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Friday, March 15, 2013

The Deficit and the White House Tour Blues

Trivializing the United States's fiscal problems only makes it more likely that they'll have to get a lot worse before they get any better.

A frustrated group of sixth-graders from St. Paul's Lutheran School in Waverly, Iowa, recently sent a message to President Obama: “The White House is our house,” the class said in a Facebook video. “Please let us visit.”  
When White House Press Secretary Jay Carney was confronted by White House reporters on the matter, he took the party line and said, “It is extremely unfortunate that we have a situation like the sequester that compels the kinds of tradeoffs and decisions that this represents.” 
The recorded White House message for those looking for tour information tells us more:
Due to staffing reductions resulting from sequestration, we regret to inform you that White House tours will be canceled effective Saturday, March 9, 2013, until further notice. Unfortunately we will not be able to reschedule affected tours. We very much regret having to take this action, particularly during the popular spring touring season.
But why would the tours be curtailed just at spring break time? Couldn’t the nation’s trillion-dollar deficit wait a few weeks for the trivial savings that accrue from the eliminated tours? Best estimates of savings indicate the deficit will be reduced by $74,000 a week, $3.8 million annually.
Obama is apparently playing in the political sandbox. The White House move was sand in the face of his opposition and the American people. Not to be outdone, House Speaker John Boehner responded tit for tat. In a letter to his Ohio constituents, Mr. Boehner happily indicated that he was “disappointed the White House has chosen to comply with sequestration by cutting public tours,” noting quickly that he was “pleased to assure . . . that public tours of the United States Capitol will continue.” Rubbing a bit of sand in the wound, Boehner added that planning for the possibility of mandatory budget cuts “has been under way for some time.”

The Iowa sixth graders get it.

On March 9, the day White House tours ended, Holly Finn, writing in the Wall Street Journal, indicated that in the last 12 months there were 750 federal government conferences with a total cost of $250 million, or an average cost of $333,000. Elimination of 11 conferences or just limiting conference budgets by 1.52 percent would cover the savings from curtailed White House tours. Surely, there is room to impose a little economy on government conference planners. But caught in a sequestration crisis of their own making, Washington politicians seem instinctively to crawl into the sandbox and behave like children.

Editorial artist Robert Arial captures the essence of the Washington budget battle in the accompanying cartoon. One side calls for more taxes; the other for less spending. It’s as if there is a fixed pie to be divided and always winners or losers when the pie is sliced differently. Sadly, no one is trumpeting prosperity as a way out of the deficit woods. There is no prosperity leadership pointing the way to a larger pie.
The deficit hole we are in is far too deep and wide to be filled by GDP growth alone, but prosperity will help in more ways than one. There would be more revenue and more jobs. But revenue growth is constrained to 19.1 percent annually in normal times, no matter what the marginal tax rate. Year in and year out, the taxpaying sheep allow only so much wool to be clipped. With expenditures running 22 percent of GDP or more, it will take a combination of future budget cuts and improved GDP growth to fill the hole. 
Instead of curtailed White House tours, why are there no calls for loosening some of the constraints that hold back prosperity? Why is there no call for systematic regulatory reform? Why is there no outcry for aligning U.S. corporate tax rates with those of the rest of the industrialized world? Instead of calls for prosperity, we hear pleas for more regulation and higher, not lower, marginal tax rates.
Writing to Marquis de Lafayette in 1787, George Washington offered an insight about what it takes to bring a democracy to act. “It is to be regretted, I confess, that democratical states must always feel before they can see, it is this that makes their gov. slow, but the people will be right at last.”
Is the White House tour decision just static in the signal, a misguided effort to make the people “feel” the pain of deficit reduction, a prelude to plenty? Or is it just another in series of sandbox activities that seem to characterize the political scene?
Unfortunately, it seems sandbox actions trivialize the seriousness of our nation’s fiscal problem and cause people with common sense to question whether there is a crisis. Until there is a full and honest effort to promote growth while systematically reducing spending, it is unlikely the people will feel, see, and act to support a return to common sense. Until then, arguing about the fixed pie—and which interest group gets the larger slice—will continue to generate content for the evening news. 

  • Bruce Yandle is dean emeritus of Clemson University's College of Business & Behavioral Science and alumni distinguished professor of economics emeritus at Clemson. He is a distinguished adjunct professor of economics at the Mercatus Center, a faculty member with George Mason University's Capitol Hill Campus, and a senior fellow emeritus with the Property and Environment Research Center (PERC).