On Cutting The Government

Over the past 6-9 months I've been thinking a lot about the changes that are happening in politics as some people get more agitated about the size and scope of federal and state governments. The biggest development is the rise in influence of all the "Tea Party" conservatives who are hell bent on reducing the size of government by cutting spending, eliminating "non-essential" services, and trying to "right-size" the government. 

As I've listened to all the rhetoric, I don't think it's all such a bad idea at it's core. The government should be run like a business. Like any business, you have revenue (taxes) and you have costs (services). If these two components get out of line for too long, it becomes an unsustainable situation. Somebody has to pay somewhere (or you just print more money -- but that's a different story). 

However, while I'm all for getting rid of "waste" in government, I don't think that some people really understand what happens when you cut "waste". Because when you cut parts of the government, you are cutting jobs. When you cut jobs, people get pissed. And when people get pissed, they change their votes. So while some might contend that the 2010 election was a indictment against President Obama for all of his "budget busting" bills -- I think the more realistic answer was that everyone was pissed because they didn't have a job. In his campaign he talked about changing healthcare -- it's not like weren't expecting changes in this area.

Back to people being pissed -- when you cut the government, you are cutting jobs. Right now the unemployment rate stands at 9.1%, while the "real" unemployment rate stands to be much higher -- at some something like 15%-20% after you factor in all the people who have quit searching for work and those who are underemployed.  Let's say you get the chopping block out and start cutting programs (jobs) -- where do you think that unemployment number is heading?? It's certainly not going to be a good number. 

The other way to "right-size" the government is to reduce the benefits that it gives to people. Everyone loves to say they want to cut government spending, but when you actually give them some options, they won't touch any program that will have an effect on them. And that's the problem -- Medicare and Social Security are the biggest drivers of the future budget, but no one has the desire to make a real change to them, because they affect so many people. In the end, you have everyone cursing any potential tax increase, but nobody wants to pay. It's not a good combination.

I think people need to be realistic and pragmatic about how to reduce the deficit. The bi-partisan group in Obama's fiscal commission recommended spending cuts and tax increases that draws ire from both sides of the aisle.

Will someone finally listen to them?