Budget cutting

If we all agreed what “pork” was, there wouldn’t be any of it in the budget. The “pork-busting” idea needs to be backed up by its backers with specifics on what should be cut and why.

With the National Budget Simulation, one can specify exactly where cutting should be – and see what the outcome is.

It’s a static model, but it’s a good starting point.

As one who thinks that taxes are plenty high enough, on the rich as well as on everyone else, and that budgetary problems should be solved by budget cutting, it’s time to go to work.

Here’s my first cut, which actually yields a $347.47 billion surplus:

I’m leaving out some “Hold even” line items in this table.

Also, on Social Security and Medicare generally, I’d like to see real-dollar benefits remain constant indefinitely, but that’s not supported by the script, so I’m not going to fool with it except to take the opportunity to undo Bush’s upcoming expansion of Medicare, which seems increasingly unpopular on both sides of the aisle. What would really be helpful is if we took away the FDA’s enforcement powers and wound up with a cure for aging; that could reduce the resistance to killing that beast once and for all. Till then, I’ll assume here that we’re stuck with it, but I’m not going to accept the relentless long-term growth that current rules call for as desirable or inevitable.

I’m making an attempt to zero in on the cuts that will do the most good per unit of political resistance that must be overcome, both in terms of money saved and in terms of economic activity discouragement and redirection eliminated. Suggestions and critiques are encouraged.

Military Spending

Military personnel +10% The mullahs aren’t going to overthrow themselves. We’ll need a few more good men down the road, along with some of the guys currently babysitting Iraq.
Operation and Maintenance +10%
Procurement +10%
Research, development, test, and evaluation +10%
Military Construction, Family Housing and Other +10%
Atomic Energy Defense Activities Hold even We’ve probably got enough nukes for now.
Defense Related Activities Hold even

International Affairs

International development and humanitarian assistance cut 30% Individuals are eager to pick up the slack here if they’re left with the means
International military aid Hold even Keep helping the good guys all over the planet.
Conduct of foreign affairs Hold even
Foreign information and exchange activities Hold even

General science, space, and technology

National Science Foundation programs cut 50% If you don’t like politicized science, then maybe you shouldn’t have politicians running science foundations and such. Free some brains for the private sector to use, while we’re at it. But some basic science might pay off as long as we don’t use it as an excuse for new restrictions on people.
Department of Energy general science programs Cut 50% We know where the energy is, and we know how to get loads of it. The problem is that people are afraid to let any idiot get his hands on too much energy, and people are afraid of commercial nuclear power for some crazy reason. The answer is to (a) get over our nuke plant phobia and (b) go to space and get more energy and more elbow room for idiots to win Darwin Awards without destroying cities while geniuses come up with safe, effective antimatter rocket propulsion.
Space flight, research, and supporting activities Cut 50% What’s needed are property rights and massive deregulation so that the private sector can get the ball rolling. Then when craft are ready, a police presence in space using cheaper, more mature craft than we have now will help entice more private sector activity up there. Everything left in this line item should be redirected to prizes and, eventually, purchase orders of cheap, mass-produced vehicles

Non-Defense Energy Spending

Energy supply cut 30% Sell the TVA, ditch Federal power marketing, rural electric & telephone liquidating accounts, keep the rest for now
Energy information, preparedness, and regulation cut 50% Deregulation is needed for overall energy supply to increase. More refineries, more nuke plants, etc.

Natural resources and environment

Conservation and land management cut 70% Need to get rid of most of our public lands and let the private sector use them.
Recreational & Park resources Eliminate The best ones will be maintained as profit-making parks, the most valuable ones resource-wise will be used by the private sector for such without destryoing valuable capital (i.e., the land and its renewable resources) if sales and leases are at market rates and under market-determined usage restrictions for lessees.


Farm income stabilization & crop insurance Eliminate Stop screwing with the agricultural market. This is causing misery all over the world and boosting food prices here at home.
Agricultural research and services Eliminate

Commerce and Housing Loan Programs

Universal service fund Eliminate If you want rural telecom to get better and cheaper over time, don’t subsidize current technology at current rates!
Other advancement of commerce cut 70% The notes suggest that this is where a lot of regulatory crap is hiding. Also good candidates for the chopping block within this item are “Small and minority business assistance”, “Economic and demographic statistics”, “International Trade Administration”, “Spectrum auction subsidy” (huh? Shouldn’t money come in from spectrum auctions?)


Highways and highway safety cut 50% Cut national highway and automobile regulations; eliminate money paid to states to encourage state regulations, projects that are primarily for state and local transportation, and so on. Leave some money for routes actually used primarily for interstate commerce, at least for now.
Mass transit Eliminate Not much interstate commerce going on here. Cities have their own budgets and tax collectors. The private sector can even run mass transit systems as they have in the past.
Railroads Eliminate Might in theory be useful in interstate commerce, if it wasn’t so badly run. Sell it to the private sector.
Air transportation Cut 50% I’d like to see further deregulation to encourage more air traffic, especially among personal aircraft. This will lead to smaller population densities and less vulnerability to attack or disaster. Also, the Canadians seem to do okay leaving air traffic control to the private sector, so we should be able to do the same. If so, we can whittle this item down until all that’s left is enforcement of a mandatory liability insurance rule for aircraft operators.

Community and regional development

Community development Eliminate
Area and regional development Eliminate
Disaster relief and insurance cut 50% Get rid of subsidized flood insurance and impromptu payoffs and let the market encourage people to live in the right place and take the right amount of risk for their resources, job description, etc. This is actually the perfect opportunity to do this, as people across the political spectrum gasp at the kinds of costs that our current habits demonstrably lead to. Keep some homeland security stuff and some resources to show off to the world how well our military and National Guard can handle the worst that nature (as well as human enemies) can throw at us.


Elementary, Secondary, & Vocational education Eliminate Public education doesn’t work. It seemed to work at the beginning, but unlike market institutions, it hasn’t evolved as needed. Even “good” public education leaves its students with a nearly worthless diploma after consuming their entire childhoods. For those inclined to scream with outrage over this cut, remember that this is Federal education spending; I’m not touching your state’s education budget here, which along with the local school district is where most of your school’s money comes from.
Higher education Eliminate Public higher education is following the same trajectory as public education generally, but hasn’t deteriorated as much to date. Still, pull the plug and sell it all to the private sector before we flush progressively longer portions of our future generations’ lives down the toilet.
Research and general education cut 50% Ditch PBS, and most education “research” activity, which has been a bust for quite a while. Keep the Library of Congress and the Smithsonian; it’s good to preserve as much of our civilization’s data and artifacts as we can as insurance against a new Dark Age, as well as an aid to individual self-education.

Training, labor, and unemployment

Training and employment cut 50% Much of it is crap for yesterday’s jobs.
Labor law, statistics, and other administration Eliminate The best way to encourage employers to take a chance on people with sketchy credentials is to let them fire with impunity if it doesn’t work out. Labor law just gets in the way of people finding, offering, and changing jobs. Unjust discrimination is also unprofitable discrimination and doesn’t need to be outlawed; vigorous suppression of mob violence and domestic KKK-style terrorism will do the trick.
Unemployment compensation Hold even

Non-Medicare Health Spending

State Children’s Health Insurance Eliminate Stop paying for state programs. That’s what state taxes are for. Giving them free Federal money just encourages them to spend it without weighing costs and benefits.
Medicaid grants Cut 50% Block grants to the states and matching funds for state projects are some of the worst ideas to come out of the Republican party in recent years. State spending should be paid for with state funds. Federal money makes state governments behave quite a bit like individual welfare clients. I assume that there’s still direct Federal benefits in here; if so, it’s not worth the trouble of fooling with them for now.
Disease control, public health and bioterrorism Hold even There’s some “public health” bullshit like anti-tobacco, anti-fat, etc. activity in here, but it can (and should) be replaced by more activity to study and prepare countermeasures for bioterror and naturally occuring epidemics (i.e., actual public health issues).
Food safety and occupational health and safety cut 50% Strip these guys of their enforcement powers, especially the FDA, so medicine can advance faster. They can stay in existence and keep inspecting if they get over their bias toward overprotectiveness; letting consumers use their own judgement and cheerfully ignore them if they blow their credibility should keep them more honest.


Prescription drug benefit Eliminate Democrats and Republicans alike are seeing the utter folly of this turkey. Hopefully Bush pushed it just to keep the Democrats from loading us with a bigger one. Now that Democrats are bitching about it, it’s the perfect opportunity to kill this beast once and for all

Corporate Tax Breaks

Energy, Mining, and Timber Tax Breaks Eliminate When it makes sense, this sort of activity should pay for itself. It’s not really an offset to “income” the way other business expenses deductions are, right? If it is, leave it alone.
Tax free bonds and charitable contributions Eliminate Why pay to encourage borrowing over other ways of getting capital, and why pay to encourage corporations to donate to approved charities (and get lawmakers in the business of approving charities)?
Other Corporate tax Breaks cut 30% There’s probably some useless crap hiding in here. Some of it, though, is just offsets reflecting the fact that revenue spent on business overhead is not really “income” and thus shouldn’t be used to compute an “income tax”

Personal Business and Investment Benefits

Lower tax rates on capital gains (excluding housing) Hold even Capital investment is really where wealth comes from. Without it, you can make mud huts and sharpened sticks. With it, you can make better and better tools, building progressively on previous tools, essentially forever as far as anyone can tell. No sense taxing it more than we have to.
Tax-Free Bonds Eliminate Why favor borrowing transactions over other methods of financing investments?
Enterprise and Empowerment Zones and New Markets credit Eliminate If it makes sense, the whole country should be an “Enterprise and Empowerment Zone”. If it’s just to move economic activity from one place to another, it’s not very useful overall.
Other personal investment tax breaks cut 30% There’s probably some useless crap in here. We shouldn’t be favoring one sort of investment over another if we can manage it.

Pension & Retirement Deducations

Employer-paid pensions Eliminate Why reward employers for giving you an IOU instead of cash? I don’t want my retirement income to depend on whether my employer continues to exist as long as I do.
401Ks & Keogh plans Eliminate Again, why reward employers for giving you investment services and investment contributions instead of cash? Retirement should be based on your decisions about your resources, without taxpayer-funded encouragement or discouragement.
IRAs Eliminate If it makes more sense in your situation to invest a given dollar for retirement than to use it now, you don’t need us to pay you to convince you to do it.

Health Insurance Tax Benefits

Employer-paid Health Insurance Eliminate The health insurance market will work a hell of a lot better if people stop getting it through their employers. Stop paying employers to run a company store!
Self-employed medical insurance premiums Eliminate I don’t see a good reason to subsidize this for people wealthy enough to pay taxes. Also, no sense in favoring one form of employment over another.
Medical Savings/Health Savings Accounts Eliminate Without the tax breaks above, there’s no real reason for this to exist
Deductibility of medical expenses Hold even Not worth the trouble of fooling with it for now

Housing tax benefits

Mortgage Interest cut 10% This should end up at zero, but a lot of people have an awful lot of money tied up in property whose value factors this tax break in, so we can’t do anything too drastic here. Over the long run, I don’t want to pay to influence people toward buying or renting. Each has its advantages and disadvantages, and individuals should be left to make that decision on their own.
Deductibility of property taxes on homes Eliminate This just came out last year, so we can get rid of it right away without too much trouble. There’s no sense in paying people to vote for higher property taxes than they otherwise would.
Capital gains exclusions on home sales Hold even We need a general rule that a capital gain that you can’t spend shouldn’t be taxed. This is a special case of that rule for houses that we can keep until then.
Exclusion of net imputed rental income on owner-occupied homes Hold even It’s a “tax break” that you aren’t being taxed on the “rental income” that you theoretically pay yourself for living in your own home? Why in the world would this imaginary income ever be taxed?
Housing bonds & low-income housing investments cut 30% This should also go to zero over time.
Exception from passive loss rules for $25,000 of rental loss cut 30% This should also go to zero over time

Other individual deductions and exemptions

Charitable contributions Eliminate Give away your own money to your own causes, and let the rest of us do the same. Also, I don’t want lawmakers deciding what is and is not really a charity
State and local taxes (w/o home property) Eliminate Why should we pay you to vote for higher state and local taxes and more state and local spending than you otherwise would? If it’s worth it to your state, your taxpayers should pay for it without our help; if it’s not worth doing that, it’s not worth spending the money period.
Child credit Eliminate We want more representation in the gene pool of people who don’t notice a $1,000 per child tax credit.
Child care credits and deductions Eliminate If it makes economic sense to use childcare and get two incomes, do it. Otherwise, why should we pay to tip the balance of your decision in that direction?
Employee parking and transit expenses Eliminate We shouldn’t favor one method of getting to work over another.
Adoption and foster care tax credits cut 50% We’re paying for people to import children along with paying people to adopt needy American children. This should be rethought.
Other fringe benefits Eliminate If I’m correct in assuming that these are “fringe benefits” that employers offer, I’d stop paying them to do that; we’d be better off having employers pay people with cash overall.

78 thoughts on “Budget cutting”

  1. The thing is, every nickel you cut has a constituency. The benefits of the cuts are diffuse, the pain is focused. So, the political issue is always to find support for any cuts which offsets that constituency and its influence. This is hard to do, and the “natural” tendency is for all programs to be permanent and get bigger for this reason. The Lefty equivalent is my father in law who always says, “if we got rid of the Pentagon, we could afford to [fill in blank]”. But it is barely possible to get rid of the Crusader artillery system, a weapon to fight a threat that no longer exists. Same with all these cuts, most of which I agree with.

  2. I think the real problem with cutting budgets is that we are trapped in another tragedy of the commons. We pile all our contributions into a common pot and then we all scramble to get as much back out as possible. This occurs even before you consider the effects of redistribution on political behavior. The temptation to use the political process to get a little extra back is overwhelming. People feel if they don’t take advantage others will to their detriment.

  3. If we assume that budget cutting is impossible, we’re forced to conclude that we’re doomed to a never-ending upward march of spending levels as long as the republic lasts.

    Which leads to the conclusion that the republic won’t last all that long.

    Now that Democrats and Republicans alike are bitching (with plenty of justification) about Bush’s free-spending ways, maybe he can say “you want budget cuts? Here’s some budget cuts! Pass them, unless you want to publicly eat your words!” and get results. Or maybe another Congressional housecleaning like the one in 1994 can happen, only this time Bush won’t shut down the government by repeatedly vetoing budgets with spending cuts the way Clinton did.

    Or maybe we’re screwed until America 2.0 gets off the ground. But I’m not yet ready to accept that as inevitable.

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  5. I don’t assume budget cutting is impossible. But I do think that it takes a lot of political groundwork to get support built up for cuts. I think it is probably best to impose some kind of arbitrary budget caps and force Congress to live with that. Simple, general rules seem to work best.

  6. “Now that Democrats and Republicans alike are bitching (with plenty of justification) about Bush’s free-spending ways…”

    The last time I checked my copy of the Constitution, it said that the legislative branch is the one which controls the purse. Oh, stop me from spending more, more, more. And its all Bush’s fault.

  7. Budget caps don’t work (remember Gramm-Rudman?). I agree with Milton Friedman that the most effective way to cut govt spending is to cut the funds available to govt to spend. Ironically, the strength of the US economy, which is to some extent a function of recent tax cuts, has significantly increased tax collections and thereby provided more fuel to the Congressional spending engine.

  8. Actually, what I remember is Gramm-Rudman worked for a while. The point I am making is that simple rules that are applied universally are more likely to be politically achievable, since focused cuts will lead to overpowering focused opposition, given the incentives in play. A president with a much heavier pencil than Bush II would also help, alas.

  9. Bush should have vetoed a lot of bills, but saying that is like saying Jimmy Carter should have invaded Iran — it’s not in his nature to do it. He is what he is. I don’t defend his enabling of reckless Congressional spending.

    My point is that rules and spending-limitation schemes are probably always going to be broken, as Gramm-Rudman was after a few years (though it did some good while it lasted). IMO the only way to impose spending discipline that lasts is to starve the beast — though I also think it’s possible (see the next paragraph) that increased public concern about excessive govt spending may shift political incentives enough to have some some beneficial effect.

    I think it may be politically feasible now to bundle focused spending cuts, and that we may be seeing the beginnings of such a process as the Internet facilitates formation of heretofore impossible coalitions. The “pork” meme has caught on in the last few days in a way that I think would not have happened before there were blogs, and increasingly voters may be willing to oppose wasteful govt spending on specific projects in their Congressional districts as the aggregate costs of such spending become more visible. At least that’s what I hope is happening. Time will tell if this is really something new or merely wishful thinking on my part.

  10. And a willingness to give it up either means that our sense of identity with our states as a whole is weaker than in the past or that we are really somewhat selfless – the amount that goes to charities may indicate the latter, which is, well, nice. No one ever said that our own interests were all we thought about – just important to us.

  11. It has always seemed to me that the constituency for “smaller government” for its own sake has always been very small, to the point of being politicly trivial. The recent pork-blogging may just be a way for that same community to have some fun. I don’t think that voters in a particular district are likely to oppose spending in their district. They won’t see it as “pork”, they will see it as “jobs”. I hope I’m wrong.

  12. My point is that, because of the Internet, the anti-pork constituency may no longer be comprised exclusively of people who favor small govt. By making the national cost per taxpayer of local pork spending more apparent, the Internet may be changing the political cost/benefit equation for such spending.

  13. Make a simple test. How much money does the University of chicago get from the federal government–remembering that the school is Private…would you give this back as pork. If not, why not?

  14. Depends on what kind of spending it is. If it’s for defense-related research, I would probably keep it. Anything else, cut.

    I don’t hold a brief for the University of Chicago, and I doubt Ken does either. I would like to see radical reductions in govt spending, except on some defense programs (and I’d like to see more spending on other defense programs).

    But subsidies for non-defense-related university research? NPR? My local public library and arts center? Mass transit? Medicare? Ethanol production? The National Weather Service . . . ? Cut, cut, cut.

  15. I’d be more than happy to see budget cuts across the board. I’d be even happier to see EXACTLY where every cent is going that I’ve already paid. $300+ billion dollars for the “war on terror” and we’re still generally losing. (Seriously. Do YOU feel safer today than four years ago?) Why? Maybe because the money is being spent on things like private Gulfstream jets to take “enemy combatants” to countries without our freedoms so they can be tortured? Or because we’re giving no bid contracts to companies that bought themselves a candidate for two elections in a row? That’s NOT free market. Its cronyism.

    I’m more interested in cutting the everyday misspending of my money than I am in wholesale slashing of departments. Lets see the REAL bill first, then start dickering over the appetizers.

    But, I do agree on one point. Bring on the nuclear plants and the independence from foreign energy. Its time to put aside our irrational fears and start marching forward again.

  16. “International military aid Hold even Keep helping the good guys all over the planet.”

    That was your comedy laugh line, right? Where Jimeny Cricket accidentally loses a shoe, or Gabby Hayes sneezes at the wrong time?

    Military aid is one of the more egregious subsidy programs out there, and frequently is enormously bass-ackwards. It’s probably not a good idea to be selling advanced weaponry to the Saudis if we also want the Isrealis to have it. Zero that one out too.

    Oh, and auctioning off the national parks? Over my dead body, thanks.

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  18. What about something to the effect of the military base closing commission? A bipartisan panel of economists, former legislators, former senior fed agency execs, etc. Each agency would be charged with proposing programs to cut or trim based on annual target percentage of their budget. The commission would then review the proposals and once they approve, Congress could only vote up or down.

  19. Incidentally, I’m inclined to say that every agency would have to propose cuts – even those that are gaining money for some other reason. There’s always junk to cut. The private sector is constantly firing people and killing projects even while hiring people to start new, presumably better projects.

  20. Frankly, I consider a lot of your cuts to be a variation of being “stuck on stupid”: They’re based around the idea that people make inherently rational choices, and if the government simply lets people have more freedom (in areas such as saving for retirement), life will be hunky-dory.

    Reality doesn’t work that way. Humans are inherently irrational creatures, and on many things (such as saving for retirement) have to be herded.

    Any honest social scientist or economist recognizes that, and under that logic, the cuts you make now in those areas are oftentimes simply “borrowing from the future”, as Bush is doing; people will go out and make terrible choices, and enough people will make enough terrible choices that we’ll have to pay for it a generation later to bail them out so they’re not starving on the streets.

    Most of the cuts you’re talking about work in a world where everyone is responsible for all their own major choices, are free to make those choices rationally, and “I got mine” means you don’t have to worry about other people’s poor decisions.

    That’s not reality. When it comes to creating a plan that even comes close to reality, that mindset doesn’t cut it.

  21. “(Seriously. Do YOU feel safer today than four years ago?)”

    Ummm Dave, actually *I* do. (well except that four years and two weeks ago WTC II occurred)

    Compare the terrorist incidents, from both domestic and international sources, of the 60s (radical domestic leftists, SDS and Black Panthers anyone) vs 90s (radical domestic rightist, militia movement not to mention international terrorism, WTC I and millennial bombing plots) vs 00s (WTC II and some random domestic crazies).

  22. Be specific. Don’t say most cuts. Which ones do you mean?

    If people are irrational, and people elect the government, then the government they elect is irrational, and why should be expect it to make better choices than the inidividuals?

    Captalism/libertarianism/freedom doesn’t necessarily assume that people make rational choices. It just assumes that the aggregate of all their decisions will eventually be rational. Some people will lose, others will see them losing and change their ways.

  23. Joe,

    Do you think government officials are immune from the types of behavioral errors that are characteristic of humans generally? If so, why?

  24. If you really don’t want to distort the rent-versus-own decision, then you need to keep the mortgage tax break: Landlords get to deduct interest expense as a business expense. If you don’t allow homeowners to do the same, then you are essentially tilting the relative cost of shelter in favor of rentals. Put another way, if you eliminate the mortgage deduction, I would have an incentive to sell my home to someone and then lease it back under a 100-year lease to take advantage of the (arbitrary) ability of that someone to deduct interest that I can’t if I were to “lease” my home to myself. (Adding substantial transactions costs along the way, by the way.)
    Sorry but you’ve got the economics of this one wrong.

  25. While we are cutting, eliminate all business taxes especially payroll taxes, and personal income taxes. Replace personal income taxes with fixed rate excise taxes no more than 5%, shown as a line item on your sales receipt.

  26. “The temptation to use the political process to get a little extra back is overwhelming. People feel if they don’t take advantage others will to their detriment.”

    It’s similar to the law of the commons. You can feel it every day on the road heading to work. Intelligent Cruise Control cars driving with with manual cars in conditions similar to freeway driving save about 20% of fuel. If drivers simply accelerated faster, obeyed the speedlimits (on surface streets), and avoided using their brakes (use engine braking; coasting to avoid anticipated stops) we could see much greater fuel savings, effectively time traffic signals, and significantly decrease drivings times. But when I’m driving the speedlimit and some assholes start flying by me to get to the next traffic stop infront of me and take their sweet time getting back up to speed, I’m pressing the accelerator.

  27. Actually, Friedman’s opinion is that over his lifetime he has learnt the single most effective way to constrain government is term limits.

    Makes sense to me – maybe that where we should be focussing our efforts. Of course, its virtually impossible to imagine Congress passing term limits on itself.

  28. re: Bush responsible.

    Sorry, it’s the congress that taxes and spends (and ties the executive’s hands in terms of forcing spending v. chosing not to).

    If the people want to spend less, elect more conservative members of congress. Else the situtation will remain as we (the people) let it. Once, when the courts believed that the constitution constrained government, we had a prayer of keeping the beast contained. Now all we have to blame is ourselves (and to fix it we need to vote away from our local interests).

  29. Your list would be more helpful if you put actual dollar amounts next to them (either direct spending or revenue not collected due to tax breaks). Many items on your list are at the same level, even though they are orders of magnitude apart.

    As an example, foreign aid is $15bn civilian, $8bn military (much of it in the form of handouts to Israel and Egypt), whereas Military personnel is $150bn. A 10% increase in military personnel budgets is not offset by a 50% decrease in foreign aid…

    Of course, the elephant in the dining room is debt servicing. No amount of balanced budget amendments is going to make a dent – politicians (a majority of them lawyers) are all too adept at finding loopholes. Procedural safeguards are no substitute for political will and old-fashioned fiscal discipline.

  30. End the Drug War

    $20 bn a year at the Federal Level. $78 bn a year at the State Level.

    Of course it represents a big jobs program for Law ‘n Order Republicans. And Lawyers. And Judges. And Prison Guards. etc.

    Science is beginning to show that drug use is a form of Self Medication. For PTSD mostly. With some use by those with bipolar (Pot is safer than Lithium). And ADD, ADHD.

    The war will not withstand science. I give it 7 to 10 more years. Unless the science gets more publicity. Then it might be less.

  31. oh my god. this is a joke right?

    this guy is a complete fucking idiot otherwise, sorry to day.

    im not even going to comment on individual incredibly ignorant budget cuts this guy has made, there are far too many.

  32. The Economist ran an interesting article on nuclear power a few years back. NUCLEAR POWER ISN’T CHEAP. Currently nuclear power plants are heavily subsidized by Federal and State taxes — the bill that comes every month is small, but thats because we’re paying for it with our state and federal income tax.

    Let the price of energy go up — after an initial spike private industry will jump to make a buck and prices will go down.

  33. Dave Sanders,

    We already have electrical energy independence.

    The problem is energy for transport. i.e. liquid fuels.

    Nuclear power for energy independence is a non-sequitur. i.e. a solution for the wrong problem.

    In any case, in six to ten years the price of wind electricity will be below the price of nuclear power. Which makes the economics of nuclear power iffy.

    Every one who can turn on a light switch is not an energy expert.

    BTW I design and test aircraft electrical systems and in my youth I was a Naval Reactor Operator. And as you can tell from my wind comment I have been paying attention to recent developments as well.

  34. There is no other comment from the initial post needed to prove the complete and utter ignorance of the initial poster than this: “The best way to encourage employers to take a chance on people with sketchy credentials is to let them fire with impunity if it doesn’t work out. Labor law just gets in the way of people finding, offering, and changing jobs. Unjust discrimination is also unprofitable discrimination and doesn’t need to be outlawed; vigorous suppression of mob violence and domestic KKK-style terrorism will do the trick.”

    This betrays a level of ignorance that astounds me. There are no polite words adequate to describe the level of delusion that it takes to make that statement other than stating that the writer must have hallucinogenics better than the best LSD that has ever existed. THIS is the perfect example of the fact that Joe is right and the defenders of the initial post who belong to the government is evil, markets are perfect crowd are wrong and will forever be so because their religion dictates it. No, they’re not Christians. Their first love is the First Church of Free Market.

  35. Line item budget cuts are all well and good, but it seems we really need systemic changes in government processes to avoid arriving in the same situation again later. Structurally, we will still have a situation where porcine collective-advocates compete to overgraze the commons.

    What structural changes, major or minor, would affect this dynamic? So budget caps won’t cut it. Sunset provisions for appropriations? Super-majorities for appropriations? Term limits? Line item veto? These are old ideas, of course, but perhaps in the current environment, a few minor incremental tweaks could actually be enacted.

    Sadly, self-interested pork seeking is not the only problem. An annoyingly large portion of the population supports higher taxes and larger government of no benefit to themselves simply on the philosophical grounds that money taken out of the pockets of greedy capitalists is better spent anywhere else.

    And here they come…

  36. Joe says “Humans are inherently irrational creatures, and on many things … have to be herded.”

    I’ve heard this one over and over, and it always makes me laugh. Where do you come from, o wise sage, the planet Krypton?

  37. To Rahul’s point that we should have term limits: I used to believe this, and in fact, voted (to my regret) for term limits when I lived in California.

    Cue the Law of Unintended Consquences: Because so many people have moved on, there is no “institutional memory.” Lobbyists now run the California Legislature. No bad idea, from driver’s licenses for illegals to the Auburn Dam, ever dies.

    It’s an orgy of rent-seeking and appropriating other people’s money.

    Now a term limit on lobbyists — there you might have something.

  38. Lobbyists do not get elected so you can not set term limits on them..
    ALL lelgislation that involves $#$$gets processed throughb, by, or deals withlobby groups. They in fact control budget spending and cutting…

  39. Fazal Majid: Isn’t debt service only a problem if the economy isn’t growing rapidly? IOW, if govt spending were cut substantially and the rate of economic growth increased, as I think it would, wouldn’t government debt become less of a problem? Note that I am not arguing that a high level of govt debt is good, but rather that increasing the rate of economic growth is an effective way of shrinking the debt.

  40. Jim S wrote:
    This [Ken’s original post] betrays a level of ignorance that astounds me. There are no polite words adequate to describe the level of delusion that it takes to make that statement other than stating that the writer must have hallucinogenics better than the best LSD that has ever existed. THIS is the perfect example of the fact that Joe is right and the defenders of the initial post who belong to the government is evil, markets are perfect crowd are wrong and will forever be so because their religion dictates it. No, they’re not Christians. Their first love is the First Church of Free Market.

    Jim: If Ken’s case is so weak it should be easy for you to tell us why. Yet all you do is assert that Ken is wrong as though it were self-evident. Perhaps, since we already know your conclusions, you can now explain how you reached them. Or am I asking too much.

  41. This is why I need to be dictator. No discussion, no horsetrading, this is what is going to be and that’s the end of it.

  42. My ideal solution (read, not a prayer of it ever actually happening) would be this: a constitutional amendment limiting federal income from all sources (including loans) to 10% of GDP except during times of declared war.

    Pork would be a lot less popular if congress had to make a cut elsewhere for every pork project they wanted to pass. Stick them on a fixed budget, and I bet we’ll start seeing some spending discipline.

    Beyond that, this arguing over individual cuts, while worthwhile, is like slapping a bandaid on a gaping chest wound.

  43. It’s incorrect to say the monthly bills for Nuclear Power are so small because the govt. pays so much of those. Nuclear Power is indeed very cheap on a month-to-month basis. However, the start-up costs on a nuclear plant are extremely high and need federal subsidies to be economic for the power company. For Nuclear Power, either the costs of coal/oil/natural gas have to become substantially high or the govt. would have to create some very restrictive environmental regualtion or cap on power plants. But then, power would then have a much higher price tag.

  44. I went and took the test. I saved a bit, but I object to the premise behind the exercise. Many of the questions were based upon the idea that any part of the tax system that does not take everything the people owns or earns is a subsidy.

    I say rubbish. The premise is wrong and the quiz was out of whack.

    To me the only effective budget cuts are ones that kill entire departments. Start with the Department of Education. Now that the NEA is upset with federal involvement in education because of NCLB, abolish the whole thing. Next up DOL.

  45. How many of the cuts that you all are proposing would you be comfortable paying taxes or fees on the local level? Nebraska fought consolidation bitterly and I’ve begun to appreciate how much local control kept local citizens interested in (and active in ensuring)the quality in education.

    The split in this country in certain vocational ways is not terribly healthy. Yesterday, at the National Booki Festival someone observed that a huge (I think over 95%) of librarians voted for Kerry; people clapped as if this were a good thing. Those percentages hold for academics and the media. I think those percentages would be equally bad if they were Republican. I suspect that weighted vote indicates a separation in many places from the community served.

    A closer relation between those paid and those being paid might lead to broader understanding. Right now, I suspect taxpayers would be shocked if they knew where taxes were going in academia. But if that connection were closer, if academics knew what was desired of them and taxpayers knew what academics could do, institutions would be more purposeful (and no, I don’t mean less about ideas). Monopolies on newspapers lead to similar separations–how many reporters write for other reporters?

    As usual, I am off-point, but the best way to save money is when the person who is doing the paying has some idea of what the person being paid does. We are aware, for instance, that this is not free money.

    I do think libraries, for instance, can be a quite important good in a community. Depending upon the choices someone makes, life with very little disposable income can be quite pleasant – surrounded by books, art, music, and movies checked out from the local library. An attractive park can make staying at home with a child for the first few years pleasant.

    I haven’t reread Mickey Kaus’ The End of Equality since I fell in with you all, but I liked his sense that some parts of the public square were worth financing. We need not be equal in income – that isn’t important. But some of the safety net should be libraries, parks, decent streets. After all, rich or poor, we all use them. And a park paid for by locals is more likely to be a park actually needed and kept up.

    And while there are plenty of boondoggles in research, people like Borlaug have made a huge difference in the world. Sure, you can think of India as potentially part of the Anglosphere – but did people think that would be true in 1960? Why not? Such productivity helps us all.

  46. I don’t know what’s wrong with that simulation, but when I make exactly one change — eliminate agricultural subsidies — and ask it to calclulate, it says the deficit goes *up* $0.04 billion. So I wouldn’t trust any of the results you get.

  47. Can you factor the impact of Congress approving the conversion from income tax to the “Fair Tax” (HR-25)? The adoption of the Fair Tax would change the U.S. taxing method (spending vis-a-vis income) and bring about the elimination of “deductions and credits.” It should assist in the adoption of your proposed eleminations and reductions in the tax code without declairing winners and losers.
    Thank you

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  49. Reagan was right in thinking that the only way to keep government small was to starve the beast. It’s not in human tendency to save up money and especially so when there’s a lot of it. Throw in spending measures determined by a 570+member comittee (And then some) and you have a perfect storm for waste the wazoo.

    So Reagan’s natural idea for government was along two lines both accomplished by:
    Free up the Economy by lowering taxes and allow it to be the workhorse it could be.
    Shrink Government by lowering taxes and starving the beast.

    It was a plan so simple, it had to work. Unfortunately for Reagan, only one worked: The tax cuts sparked an unmatched period of growth. Reganomics worked like a beaut! But it also spawned a surge in actual tax revenue. In fact, it doubled the tax base revenues as opposed to lowering them. This is all due (at least in theory) to the Laffer Curve. Google it if you’re interested. Basically, it says there’s two places where tax rates post zero revenue, namely zero, and 100 percent. The points between the two yield varying levels of revenue in the shape of some curve. Unfortunately, Reagan moved the tax rates closer to that prime point. The economy grew first, and while tax revenues were lower at first, overall, the government recieved twice the amount of revenue it had recieved before.

    The only way to starve the beast would be to:
    Raise taxes away from the Prime point on the Laffer Curve, which is something we don’t want to do (remember ‘stagflation’? No one wants that). The other one is to lower taxes beyond the prime point on the Laffer Curve. Unfortunately, we don’t know how far that is! It’s certainly below the current rate, we know that much (Bush lowered tax rates, yes, but evidence mounts that he increased revenues!). Such a drastic cut in taxes would have to be opposed by a whole lot of people! Of course, raising revenue would be as simple as cutting taxes further than they are right now (if they’re smart) but we don’t want higher revenues, we want smaller government.

  50. I know that last post doesn’t make a lick of sense on the surface, but if you study history and do some research, it makes sense.

  51. But can we even say that the budget cuts caused the increased revenue?

    There was some deregulation activity going on around the same time. Deregulation is a good way to light a fire under the economy and thus indirectly boost tax revenue.

  52. “The best way to encourage employers to take a chance on people with sketchy credentials is to let them fire with impunity if it doesn’t work out. Labor law just gets in the way of people finding, offering, and changing jobs. Unjust discrimination is also unprofitable discrimination and doesn’t need to be outlawed; vigorous suppression of mob violence and domestic KKK-style terrorism will do the trick.”

    You realize that this item also includes basic workplace safety laws and oversight, right? Do we really want to go back to 120 years ago when 35,000 workers were killed on the job every year out of a population 1/5th the size of today’s?

  53. I note the call for increased “Wind Energy” both Ted Kennedy and John Kerry vetoed wind generators from “their” area, it spoils the view. If the writer is for wind energy perhaps they will say “Who’s view should be spoiled?” The same can be said of the “do not drill” and NIMBY crowd, where should the refineries be built? Why is it OK to despoil Texas and not Florida or Alaska? Why force OPEC to increase production and bad American production? All men are created equal and should share the equal burden of feeding the worlds energy requirements, not how to restrict the requirements but to meet the requirements.

  54. Just wanted to says that some of the things you have proposed here are idiotic, such as cutting national park funds and privatizing them into money making ventures. That is one of the most cold blooded and inhuman things I have heard in a long time. and that is impressive given our current administration.

  55. I don’t think the idea to privatize the parks is idiotic but I do think it’s unwise.

    A market only works in the long run if its pricing mechanisms can factor in all of the costs/benefits/effects for all of the stakeholders. You and I agree to exchange value for value and both walk away satisfied. If either of is unsatisfied, we walk away and find a better business partner. But in the case of the parks, all of the stakeholders aren’t involved in the contract.

    Let’s say the government sells the Grand Canyon to a garbage collection company. The government is no longer paying for upkeep and the price is great so we all get a tax break.

    The company loves the spot because it’s already dug out and they just need to backfill with the garbage. They’ve got capacity for years. Their stockholders get a lot of value.

    Great deal, right? Of course not. The Grand Canyon is not just a conveniently capacious hole in the ground. It’s a national treasure that needs to be saved for people who aren’t born yet and have no say in today’s transaction.

    This is paper thin example. In any well run privitization program we would no doubt get much more money from a company planning to use the Grand Canyon as a tourist venue. But other sites would probably not be so obviously valuable in their current sustainable use.

    We just couldn’t afford the uncontrolled negative externalities of this transaction.

  56. This is obviously written by a soulless subcretin. Cut the military, that’s where the pork is, not social programs.

  57. “What would really be helpful is if we took away the FDA’s enforcement powers and wound up with a cure for aging; that could reduce the resistance to killing that beast once and for all.”

    Complete and utter fantasy.

    “Keep the Library of Congress and the Smithsonian; it’s good to preserve as much of our civilization’s data and artifacts as we can as insurance against a new Dark Age, as well as an aid to individual self-education.”

    Yes you’ll need some preservation as you create your new Dark Age.

    Amazing. The US is flushing it’self. How helpful, not even a whimper, just a whooshing noise ;).

    Do What Now ??? … Standards and Practices !

  58. The ignorance of your suggested budget cuts is impressive! A couple of others have noted this, but it appears from later posts that a few specifics are required. Let me see, where to begin? In no particular order of importance: National Science Foundation: you suggest cutting by 50% with the notation that it would “free some brains for private sector use”. Do you have any idea what these funds support? How about improving access to science education…so that we have a workforce that the private sector can “use”. Adoption and foster care tax credit: Are you planning to go back to the days of warehousing children in orphanages? This is a small incentive but it actually helps to place children into stable living environments…but then your cuts to the child health insurance programs would certainly result in fewer children being healthy enough to survive…or to be prepared for learning optimally. Oh, and by the way, Medicaid and the CHIP programs are expensive, but the cost to society of scapping them would be catastrophic – prevention and early treatment have been proven many times to be less expensive than the alternative. Your cuts would result in a dog-eat-dog society where the strong feed on the weak, where there would be no beauty in the country, and where only those priviledged few would survive to find themselves with no one to do the work of producing those luxuries they’ve become so used to. Your cuts to education are unbelievable. I think the basis of your errors is in thinking that everyone has had the same benefits that you have had…the same family structure, the same knowledge and skill sets of your parents, the same educational opportunities. You also appear to think that the “market” will automatically adjust for corporate greed and stupidity. In case you haven’t noticed, while CEO pay has increased dramatically every year for the last three or four years, average wages has stagnated or decreased. CEOs who bankrupt their companies while enriching themselves also destroy the lives of the people who worked for that company. People who already have a lot of disposable income are doing better, while those who were already struggling are doing worse. Under your budget cuts, there will be nothing but misery for millions of Americans. Not everyone has had the benefit of your education and obviously immense intellectual gifts that will allow them to choose wisely between saving vs. spending the money they need for their future retirement. And Democrats are pissed about the Medicare drug benefit because the crap the Republicans passed doesn’t help our senior citizens who are having to choose between food and the medicines they need – it is simply corporate welfare for the prescription drug companies. While you are cutting the FDA’s funding for enforcement, I hope you have some kind of silver bullet to protect you from taking a flawed drug that is advertized to cure your impotence, but that will stop your heart…but then you don’t seem to have one.

  59. Harvard’s endowment is over $10 billion, and the school was whining they had to let the big, bad, JAGs on because of a measly $400 million?

    No bike paths, no statues, all letterhead is generic and the template can add the name of the current administration.

    I think there should be a lottery, $100 a pop for a team of normal Americans to go thru the budgets like a fly over flypaper.

    Congressional staffs and Congressional bennies are the first thing to go. They all get HSAs. No raises. A tax on Gucci Gulch. I also have no problem raising the entrance fee to our public lands, it is awfully low. Now that Katrina’s taken out our sugar production, good-bye subsidy. —

    –And Democrats are pissed about the Medicare drug benefit because the crap the Republicans passed doesn’t help our senior citizens who are having to choose between food and the medicines they need –

    Oh, please. How 80s. I’m surprised you didn’t mention dog food. Ever read about what a MN and Canuck tribe were cooking up? Opening up drug stores at the casin***os, supplied w/Canadian drugs. They wanted to go where their market was.

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  62. The simulation works and the comments are good you have started people to not only think but put their thoughts in writing. (some good some eh!) There seems to be a consensus the root and stem of the problem is in the Congress. Sadly it would appear that “ear marking” Reps and Senators put their own re-election before country. (one mans pork etal) Interesting to note the benefits of the 17th Amendment similar to the benefits Carthage and Rome found in the need of Senators seeking contributions to remain in power. Hannibal refused funds by the Senate lost to Rome

  63. The script doesn’t support changing the fundamental way things are attacked as opposed to the funding for them.

    That is:
    Accept for a moment the liberal position on a given subject (any subject). For instance ‘saving for retirement’.

    Then apply the most conservative methods you can manage to do that job.

    Hint: Social Security isn’t it.
    I picture a far less restricted ‘IRA’ arrangement. You have your own pre-tax account with the (insured) broker you choose. The government would no longer be saying “Give us your money and we’ll protect you later” but instead “Thou _shalt_ save enough to protect yourself”.

  64. “Isn’t debt service only a problem if the economy isn’t growing rapidly?”

    Debt is not bad in itself, independently of economic growth, if it used to fund productive investment, as opposed to operating expenses. That is assuming government borrowing doesn’t crowd out private investment and that the public investments are really productive. Just like for private citizens – a mortgage or college education is good, credit card debt for consumption is bad. Government sucking all available funds is probably not a problem right now, if anything there is an oversupply of capital, although that could shift quickly if, say, the Chinese decide to stop pouring money into our fiscal house of cards.

    Of course, therein lies the rub. Government bureaucrats are not known for their acumen. For one Arpanet/Internet funded in the sixties, how many $100M bridges to nowhere in Alaska?

    Of course, this rejoins your argument – if you know money returned to the private sector in the form of tax cuts is going to be reinvested in productive uses like R&D or capital investment (e.g. as opposed to feeding a speculative real estate bubble or getting stowed in money market accounts, as probably happened in 2002-2003, or being invested abroad), the tax revenue from increased growth could offset the tax cut in the right circumstances just as effectively as spending it on public works would.

    My point was actually different – given how big a proportion of the total budget debt finance already represents due to accumulated deficits, there isn’t that much room for maneuver to lower taxes sufficiently to raise growth durably. Sure, the short term spurt makes it possible to sustain higher levels of debt for a while, but at some point you have to repay the capital, not just interest.

  65. Simon: “The problem is energy for transport. i.e. liquid fuels.

    Nuclear power for energy independence is a non-sequitur. i.e. a solution for the wrong problem.”

    Not quite true. Hydrogen/oxygen fuel cells, used for transportation, require supplies of hydrogen and oxygen gas. Such supplies are produced by running an electrical current through water. Said electrical current coming from where? A nuclear power plant.

    Practical hydro/oxy fuel cells require increased electrical production, the most efficient source of which is nuclear power.

    Of course, this is predicated on the assumption that such fuel cells will become practical. As of yet, they are not.

  66. Fazal Majid,

    I don’t think we disagree. As a practical matter, I think the surest way to reduce govt debt, and debt servicing expenses, as a fraction of GDP, is to reduce the overall level of government spending. In theory government functionaries may invest money as productively as private individuals do, but I think it’s rarely true in practice.

    Procedural safeguards are no substitute for political will and old-fashioned fiscal discipline.

    Of course nothing will change for the better without the political will to do so. I hope that the Internet will facilitate creation of voter coalitions that can nudge legislators in the right direction.

  67. I am sorry this has lost some of its interest; however, thereis one glaring result. The central point of economics is lost. The “Budget Cutting” is a very simple process; once the central point is recognized. Economics is a decision science.
    Where I cut is part of my core decision and the process becomes simple, albeit currupted by political reality. If I subscribe to the belief that the purpose of government is to provide benefits of freemen it is incumbment to secure that freedom that will allow freemen to act for their own welfare. If on the otherhand I believe government should provide for the population the benefits of common everyday life I must take away some freedom to provide welfare.
    I support freedom to make my own way in lifehowever hared that life may be and therefor support a strong military, secure borders and little government intervention in matters that are not their business. (school’s are a local government providence and not for the national or state government except in the case of malfeasance) my budget is easily reduced following this choice.
    I recognize that others have a different view of what the purpose of government is and would cut border and military thinking is best. I recall President Clinton telling a large group of listeners that they were overtaxed; however, should the taxes be cut they would mis-spend the money. They responded with cheers! They sought not freedom with its hard choices but welfare with security and comfort at the expense of achievement.
    This excercise is best viewed with the prism of economic choice not getting lost in the fog of if, but, then parameters.

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