11 Nov 2010
I decided to wait 24 hours for the dust and the entirely predictable massive overreaction to specific proposals to settle down a bit before commenting on the deficit reduction plan released yesterday by commission co-chairs Erskine Bowles and Alan Simpson.
My assessment: The plan definitely...and maddeningly...doesn't add up.
What Bowles and Simpson released was really nothing more than their own version of the annual report the Congressional Budget Office publishes on deficit reduction options. It's the co-chairs laundry list of spending and revenue alternatives. But, for the most part, it's not a coherent plan that embodies a vision of what the government should be and do to match the fiscal constraints.
For example...The plan calls for a substantial reduction in federal employees. A reduction in employees generally results in the government relying on more outside consultants to get the work done but, in addition to the recommended reductions-in-force, Bowles-Simpson also calls for a significant cuts in the use of contractors.
The combination of those two seems to indicate that the now smaller number of federal employees will have to do everything that was done before, that is, that they will have to be much more productive. But Bowles-Simpson also calls for a three-year freeze on federal employee salaries and that almost inevitably means an increasing number of federal workers will quit. That will reduce rather than increase productivity as new and less experienced workers replace the more senior folks who will have left for greener pastures.
In other words, Bowles-Simpson projects substantial savings based on the expectation that a less experienced and much smaller federal workforce will be more productive and just as effective than the more experienced and larger workforce it replaces. That makes absolutely no sense.
Bowles-Simpson seems to have been put together backwards. Instead of starting with a plan about what the federal government should no longer do and then determining the savings from the smaller number of employees that would be needed to do what's left to be done, with limited exceptions the plan focuses on the reduced workforce but makes few assumptions, suggestions, or recommendations about what services the government should no longer provide. The assumptions it does make don't appear to justify the cuts in the number of employees and contractors.
The type of proposals that are needed are: Should the government stop prosecuting and jailing as many criminals and should the sentences be shorter for those it convicts? Should it fund less or no research on cancer and similar diseases? Should the FBI no longer investigate white collar crime? Should the military not be prepared to conduct as many operations? Should veterans health care be eliminated?
I also find it hard to understand where the $3 billion annual reduction in farm subsidies comes from. Is this a partial decision to get the federal government out of that business? If subsidies to farmers are being cut, is that based on a decision to stop providing subsidies to all industries? If not, what's the justification for singling out farmers?
Bowles-Simpson also doesn't add up because it relies on a variety of what in the past would have been ridiculed as budget gimmicks, such as mandating limits on certain costs without providing any real way of actually making that happen.
The most egregious gimmick, however, and the one that is a clear golden oldie in the federal budgeting world, is assuming $11 billion in annual savings from domestic discretionary spending by creating a committee to recommend the cuts. This is nothing more than a modern-day version of the magic asterisk in unspecified future savings that David Stockman and Dick Darman relied on in 1981 to make the numbers in Ronald Reagan's first budget work.
Without this vision, without embodying an overarching concept for what the government should no longer do, Bowles-Simpson is just a series of one-off proposals that are a plan only in the sense that they are listed in the same document.
That makes each proposal relatively easy to criticize individually...exactly what's happened since the plan was released.
My assessment: The plan definitely...and maddeningly...doesn't add up.
What Bowles and Simpson released was really nothing more than their own version of the annual report the Congressional Budget Office publishes on deficit reduction options. It's the co-chairs laundry list of spending and revenue alternatives. But, for the most part, it's not a coherent plan that embodies a vision of what the government should be and do to match the fiscal constraints.
For example...The plan calls for a substantial reduction in federal employees. A reduction in employees generally results in the government relying on more outside consultants to get the work done but, in addition to the recommended reductions-in-force, Bowles-Simpson also calls for a significant cuts in the use of contractors.
The combination of those two seems to indicate that the now smaller number of federal employees will have to do everything that was done before, that is, that they will have to be much more productive. But Bowles-Simpson also calls for a three-year freeze on federal employee salaries and that almost inevitably means an increasing number of federal workers will quit. That will reduce rather than increase productivity as new and less experienced workers replace the more senior folks who will have left for greener pastures.
In other words, Bowles-Simpson projects substantial savings based on the expectation that a less experienced and much smaller federal workforce will be more productive and just as effective than the more experienced and larger workforce it replaces. That makes absolutely no sense.
Bowles-Simpson seems to have been put together backwards. Instead of starting with a plan about what the federal government should no longer do and then determining the savings from the smaller number of employees that would be needed to do what's left to be done, with limited exceptions the plan focuses on the reduced workforce but makes few assumptions, suggestions, or recommendations about what services the government should no longer provide. The assumptions it does make don't appear to justify the cuts in the number of employees and contractors.
The type of proposals that are needed are: Should the government stop prosecuting and jailing as many criminals and should the sentences be shorter for those it convicts? Should it fund less or no research on cancer and similar diseases? Should the FBI no longer investigate white collar crime? Should the military not be prepared to conduct as many operations? Should veterans health care be eliminated?
I also find it hard to understand where the $3 billion annual reduction in farm subsidies comes from. Is this a partial decision to get the federal government out of that business? If subsidies to farmers are being cut, is that based on a decision to stop providing subsidies to all industries? If not, what's the justification for singling out farmers?
Bowles-Simpson also doesn't add up because it relies on a variety of what in the past would have been ridiculed as budget gimmicks, such as mandating limits on certain costs without providing any real way of actually making that happen.
The most egregious gimmick, however, and the one that is a clear golden oldie in the federal budgeting world, is assuming $11 billion in annual savings from domestic discretionary spending by creating a committee to recommend the cuts. This is nothing more than a modern-day version of the magic asterisk in unspecified future savings that David Stockman and Dick Darman relied on in 1981 to make the numbers in Ronald Reagan's first budget work.
Without this vision, without embodying an overarching concept for what the government should no longer do, Bowles-Simpson is just a series of one-off proposals that are a plan only in the sense that they are listed in the same document.
That makes each proposal relatively easy to criticize individually...exactly what's happened since the plan was released.
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