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Budget cut plans push D.C. to edge

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Business Columnist
Pittsburgh Tribune-Review

Retired business editor Jack Markowitz writes Sundays and Thursdays.

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By Jack Markowitz

Published: Thursday, Feb. 28, 2013, 12:01 a.m.

What a thrilling week it has been with a phony doomsday in the air. If you aren't in business.

If you are in business, it's just another week of wondering what the government will do next. The suspense never stops. New mischiefs in health care regulation, new penalties for coal, a $9 minimum wage — pour it on, politicians.

Government's zigs and zags have become the big uncertainty for business. Not the fickle marketplace as a whole, nor the weather, the fashions or the flu. But government.

The doom of choice this week has been the budget “sequester,” an across-the-board cut in federal spending. Will it happen, or won't it?

Just a 2.3 percent cut, $85 billion in total.

And this in total spending of $3.5 trillion-odd. But cut that little bit, says the president, and you'll see vast damage. Little children will miss their Head Start. First responders perhaps won't get to fires, floods and crime scenes in time. Up to 750,000 jobs may be lost.

All this from a $23 trim in $1,000 of spending.

Which just proves that no amount of budget-cutting can be tolerated in Washington, the unrivaled capital of government jobs, without the drapery of doomsday being hung.

Famed economist Milton Friedman long ago recommended that government spending be whacked 10 percent. He said Cabinet officers would find the ways to trim the least important programs, priorities and people. Today this would mean $350-odd billion out of a year's outlays. And in a very few years, we'd see budget balance and at least a start in paying down the $17 trillion national debt.

Nothing so ambitious has a chance of happening. But wouldn't it give a boost to business confidence, plant expansions, construction, and hiring, and bolster consumers' and investors' confidence in the dollar? A new age of prosperity might dawn if we'd get a leash on the spending tiger that threatens to chew up American prosperity as we've known it.

True, there is some economic downside to any cut in spending, even by government. The upsides just weigh more.

Yet the White House this past Monday staged a conference call of administration officials to brief media all around the country on “the devastating impact the sequester will have on jobs and middle class families ... if Republicans in Congress fail to compromise to avert the sequester by March 1.”

That's tomorrow. By now, with doom drummed into constituents' ears all week, Republicans already may have caved on the “compromise” — another tax on upper income folks, including many in business.

If so, the GOP will have missed an opportunity — maybe its last — to move the heavy train of government spending back a few inches at least. It's a shame that half the cuts are targeted to national defense, but there is undoubtedly some fat even there.

Other rollbacks are positively tempting. Such as pay and pension levels for federal employees far in excess of private sectors norms. And subsidies for corn-based ethanol that raise the price of food while doing zilch for the environment. A Head Start for needy children wouldn't help nearly as much as a Better Beginning — in two-parent families, which this government perversely discourages. What business person would figure that?

Jack Markowitz is a Thurseday columnist for Trib Total Media. Email



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