Stuff the Beast!

Stuff the Beast!

Stuff the Beast!

A mostly political weblog.
March 5 2009 8:37 PM

Stuff the Beast!

Starving Stuffing the Beast:

Ross Douthat thinks


--he's pursuing the opposite of Bush's "starve the beast" policy, which sought to limit future spending by denying government revenues. Obama, the theory goes, is trying to cram as much spending as possible into the budget, knowing full well it's not paid for: 

Obama's spending proposals would ... create new spending commitments and run up large deficits, in the hopes that the dollars poured into health care and education will create a new baseline for government's obligations, which in turn will create the political space for tax increases on the middle class. Like the starve-the-beast approach, the Obama strategy puts off the hard part till tomorrow: Give them tax cuts today, conservatives said, and they'll swallow spending cuts tomorrow; give them universal health care, universal pre-K, subsidies for green industry and all the rest of it today, liberals seem to be thinking, and they'll be willing to pay for it tomorrow. ...

[I]f you can change the baseline of social spending that Americans expect from their government before that day of hard choices arrive - and once created, government programs are awfully hard to get rid of, whether they're actually effective or not - then you've tilted the landscape of negotiation in liberalism's favor, and ensured that a post-Obama entitlement compromise will look a lot more like social democracy than a pre-Obama compromise would have. 

What would be wrong with a "stuff the beast" strategy? It's disingenuous--but what of that, if the end result is progress? And if the result of Obama's strategy would be only a) universal health care, unversal pre-K, and green industries and b) higher taxes to pay for them, maybe near-unalloyed progress is what it would bring. But there are three obvious questions for the beast-stuffers :

1) What parts of government are expanded--the effective parts or the BS parts? If you read the MSM or commentators like Jon Chait , you get the impression that long-suppressed Dem "priorities" are satisfied by  mindlessly in a Congress-pleasing manner expanding all agencies of government by, say, 15%.   That certainly seems to be the animating philosophy of the just-passed stimulus and about-to-pass "omnibus" spending bills. There was, for example, this chilling sentence in a recent WaPo piece on the stimulus:

Processing the rush of money is complicated by requirements unique to the stimulus act. The Department of Housing and Urban Development is getting $1.5 billion for "homelessness prevention," a task in which it has never explicitly engaged.


Do you have any confidence that HUD, an agency that has done more to destroy American cities than crack cocaine, will spend this $1.5 billion, without toxic side effects, in a way that significanty reduces homelessness--as opposed to sustains myriad HUD grantees, and community organizations, and (of course) bureaucrats? True, all spending is stimulative--and those grantees will in turn be spending the $1.5 billion somewhere. But if you were actually prioritizing government programs, as opposed to giving every agency its due, is this $1.5 billion you'd budget?  I doubt it. It's not "waste," exactly. It's just inefficient and ineffective (at best). Mulitiply this problem across the Veteran's Administration and the Agriculture Department and the Labor Department and you get the picture.

2) If the spending isn't effective, is the spending at least reversible? Tax cuts may be less stimulative than direct spending, as Paul Krugman and others argue (in part because taxpayers may save the cuts instead of spending them).  But tax cuts have one obvious virtue--unlike spending, they are relatively easy to reverse when the economy recovers and Keynes-style stimulus isn't needed.  Indeed, Obama is in the process of rescinding a bunch of tax cuts--Bush's--now.  Actually cutting spending on specific programs, once it's been incorporated into the budget, is excruciatingly difficult at best. In particular cases it may be possible. But a large across the board reduction over time at the federal level has basically never been accomplished. Not even by Reagan.

There were probably several ways to make the "stimulus" spending reversible. Obama could have started up special, new free-standing programs, as FDR did with the WPA, designating them explicitly as temporary. Then you could kill them before they accreted a big constituency. Or, Robert Samuelson argues , it would have been better if Congress had done most of its spending through "large, temporary block grants to states and localities and letting them decide how to spend the money."  Block grants can be cut--in this context they'd be akin to revenue sharing, a Nixon-era program that, unlike HUD, has disappeared.

 But that's not what Obama and Pelosi did, Samuelson notes:


Instead, the stimulus provides most funds through specific programs. There's $90 billion more for Medicaid, $12 billion for special education, $2.8 billion for various policing programs. ... "Temporary" spending increases for specific programs, as opposed to block grants, will be harder to undo, worsening the long-term budget outlook. 

So a good chunk of the spending increases will be permanent. Why should liberals care? Because they desperately need to make room for necessary new programs like universal health care.  Does Obama think he can spend a couple of percentages of GDP on generalized Congressionally-directed federal bloat and then build a huge national health care structure on top of that ? At some point, you run out of GDP, no? Every bilion dollars of low-priority government that Obama cements into the federal structure is a billion dollars he won't be able to spend on health care (and Social Security, and supplemental pensions) unless he raises taxes to pay for it. And there are limits, political and economic, to how much taxes can be raised. We don't want to reach them.

3) Does the spending serve the ends of liberalism? Reihan Salam flags a chart posted by Matthew Yglesias showing that other nations have reduced economic inequality more through their spending than through taxation, however progressive. Netherlands cut .1 off the Gini coefficient of inequality! Finland cut .15! If your idea of the goal of liberalism is reducing money inequality, these achievements will be very exciting for you, as they apparently are for Yglesias. But we'll never get rid of money inequality. Democrats probably won't even succeed in reversing the decades-long trend to greater money inequality in the U.S. Is money equality all that liberals are trying for? I've argued no, that economic inequality is only an interstitial goal in liberals' overarching drive to prevent income differences from creating invidious social differences--i.e. the goal of achieving social equality despite money inequality.

If that's the goal, it gives us another reason to think that all federal "spending"--even relatively effective, non-"wasteful" spending--is not alike. I happen to believe there will be a huge social equality payoff if the vast majority of Americans are in the same health care system. Any such system that provides good care--a necessity if the affluent are going to buy into it--will be very expensive. But it will be worth it. The equivalent spending on the Commerce Department or Community Development Block Grants or HUD or the Veteran's Administration or farm subsidies--well, not such a big social equality payoff, even though there might be a money equality payoff in Yglesias' chart. Even valued check-mailing programs like Social Security, beyond a certain point, don't do much for social equality. The checks are a good thing. They even reinforce the common value of work. But they don't erase invidious economic differences the way actually sitting around in the same hospital waiting room does.

Stuff the beast? OK. But I can't help but feel that Obama's been stuffing it with a lot of non-nutritious filler.

[I reserve the right ro revise and extend, including tinkering with tricky beast-digestion metaphor.]

Backfill-- Beast on Beast Action : Matt Miller had the basic reverse-beast-starve mechanism pegged a week ago , but tragically called it "Feed the Beauty." (He approves of it.) ...  6:05 P.M.