Budgets And Deficits: Spending Less On Worthwhile Projects: A Reprint

A reprint of my decade old blog post about budgeting and deficits that I believe is currently relevant.

Sunday, March 13, 2011

Budgeting And Deficit Reduction Is About Spending Less On Worthwhile Projects

Posted By Milton Recht

A comment I posted on Econbrowser, "AP: GOP budget targets agency that warned of tsunami" posted by Menzie Chinn:

Americans cannot afford to fund every worthwhile project. Budgeting is about admitting dollars are limited and setting project priorities. Just like a household that goes to the grocery with a fixed budget. The household cannot afford to buy every appealing delicious or nutritious food item in the store that catches their eye. Some items must stay on the shelf and not go in the cart.

Looking at any government project or expense in isolation is unfair. You have to look at all of the items together and decide which are the ones you want to keep and fund and which are the one you want to pass on.

Would you rather have a Tsunami warning system, headstart, a no fly zone over Libya, heating fuel subsidies for the poor, housing rent subsidies for the poor, incentives for converting to solar energy, etc. A great majority of the things the government spends money on are worthwhile, but which are the keepers and which are the unfunded and shelved.

The choices are tough. There is no right or wrong answer or choice, but it is unfair to discuss just one project in isolation. It makes it seem as if there is no reason other than politics not to fund a project and that is not the case when one is trying to reduce a deficit and balance a budget. In budgeting, sometimes very worthwhile funding must be curtailed.

It is the bright, rational do-gooder people who look at defunding of a project in isolation that are the biggest political force against budget balancing and deficit reduction. They are for deficit reduction, but they are not willing to make the hard choices, set priorities and limit funding with the understanding that some good projects will not get money.