Committee for a Responsible Federal Budget

Contestant #1 In Our Spending Challenge

Jan 20, 2010

Yesterday, we challenged those of you opposed to tax hikes to take the spending challenge, and show us how the debt can be stabilized with spending cuts alone.

Soon after, our first contestant stepped up. This commentor suggested that cutting government bureaucracy was the answer:

[The] US should cut 10-15% of all the bureaucracies in its government. Those genius bureaucrats should have no problem finding a job in the private sector. With similar personal income tax Canada provides health care to all the people and US provides benefits to a monstrous bureaucracy called HHS.

So how do the numbers add up?

Of course, it depends on how you define bureaucracy -- but lets take a broad approach and assume we are talking about all government employees. According to an OMB estimate, the government spent around $420 billion on wages and benefits in 2009. That includes not only agency employees, but also military personnel, postal workers, and those employed by the judicial branch (judges, clerks, etc).

Cutting 15% of that would save just over $60 billion - or 0.4% of GDP. Assume we laid off (or allowed to retire, without replacing) 15 percent of workers effective in 2011 (and took away their benefits); and assume the savings grew with the economy, accruing interest along the way.

[chart:2046]

In that scenario, the deficit in 2018 would be 6.2 percent of GDP instead of 6.8 percent of GDP. And debt held by the public would be 82 percent of GDP instead of 85 percent (remember that our target is 60 percent).

It's a start, but it still leaves a tremendous amount of that hole to be filled in. So now what?

(We welcome more contestants and more recommendations).