Why The Big, Dumb Spending Cuts Nobody Wants Are A Good Idea

Ezra Klein’s believes that it’s a horrible thing that the big, dumb spending cuts that nobody wants might actually happen:

The initial idea was that if the supercommittee failed, there would be automatic spending cuts and automatic tax increases. This way, both parties would have an incentive to reach a deal. But Republicans refused the tax increases side. So instead, the two sides settled on automatic spending cuts to domestic programs to hurt Democrats and automatic spending cuts to defense to hurt Republicans. And thus the big, dumb spending cuts that no one wants came into being.


You might wonder why Republicans and Democrats, both of whom agree we should cut spending, are so dead-set against these particular spending cuts. The answer is that they are very, very dumb. A certain number of programs — Social Security, Medicaid, Medicare beneficiaries and nearly all spending directly benefiting low-income Americans — are exempt, but beyond that, everything gets pretty much the same size cut.

As a senior administration official said on a conference call today: ”The administration has no discretion in deciding the cuts identified in this report. The exempt versus non-exempt determinations are based on the requirements in the law. The administration can’t choose which programs to exempt or what percentage cuts to apply.” You can see exactly where those cuts would fall here.

In other words: Spending we consider essential gets the same size cut as spending we consider wasteful. There’s no ability to make the cuts to farm subsidies a bit bigger and the cuts to, say, the FBI a bit smaller. It’s $1.2 trillion in deficit reduction in which we pretty much don’t make a single choice about what is and isn’t worth funding.

I think that Ezra is right: these cuts are dumb. After all, that was the point. The point was to ensure that we’re going to get $1.2T of spending cuts, come hell or high water. And the fact that they’re dumb is a great incentive to find better ones.

So the options are:

  1. Get $1.2T in spending cuts that we don’t really want, but which are better than not cutting spending at all.
  2. Get $1.2T in nice, targeted spending cuts that make a lot of sense.

Contrast this to what would have happened if the sequester didn’t get put in place:

  1. Don’t get $1.2T in bad spending cuts.
  2. Don’t get $1.2T in good spending cuts, because Congress has no incentive to do anything.

I personally believe that cutting spending by $1.2T over 9 years is a good thing. I would prefer that Congress actually try to figure out where cutting that spending is most effective, slashing unnecessary and outmoded programs and departments while leaving the necessary stuff (assuming it exists!) untouched. But I’d still prefer $1.2T in “bad” cuts over not cutting spending at all.

Failure to make a deal on finding $1.2T in “good” cuts only serves as more evidence that Congress is a bunch of morons and that their collective approval rating should dip from the low teens to single digits. Frankly, that should bother them, but it doesn’t bother me.

Either way, the American taxpayer wins.

  • MingoV

    It would be simple to achieve ANNUAL federal spending cuts of 1.2 trillion dollars a year: simply adopt the 2007-2008 federal budget and transfer a small percentage of non-entitlement spending to entitlement spending (that has increased since 2007 due to more beneficiaries and COLAs).