Economics and Government

From the Opinion Section of the Colorado Springs Gazette Our View - Friday (30 SEP) "Calling Bush's bluff Congressional pork - cutting plan has promise: Colorado Congressman Mark Udall of the Second Congressional District has joined a few Republican colleagues in cosponsoring a piece of legislation aimed at helping to defer the cost of hurricane recovery efforts. And I think this idea has promise. It's called "Stimulating Leadership In Cutting Expenditures" Act- SLICE- and it would authorize President Bush to identify for elimination any wasteful or unnecessary spending items he can find in the recently approved transportation bill, as well as 2006 appropriations bills." I'm all for cutting wasteful and unnecessary spending in the bloated Federal government budget! Let me first look at what is the purpose for the cuts- to help fund hurricane recovery efforts. Is it the Federal governments job (under our Constitutional Republic) to come to the rescue of States and or Cities and take over recovery efforts and nearly completely fund the reconstruction? Looking at it from an Individualistic Ethics (economists) view is their a market failure that warrants Federal intervention? I don't see that this situation fits any of the 3 sources of market failure (monopoly, externality, or public good). So, I suppose I'll have to look at this from a Normative Economics point of view. Given that the American people have always been rather generous and helped out each other and the world in a time of need, I believe that the American people support by a significant majority the Federal governments efforts in reconstruction. Given that the area of devastation is nearly the size of the United Kingdom at over 90,000 square miles and that even with record levels of giving to charities and from Foreign countries (Glad to finally see that all these foreign countries we helped over the years, some are finally helping us in this time of great need!) that fund raising may total only about $10 billion dollars when all is collected and with maybe $50 billion from insurance covered losses that would only cover about 20% of estimated losses given that estimated losses of about $300 billion dollars there is no entity, but the Federal government that is capable of currently funding this recovery effort. The alternative is that we just don't rebuild a good portion of the devastated area and leave it to mother nature? This would still leave 100's thousands of refugees to resettle elsewhere. I don't think that as Americans, we would accept that alternative and we have always been fighters and have rebuilt from other disaster's like the great San Francisco Earthquake in the early 1900's. That also took Federal efforts to stabilize the area and to help the recovery efforts. Now back to SLICE, I think that given the political reality that the Federal Government is going to fund the bulk of the recovery efforts and that we currently are running over $300 billion a year Federal annual budget deficit this proposal is a good idea and deserves futher exploration. The recently approved pork laden Federal transportation bill was fat with about I believe to be $25 billion in pork (about 10% of the bill), one good example is the nearly 1/4 billion dollar bridge in Alaska that will connect a town of 8,000 people to an island with only 50 residents! The Federal budget is riddled with special interest projects and wasteful spending for top to bottom and it shouldn't be hard to find at least $100 billion dollars to cut in fiscal 2006 bills ($300 billion would be more like it , but I'm a political realist). The Federal budget is over $2.2 Trillion annually and a $100 billion is only 4.5% of the annual budget! This would be like you or I with let's say $40,000 a year income in having to cut back $1,800 a year or $150 a month. It may seem like a lot, but given that you and I are already adjusting our spending by about $60 a month to afford needed gas each month and that the winter heating is projected to cost the average household an additional $1,000 this year. You and I have already adjusted or will be adjusting our budgets by about $1,800, should we expect anything less from our Federal Government?