From the WSJ (Conservatives balk ...):
The open-ended commitment by President Bush and congressional leaders to rebuild New Orleans and the Gulf Coast is stoking anger among conservatives over the Republican government's record of higher spending and debt.
Following the nation's worst-ever natural disaster, no Republican in Congress is opposing federal aid that already totals $62 billion and is expected to exceed $200 billion. But the party's conservative wing, led yesterday by Oklahoma's Tom Coburn in the Senate and Rep. Mike Pence of Indiana in the House, is calling for offsetting "sacrifices" in federal spending. And they're backed by a growing chorus of conservative activists, columnists and bloggers.
Here are two things I've always thought about federal spending. Big projects (over $100 million) require a benefit-cost analysis and economic impacts (i.e., spending), as opposed to benefits, are not allowed in a benefit-cost analysis at the federal level (because spending on one region easily moves elsewhere leading a a negligible effect on GDP, and this is what Ben Bernanke has been saying).
Based on what I think I think (with apologies to Peter King at SI) and what I've read, spending to completely rebuild NO won't pass a benefit-cost analysis. So, what am I missing here (and I know I'm missing something [other than the politics])?
(Off-topic) And the article continues:
"It's not about taking care of the folks that need us," Mr. Coburn said in an interview. "But I wouldn't vote for another penny until we get real about the hard choices of cutting some spending." In what would be a real break for conservatives, Mr. Coburn said he is also not inclined to vote to extend the Bush tax cuts absent some fiscal restraint.
...
Ben Bernanke, chairman of the president's Council of Economic Advisers, yesterday told a group of economists, "The costs of rebuilding after Katrina are, of course, substantial and will add to the budget deficit in the near term; incurring those costs is essential if we are to repair the unprecedented damage wrought by that natural disaster. This necessary spending should not, however, jeopardize the president's long-term deficit-reduction goals."
Huh? Congress can find $200 billion in spending cuts? And find more cuts than that to actually reduce the deficit? Or is this the supply-side line that revenues will grow with tax cuts?
