Beneficial and Nonbeneficial Spending

The Economist:

MARK THOMA has an appropriately succint post up today which reads in its entirety (and I hope he'll forgive my quoting the whole thing):

We have enough money to pay for military action in Libya, but not for job creation?

It's hard not to be cynical about government policymaking, and this is why. Forget about fiscal stimulus for the moment. At present, both Republicans and Democrats are committed to cutting the government's budget in the current fiscal year. These cuts will almost certainly threaten programmes with positive economic returns; job retraining programmes are on the chopping block, for instance. Certainly few party leaders are seriously discussing new spending on programmes with positive economic returns. America has substantial infrastructure needs—current spending is inadequate to simply maintain critical infrastructure at its current state of repair—and yet the odds of passing a new transportation law to replace the one that was scheduled to expire in 2009 but which has since been extended repeatedly, well, they're close to zero. Why? No one can agree on a way to fund new infrastructure spending.

Libya poses no threat to America. It's far from clear that American intervention will yield positive outcomes for Libyans. And yet here America goes, launching massively expensive sorties, dropping massively expensive ordnance. And obviously it isn't just America, Britain managed to join the fight despite its austerity drive.

The point here is not that government spending should never be cut. It should be, and it almost certainly must be if America is to avoid a serious fiscal crisis down the road. But for a very long time now, much of official Washington—Democratic and Republican leaders, along with policy intellectuals and op-ed pages—has acted as though an immediate fiscal crunch loomed. This was never true. American debt levels may be an issue by the end of the decade, but they aren't now, and deficits are forecast to fall sharply for the next few years. Bond yields have rarely been lower. The fiscal problem is long-term, not short-term. And yet dire fiscal scenarios have been used to sell painful short-term cuts, some of which were necessary but could have been accomplished later, many of which weren't necessary at all. Americans have been told, by the president of the United States and his chief Republican antagonists, that in hard times the government, like households, must tighten its belt. And then along comes Libya to put the lie to all of these assertions.

There is a little more over there.  It is well-said.