Tag Archives: overspending

Stimulus Roundup

Most people doubt Congress’ ability to spend money wisely. The stimulus has given them some proof:

-$800,000 for an African genital-washing program.

-$700,000 to create computer software that can tell jokes.

$40,000 for ten trash bins.

-$1.6 million to irrigate a golf course inTexas.

-Thousands of dollars to replace – twice – a sidewalk “that doesn’t front any homes or businesses, and leads into a ditch”

300 truckloads of oyster shells.

Bonus non-stimulus spending: “[T]he Census spent $23,000 on a totem pole in Alaska. Census representative Hector Maldonado says the agency thought it was a great idea. The plan was to increase participation in Alaska, but despite the totem pole, participation dropped in the state by two percent from the last census.”

Regulation of the Day 149: Sliced Bagels

In New York State, sliced bagels cost 8 cents more than unsliced bagels. It’s not because they’re more expensive. The marginal cost in labor and equipment is practically nil. Nor is it because bagel shop owners are greedy. Shops in Connecticut and New Jersey don’t charge more for sliced bagels. And there’s nothing about New York consumers that makes them more susceptible to predatory bagel pricing. The reason is government.

Albany’s legislators are in quite the fiscal mess right now. Short of cutting spending, they’re trying everything they can to plug their $8.5 billion budget deficit. The Wall Street Journal explains how this affects bagels:

“In New York, the sale of whole bagels isn’t subject to sales tax. But the tax does apply to “sliced or prepared bagels (with cream cheese or other toppings),” according to the state Department of Taxation and Finance. And if the bagel is eaten in the store, even if it’s never been touched by a knife, it’s also taxed.”

So there you have it. Bruegger’s, a New York bagel chain, put signs in its stores telling customers that “We apologize for this change and share in your frustration on this additional tax.”

Bruegger’s shouldn’t be apologizing to its customers. The state legislature should be apologizing to theirs. If they had been able to keep state spending in check, there would be no need for the tax.

(Via Reason’s Katherine Mangu-Ward)

How Much Would a Congressional Pay Cut Save?

Rep. Ann Kirkpatrick is proposing a 5 percent pay cut for members of Congress.

“In the face of our ever-deepening federal debt, the federal government must follow their example by finding common-sense solutions to do more with less,” she told The Hill.

A noble sentiment. And one that would save $8700 per member. With 535 members of the House and Senate, the total savings are $4.65 million.

The federal government is on track to spend about $3.8 trillion this year. Trimming $4.65 million means that for every $816,502 the federal government spends, it would save one dollar.

Rep. Kirkpatrick is proposing a 0.00122 percent spending cut. That’s not even a rounding error.

I do not intend to mock Rep. Kirkpatrick. Her spending cut is better than nothing, and I am glad she is proposing it. But placed in proper context, it is very, very small. It is a largely symbolic proposal, and should be treated as such. A 5 percent pay cut for Congress is no austerity measure.

More fundamental solutions would involve fundamental entitlement reform paired with a deregulatory stimulus. Cato’s Chris Edwards has some other spending cut ideas that deserve a serious look. They total $380 billion, or ten percent of federal spending.

Senate Passes $18,000,000,000 Spending Bill: Will it Create Jobs?

The Senate just passed an $18 billion spending bill. Since the House already passed it, the legislation is now headed to President Obama’s desk to await his signature and become law.

The hope is that the spending will create jobs. If you’re reading this blog, then you probably know enough about economics to know that isn’t what will actually happen. Remember: anything that Washington giveth, it must first taketh away from somewhere else. It’s a zero-sum game. All those new jobs that politicians will be touting for the cameras will have come at the expense of other jobs elsewhere. On net, they’re not creating a thing.

Take the payroll tax break for small businesses that’s in the bill. Yes, those small businesses benefit. Maybe the money they save will even be used to hire more workers. That’s easy enough to see. But that money had to come from somewhere. That is harder to see. Too hard for the Senate to see, at the very least.

The reason is this: the government is foregoing some payroll tax revenue. But since it isn’t cutting spending to match, it has to borrow more. And there’s only so much investment capital to go around. Because Washington is borrowing more, less is left over for private investment opportunities. At the very least, companies will have to offer investors higher interest rates to lure them away from government bonds.

That makes getting loans more expensive. And when something gets more expensive, there tends to be less of it. Because of today’s bill, about $18 billion less capital will be available for the private sector to create jobs.

The legislation the Senate passed today is no jobs bill, at least on net. It is a spending bill. It doesn’t create jobs, it only redirects them.