Posted by Ilya Somin:
The Coming Explosion of Federal Spending:
http://volokh.com/archives/archive_2009_05_17-2009_05_23.shtml#1242685097
My George Mason colleague Veronique de Rugy has [1]an excellent
article on the explosion of federal spending built into the Obama
Administration's budget plans for the next decade. As Veronique points
out, there will be massive increases in both spending levels and the
deficit even under the administration's optimistic projections, which
unrealistically assume extremely high rates of economic growth, fail
to consider much of the administration's proposed increases in health
care spending, and also assume that all of the "temporary" stimulus
spending will be completely phased out - despite long experience
showing that it is extremely difficult to cut budget items once
spending on them has increased. Even the administration's optimistic
calculations predict a deficit of $712 billion in 2019 (compared to
$455 billion in 2008). The administration also predicts that
nonmilitary federal spending will be 17% in 2019, about 15% higher
than in 2008 and some 30% higher than in the last year of the Clinton
Administration. The Democratic-controlled Congressional Budget Office
has [2]reached even more pessimistic conclusions in its analysis,
which uses more realistic growth projections.
Back in October, I expressed [3]my fear that the combination of an
Obama victory, simultaneous Democratic control of Congress and the
executive branch, and the economic crisis, would lead to a massive
expansion of government. Sadly, that prediction seems to have been
vindicated.
It's true that Obama's spending policies are in some respects a
continuation of Bush's. The Bush Administration also presided over
massive increases in federal spending and regulation, and I often
criticized them for it (e.g. [4]here and [5]here). However, Obama's
spending plans far exceed even Bush's dubious record. Justifying
Obama's spending proposals by reference to Bush is much like an
already obese man claiming that upping his consumption of hamburgers
to twenty every day is fine because he spend the last eight years
eating ten per day.
Liberal Washington Post economics columnist Robert Samuelson makes
some related points in [6]this op ed. Samuelson also points out the
clever political strategy behind the Administration's spending policy:
One reason Obama is so popular is that he has promised almost
everyone lower taxes and higher spending. Beyond the undeserving
who make more than $250,000, 95 percent of "working families"
receive a tax cut. Obama would double federal spending for basic
research in "key agencies." He wants to build high-speed-rail
networks that would require continuous subsidy. Obama can do all
this and more by borrowing.
Consider the extra debt as a proxy for political evasion. The
president doesn't want to confront Americans with choices between
lower spending and higher taxes -- or, given the existing deficits,
perhaps both less spending and more taxes. Except for talk, Obama
hasn't done anything to reduce the expense of retiring baby
boomers. He claims to be containing overall health costs, but he's
actually proposing more government spending...
Implicitly, the administration is hoping to exploit voters' political
ignorance. If voters were well-informed about federal budget and tax
policy, they would understand the contradiction between the
Administration's plans to massively increase spending and its tax cut
promises. At some point, the bill for all that debt will have to be
paid in the form of either inflation or massive tax increases that go
well beyond "the rich." But since[7] most citizens are "rationally
ignorant" about politics, they are likely to be unaware of the
problem. Thus, Obama and other politicians can promise massive
spending increases while at the same time promising tax cuts, and reap
political benefits for doing so. Of course there will be political
damage for whoever is president in 2020 and has to face the resulting
serious fiscal crisis. But that is of little concern to today's
incumbents, who are understandably focused on their own more immediate
political future.
Obama is far from the first political leader to exploit public
ignorance. Certainly, the Republicans have used similar tactics in the
past, including under the Bush Administration. That fact, however,
doesn't make our current situation any better.
References
1. http://reason.com/news/show/133217.html
2.
http://www.washingtonpost.com/wp-dyn/content/article/2009/03/20/AR2009032001820.html
3. http://volokh.com/posts/1223680111.shtml
4. http://volokh.com/archives/archive_2009_01_18-2009_01_24.shtml#1232335004
5. http://volokh.com/posts/1146756572.shtml
6.
http://www.washingtonpost.com/wp-dyn/content/article/2009/05/17/AR2009051701728.html
7. http://papers.ssrn.com/sol3/papers.cfm?abstract_id=916963
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