|
Townhall.com…
Same as the Old Boss?
By John Stossel
Last year, I reported that the United States fell from sixth to eighth
place -- behind Canada -- in the Heritage Foundation/Wall Street
Journal's 2010 Index of Economic Freedom. Now, we've fallen further. In
the just-released 2011 Index, the United States is in ninth place.
That's behind Hong Kong, Singapore, Australia, New Zealand,
Switzerland, Canada, Ireland and Denmark.
The biggest reason for the continued slide? Spending as a percentage of
gross domestic product. (State and local spending is not counted.)
The debt picture is dismal, too. We are heading into Greece's territory.
Are we doomed? Not necessarily. Economist David R. Henderson points out
that our neighbors to the north faced a similar crisis. In 1994, the
debt that Canada owed to investors was 67 percent of GDP. Today, it's
less than 30 percent.
What did Canada do? It cut spending from 17.5 percent of GDP to 11.3
percent.
This wasn't merely a cut in the growth of spending, a favorite trick of
congressional committees. These were actual reductions in absolute
spending.
"If a cabinet minister wanted a smaller cut in one program, he had to
come up with a bigger cut in another program," writes Henderson in
"Canada's Budget Triumph," published by the Mercatus Center. All but
one of Canada's 22 federal departments experienced real cuts in
spending. While Canada raised taxes slightly, spending was cut six to
seven times more.
These supposedly painful cuts didn't cause terrible pain. In fact,
there was much more gain than pain. Unemployment dropped, the economy
boomed, and the Canadian dollar -- then worth about 71 cents U.S. --
today is about equal to the American dollar.
If Canada can do it, we can, too. But the signs aren't good. New
Speaker John Boehner, leader of the Republicans who now control the
House, says he wants to cut spending. When he was sworn in last week,
he declared: "Our spending has caught up with us. ... No longer can we
kick the can down the road."
But when NBC anchorman Brian Williams asked him to name a program "we
could do without," he said, "I don't think I have one off the top of my
head."
Give me a break! You mean to tell me the Republican leader in the House
doesn't already know what he wants to cut? I don't know which is worse
-- that he doesn't have a list or that he won't talk about it in public.
The Republicans say they'll start by cutting $100 billion, but let's
put that in perspective. The budget is close to $4 trillion. So $100
billion is just 2.5 percent. That's shooting too low. Firms in the
private sector make cuts like that all the time. It's considered good
business -- pruning away deadwood.
GOP leaders say the source of their short-run cuts will be
discretionary non-security spending. They foolishly exclude entitlement
spending, which Congress puts on autopilot, and all spending for
national and homeland security (whether it's necessary or not). That
leaves only $520 billion.
So even if the Republicans managed to cut all discretionary
non-security spending (which is not what they plan), the deficit would
still be $747 billion. (The deficit is now projected to be $1.267
trillion.)
This is a revolution? Republicans will have to learn that there is no
budget line labeled "waste, fraud, abuse." If they are serious about
cutting government, they will ax entire programs, departments and
missions.
I'm not confident they have it in them. I hope I'm wrong, but they're
politicians, after all. I'm reminded of Spencer Abraham. When he was a
senator, he sponsored a bill to abolish the Department of Energy. But
then George W. Bush appointed him to head the department. Suddenly, he
saw the importance of the Energy Department. "I changed my mind after
Congress passed legislation in 2000 reorganizing the department,"
Abraham explained to his former Senate colleagues. Yeah, yeah.
That's why I fear that the new Congress will soon remind me of that
line by the Who: "Meet the new boss, same as the old boss."
|
|
|
|
