Tax Analysts Blog

Sometimes a Fig Leaf Is Just Too Small

Posted on Apr 20, 2009
    Washington Post: President Obama plans to convene his Cabinet for the first time today, and he will order its members to identify a combined $100 million in budget cuts over the next 90 days, according to a senior administration official.

Seriously? No joke?

Look, I'm all for political pragmatism, at least in the service of a good cause. And symbolic politics (as opposed to substantive policymaking) is nothing to sneer at. Sometimes you need the former to make the latter possible. So let's ignore the incoherence of trying to cut short-term spending in the midst of a massive stimulus program.

But $100 million out of a budget of $3.5 trillion? Does the White House really think that's going to help the cause? Seems like a gift to Republicans, if you ask me. The ridicule will be easy and obvious. Greg Mankiw gets it started:
    To put those numbers in perspective, 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 be cut? By $3 over the course of the year--approximately the cost of one latte at Starbucks.

Maybe Obama is going to stage-manage this episode better than I think. Maybe he'll frame it as part of a larger battle against waste and inefficiency -- and offer some colorful details to flesh out the budgetary abstractions. A few $6,000 toilet seats in the Pentagon, for instance, or a research program on volcano monitoring (well, maybe not).

To give Obama some credit, there's precedent for this sort of symbolic politics. In 1933, Franklin Roosevelt began his presidency with the Economy Act -- a much ballyhooed effort to slash unnecessary spending. Curious, given the New Deal's subsequent spending blitz and its (fitful) efforts to "prime the pump."

But maybe brilliant, too. As economist Herbert Stein later observed: "However muddled they [FDR's spending cuts] seemed and may actually have been at the time, in retrospect they look like a brilliant strategy to make possible inflationary or, as we might now say, expansionary action."

Maybe. But here's the thing about fig leaves: If they're too small, they don't cover up. They just call attention.

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