Saturday, June 16, 2012

Another False Choice

Here's a great new false choice that is being bandied about.  From Reuters reporting a Reuters/Ipsos poll:
The online poll found Americans split over the right course for government, with 51 percent of respondents saying they support dramatic cuts in government spending and 49 percent saying that increased infrastructure spending would improve the economy.
Let's take a quick look at why this is such a false choice.  Let's say you wanted to dramatically, say by 20 percent or so, increase infrastructure spending while simultaneously cutting government spending.  Would that actually be possible?

Well, helpfully, the government publishes statistics on infrastructure spending.  From the BEA National Income and Product Accounts, we can see that infrastructure spending in 2010 was $505 billion including state and local governments.  Meanwhile, total government outlays in the same period from the same source were $5.26 trillion.

So let's see, a 20% increase in infrastructure spending would be $100 billion or a 2% decrease in government spending somewhere else.

Let's face it, the issue with infrastructure spending has nothing to do with how much money the government has to spend, it's all about what the government chooses to spend the money on.

If you're complaining about your roof leaking while taking a $100,000 vacation, there aren't a whole lot of people who are going to have sympathy for your plight.

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