An Obama policy the tea party should love

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  • Obama raising federal minimum wage - a deal Tea Partiers could love?

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  • What to make of Obama's wage increase for federal workers

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  • Is there a silver lining to a wage increase to federal workers?

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In Tuesday's State of the Union address, President Obama put forth at least one initiative that is useful, should arouse bipartisan support and deserves to be taken much further than he suggested. I am talking about his plan to force federal contractors to pay workers a minimum of $10.10 per hour, instead of the federal minimum wage of $7.25.

Why, you may ask, is this initiative so useful? Well, let me explain. By voluntarily paying higher prices for some goods and services the federal government procures, without clamoring for new appropriations, Obama is effectively reducing the size of government. Paying prices that are 40 percent higher than before, without the corresponding massive budget expansion, brings down the amount of goods and services acquired by almost 30 percent. And Obama believes this to be a good idea. I am sure that even conservative tea party members who are opposed to most of the president's agenda will welcome this development.

The ball is in their court now. Let them take the president's plan, and the underlying reasoning, seriously. If, as the president believes, 30 percent of what the federal government does, outside of writing checks to people and defending the nation's safety, is useless, then why not just get rid of it? 30 percent of domestic non-defense discretionary spending equals some $200 billion, so Obama's plan would shave about $2 trillion off total expenditures over the next decade, almost a sixth of the national debt. Conservatives should embrace this opening with enthusiasm.

'Tis quite the evolution the president has gone through. A mere year ago, he was painting doomsday scenarios about the impact of the sequester, and only a few months ago he worried aggressively about the impact of the government shutdown. Of course, nothing disastrous actually happened and pandas continued to fail to procreate. It is heartwarming to observe that the president learned from those experiences, and is now ready to make drastic cuts to the size and scope of federal government programs.

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About the Author

 

Stan
Veuger

  • Stan Veuger is a resident scholar at AEI.  His academic research focuses on political economy, and has been published in The Quarterly Journal of Economics. He writes frequently for popular audiences on a variety of topics, including health and tax policy. He is a regular contributor to The Hill, The National Interest, U.S. News & World Report, and AEIdeas, AEI’s policy blog. Before joining AEI, Dr. Veuger was a teaching fellow at Harvard University and Universitat Pompeu Fabra. He is a board member of the Netherland-American Foundation in Washington and at The Bulwark, a quarterly public policy journal, and was a National Review Institute Washington Fellow. He is a graduate of Utrecht University and Erasmus University Rotterdam, and holds an M.Sc. in Economics from Universitat Pompeu Fabra, as well as A.M. and Ph.D. degrees, also in Economics, from Harvard University. His academic research website can be found here.


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