Selected Skirmishes: A Thousand Pints of Lite

Let me share with you my crack dieting technique, perfected during two stressful decades of graduate school: With the advent of light beer, why suffer when shedding tonnage? The health science is plain: Regular beer has 175 calories per 12-ounce can, light beer has but 90. Hence, each Lite consumed saves 85 calories.

It takes 3,500 calories to burn up a pound; you must drink 41.18 Lites to dislodge 16 ounces of body matter. Even when in good shape, however, I find it difficult to maintain my competitive edge for more than a case a night. Therefore, on a seven-day-a-week workout schedule, it takes 55.56 days to drop 32.38 pounds—your physical fitness reward for diligently consuming exactly 1,000 pints of Lite.

You think this is funny math. You think I should be weighing in after these drinking binges, and comparing my weight before to my weight after. No way, José. I'm doing it right. This is the precise accounting method established by our government to track its own dieting efforts.

Take the annual budgets of the federal, state, county, city, school board, mosquito abatement district, etc. governments. Every year they go up. Count in nominal dollars, inflation-adjusted dollars, dollars per capita—spending goes up. But the official report is that the budget has been slashed by $X million/billion/zillion. These "savings" take place against a wish-list budget that percolates up from each agency, which naturally desires to fatten its take by requesting a wad more than they got last year and a tidy piece more than they expect to haul in this year. When these increases are shaved by our elected guardians of the public trust, voilá—the budget has been slimmed!

Unless you're a bonehead of the sort who's forgotten to slip out of his bellbottoms and dress for the '90s, you will know that the '80s were a decade of defeat for government. Budgets were slashed; the public sector starved. Yet, the share of national income consumed by federal spending began and finished the decade at 22 percent (with the middle years bulging above that percentage), and this allowed the federal government to spend 14 percent more per capita in real terms in 1989 than it had in 1981. State and local spending, slashed to the absolute bone in the lean budgets of the Greed Decade, also managed to rise—17 percent in real per capita terms—from 1981 to 1989. The spending trim-down was from pig-out trend lines, not from stored body fat.

But that's the obvious part of this fiscal three-card monte. The real sneaky move is the one that flies right past—you've already missed it—that a public dollar spent counts as a public dollar consumed. (Macroeconomists and faith healers similarly define national income, Y, as being equal to consumption spending, C, plus investment spending, I, plus government spending, G. Murray Rothbard may have been closer to Science with his reformulation: Y=C+I minus G.)

The value of a house—a privately sold house—is the value of the dwelling to an actual consumer. That consumer won't pay a penny more because, say, the subcontractor screwed up and had to retile the master bath four times before she got it right. But the $umpteen-billion cost overrun on the B-102? That's (a) "money for defense," and counts (b) as a measure of U.S. military preparedness. (Which is why those who oppose such expenditures are presumptively squishy on national defense.)

So you're not even a little exorcised over this social bookkeeping fraud? Fine. But misreading inputs for outputs tips the policy game. Take poverty spending up or down. Up means better—more poverty reduction; less means worse—more poverty. How do we know? We don't weigh poverty in. We don't measure "people de-povertized." We measure money the government says it's spending on poverty programs.

Reagan hurt the poor, don't ya know—he cut government spending for welfare. (This assertion being straight out of the 1,000-pints-of-Lite diet book.) But what a wacky means of tracking the problem, when the undeniable solution would be to get everyone off welfare and defund the budget to naught. Paying welfare is itself an admission of systemic failure. It's parallel to concluding that United is the best airline because it spends the most on crash cleanup operations.

Funny math is ruled out where people play with their own money.

No such constraint was placed on Dr. Galbraith's freely flowing recommendations two decades back when he sermonized that there wasn't a social problem in New York City that couldn't be solved by doubling the muni budget.

This year, well over $2 billion in government cash will be spent in New York City for "housing for the poor." If this doubling and redoubling of the associated 1960s allowance has cleaned up that social problem, I'd really like to know exactly who it is I'm stepping over on the streets of Manhattan.

But, you see, we're doing so much more now for the housing problem, and we have the receipts to prove it. The lack of success that real human beings in New York have met in actually finding affordable housing—oh, that's another thing altogether. It's like sticking to your Lite diet. Just keep chuggin', and don't dare look down at the scale. If you pour in sufficient inputs, the results are assured. By definition. So bottoms up, you budgetary animals! And Spuds MacKenzie for director of OMB.

Contributing Editor Thomas W. Hazlett teaches economics and public policy at the University of California, Davis.