Priority-Based Budgeting, or Shooting the Cocker Spaniel

Last weekend, President Obama pleaded to the Senate to extend portions of the stimulus bill. As my colleague Veronique DeRugy wrote at NRO, he relied on a tactic known as the “Washington Monument Syndrome”: Threatening to shut-down the most-valued aspects of government first in response to a budget cut. The syndrome gets its name from the Department of the Interior, which has threatened to shut down the beloved (and inexpensive) Washington Monument if its belt is tightened.

I recently learned that this tactic is also sometimes known, more colorfully, as the “shoot the cocker spaniel” ploy.

The idea runs counter to basic budgeting intuition. In economics 101, we teach our students that demand curves slope downward and supply curves slope upward. This is just another way of saying that the last increment of any item you spend money on should be the item with the lowest benefit and the highest cost. So if you cut back, you should cut those low-benefit-high-cost items first.

It also runs counter to the type of budgeting that families and businesses do every day. When a firm’s revenues are down, the least-productive and most-expensive units are the first to go. And when a family’s budget gets tight, they don’t shoot the cocker-spaniel. Instead, they skip a night out.

The Grace Commission famously identified thousands of wasteful spending items at the Federal level and Citizens Against Government Waste continues to point out areas where budgets can be trimmed. Various state think tanks, in conjunction with CAGW, have done the same in a series ofPig Books.”

The AP is now reporting that the Senate has rejected the President’s pleas. Perhaps the states will crack open the pig books and find something to kill other than the cocker spaniel.

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