The GOP’s penny-wise, pound-foolish spending cuts

U.S. House Speaker John Boehner (Jonathan Ernst - GETTY IMAGES) Let’s say that for every dollar you gave me, I gave you a crisp $10 bill in return. Good deal, right? Almost too good. But before you start to ask questions, I’ll remind you that this is my thought experiment. Perhaps I just love dollar bills. Or perhaps I just love you. At any rate, there are no strings attached, and you can take advantage of it more than once.

Now let’s say that you’re in debt and you need to get your finances in order. Do you start handing me more dollar bills? Or fewer?

If you’ve got any sense, you’ll give me more. Converting dollar bills into $10 bills is an excellent way to pay off your credit card. Except, it seems, if you’re a House Republican.

On March 1, House Republicans voted to cut $600 million from the budget of the Internal Revenue Service for the remainder of 2011, and they want even deeper cuts in 2012. Perhaps that doesn’t surprise you: Republicans don’t like spending — at least when they’re not in power — and they don’t like taxes. Why would they fund the IRS?

Well, as the Associated Press reported, “every dollar the Internal Revenue Service spends for audits, liens and seizing property from tax cheats brings in more than $10, a rate of return so good the Obama administration wants to boost the agency’s budget.” It’s an easy way to reduce the deficit: You don’t have to cut heating oil for the poor or Pell grants for students. You just have to make people pay what they owe.

But deficit reduction is not the GOP’s top priority. It’s a bit lower on the list, somewhere between “get Styrofoam cups back into Congress” — an actual push the Republicans took up to thumb their nose at Nancy Pelosi’s environmental policies — and make “Sesame Street” beg for money. In fact, if you listen to Speaker John Boehner, he’ll tell you himself. “The American people want us to focus on creating jobs and cutting spending,” he has said. And that comment wasn’t a one-off: “Our goal is to cut spending,” he said in another speech.

Cutting spending is related to, but in important ways different from, cutting deficits. For one, it rules out tax increases. That’s how Republicans can lobby to make the Bush tax cuts permanent, at a cost of $4 trillion over 10 years, and yet say they’re fulfilling their campaign promises by making much smaller cuts to non-defense discretionary spending. If you add up what Republicans have offered since the election, the policies they’ve endorsed would increase deficits but also decrease spending, at least in the short term. The IRS example shows that spending cuts don’t always reduce the deficit. But it’s worse even than that: Spending cuts don’t always reduce government spending.

There are three categories of spending in which cuts lead to more, rather than less, spending down the line, says Alice Rivlin, former director of both the Congressional Budget Office and the Office of Management and Budget. Inspection, enforcement and maintenance. The GOP is trying to cut all three.

Let’s begin with the costs of cutting inspection — for example, the Food and Drug Administration and the Agriculture Department. Together, the agencies are charged with ensuring that the nation’s food is safe. That’s increasingly crucial as our interconnected, industrialized system makes contaminated food a national crisis rather than a local problem. In recent years, we’ve seen massive recalls stemming from E. coli in spinach, salmonella in peanut butter and melamine in pet food. Each required the recall of thousands of tons of food and alerts to consumers who, in many cases, were screened or treated.

The problem was bad enough — and the people and pets sick enough— that Congress passed a bipartisan food-safety bill during last year’s lame-duck session. But now Republicans want big cuts in the agencies’ budgets, meaning fewer inspectors and a higher chance of outbreaks and food-borne illness. And those don’t come cheap. They show up in our health-care costs, disability insurance and tax revenue, not to mention in the pain and suffering and even death they cause.

Next up: enforcement. As any budget wonk will tell you, cracking down on “waste, fraud and abuse” won’t cure all our fiscal ills. But waste, fraud and abuse do happen, particularly in Medicare and Medicaid, where they can be costly. Republicans are looking for big reductions in the Department of Health and Human Services, meaning fewer agents to conduct due diligence on health-care transactions. Costs will go up, not down.

Then there’s deferred maintenance. In 2009, the Society of Civil Engineers gave America’s existing infrastructure a grade of D. They estimated that simply maintaining America’s existing stock would require up to $2.2 trillion in investment. But Republicans have been cool to Obama’s calls to increase infrastructure investment. Just “another tax-and-spend proposal,” Rep. John Mica (R-Fla.) said when the initiative was announced. But a dollar in maintenance delayed — or cut — isn’t a dollar saved. It’s a dollar that needs to be spent later. And waiting can be costly. It’s cheaper to strengthen a bridge that’s standing than repair one that’s fallen down.

And there are plenty of examples beyond that. Republicans have proposed massive cuts to the Securities and Exchange Commission, which would make another financial crisis that much likelier. They’ve proposed cuts to the National Oceanic and Atmospheric Administration, which conducts tsunami monitoring. In their zeal to cut spending, they’re also cutting the spending that’s there to prevent overspending. Just as you have to spend money to make money, you also have to spend money to save money — at least sometimes.

There are all sorts of reasons Republicans are being penny-wise and pound-foolish. Cutting $100 billion in spending in one year sounded good on the campaign trail but turned out to be tough in practice. Curtailing the IRS and cutting the Department of Health and Human Services — and, particularly, its ability to implement health-care reform — is a long-term ideological objective for Republicans.

Whatever the reason, the effect will be the same: a higher likelihood of pricey disasters, an easier time for fraudsters, and bigger price tags when we have to rebuild what we could’ve just repaired.