Thursday, February 17, 2011

Cutting the Budget: A Modest Proposal

Both President Obama and the Republican leadership in the house agree that it is vital to reduce the federal budget, although they disagree about the details of what and how much should be cut. To solve their disagreement and get the budget under control, I offer a simple proposal.

Let the two sides agree that both will support any cut that either supports, and both will oppose any increased expenditure that either opposes. The Republicans get to cut any expenditure that they disapprove of, the President gets to cut any expenditure he disapproves of, and neither gets to make any additional expenditure unless the other agrees.


Will McLean said...

Unworkable, since the simple plan only applies to expense, and not revenue.

A workable plan would require similar agreement on the revenue side. The comparable agreement would be that both sides would need to agree on any revenue decrease, but either side could increase revenue.

But that would be absurd.

Why should the minority be able to raise taxes if the majority was opposed?

David Friedman said...

I considered the question of tax increases. But at present, both sides claim to be in favor of cutting the budget. They don't both claim to be in favor of raising taxes.

Anonymous said...

Not necessarily good idea. New structure under some preferences may resemble Prisoner's dilemma. Suppose each side has preferences that peak with budget is half the size, but want to cut only other side's pork. Under new proposal each cut's pork of the other side, government spending goes to 0 and each is worse off (assuming they prefer status quo to 0 government). Obviously this is extreme case for illustration.

Anonymous said...

As long as tax cuts for the wealthy are included in expenditures that can be cut, it sounds like a fine deal.

Anonymous said...

Keith Hennessey has a convincing argument that tax changes aren't an option right now. The problem is that the spending side is not just large, but projected to grow, even as a percentage of GDP.


Anonymous said...

One party or the other will have to take the heat for any given cut. That seems to me an incentive for each party not to propose cutting very much, especially if such cuts would be enacted automatically. It's likely that a party will support large cuts (such as eliminating the department of education) only so long as the other party has enough power to prevent it from actually happening.

Anonymous said...

To the second anonymous poster:

1) Tax-rate cuts aren't an expenditure.
2) Unless you're talking about inheritance taxes (which were raised this year), there were no tax cuts based on wealth.

Jonathan said...

I like the idea in principle.

Some years ago I was thinking that governments should be constitutionally required to repeal two old laws every time they wanted to pass a new one.

But I never took it very seriously and I don't know whether it would have the desired effect, even if it miraculously became real.

Raphfrk said...

Presumably, you mean that the majority must repeal two laws for each new one that it wants to pass but 2/3 can pass laws without that requirement?

Otherwise, a country wouldn't be able to initially create laws. Ofc, that shouldn't be an issue for the time being.

There is an issue with defining what a law is. If you define it as a bill, then they could just repeal two bills and then then pass a new bill which is the 3 bills combined into 1.

For it to really work, it would need to be based on something like word count, and have some way to prevent references being used to circumvent that.

Jonathan said...

Raphfrk: Yes, a new country could skip this idea for maybe a century or so; unless it inherited a body of law from an older country.

"... pass a new bill which is the 3 bills combined into 1."

This did occur to me. The idea would need some refinement in practice.

49erDweet said...

Or the voters could just elect responsible adults . . . . . . . . . . nah, that won't work, either

Anonymous said...

How about get more Republicans in with filibuster proof majorities and do whatever the heck you want.

Anonymous said...

Let them auction off their savings.
Each party comes up with a prioritized list of savings. Then to cut 100B the first 50B of each list is cut, unless the same thing is on both lists then the cut goes as from the one list that had the highest priority, or if same priority then its not counted for the 100B in cuts to be made. The auction part comes in as to how much of both lists they want to make. Hold votes for every 100B or so.

cubanbob said...

The idea is interesting but not feasible with the current crowd.
The republican's ought to man up and just propose all of the cuts in spending including their special interests. As for revenues, simply eliminate all tax credits (except for those covered by tax treaties) and deductions, the non profit status of all non purely religious charities and extend the income tax to all who are currently exempt. Impose a 10% surcharge on all excise taxes and customs duties and on income over $250,000 for the next two years. Everyone's ox gets gored so what are the democrats left with besides immature whining?

Daniel in Brookline said...

A nice idea. But I don't see the Democrats agreeing to cut anything from the budget just because it's on a Republican wish-list; nor do I see them agreeing to give the Republicans veto power over any and all spending increases.

It would be nice to propose it, just to see what people say. But it wouldn't happen.

Here's something I wish we'd had in place last year: a requirement that no bill can be voted upon until it's been read aloud, in its entirety. And no, I don't see that happening either. (In 2008, we were promised that all new bills would be posted on the Internet for five days before being voted on; that didn't last long, did it?)

Daniel in Brookline

Doc Merlin said...

Won't happen as one side can write a net expense in such a way as to be scored as a net cut by the CBO. In fact this was done with the health care legislation.

Kristo Miettinen said...

Unfortunately, this just devolves into politics as usual. Each side has sacred cows in spending that the other can threaten; therefore, the threats can be used by each side to force the other side to negotiate over the whole spending package as an omnibus.

Which brings us right back to where we are today.

To make this work, you'd have to add some sort of enforced seclusion. Each side can propose cuts, but apart from that they cannot communicate across the aisle, and therefore they cannot logroll except within their respective caucuses.

But that would violate their rights as a deliberative body...

Anonymous said...

One side gets to divide the pie but the other side gets first choice of pieces.

That's how mother used to do it.