Morning Bell: Why Liberals Love Government Waste

Conn Carroll / March 02, 2011

Yesterday, the Government Accountability Office (GAO) released a 345-page report detailing 34 major areas of wasteful government spending that Sen. Tom Coburn (R–OK) says could save the federal government $100 billion or more every year. Conservatives jumped on the news, with House Majority Leader Eric Cantor’s (R–VA) office releasing a statement:“That is why House Republicans are hard at work cutting spending and getting our fiscal house in order – we need to prevent taxpayer dollars from being wasted and put Washington on a budget so we begin to live within our means and get people back to work”

Liberals, however, greeted the report with polite applause but then predicted nothing would come of it. Why is the left so uninterested in eliminating wasteful government spending? Why can’t progressive politicians agree to cut programs that even the GAO identifies as duplicative or ineffective? The answer can be found in the left’s reaction to two reports issued in the last weeks, one by bailed-out Goldman Sachs and the other by failed stimulus architect Mark Zandi.

On February 23, Goldman Sachs released a report purporting to show that the $61 billion in cuts in the House fiscal year 2011 spending bill would reduce economic spending by up to 2 percent this year. Not to be out done, Zandi released a report on February 28 purporting to show that the same $61 billion in cuts would cost 700,000 jobs through 2012. In stark contrast to the GAO report on wasteful government spending, liberals on Capitol Hill broadly promoted the findings of these two studies as proof that the House budget would harm the economic recovery.

But wait: How can the Zandi and Goldman studies claim that the spending cuts in the House budget will harm the economy if they came out before the GAO study identifying wasteful government spending? What if all, half, or just some of the spending cuts in the House budget are simply cuts to government waste? Surely these facts would change the outcome of Goldman’s and Zandi’s computer simulations, right? Wrong. The Goldman and Zandi reports have absolutely zero relationship to the real world. They both assume that all government spending, no matter how wasteful or duplicative, not only helps the economy grow but does so by large multipliers. This is the exact same thinking that led the Obama Administration to claim that their $1 trillion stimulus would keep unemployment below 8 percent when in fact unemployment rose to 10.1 percent. The Heritage Foundation’s Brian Riedl explains why government spending does not stimulate economic growth: (more…)