Monday, February 25, 2013

Discretionary Spending has Doubled since 2000, so Why the Panic Over Sequestration?

Check out this graph that I came up with using the White House's historical budget tables and nominal GDP data from FRED:


As you can see, government spending has dwarfed the growth in the economy since 2000 with even non-Defense discretionary spending up a whopping 85% since then compared to growth in nominal GDP of 57.5% (so no blaming the wars in Iraq and Afghanistan).  The sequester cuts barely even register as blips on these spending growth curves with total federal spending continuing to climb after these supposedly "draconian" cuts.

So all the scare tactics that seem to imply that aircraft will drop from the skies, cops and FBI agents will be let go and children will die from lack of vaccinations are just a bunch of BS.  As everyone who has been to a government office knows, there is plenty of slack in government with government workers being paid more to do less than private sector counterparts.  Check out this list of common sense cuts from Rand Paul that won't cause anyone to lose their jobs:

•         Stop Hiring New Federal Employees: $6.5 billion saved annually 

Every year, thousands of federal employees retire or leave their jobs. In 2011, roughly 62,000 people ended their careers with the government. Estimates vary, but allowing a federal bureaucrat to retire without replacing that person with another employee can save anywhere from $60 billion to $200 billion over 10 years. This provision estimates to save $6.5 billion in one year.

•·         Bring Federal Employee Pay in Line With Private Jobs: $32 billion saved annually 

According to the Congressional Budget Office, the average compensation of a federal employees is 16 percent more than their private equivalents. By reducing salaries to align more with their private counterparts, this provision could save as much as $32 billion a year.

•·         Reduce Federal Employee Travel by 25 Percent: $2.25 billion saved annually

The latest data provided by the General Services Administration suggested that the federal government spent $9 billion on travel. Reducing the federal travel budget by at least 25 percent can reduce the budget by $2.25 billion a year.

•·         Focus Military Research on Military Needs: $6 billion saved annually 

According to research done by the staff of Sen. Tom Coburn (R-Okla.), found that the Defense Department spent $6 billion on research that had nothing to do with military or military-related health inquires.

•·         Require Competitive Bidding for Government Contracts: $19 billion saved annually 

The Davis-Bacon prevailing wages law requires federal projects to pay the employees higher wages. This would repeal this requirement and allow the government to save money by making pay competitive to all government employees. The Heritage Foundation estimates that this will save $9 billion a year. Also, many contracts in the federal government are provided to companies without requiring a competitive bid - or the opportunity for the government to contract work at the lowest price possible. This provision would require the government to competitively bid all contracts. This provision would save an additional $10 billion a year.

•·         Cut 50 Percent of Foreign Aid: $20 billion saved annually

We spend more than $40 billion a year on foreign aid. When we're dealing with a budget crisis here at home, it's only responsible to bring this money home. This provision would eliminate half the foreign aid budget. 

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