Quick Summary of Obama's Speech

If you are masochist, you can read the whole thing. Clive Crook at the the Atlantic summed it up accurately as a "waste of breath."

The speech was more notable for its militant--though ineffectual--hostility to Republican proposals than for any fresh thinking of its own. It was a waste of breath.

I'd summarize the speech as follows.

Government is what makes America great.
Blame Bush
Republican ideas are bad
Raise taxes
Make minor budgetary changes and pretend they'll solve our problems

When you are a government worshiper like the president, the very idea of slashing big government is anathema. Obama is a living, breathing reason to vote Republican if you care in the slightest about the financial future of this country. The GOP has many problems, but it is a solid lesser of two evils and has been for a long time.

A Look at Some Cuts in the Latest Agreement

Reuters has an article with the somewhat misleading headline, "Budget plan cuts food aid, stewardship programs." Cutting food aid, that sounds scary doesn't it? Here's the lede:

Programs that help poor mothers buy food and that share the cost of land stewardship would be cut under government-wide reductions unveiled on Tuesday.

Really? They are cutting the WIC -- Women, Infants and Children -- program? But when you read further you find that in fact that the so-called cut involves "eliminating reserve funds." That sounds much less scary, and indicates that beneficiaries won't be affected. But what about the other cuts?

Cuts in stewardship spending included $119 million from the Wetlands Reserve, $80 million from the Environmental Quality Incentives Program (EQIP) and $39 million from the Conservation Stewardship Program (CSP).

Those sound pretty trivial. Then there are the "other large cuts." My comments in italics.

-- $433 million from an agriculture credit insurance fund run by the Farm Service Agency. Hard to tell how much that is without knowing the size of the fund. But I'm guessing it could be cut more.

-- $350 million in dairy subsidies. Most agricultural subsidies should be eliminated instead of cut.

-- $194 million from foreign food assistance and related programs, including food aid donations and a global school meals program. The programs were forecast for $1.9 billion this year. We have a fiscal crisis in this country yet we are giving away $1.9 billion in food aid overseas. And we are only going to cut 194 million. This sort of trivial cut is an example of just how unserious our government is about resolving our financial situation.

-- $134 million from the newly inaugurated Biomass Crop Assistance Program (BCAP) that encourages farmers to experiment with next-generation crops, such as switchgrass, for making biofuels. The USDA had estimated BCAP outlays at $199 million. Should be completely eliminated. Farmers can decide for themselves what to grow.

-- $126 million from the National Institute for Food and Agriculture, a research agency. Could almost certainly stand to be cut further, or possibly eliminated.

-- $118 million from the Natural Resources Conservation Service, which oversees land, water and wildlife stewardship. Not sure about this one.

-- $265 million from rural economic development programs. Entire programs should be eliminated as unaffordable luxuries.

This is a prime example of why many of us are not impressed with these budget cuts. Instead of a serious effort at fiscal reform, we are getting bloated programs pared down a bit. The U.S. government is like a 6 foot, 500 pound man whose target diet goal is to get down to a healthier 475.

What Serious Budget Cuts Would Look Like

It's been pretty funny -- but not surprising -- watching the hysterical screaming from Democrats and the left in general about the minor budget cuts proposed by the GOP in the form of a plan by Rep. Paul Ryan. A few months ago, Senator Rand Paul outlined a plan of his own with far more significant cuts -- the kind of cuts we need if we are to even begin to bring the deficit under control, let alone the debt. His plan includes such things as completely eliminating the Departments of Energy and Health & Human Services, cutting the Department of Education budget by 83%, and the complete elimination of foreign assistance programs. Sounds radical, doesn't it? Those cuts, and the numerous others he proposed, would still only reduce the deficit by one third.

The Broken Military Budget Estimation Process

A wire story was out yesterday called, "Nearly 7 in 10 major U.S. arms programs over budget." The details come from a GAO report. Here are some key points:

Of those reporting relevant cost data, 69 percent, or 64 programs, chalked up increases in total acquisition costs, the GAO said. 

A total of 75 percent, or 69 programs, reported increases in research and development costs and these were 42 percent above their original estimates in 2008, up from 40 percent above the year before.

And delays in delivering weapon systems increased. What ever happened to underpromising and overdelivering as a principle for estimating? For as long as I can remember, the Pentagon has based its acquisitions on rosy estimates of cost & development times. This is typical government inefficiency taken to the extreme. Instead of basing our acquisitions on worst-case realistic estimates, we base them on fantasy projections that lead to massive cost overruns and undelivered or non-functioning systems. The spiraling costs lead to cuts, some of which affect promising platforms that have to be killed because we can no longer afford their development -- all because we can't be bothered to use reasonable, conservative estimating practices.

What are the administration's plans?

Ashton Carter, the Obama administration's choice to become the Pentagon's top arms buyer, told his Senate confirmation hearing on Thursday he would go program by program to crack down on cost overruns if confirmed.

That's like treating the symptoms of a cancerous tumor, while ignoring the tumor itself. The Obama administration should call for a complete overhaul of the military cost estimation process. It's one area where reform is desperately needed.

No Defense Cut

In a recent post I commented on a report that said the Obama administration would request a 10% cut in the military budget.  Congressional Quarterly reported yesterday that the actual budgetary request is in fact an increase. Apparently the amount is less than the Pentagon would like, so some there decided to spread misleading information and call it a "cut," when it is no such thing. 

Characterizing actual increases as "cuts" for political purposes has long been a Democratic tactic. How many times did we hear that the Bush administration had cut funding for something, only to find that there was an actual increase once the details were examined? Even now you will still hear blanket statements claiming that Bush "cut" regulation, even though he massively increased it.  Just about  any time the rate of increase for some pet program has slowed, it has been characterized as a "cut." It's unfortunate to see some on the right now resorting to the same type of intellectual dishonesty. An increase, even if less than expected or desired, is not a cut.