Missing the Forest for the Straw

While taking a break from 'Operation:Installarchy' on Friday and enjoying the long weekend, I noticed that Matthew Yglesias responded to my post defending Jacob Levy's politics. Well, more or less.

I say that because Matthew decided to respond to two things that were news to me- first, that I was advocating eliminating all discretionary spending by the Federal government, and second that being Jacob and I are strong deficit-hawks, that we'd have to cut medicare in any case to balance the budget with tax cuts.

The first one was a real head-scratcher. I re-read my post and couldn't figure out where he got that idea until I popped down to footnote four, which I pointed out in a tongue-in-cheek way that all the discretionary spending of the government happens to be about (but still not quite) the federal deficit, and so you could get far more savings from unilaterally cutting all of that as you could from cutting all of medicare (which is far less than the total of discretionary spending). A great deal of Matthew's original jibe against Jacob was that balancing the budget would have to cut Medicare, by a lot. Quoth the Yglesias:

One could, I suppose, achieve the Levy agenda by simply eliminating (not privatizing, eliminating) Medicare altogether, but that doesn't seem pragmatically achievable, and if one really thinks old people should just die when they get sick, one ought to say so clearly.

Jacob never suggested getting rid of Medicare; the suggestion to the contrary was just a convenient strawman. And in my case, as well, I said specifically that eliminating all discretionary spending was as likely as eliminating Medicare altogether (i.e. not going to happen). I suppose cheeky tone doesn't come through the internet very well. But in any case, when Matthew says:

Brian's thought is that this is wrong, and we could achieve our savings through the 33% of the budget dedicated to domestic discretionary spending. This, as Steve Verdon writes is around $424 billion per year. So if we just eliminated that, we would still be left with a $76 billion deficit, before Levy's new spending initiatives and new tax cuts.

...it is not only a straw man, it depends on the second vital assumption, that I am a deficit hawk and am most concerned with balancing the federal budget. This is news to me, but since I haven't spoken out on the subject before I'll assume good faith ignorance and correct the error here- I believe that the amount of spending is more important than the accounting issue at the end of the day. A balanced budget where the government is spending 50% of GDP is worse than a $500 billion deficit at 20% of GDP. Its the spending that's the problem, for a variety of reasons[1].

I will say that Matthew, of course, is correct in that if you got rid of all the discretionary spending you'd really screw a lot of things up (as well as, duh, being logically impossible to do while also boosting discretionary spending on the favored policies). As a reluctant minarchist, I agree too that you can't just wave the magic wand and overnight abolish all or even most of the Federal government (or, sadly, even a good sized minority slice. Bureaucrats fight like cornered weasels when it comes to defending their claim on tax revenues), mostly on consequential grounds[2].

But all of that misses the original point of both Levy's post and my own. The point is to (a) keep the spending down, and (b) re-slice the federal spending pie. Taking the tax/debt hit now to privatize Social Security is worth doing (and incurring debt for) to resolve the longer-term consequential problem[3] as well as the moral problem[4] . Engaging in the fight against Islamist terrorism and Islamofascism in general is worth doing (but, as Jacob said, worth doing right; King George hasn't shown us much competence in that area since the end of 2002[5]). As far as federal vouchers, to the extent that Jacob supports such an idea, I oppose him and it. Education is perhaps one of the purest local issues around, and the Federal government should get out of the education business ASAP.

Regardless, those things that are worth doing, do[6]. But instead of just assuming that everything done by the government pre-9/11 is justified (and whos funding should be maintained or increased), the government should have held the line on all agencies and raided the "September 10th" departments in favor of the war spending (for starters)[7]. Holding the line on discretionary spending means less of a deficit problem now, as well as perhaps more money for the things that really matter.


fn1. Among other reasons, deficit spending increases the total Federal debt, which will eventually demand more and more current funds just to pay the interest. Such prolonged deficit spending (due to, as Brad DeLong might say, 'structural deficits' or just chronic fiscal idiocy) will thus provoke a debt crisis (where most tax revenue goes toward maintaining the debt) which will either result in default or a catastrophic increase in taxation. Both involve massive bad consequences for the economy. So focusing on the deficit is ok as a 2nd-order priority, but really its the spending that's the issue. I say 'less of it, please'.

fn2. A lot of people depend on government services and civil society at the moment can't easily duplicate most governmental tasks. Eliminating them overnight would cause a lot of pain, anguish, and as a result do a lot of harm to the idea of a voluntary society. (Chaos begets calls for the state; anarchy does not equal chaos, so chaos should not be the immediate foreseeable result of a given policy prescription.) Of course, all that means is that it will take more than a day to build Ancapistan, not that we can't or shouldn't work towards its eventual realization. (sing it with me now) Anarchy, Eventually! Anarchy, Eventually! Woo! (cue punk rock anthem)

fn3. A default-on-obligations or massive tax catastrophe, as in footnote 1.

fn4. Stealing from the working to give to the retired in a big redistributionist ponzi scheme, and as a result making everyone dependent on the government for their retirement support is immoral, not to mention incredibly illiberal. Liberals should work to free people from dependency on arbitrary power, not work to create that dependency. Workers should have real security, which comes from having a property right in their retirement assets, one that is not so easily altered by government diktat. Today, Congress could theoretically end Social Security altogether, and kick everyone to the curb. In a private accounts scenario, congress would have to pass a law confiscating mass amounts of private savings, which would at least have to originate in the House; I imagine it would be much more politically difficult to raid people's private savings than to jigger an SSA benefits formula.

fn5. I'm being charitable. One could say that aside from the initial attack on Aghanistan, he and his crew and screwed the pooch on the WOT since then. I'd be hard pressed to strenuously disagree, though I mildly do. But the record since 2003 is pretty much pure crap.

fn6. The standard anarcho-capitalist disclaimer applies.

fn7. Why the Depts. of Education and Energy have had massive spending increases I have no idea, for example. Neither has any appreciable WOT role, either in terms of either Global Efforts, Afghanistan, or Iraq.

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Brian, On the

Brian,

On the defusing-the-Social-Security-Timebomb topic, I'd like to mention one solution that I think would probably be far superior to the "private accounts" method mentioned, and that wouldn't require creating new taxes. It would probably have some serious economic side-effects, but there may be ways of dealing with that, so here's the idea:

Back before the Civil War, several people had mentioned the idea of using something I'll call "compensated emancipation" for lack of a better term to end slavery peacefully. One of the suggestions was to take all of the US government owned land out West due to such things as the Louisianna Purchase, and auction it all off. The proceeds from the auction of excess land would have gone to buying the liberty of each and every slave in the country, at which point slavery could be completely banned. That would compensate any farmers who had been using slave labor, allowing them to have some money to reorder the way they do business, and it would also have greatly diminished the power of the federal government.

Well, they blew that opportunity, and we got the Civil War.

But what about now? The government has very large amounts of assets, many of them which could be as or more efficiently managed in the private sector, including a large chunk of the open land in the Western US. Why not sell the land, and then use the proceeds to buy out everyone who has put money into the SS system? That way nobody who had lost money on the system would get shafted, there would be no potential for future SS related timebombs, and the accounts would be entirely private--with no way for the government to manipulate them for various purposes.

Anyhow, what do you think about such an idea? Would it work? Would the unintended negative side-effects outweigh the positive effect of getting rid of Social Security, and reducing the power of the national government?

~Jon

It might be able to work; I

It might be able to work; I certainly think that selling off federal lands is a good idea in any case, as private owners have greater incentive to maintain their land profitably and sustainably (and anecdotal evidence supports this), thus there would be a "positive utility gain" from the sale.

I don't know if it would be enough to fully fund the SSA's massive liabilities, though. I think that any plan should at least assume, conservatively, that there will be need for new debt issued/taxes levied in the short run to square the circle. But its a good idea nonetheless to try and defray the costs through Federal asset sales.

I say that because Matthew

I say that because Matthew decided to respond to two things that were news to me- first, that I was advocating eliminating all discretionary spending by the Federal government, and second that being Jacob and I are strong deficit-hawks, that we?d have to cut medicare in any case to balance the budget with tax cuts.

Bingo, for somebody with a philosophy degree Matthew sure does spend alot of time building strawmen, no?

In fact, in reading Levy's first post there is nothing about the deficit and dismay over the spending increases. A completely different focus/emphasis than Matthew paints.

Personally I think it is rather dishonest of Matthew, but hey he's a big time journalist and I'm not. Maybe he's angling for Jayson Blair's old job.