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YOU DECIDE: Can government waste easily be cut?

February 08, 2008

MEDIA CONTACT: Dr. Mike Walden, 919.515.4671 or michael_walden@ncsu.edu

Dr. Mike Walden
Media representatives: For a black-and-white or color copy of this photo, call 919.513.3127 or e-mail dave_caldwell@ncsu.edu.

I like presidential campaigns.

Obviously, from my professional point of view, interesting policy proposals are discussed. But the excitement, drama and unexpected twists and turns in these big-time contests also spark my interest, and this year's presidential election will be the 10th in which I will vote.

While the tactics, technology and styles of presidential campaigns may have changed over the decades, some elements remain the same. One is the recommendation to reduce or eliminate wasteful government spending. Calls by candidates to clamp down on waste always receive big rounds of applause.

And for good reason.

If wasteful government spending is identified and removed, then one of two good things can happen. The funds could be redirected to non-wasteful government spending, or the monies could be returned to taxpayers as a tax reduction and presumably be spent in areas that make households better off.

Clearly, eliminating wasteful government spending appears to be a "win" for everyone. Yet here's the puzzle: if cutting out waste is so beneficial, why hasn't it already been done? Why is it always an issue in every political campaign?

There are three parts to the answer.

First, although wasteful spending is easy as a concept, it's hard to identify in practice.

Second, working with government budgets and identifying programs to cut are time-consuming, tedious and uncertain.

Third is the issue of garnering enough political support to cut or abolish any government program.

Pick up any government budget and you won't find a category labeled "waste" (unless it stands for "waste removal" in a city or county budget). Instead, you'll find labels like education, health care, Social Security, transportation and public safety: all governmental functions that most people find important.

For example, only six categories in the current federal budget - Social Security, Medicare, Medicaid, defense, national debt interest and assistance programs like food stamps and unemployment compensation - account for 82 percent of total spending. And in the remaining 18 percent are programs for Homeland Security and highways.

Furthermore, some of the largest of these programs, like Social Security, Medicare and Medicaid, are effectively on automatic pilot. This means their spending is not set by a specific amount appropriated by the president and Congress each year but instead is determined by the number of people eligible for the programs and the costs they create. It should be no surprise that such "mandatory" programs - as they are called in Washington - have been, and will continue to be, the fastest-growing parts of the federal budget.

So-called "pork" spending in the federal budget - amounts that bypass typical scrutiny and evaluation - accounts for only one-half of one percent of federal spending!

So identifying what in someone's evaluation is government waste means going through the details of budgets line by line, understanding the programs and what they do and evaluating the merits of the spending either on philosophical grounds (government should or shouldn't be engaged in the function) or benefit/cost standards.

I've done some of this, and believe me, it's no easy task.

Then, when you have your list compiled, it must meet the political test. Enough votes must be found to support your definition of wasteful government spending.

Don't misread me. I'm not saying there is no government waste, and I'm not saying people shouldn't try to find it. I am saying that, in my evaluation, it's a harder job than campaign slogans imply.

This is why, I think you'll decide, that future campaigns will sound the same theme!

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Dr. Mike Walden is a William Neal Reynolds Professor and North Carolina Cooperative Extension economist in the Department of Agricultural and Resource Economics of N.C. State University's College of Agriculture and Life Sciences. He teaches and writes on personal finance, economic outlook and public policy. The Department of Communication Services provides his You Decide column every two weeks. Earlier You Decide columns are at http://www.cals.ncsu.edu/agcomm/writing/walden/decide.htm

Related audio files are at http://www.ncsu.edu/waldenradio/

Posted by Dave at February 8, 2008 08:00 AM