A Million Here, A Million There

In a great example of what the distributed, decentralized processing power of the internet is good for, a number of bloggers have teamed up to take President Bush at his word and demonstrate that the costs of Gulf Coast reconstruction can be paid for by cutting "pork" from the federal budget. "Porkbusters," created by Glenn Reynolds and N.Z. Bear of Truth Laid Bear, is an admirable effort, much along the lines of Josh's efforts on the DeLay Rule, Social Security, and now the Gulf Coast Wage Cut. In addition to contributing annotated examples of wasteful federal spending, participants are encouraged to "call your Senators and Representative and ask them if they're willing to support having [a local] program cut or -- failing that -- what else they're willing to cut in order to fund Katrina relief...Post the results."

After just a few days, the project has identified over $14 billion in spending that could be cut, a small downpayment on the $200 billion reconstruction project. And a lot of it is true waste, mostly the earmarked projects in HUD and Transportation spending that were under control in the late 1990s but have exploded recently. (Who knew there were so many bike trails being built?)

But cut all these million-dollar boondoggles and you would still never have anything close to the cost of reconstruction. I did a quick skim of the list, and there are only three items that amount to more than bike trails. One is the seismic upgrade of the Golden Gate bridge, a billion-dollar undertaking which its would-be cutter says could be paid for by raising tolls. One participant proposes to eliminate all domestic violence programs (and runs an anti-feminist blog apparently dedicated to the repeal of the Violence Against Women Act) -- that would save $3.1 billion over five years. Another wants to cut a light rail project in Charlotte, NC, but the $2.8 billion ascribed to that project includes state as well as federal costs. Federal funding for that was only $30 million last year. So just by looking closely at the two biggest suggestions, that $14 billion becomes $8 billion.

But this project should continue, because it will provide provide participants with an education in the actual insignificance of domestic discretionary spending, of which "pork" is a small part, in the bigger context of war, reconstruction, and tax cuts. Eventually participants will grasp the truth of what budget expert Stan Collender writes this week in his National Journal column:

President Bush either is wrong, mistaken, or misleading: The significant additional federal spending because of Hurricane Katrina absolutely will not be offset with cuts to other programs.

There are two reasons. First, there isn?t enough ?unnecessary? spending or waste, fraud, and abuse in the budget to pay for the federal costs of Katrina, which are now expected to total at least $200 billion in fiscal 2006 alone. That may be hard to believe in a budget that will approach $2.6 trillion next year. But when you subtract those things the White House will not want to cut -- Social Security, interest on the debt, most other federal mandatory spending, the Pentagon, the costs of activities in Iraq and Afghanistan, homeland security and foreign aid -- there is only about $500 billion left to be scrutinized. Completely offsetting Katrina-related costs would mean that all other programs would have to be cut by about 40 percent, a ridiculous notion under virtually any circumstances.

[Domestic discretionary spending] has been the part of the budget where the Bush administration has focused most of its attention since 2001 and undoubtedly is where, in a perfect world, it would like to make more changes. But cuts like this would have a disastrous impact on the day-to-day activities of virtually every domestic federal department and agency; some would have to cease operations completely.

A report from the Center on Budget and Policy priorities adds some context. The Center points out that, even if Katrina reconstruction costs $200 billion over five years, federal spending over that period will average 20.1% of gross domestic product, lower than in any year from 1975 to 1996.

It is revenues, however, that are completely out of line with historic norms. At 17.2% of GDP, tax receipts over the next five years will be much lower than in any year from 1977 through 2002.

The gap is the deficit. Anyone who wants to reduce the deficit should start by looking at what's unusual, what's changed that turned the surplus into a deficit. That's probably the place to start. And it's not spending.

That leaves the question, do we need to offset the spending for Gulf Coast reconstruction? In theory, of course not. That's exactly the kind of project that one runs deficits for -- a crisis, a major capital investment, an undertaking that will yield economic benefits into the future. But it is exactly the reason that one doesn't want to run massive deficits routinely in good economic times. It makes it all the more painful when you do have an emergency or a recession. It is the deficit that pre-existed Katrina -- projected at $4.5 trillion over the period 2006-2015 -- that we need to be concerned about and that will take a toll on our economy.

There's lot of other good stuff at the Center on Budget site today, including a paper showing that just the two tax cuts that are scheduled to go into effect in January, and that benefit almost exclusively the very wealthy (97% of benefits go to households with incomes over $200,000), would cost $146 billion over ten years. How about that as a place to start paying for reconstruction? Also, a good breakdown of the demographics of people affected by Katrina, by poverty, race, lack of vehicle, etc.