How to Cut the Federal Deficit

by Fred Siegmund

I clipped a news article way back on August 11, 2005 when the Associated Press reported President Bush’s comments on a new transportation-spending bill.

According to the article, “President Bush calls the massive $286.4 billion transportation spending bill he signed into law Wednesday a job creator.”

The article goes on to describe the bill that will pay for 6,000 favored projects in the districts of nearly every member of Congress. Even though the legislation is $30 billion more than the President recommended, he is quoted as “proud to sign it.”

Remember, too, that 2005 was a year when the government reported a Federal deficit of $418.3 billion.

We have to admire President Bush’s candor in this matter because few politicians are prepared to emphasize that transportation projects are for creating jobs instead of transportation.

Isn’t this President Obama’s Plan, Too?

The effort of President Bush to create jobs sounds very nearly the same as President Obama’s economic stimulus plan.

If President Bush recognized the job creating potential of government spending, shouldn’t politicians all around the country recognize these same intentions in the Obama stimulus plan?

The current worries about the growing Federal deficit could make us forget that deficits are part of government spending. The deficit in 2008 jumped to $933.6 billion, which was part of the $5.025 trillion of Federal expenditures.

Eliminating $933.6 billion of deficit-funded Federal Expenditures will eliminate $933.6 billion pumped into the spending stream; spending that both President Bush and President Obama agree helps to create jobs.

If America has less government spending, then private sector spending will have to make up the difference. The country needs more spending to create jobs, but we are a country with nearly 10 percent unemployment, and 43 million jobs paying less than $25,000 a year.(1)

Income Inequality, But Not Tax Inequality

We are also a country with a growing inequality of income where entertainers, sports figures and corporate chiefs are paid tens of millions of dollars. Recently, NBC announced they’d be paying Conan O’Brien nearly $33 million dollar to leave his job.

If that $33 million was divided into $50,000 pieces, it would be help 660 families.

Those 660 families might buy 660 cell phones, but we have to doubt Mr. O’Brien will buy that many cell phones.

Those 660 families might go to restaurants a couple of times a month. That would be 15,840 (2x12x660) restaurant meals a year, but we have to doubt Mr. O’Brien will eat out that much or create many restaurant jobs.

Maybe those 660 families will go to the movies twice a month, and so on?

Working Americans have wages too low and taxes too high to keep us employed with their spending, but the wealthy are not making up the difference in spending or in taxes.

If the politicians want to lower the deficit and create jobs in combination, they will have to lower taxes on working Americans and raise taxes on the Conan O’Brien’s of the country.

It no longer matters who thinks it fair or unfair. When it comes to jobs and deficits, distribution matters.

(1) Occupational Employment Survey, U.S. Bureau of Labor Statistics

About the author: Fred Siegmund covers America's jobs as part of work doing labor market analysis and projections for a client base of recruiters, trainers and counselors. Visit him at

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