason University and an occasional contributor to the Sunday Business section of The New York Times. “You have to cut spending within the next 10 years anyway. It may be time to take some lumps.”

Of course there is a contrasting attitude that we can and will do this instead in the time of a rip-roaring recovery.  And:

 “It is cutting some of the best spending that government does,” Professor Cowen said of the cuts that would fall on the domestic side of the ledger. He said Congress should focus instead on cuts to military spending, farm subsidies and health care programs like Medicare that he regarded as ripe for reductions.

He said that military contractors and personnel might be able to find new jobs with relative ease, because unemployment rates are fairly low for well-educated workers; it is those with less education who are struggling most.

Of course the piece presents some other opinions as well.  It’s also worth noting that in 2008-2009 I argued repeatedly that fiscal stimulus should have concentrated more directly on propping up state and local expenditures, and that many of the other projects, such as high-speed rail, were a waste and would only temporarily boost employment if that.  In retrospect I believe that advice is holding up quite well.

joshua February 27, 2013 at 8:02 am

“It is cutting some of the best spending that government does” – Yes, and also some of the worst. I suppose one’s excitement about the sequester depends on one’s beliefs about how much of government spending is the former and how much is the latter.

Although, I am not sure whether to look at it as the good/bad ratio of “the least important ~3% of every government budget,” or the good/bad ratio of “the ~3% of every government budget that is most likely to be cut,” which are not necessarily the same things…

Bill Harshaw February 27, 2013 at 8:22 am

Don’t know about high-speed rail but they should have invested more in the rail line to NYC. Most of the way it’s still very bumpy, as I learned last week. I’m no engineer, but I assume each bump contributes disproportionately to wear and tear on the equipment and wastes energy. If they can engineer Metro to be fairly smooth, they ought to have been able to do Amtrak.

Simone Simonini February 27, 2013 at 10:09 am

Take the Boltbus.

nixonian wallonian February 27, 2013 at 10:46 am

I consider it a benefit that it’s expensive or uncomfortable for New Yorkers and Bostonians to come down to Washington.

Brian Donohue February 27, 2013 at 9:07 am

I’d frame the government jobs thing differently. Since peaking in May 2010 at 22,997,000, government jobs have fallen by 4.65%, to 21,928,000 in December 2012.

Between the peak in April of 1980 and the trough in July 1982, government employed fell from 16,583,000 to 15,890,000, a drop of 4.18%.

Both of these drops are, I think, exaggerated due to census hiring.

Since World War II, these are the ONLY two periods were employment in government has fallen at all.

Forest fire analogy, blah blah blah, it’s not a bug, it’s a feature.

DKF February 27, 2013 at 11:01 am

Y, I notice they conflate “Government” and “Federal Government”…typical NYT sleight-of-hand, not even a very creative one. Also, as you note, May 2010 was clearly within the “census bulge”…easy to pick out on the graph.
Even with recent reductions, the number of federal government employees remains roughly at the same level as when the current administration took office. State and Local employment is down 3.6%, but that’s largely a choice that people make in their own jurisdictions. Graph here: http://research.stlouisfed.org/fred2/graph/?g=fY8 .
Overall, I’m less impressed with the article than Tyler was…selective windows on quoting data, using data out of scope in an attempt to make a point, a very inadequate discussion of government spending’s effect on private investment and consumption….not objective reporting in my view.

Rich Berger February 27, 2013 at 10:03 am

How about this one – http://www.gao.gov/press/financial_report_2013jan17.htm.

Tell me how the feds cannot do with less.

yy February 27, 2013 at 10:27 am

“and that many of the other projects, such as high-speed rail, were a waste and would only temporarily…”
except that after building it, you then have high speed rail.

Ted Craig February 27, 2013 at 11:21 am

And on-going maintenance costs.

yy February 27, 2013 at 11:57 am

yeah, lets get rid of the interstate highway system because of maintenance costs!

JWatts February 27, 2013 at 1:39 pm

There’s an implicit assumption that high speed rail would be completed on time and budget. It’s at best a dubious assumption.

If you really like high speed rail, why not get together with a group of like minded people and pool your money and build it. Kickstarter is just waiting for you to take advantage of it.

yytt February 27, 2013 at 5:05 pm

or we get a group of like minded people and we could ‘kickstart’ an army

JWatts February 27, 2013 at 10:49 pm

They could be led by Colonel KickAss. ;)

Go Kings, Go! February 27, 2013 at 10:30 am

You usually excerpt the useful parts. Celebrity breeds megalomania.

affectionately, a Jester.

john personna February 27, 2013 at 10:33 am

It is so sad that we are offered two bad choices: carry on, and a dumb sequesters. It would be so much nicer if we were taking this piece by piece, with farm bills, energy bills, and defense bills, that seek to balance costs and benefits. What we have is a Congress which requires the Army to buy tanks they don’t want, and then requires them to take money off the top of their budget. Seriously.

Brian Donohue February 27, 2013 at 11:25 am

Hey, the government’s still got 48 hours to propagandize citizens about the Worst.Cataclysm.Ever.

Even if this fails, as seems likely, first thing Saturday morning, a queue will form, and the process of restoring the ‘truly dumb cuts’, if any, will begin.

Paul February 27, 2013 at 11:46 am

Targeted cuts would be DOA. They would affect some congressional districts disproportionately and how would an incumbent explain that? This really is the best option ever in the real world for getting any cuts (a “cut” is just a smaller increase remember.) Republicans should grab this opportunity and run with it. For once Obama’s political advisor gurus made a blunder.

john personna February 27, 2013 at 12:19 pm

We shouldn’t really call good governance DOA. That’s giving too much away. And if Obama is asking for any kind of planned cuts, whatsoever, he is asking for better governance than an across the board desperation move.

JWatts February 27, 2013 at 1:45 pm

There’s some talk that Republican’s will pass a bill giving Obama the authority to apply the cuts as he sees fit within fairly broad outlines.

http://www.politico.com/story/2013/02/senate-gop-ponders-shifting-power-to-obama-88149.html

Shane M February 27, 2013 at 10:55 pm

Interesting. Sounds like a variation of “fast tracking” treaty negotiations and leaving only an up/down approval vote. It seems odd that one person should be put in charge spending of that much money, but I admit part of me wonders if that’s the only way the hard decisions can be made anymore.

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