Obama vs Worsted Wool Producers

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Here’s an example of a small program elimination through which the Obama administration hopes to save money—they want to end a program that directs $5 million in annual subsidies to producers of worsted wool:

The Miscellaneous Trade and Technical Corrections Act of 2004 (Public Law 108-429) mandated grants to manufacturers of worsted wool products who were in business in calendar years 1999, 2000, and 2001, in order to help them adjust to changes in trade law. The program was originally slated to expire in 2007, but has been extended multiple times, and current law provides a sunset at the end of 2014. Continued “adjustment” subsidies are not warranted and the program is proposed to be terminated in 2011.

As you can see here, it’s genuinely the case that there’s waste in the federal budget that progressives can feel fine about eliminating. That said, one man’s waste is another man’s income and it’s still the case that the result of this kind of belt-tightening is for “the government” to feel the squeeze, but rather specific individuals working in this industry. Which is why cutting even wasteful programs can be problematic amidst a demand-driven economic downturn. Over the long run, though, we’re better off without these kind of subsidies—not just because they waste money, but because they lead to an inefficient allocation of productive resources.