President Obama announced today that he is seeking some special powers from Congress in order to streamline several federal agencies with overlapping areas of responsibility by consolidating them into one agency. The savings, at the federal level, would amount to an estimated $3 billion over ten years. $3 billion seems pretty good to most of us (for which even a small fraction would set us up for life), but how does that stack up to government spending?
First, we'll note that last year's projected federal deficit was $1.65 trillion dollars. Note that this is not the total amount the government spent in 2011, but only the amount it spent over what it took in (i.e. the amount it needed to borrow). Also note that the $3 billion in savings is over a ten year period, so the average yearly savings is "only" $300 million. A simple division of the two will tell us how much these savings can be expected to offset our borrowing this year:
300 million / 1,650,000 million = 0.000181, or 0.0181%.
Almost two hundredths of a percent of deficit reduction is not exactly inspiring on the face of it. Still, these figures only take into account what we can see (the alleged savings by the government), but if Bastiat teaches us anything, we must also take into account what is unseen. To the extent that businesses will be able to breathe easier because they don't have six different (and often contradictory) bureaucracies to deal with, the business climate will improve in ways that are not easy to measure in dollars.
It's a start, anyway.
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