Gregg Easterbrook

With another federal spending controversy brewing on Capitol Hill, recall that in his 2010 State of the Union Address, President Barack Obama said, “We’ve already identified $20 billion in savings for next year.” Now it’s next year — so what happened to the $20 billion in savings? Let’s follow the bouncing budget cut.

The “$20 billion” promise was not the sort of empty verbiage that dominates the federal spending debate. How many times have you heard a politician thunder about cutting spending but not cite even one specific reduction he or she supports? A year ago, the Office of Management and Budget laid out Obama’s proposed cuts in specific detail.

Some highlights: End production of the C-17 cargo plane, $2.5 billion saved. End federal funding for local hospital construction, $338 million saved. End the Save America’s Treasures program, $30 million saved. (The new book “Triumph of the City” by Edward Glaeser of Harvard argues that programs such as this actively backfire by slowing urban rebirth.)

Cut the Homeland Security Activities budget of the Environmental Protection Agency — the EPA fights terrorism? — by $35 million. Cut $1.5 billion in tax favors to Big Oil. Eliminate numerous overlapping education-grant initiatives. Cut $20 million from the critical, crucial, vital Right-Size Component Personnel Travel program. A litany of specific federal spending or tax-favor reductions were proposed in 2010 by the White House. The total saved came to $23 billion, more than the president promised.

Here’s what happened: nothing.

The spending cuts the president requested in 2010 were part of his fiscal 2011 budget proposal — and Congress never voted on the FY11 budget. Since October, the country has been operating on “continuing resolution,” meaning the budget of fiscal 2010 is frozen in place:  including billions of dollars in spending that even a liberal Democratic White House considers improvident.

Congress failed to enact an FY11 budget because of the childish sandbox fight between Republicans and Democrats over who would be blamed for what. The effect of Congress’s failure to fulfill its duty is to ensure that even clearly undentified wasteful spending continues. Welcome to Washington!

Last week, Congress approved a continuing resolution that keeps government in operation till mid-March. Included in the bill was about $2 billion in spending cuts for 2011 — less than 10 percent of what President Obama backed, and more to the point, a barely detectable 0.05 percent of all federal spending for this year. Nevertheless, Senator Dianne Feinstein of California called the cut “huge.” For politicians  whose mindset is giveaway, giveaway, giveaway, a 0.05 percent reduction is strict discipline.

The Senate is considering a continuing resolution that would carry the country through the end of the fiscal year. Democrats have proposed an additional $11 billion in cuts, which Senator Dick Durbin of Illinois calls “the limit” of possible cuts. Durbin’s “limit” — $2 billion already cut, $11 billion more reduced — would be considerably less than what President Obama said in 2010 he wanted to cut. And this “limit” cut would still represent just one-third of 1 percent of 2011 federal spending.

Many of the reductions in spending and tax favors that President Obama requested in 2010 are now in the White House’s proposed fiscal 2012 budget. So that critical, crucial Grants to Manufacturers of Worsted Wool program may finally go out of existence — assuming Congress ever deigns to enact an FY12 budget. Congress might even finally eliminate an Army Corps of Engineers allocation hilariously called the Low-Priority Construction Projects Program. Deleting the program — “Mr. Chairman, my agency desperately needs more funding for low-priority projects” — would save $214 million in a year. If, that is, Congress ever enacts a budget.

The lesson of the phantom $20 billion budget cut is that anybody can blow hot air about big spending reductions in the future: all that can be believed is cuts in the current year.

Last month, President Obama announced a plan to reduce the deficit by $2.2 trillion over the next decade. But hardly any cuts take effect now; the bulk of the president’s proposed reductions would not begin until 2016, when a second-term Obama would be preparing to leave office. Tea Party types, for their part, call for extensive future spending cuts — but want to exempt defense and Social Security. Unless defense and Social Security are on the table, as the recent bipartisan debt-reduction commission concluded, no significant fiscal reform are possible.

Saying the country will spend without restraint now but switch to strict fiscal discipline in the future is like saying, “I can quit smoking anytime I want.” In 2010, the White House asked for $20 billion in spending cuts, and Congress would not make the cuts. Until Congress makes right-now, this-year cuts, the national debt situation will keep getting worse.

Photos; Top: Shadows are cast on the White House in the early morning in Washington, February 4, 2009. REUTERS/Larry Downing, Bottom: Marine One (top) carrying U.S. President Barack Obama approaches the South Lawn as he returns to the White House from Camp David in Washington, February 8, 2009. REUTERS/Jim Young

Dictatorship is under siege throughout the Arab world: fingers are crossed that democracy will prevail. Something else is under siege, too — the notion of family rule. This is among the oldest, and most harmful, concepts in human society. Is it about to vanish at last?

For centuries, in some cases for millennia, regions and nations have been ruled by families — either formally as royalty, or de facto via warlords, khans and shoguns who in most cases inherited their positions. As recently as a century ago, families still ran most of Europe, all of Russia and Japan, while an assortment of warlord-like figures with inherited standing ran much of what’s now South America and the Middle East, and kings and emperors controlled the subcontinent and most of Africa.

Today family rule has been vanquished, or reduced to constitutional status, in most of the world. The big exceptions are Cuba, North Korea, the Middle East, and parts of Africa and Pakistan. The fall of Hosni Mubarak in Egypt, following a 30-year warlord-style rule — and the unlikelihood that his sons will inherit control of the country, as Mubarak planned — represents a major subtraction from the remaining portion of the globe under family control.

Let’s hope the trend continues. Today China, India, the United States, Indonesia and Brazil, the world’s five largest nations, representing more than half of the global population, have abolished all forms of inherited rule. Much of the rest of the world has done or is doing the same. This is no guarantee of happiness, of course. Open systems can be chaotic (the United States), still lack personal freedom (China) or be poorly administered (Italy). But in the main, ending family rule has been good for societies that achieve this.

Mubarak kept Egypt out of war, but that’s the only positive that can be attached to his three decades of warlord rule. Egypt’s economy stagnated, while theft of public funds by Mubarak and his family members was rampant.

Backwardness, corruption and repression are the hallmarks of all nations still suffering under family rule. Most of the Persian Gulf has kings or emirs whose sole accomplishments in life are the accidents of their births; North Korea has the maniacal and incompetent Jung-Il family; Cuba has the Castros, both are one thousand times more concerned with personal power than with the welfare of Cubans.

Perhaps it was inevitable that in a simpler past, family rule would have been a part of human culture. In the modern era, family rule differs little, in structure and function, from organized crime. Now the crime boss of Egypt is out, following the removal of the crime boss of Tunisia.

We can hope the example will spread to other parts of the region, and that more family rulers will fail or flee. And we can hope that the United States will not backslide. The current generation has seen America’s first presidential succession, from George Hebert Walker Bush to his son George W. Bush. The younger Bush’s brother Jeb may be a future presidential candidate, while there remains a chance Hillary Clinton, wife of a former president, could be elected to the White House. George W. Bush was freely chosen for his post, rather than strong-arming his way to rule. But family rule is family rule — not good for any nation.

Bahrain, where the current strongest protests are occurring, is ruled by an absolute monarch whose primary achievement in life was being handed a crown by his father. The sooner his family’s rule ends, the better. The sooner the whole concept of family rule fades into history, the better off the human family will be.

Photo caption: Tunisian protesters stand in front of the prime minister’s building during a demonstration in Tunis, January 21, 2011. The graffiti reads “death to dictatorship”. REUTERS/Zohra Bensemra

In all respects save employment numbers, the United States economy is back to normal. Real growth in 2010 was 2.9 percent — not spectacular, but any developed nation would take that figure. The adjusted U.S. GDP just rose back above its prior peak of late 2007 — meaning U.S. economic output has never been higher than right now. Sales numbers are good across most industries, corporations are sitting on ample cash, banking and equity liquidity is fine, no primary resource is scarce and the index of Standard & Poor’s 500 earnings per share is at an all-time high.

That’s a healthy economy — except for unemployment. Job numbers have improved somewhat but are nothing to write home about. Even considering that hiring usually trails a recovery by several months, unemployment numbers are spooky. President Barack Obama just implored the U.S. Chamber of Commerce to “hire and invest”.

Let me propose an uncomfortable notion. Namely: two mainly unrelated phenomena happened at once, the recession and a job contraction. Though the former triggered the latter, they actually had little to do with each other. The job contraction would have happened regardless.

That’s why the end of the recession — and federal stimulus spending — hasn’t cured the jobs problem. And until we accept that the surge in unemployment is mostly something that would have happened even if the autumn 2008 financial-markets meltdown never occurred, we’ll continue to be puzzled about why jobs have not bounced back though growth has.

Workplace productivity has improved markedly in the last generation, and it’s led to the point where far fewer people are needed for many kinds of output. Twenty-five years ago, about 150 hours were required to manufacture an automobile. Today the average is down to about 80 hours, and it’s still declining. The car produced today is of much higher quality than the car produced then, meaning used cars last longer and don’t require replacement as often. The net is a huge decline in automotive assembly employment, while cars, as products, are the best they have ever been.

This isn’t just happening in Michigan and Indiana. The decline in auto manufacturing jobs in Stuttgart — the Detroit of Germany — is about the same as in the United States, though Stuttgart quality and production remain robust.

And it’s not just happening in cars. In the early 1990s, Boeing’s main aircraft factory in Washington state required 22 days to build a 737 airliner. Today that factory builds a 737 that is technologically improved over earlier models, and completes each plane in 11 days. That means fewer jobs.

The drop in manufacturing employment — often blamed on jobs fleeing to China — emphatically is not happening for that reason. In the last 20 years, the United States has lost eight million manufacturing jobs. Over the same period, China has lost 26 million manufacturing jobs. China and the United States both have great numbers for industrial production, and should for decades. But steadily fewer people are needed, owing to improved productivity and advancing technology.

Should we ban productivity improvements? Outlaw better technology? If we’d done that in the 1950s, we would all be driving 10 MPG finned Cadillacs without seat belts.

Manufacturing is hardly the only sector where job reduction is mainly caused by trends other than the 2008-9 recession. Communication technology allows steadily more output (as cell calls, as news reporting) with smaller staffs. Shipping, wholesaling and  warehousing have shown major improvements in productivity per worker. Other fields have as well. This was in the cards whether there had been the 2008 meltdown or not.

Now think about the fact that employment is down since 2008 — but GDP is up. That means the economy is functioning just fine with fewer jobs.

Perhaps the economy would function even better with more jobs. Maybe if businesses that are flush with cash would “hire and invest,” as the president hopes, there would  be another boom. A plausible case can be made for this. Let’s hope we find out.

But the fact that nearly all economic indicators have bounced back quite nicely without a return to the previous jobs level seems to tell us the recession and the job drop happened mainly independent of each other.

And it may mean a fundamental rethinking of hiring and employment policies is needed — by business as well as by government — if the United States is to return to the five percent unemployment level that ensures a job is always waiting for those who need one.

President Barack Obama’s conciliatory tone in his State of the Union Address was exactly what the country needs at this moment. And once again, Obama showed he is the best political orator since Ronald Reagan.

On tone and feeling – which matter a great deal in politics – the president deserves high marks. So too do members of Congress who for once behaved in a bipartisan manner, not like squabbling children.

Substance? That’s another matter.

In the address there was a lot of talk about jobs and innovation, both obviously important: but issues that no president controls. There was talk of better access to high-speed Internet and of regulatory and tax-loophole reform: not one single person opposes either. There was dream-world talk of high-speed rail and energy in the year 2035. But there were precious few specifics regarding what will be done right now to address runaway federal debt. And runaway federal debt, which suggests the U.S. future may be less bright, is a major issue holding the economy back.

The president proposed a five-year freeze in discretionary federal spending, which he acknowledged is a mere 12 percent of the federal budget. A freeze in 12 percent of future spending – that’s all you got?

The president vaguely mentioned cuts in “community action,” giving no details. Obama endorsed the military budget cuts proposed by Defense Secretary Robert Gates, and those cuts are well-advised. But note the wording: “The Secretary of Defense has also agreed to cut tens of billions of dollars in spending that he and his generals believe our military can do without.” Gates has the right idea, but no Secretary of Defense can “agree” to “cut” even a dollar from Pentagon spending – Congress controls the military budget. Obama created the impression that cuts have already happened, leaving open the door for Congress to reinstate spending.

No other specific spending reduction was proposed.

Last year in the State of the Union Address, Obama said, “We’ve already identified $20 billion in savings for next year.” Now it’s next year – what about that $20 billion in savings? Unmentioned.

In June 2001, Obama said, “Next year, when I start presenting some very difficult choices to the country, I hope some of these folks who are hollering about deficits and debt step up, because I’m calling their bluff.” Now it’s next year. Where were the difficult choices? Unmentioned. No bluff was called.

Even in the course of speaking about stopping increases in discretionary spending, Obama said he’d exempt spending for “innovation and education,”  information technology, research “and especially clean energy technology.”

These are important. But if you declare a blanket freeze and then start making exceptions in the same speech, nobody will take the freeze seriously. Lobbyists will say that ethanol subsidies are “innovation” and thus exempt them from cuts. Lobbyists will say the same about corporate handouts, and about every other kind of boondoggle. Make one exception, and it will open the door for many exceptions. Which the president has already done.

And what about the deficit commission report? The president misrepresented it, saying, “Their conclusion is that the only way to tackle our deficit is to cut excessive spending wherever we find it – in domestic spending, defense spending, health care spending, and spending through tax breaks and loopholes.” Notice what’s missing – the deficit commission recommendations to increase the Social Security retirement age and cut Social Security benefits to the rich.

Cutting the Social Security retirement age – everyone knows longevity has increased since the Social Security system began in 1935 – and eliminating Social Security transfer payments to the rich are the most promising ideas to reduce runaway growth in the federal debt. The president not only didn’t endorse these ideas, he pretended they did not exist. On this point Obama seemed more concerned with being reelected – seniors vote, the young don’t – than acting responsibly in his stewardship of the nation.

Obama’s vague language about spending restraint in the future – which boiled down to, “I’ll quit smoking next year” — must be weighed against last month’s $900 billion decision not only to extend existing tax cuts but add new ones. The White House backed a $800 billion stimulus bill in 2009, then the $900 billion tax-cut decision in 2010 – that’s an additional $1.7 trillion added to the national debt, a breathtakingly lavish giveaway at the same time that the president talks in the most hesitant terms of minor cuts that might take place at unspecified future dates.

The Tea Party, which supported the new $900 billion tax cut, deserves its share of blame. After coming to office with a promise of fiscal crackdown, the Tea Party’s first act was to back a huge, undisciplined giveaway.

Both the Obama White House and the Tea Party types on the Hill said the latest tax cut was needed to revive the economy. But the economy fell into its current cold snap while big tax cuts were in effect. Most of the cuts extended in December were enacted in 2003. If having major tax cuts in place for seven years didn’t prevent the economic slowdown, why should we believe that more years of tax cuts will fix the slowdown? Here, I examine the argument that the parade of Washington special giveaways like this are a cause of the slow economy, not its palliative.

Bear in mind, the current bleak deficit picture is the picture before the health care reform bill causes federal medical spending to skyrocket. It may well prove that many aspects of Obama’s health care reform are justified – for millions of Americans, better health care coverage with less money stress will be a blessing. But the nation should be bracing for the invoice, which is likely to be substantial. Instead of saving to pay that invoice, we’re ordering another round of champagne.

Officially the health care reform bill will cut medical costs to taxpayers, but this is a fiction based on the bill’s assumption of fantastic savings from unspecified cuts in unspecified future years. Doug Elmendorf, director of the Congressional Budget Office, said in 2009 that ObamaCare will not bring down spending, rather “significantly expand federal responsibility for health care costs,” shifting the price from private payers to government.

Supposedly, health care cost restraint will be the task of a new Independent Payment Advisory Board. But the board’s first proposals are not due till 2014. This reflects the ritual of talking big about cost discipline, then postponing any action into the future while giving every interest group a bag of candy today. This analysis from the Centers for Medicare and Medicaid Services, which administers most federal health care spending, says the promised dramatic future cuts in health care costs are “extremely unlikely to occur.” If that reality were reflected in deficit estimates – all of which assume the magic-bullet of future health care cuts – the national debt meter would sink further into the red.

Consider that one month after the health care reform bill passed last spring, Congress, with White House backing, cancelled a scheduled cut in Medicare payments to physicians. The cut was first scheduled in 2003, and has been cancelled on an annual basis since. If even a minor, halting step in the direction of Medicare cost control was cancelled last year during a deficit crunch, it becomes “extremely unlikely” that very deep cuts will occur beginning in 2014. Yet instead of saving to prepare for that day, we’re spending like there is no tomorrow.

Prediction: Tomorrow will come.

The easy way out in politics is to talk vaguely about fiscal discipline, promising dramatic future action while giving away money hand over fist today. Nothing’s easier than to give away borrowed money. George W. Bush did this like mad in this final three years in office, and now Barack Obama is doing it in his first three.

Leadership means the ability to say the word “no.” From 2006 on, Bush never said the word “no.” Barack Obama, beginning his third year, has yet to pronounce the word “no” regarding any spending request.

Consider this quote: “Raising America’s debt limit is a sign of leadership failure. Leadership means that ‘the buck stops here.’ Instead, Washington is shifting the burden of bad choices today onto the backs of our children and grandchildren. America has a debt problem and a failure of leadership. Americans deserve better. I therefore oppose the effort to increase America’s debt.”

Whose said this? Barack Obama, in 2006, opposing the first George W. Bush borrowing-based giveaway. If only the Obama of 2006, not the Obama of 2011, had presented tonight’s State of the Union Address.

Photos, Top: President Obama at the State of the Union in 2011. REUTERS/Kevin Lamarque
Bottom: President Obama at the State of the Union in 2011. REUTERS/Jim Young

Defense Secretary Robert Gates just proposed cutting the military and security budget  by $78 billion over five years — perhaps only a downpayment on coming further reductions. Secretary Gates’s list of proposed cuts includes high-profile projects and weapons. But he does not mention the National Geospatial-Intelligence Agency, an exemplar of undisciplined spending in the name of defense.

Never heard of the National Geospatial-Intelligence Agency? You’re not alone. A fair guess is that nine of 10 Washington pundits and political insiders don’t know the NGA exists, while perhaps one in 100 can describe its function.

The National Geospatial-Intelligence Agency has 16,000 employees — nearly as many as Google  — and a “black” budget thought to be at least $5 billion per year. The NGA is building a new headquarters complex with the stunning price of $1.8 billion, nearly the cost of the Freedom Tower rising in Manhattan. That new headquarters, near Fort Belvoir, Virginia, will be the third-largest structure in the Washington area, nearly rivaling the Pentagon in size.

The NGA has current touches, possessing a marketing slogan — “Know the Earth, Show the Way” — calling the Defense Department and CIA bureaus that receive its work product “customers” or “partners,” and posting photos of staff receptions on Flickr. But what the National Geospatial-Intelligence Agency does for the most is part classified. About all the agency will say is that it supplies “geospatial intelligence support for global world events” and “can create highly accurate terrain visualization,” phrases that don’t explain much.

This is what the NGA does: take detailed aerial pictures of the Earth’s surface — mainly of cities, including America cities — then overlay them with other forms of data, such as maps of streets and power lines. Think there are drone aircraft only in the skies of Afghanistan and Pakistan? Drone aircraft controlled by the NGA have been crisscrossing the skies of the United States for several years, photographing minute details of roads, houses and campuses. Supposedly this is a counter-terrorism measure: good luck explaining how extremely detailed images of individual homes will deter terrorists. If you were sunbathing nude when an NGA drone passed above your backyard, agency files contain a photo you’ll hope not to see on Flickr.

The NGA also merges pictures with satellite imagery from the National Reconnaissance Office, itself a little-known agency; the NGA is in the process of acquiring imaging satellites under its own control. The goal is a kind of ultimate TomTom for much, perhaps eventually all, of Earth’s surface.

NGA topography could help during natural disasters. More to the point, it could direct soldiers down the correct street during battle, or cause GPS-guided bombs to hit the correct building, or allow a cruise missile to fly underneath bridges before striking not just the right building but the right part of the right building. The agency’s super-maps could also be used to invade privacy. Put a tarp or tent above anything you do outdoors that you don’t want to run the risk of this agency having photos of, because there’s no privacy-protection cross-check.

Like many agencies in military, security or counter-terrorism roles, the NGA has a growing budget never subject to public scrutiny and rarely questioned by Congress.  Even subtracting for the costs of the war in Iraq and fighting in Afghanistan, and adjusting to current dollars, U.S. military and security spending has increased 68 percent in the past decade. Within this runaway spending is a tremendous amount of pure waste, coupled to many programs and agencies with valid missions but no cost discipline.

On the same day last August that Defense Secretary Gates led the nation’s newscasts by announcing an initiative to “reduce excess overhead” in defense and security spending, the National Geospatial-Intelligence Agency quietly signed two contracts that increase defense overhead. The NGA will pay nearly $1 billion each year to GeoEye and DigitalGlobe, start-up firms, for more spy photos of cities, taken from satellites the companies own or will launch.

Given the National Reconnaissance Office already has numerous imaging satellites, why does the country need spy satellites under a duplicative agency? Given the NGA already has 16,000 employees, why does it need to spend billions of dollars on contractors? Since this is all stamped SECRET, there is no discipline or accountability.

Here is the kicker: most of the photography and topographic information generated by the NGA at great expense to taxpayers is very similar to what Google and Microsoft give away for free.

This Google view of the current headquarters of the National Geospatial-Intelligence Agency, available free, differs only a little from what the NGA produces at fantastic expense. Zoom in: the image is good enough to count the cars in the NGA headquarters lot, inspect the small wood to the west where employees stroll, determine that NGA communication and power cables are buried. (No satellite dishes or utility poles.) There is ample resolution to select which of the four current NGA structures a targeting planner wants the cruise missile to hit. Here is the Microsoft Bing view, which even shows condensate rising from the HVAC station.

Google and Microsoft are doing nothing wrong by posting these images — unless it’s wrong to take aerial views, in which case the National Geospatial-Intelligence Agency is in the wrong, too.

The key point is that Google and Microsoft are able to give away topographic information, or sell it at low cost — for $399, Google Earth Pro offers better resolution — while a defense agency spends billions of dollars to do the same. As free-market entities, Google and Microsoft are concerned with cost-effectiveness. The National Geospatial-Intelligence Agency, exempt from cost controls and public scrutiny, wants to run up the price: its bureaucrats benefit from empire-building.

This is everything that’s wrong with defense spending in a nutshell.

Good reading: This excerpt of the important new book “Unwarranted Influence,” by James Ledbetter, describes how President Dwight Eisenhower, a former five-star general, became wary of the military-industrial complex.

Photos, Top: NASA satellites image of the Australian wildfires in southeastern Australia taken by the Moderate Resolution Imaging Spectroradiometer on February 9, 2009. The red boxes indicate the location of the fires. REUTERS/NASA/Handout

Bottom: This satellite image, taken February 26, 2009 and released March 9, 2009, shows the North Korean missile facility at Musudan. REUTERS/GeoEye Satellite Image/Handout (KOREA)