On Slashing $100 Million

Earlier this week, Greg Mankiw jumped on the reports that Obama planned to ask his cabinet members to slash $100 million from their combined budgets:

Just to be clear: $100 million represents .003 percent of $3.5 trillion.

To put those numbers in perspective, imagine that the head of a household with annual spending of $100,000 called everyone in the family together to deal with a $34,000 budget shortfall. How much would he or she announce that spending had to be cut? By $3 over the course of the year–approximately the cost of one latte at Starbucks. The other $33,997? We can put that on the family credit card and worry about it next year.

On the surface, this is an easy and obvious judgment — $100 million is a penny in the well and we’ll never get to fiscal solvency if we don’t make dramatic budgetary changes!

But for anyone who has ever in their life worked at the federal government, this will come across as a rather naive assessment of the ease of slashing federal agency budgets. Budgetary cuts are fought tooth and nail with the kind of fervency that would make a Prussian bureaucrat explode.

I’ve had the pleasure of working at two federal agencies and I can personally attest to how difficult it is for department cuts to gain traction or simply reach the right people. I watched two managers turn beet red in a screaming match over a discrepancy of $500 in an over $5 million dollar budget. I’ve seen a $1000 budget ‘adjustment’ (hint: moving money from one project to another) take over a year to pass through the right hands to actually be passed (with the ‘besieged’ departments doing their best to block the cut by any means possible). Budget cuts seem to awaken the inner demon in every government employee, channeling an anger usually left for divorces and little league games.

I know $100 million doesn’t sound like much given the current economic situation and federal budget. But trust me, getting federal agencies to voluntary cut their budgets by $100 million will be a painful and agonizing process.

See Also: $100 million here, $100 million there, Disagreeing With Greg Mankiw, Mankiw: This Has to Be a Joke, Right?, How Big is a Budget Number?, Obama Asks You to Save $6, Obama Gets An “F” For First 100 Days (MSNBC Poll), $100 million is not a serious budget cut, Obama’s spending cuts!, Obama Is on the Right Track When It Comes to Eliminating Government Waste, Comment Of The Day, Perpetuating A Myth, Quote Of The Day — Obama Cost-Cutting, and The Wrong Way to Cut the Deficit.

[tags]greg mankiw, on cutting budgets, barack obama, $100 million, 100 million dollars, bureaucracy, economists, addressing budget cuts, federal budget, federal deficit, fiscal solvency, federal cuts, national government, government agencies[/tags]