Are We Better Off With Sequestration?
Posted at 9:45 a.m. on Feb. 4
Tyler Cowen argues that the across-the-board spending cuts known as “sequestration” set to take effect next month could be beneficial to economic growth with a few adjustments.
“Reducing the defense budget by about $55 billion a year, the sum at stake, would most likely mean fewer engineers and scientists inventing weaponry and more of them producing for consumers… Farm support programs would be a major target, and most economists agree that those payments should be abolished or pared back significantly.”
“Medicare cuts would be unlikely to bring a macroeconomic debacle, and would ease long-term fiscal pressures. We could address the shortage of doctors by removing some barriers to entry into the profession, and, in possible new legislation for immigration.”
Mark Thoma notes that the case for sequestration overlooks the significant deficit reduction measures that have already been passed.
“We have already cut around $1.5 trillion of spending from the budget… plus the $.5 trillion in tax increases in the ATRA, plus the $300 billion in interest savings amount to around a bit over $2.3 trillion in deficit reduction… to say we’ve made no progress at all is wrong and misleads about the urgency of finding further cuts.”