In the context of federal spending that will total something like $3.8 trillion this year, $61 billion is a rounding error. Yet the Democrats resisting that amount in House-approved cuts say it will wreck the economy while leaving children unschooled, taking food from the mouths of the elderly and casting disabled people into the streets.
Laughter is the only appropriate response to such predictions. In these absurd times, when both parties quibble over crumbs while the layer cake of debt rises higher and higher, laughter is a mark of fiscal seriousness.
How else should one greet a New York Times editorial that concedes the federal deficit, projected to be $1.6 trillion this year, is "too large for comfort," but calls $61 billion in cuts "ruinous"? Or a press release from the Every Child Matters Education Fund that deems them "harsh" and "extreme"?
The cuts represent less than 2 percent of the total budget, less than 4 percent of the deficit and less than 5 percent of discretionary spending, which rose in real terms by 75 percent from 2000 to 2010 and by about 9 percent in each of the last two fiscal years. If the House-approved reductions would be "the largest one-year cuts in history," as the folks at Every Child Matters say, that is a sad commentary not on Republican cold-heartedness but on the fiscal incontinence of both parties.
This week, Senate Majority Leader Harry Reid, D-Nev., highlighted that tendency. "Do we want jobs?" he asked. "If we do, then we simply cannot pass the plan the tea party has already pushed through the House."
This argument got a boost last month from a projection by Mark Zandi, chief economist at Moody's Analytics. By Zandi's reckoning, "The House Republicans' proposal ... would shave almost half a percentage point from real GDP growth in 2011 and another 0.2 percentage point in 2012," which "would mean some 400,000 fewer jobs created by the end of 2011 and 700,000 fewer jobs by the end of 2012."
At $174,000 a year per job, that does not seem like such a good deal. But if we assume, as Reid apparently does, that money is no object, why not raise federal spending by $2.4 trillion a year, thereby creating 13.7 million jobs and eliminating unemployment altogether?
The answer, presumably, is that the resources diverted to the government's job factory, in terms of new debt and future taxes needed to pay it off, can be better employed elsewhere, creating value instead of make-work. But in that case, we should stop worrying about the jobs "lost" when government spending is cut.
A more sophisticated version of this argument, favored by President Obama, distinguishes between wasteful government spending and "job-creating investments in education, innovation and infrastructure." The problem with trusting the government to invest our money is that it faces no penalty for making bad calls.
Consider education spending, which Obama treats as an unalloyed good. Between 1961-62 and 2006-07, according to data from the U.S. Department of Education, per-pupil spending in public schools more than tripled in real terms, while student achievement stagnated. This was a "job-creating investment" only in the sense that it created jobs for public school teachers.
Picking up the president's investment theme, The New York Times says it's "obfuscating nonsense" to declare that "we're broke," as House Speaker John Boehner, R-Ohio, likes to do. "A country with a deficit is not necessarily any more 'broke' than a family with a mortgage or a college loan," the Times explains.
Suppose the mortgage is twice the home's current value, the college loan was used for an unfinished degree in anthropology, and the family cannot make payments on either without borrowing or stealing because it has no income of its own. Now this family looks more like the federal government.
Whether we call it "broke" or not, no one should be lending it any more money until it gets its house in order.