Economics

Fiscal Fraud—or Frugality?

Runaway spending is a bipartisan problem

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For the past year, Republicans have been criticizing Barack Obama for out of control spending. So they must be pleased that they have forced him, in his State of the Union address, to concede the point by proposing a freeze on outlays of the kind Republicans generally don't like.

Well, not exactly. After the administration floated a plan to cap non-defense, non-security discretionary spending for the next three years, the opposition party erupted in jeers.

The complaints were many: It affected only one-eighth of the budget, it came on top of big increases, and the savings would be trivial next to the deficits that are in the pipeline.

The loudest catcall came from a spokesman for House GOP leader John Boehner of Ohio: "Given Washington Democrats' unprecedented spending binge, this is like announcing you're going on a diet after winning a pie-eating contest."

All the criticisms, as it happens, are true. Obama's claim of stern fiscal discipline—"we are prepared to freeze government spending for three years"—collapsed into comical irrelevance as soon as he listed all the programs that won't be included: national security, Medicare, Medicaid, and Social Security, which happen to be the Four Horsemen of the Fiscal Apocalypse.

There's more: Unspent stimulus funds amounting to $165 billion. Other "mandatory" programs like unemployment and food stamps. Interest on the debt, which will triple in the next three years. Obama is going on a hunger strike, except during mealtimes.

His freeze was supposed to save $250 billion over the next decade. But during that period, the federal government had been expected to compile deficits of $9 trillion. The savings would preserve 97 percent of the red ink.

Still, it's odd to hear complaints about excessive spending from the people who brought us the bloated budgets of the Bush years. During his tenure, federal spending did not retreat under the relentless assault of tight-fisted conservatives.

In fact, during the Bush administration, total federal spending, adjusted for inflation, climbed by 72 percent. What was originally a fiscal surplus became a deficit, reaching $1.8 trillion in 2009, Bush's final budget year (to which Obama contributed only a minor amount).

Conservatives may justify that record as the obligatory price of the war on terror. But even when you omit defense and interest on the debt, reports Chris Edwards of the libertarian Cato Institute in Washington, Bush was the biggest domestic spender in the White House since Richard Nixon.

Not until he had been in office for more than six years did he veto a bill because it cost too much. Bill Clinton may feel your pain, but next to his successor, he looked like Ebenezer Scrooge.

Boehner, far from throwing himself in the path of the spending locomotive, was shoveling coal into the boiler. For him to call someone a spendthrift is like Tiger Woods calling someone a skank.

Obama's plan for this portion of the budget is pitifully modest. But it's clearly better to cap it than enlarge it, which is what has been done in the recent past. Since 2001, the expenditures subject to the proposed limit have grown from $310 billion to $447 billion.

Republicans are making fun of Obama for trying to freeze a type of spending that they helped increase. They should repent, on the ground that since $310 billion was good enough for Clinton, it ought to be good enough for Obama.

If the GOP really wants to highlight the administration's budgetary excesses, the right response is not to merely ridicule how little he offers in the way of savings, but to offer bigger and better savings of their own. Otherwise, they may find that the public disgust with runaway spending can scorch incumbent Republicans as well as incumbent Democrats.

There is a shimmering precedent for this approach. After Republicans took control of Congress in 1995, they demanded a plan to balance the budget within seven years. President Clinton didn't like it, but he was forced to cooperate.

Soon the parties were competing in the Tightwad Olympics. Lo and behold, the budget was balanced—not in seven years but in three.

Can Republicans come up with a genuine plan to contain federal spending? Would that move force Obama to get serious about fiscal discipline? There is only one way to find out.

Let the bidding begin.

COPYRIGHT 2010 CREATORS.COM

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  1. First! Happy February Reason!

    I am left thinking, “No Duh!” After reading this one. Nice to have the facts and figures to back it up though.

  2. For him to call someone a spendthrift is like Tiger Woods calling someone a skank.

    A Steve Chapman analogy is like school on Saturday.

    1. Steve was extra clever on that one, using the golf term for a bad ball clubbing that is also a term for a common slut.

      1. I think the bad ball clubbing is called a shank.

  3. Fiscal Fraud?or Frugality?

    I pick A.

  4. During a recession, there’s two things a politician can do to commit political suicide. One, is raise taxes. The other, is cut spending. Neither one is going to happen any time soon. Combine this with the Fed’s continuing monetary policy of loose, cheap money, and you get a crash of the dollar.

    You can pay me now, or pay me in Yuan.

    1. Isn’t that the problem though? They are more concerned about their job than they are the country.

      I don’t care if it is political suicide, reducing the deficit HAS TO HAPPEN. We’re now owned by China. This is unreal. The country is about to go down the tubes because these assholes lack the character to take a fucking stand for something.

      1. Exactly, the problem is that people regard it as ‘just another job’, but quite frankly you have a duty to uphold the constitution, not the paycheck.

      2. It’s the longer term effects that are the real problem though. Thus you can still run large deficits for the next year or two, IF you enact serious long term reform.

        Which will probably include both higher taxes (and not just for the rich) AND much reduced spending, particuarly on healthcare.

      3. You could view this as them being concerned about their jobs, but I think in a democracy it’s a fair position to say that you’re going to do something (or not do something) because you believe that to be the will of the people. In a democracy it’s up to the people to demand higher taxes and less spending, not the politicians to govern against are wishes.

        1. We’re not a democracy. We’re a republic. Democracy has failed everywhere it has ever been tried. The problem here is, we’re losing the “representative” in representative republic and hence, becoming a democracy.

          1. “Democracy is the most vile form of government? democracies have ever been spectacles of turbulence and
            contention: have ever been found incompatible with personal security or the rights of property: and have in general been as short in their lives as they have been violent in their deaths.” -James Madison

            “Democracy is two wolves and a sheep voting on whats for lunch, liberty is a well armed sheep contesting the vote.” -Ben Franklin

          2. You know, I actually had the chance to travel to Switzerland once? I was only there for a couple of days but found it to be one of the nicer places I’ve ever visited. I would hardly call it a failed state. But beyond the point that Switzerland represents a functional state with a more direct democracy than the US, this battle over the semantics of “democracy” is an act of futility. It is widely accepted through out the political science literature to refer to states the hold “free and fair” elections as “democracies.” The United States is widely understood to fall into this category. You can make your arguments and try to influence the definition of the word, it’s our language and we can change it as we please, but in the end it is commonly understood that today the United States of America is a democracy. Perhaps this wouldn’t have been the case in the 18th century when Madison and Franklin were making statements, but it is widely understood to be the case today. You’re free to define democracy in a very narrow way, but in the long run this is not likely to increase your ability in communicate in the commons.

      4. Yes, Todd. It HAS TO HAPPEN. And that, in part, means you have to suck up some higher taxes.

        Quit being a baby and deal with it.

        1. It always amazes me that people like you jump to “raise taxes!” every chance you get. Cut spending first, you can tax later if inflation is an issue but you wont fucking know that until you stop spending like a nation of idiots.

          What fucking good does raising taxes do when the mother fuckers in office just take it and spend it the second it comes in and then some? Fuck you and your taxation. Stop spending my god damned money, then talk to me about taxation, until then, go fuck yourself.

          1. It always amazes me that you people scream “lower taxes is the cure for everything”, even deficits. Worse yet, we followed your plan for the last thirty years…and guess what? It lead directly to gigantic deficits and a new Gilded Age for the rich. Who would have thought THAT would happen?

            There is no way we are going to cut our way out of this. We need both taxes and cuts. If you aren’t willing to accept this, you can’t sit at the table with the grown-ups.

            1. Todd is correct. Cuts first to earn our trust, then the taxes.

              I say the cuts start with the pols benefits, eliminate them and the pols will term limit themselves.

              1. I had a chance to work in Denmark (for a US company) not too long ago and I was really put off by their high taxes. While I was there I learned that they have virtually no job security and almost everyone I talked to at some time in their life had been laid off from work. I’ve never lost a job before and here in the US pay much lower taxes. But if I did lose my job, I’d be uninsured (and frankly uninsurable) immediately and I’d probably only be able to make rent for the next twelve months. In Denmark, health insurance and rent would never be a concern for me, but without a job it’d be a lot harder to buy a new car or go on vacation. Either way I’d be looking for a new job, because in the US I like having a place to live and receiving life saving medication and in Denmark I like owning new cars and going on vacations. I guess no matter where you live there are things to strive for.

            2. Awe, poor little Chad got sand in his vagina. You truly are an economic illiterate. What tax cuts over the last 30 years exactly? How int he fuck do you GET deficits? Do you even know you retarded sack of shit? You don’t get deficits because you didn’t tax enough, you got them because you spent too much.

              The “Gilded Age” for the rich as you so inarticulately put it has been nothing but a fraud by crony capitalists voting themselves favors via their lobbyists and crooked politicians. Has nothing to do with not taxing enough.

              No maybe you should run along and play doctor with the other retarded glue eating youngsters while intelligent people take back their country from shit bags like you.

  5. Waiting on Tony to complain that Obama is freezing spending at all. Gotta have those good people-saving government programs you know. And they have to keep growing so government can do more for you. Blah, blah, blah….

    1. I declare February: International Ignore The Trolls Month.
      C’mon, people, it’s the shortest month.
      You can do it.

      1. No we can’t. Case in point: optimism you are a damn bore. I can’t remember any one of your single posts.

        1. Libertarians suck! Only Obama can save us now like Jesus saved humanity!

          “They see me trollin’, they be hatin'”

          1. “Libertarians suck!” the first step to recovery. Congrats!

    2. *complains that Obama is freezing spending just to please people who won’t give him any credit for it anyway*

      1. Congratulations Obama on saving 250 billion over TEN years with your spending “freeze”. Although the increased spending on education will cost far more than what we “saved”.

        Happy now Tony?

      2. Keep searching for that grain of sand Tony. It’s there somehwre on the vast wasteland of bloated spending beach.

  6. Yet as Steve Chapman notes, it’s odd to hear complaints about excessive spending from the same Republicans who brought us the bloated budgets of the Bush years.

    I’m all for slapping the Republicans every chance we get for Bush-era spending. But lets not lose sight of the fact that deficits were actually coming down until the last year of Bush’s Presidency, and that current deficits are multiples of what Bush ran.

    So, after slapping Repubs for spending, don’t forget to kick Dems in the nards with a steel-toed boot.

    1. Deficits were coming down 2005-07?

      Only from Bush’s own ridiculous highs and thanks to a debt-fueled housing and material bubble.

      Nice try but total fail.

      You still cling to the myth that the GOP is fiscally responsible.

  7. rc,so some debt is better than others? Is there an app for that kind of justification logic?

    1. Oh shit you’re right. There’s NO DIFFERENCE AT ALL between less debt or more debt.

      So let’s just keep voting those Democrats in there and all, because godDAMMIT the Republicans deserve it.

      This is how we’ll make everything all better.

      1. Eb, I truly enjoy aggravating you.

        1. If only I was aggravated. It’s so easy to fake it on blogs.

          1. I didn’t know men could fake it. 😉

            1. Hey man, it’s cyber space, you can fake anything out here.

  8. The Clinton-era “balanced” budgets were essentially shamockeries, doing so by treating Social Security receipts as counting toward the general ledger while handing Social Security a bunch of pointless and valueless IOUs.

    1. And Bush 41 and Bush the Lesser didn’t pull that trick too?

      Baby Bush was the unrivaled king of hiding expenses.

    2. True, but even without the SS accounting gimmick, the budget was balanced for a good part of fiscal 2000, and almost balanced his last two years in office….which is far better than any Republican since I was a baby can say.

      1. they cling to their fucking myths – just like their guns and useless “gods”.

        Obama nailed these shitcans.

  9. The Clinton-era “balanced” budgets were essentially shamockeries, doing so by treating Social Security receipts as counting toward the general ledger while handing Social Security a bunch of pointless and valueless IOUs.

    1. yes, but they were still MUCH better than what we have now.

    2. I read that as “shamrockeries”.

  10. Rather than mocking this “attempt” to cap spending, Republicans should embrace it and then try for more.

    The obvious solution to the SS/Medicare looming bankruptcy, for example, is to raise the eligibility ages and then peg them to the life-expectency charts. Right now, the average recipient of SS/M will be on them for 13 years. It should be something more like 3-5 years.

    1. 3-5 years might be a little low, but overall yes agreed.

      I think by raising SS’s age to 70-71 we can solve it’s problems

      Medicare/Medicaid will take a bit more work, for example ending heroic end of life care, and especially for Medicaid requiring that reciepients do thier part by staying healthy and fit do the best of their ability.

      5:00 AM PT for poor people?

      1. 3-5 years might be a little low, but overall yes agreed.

        I don’t think 3-5 years is a little low. SS/Medicare should not be thought of as a retirement plan. It should be a nearing-the-end-of-life plan. People would still be free to retire whenever they were financially able, but they’d have to pay for it themselves and wouldn’t get assistance till, say, 4 years before the current average life expectancy.

        1. I think there is also a bit of a question about quality of work.

          For example, at 70+ you start to get a degradation effect in many (but certainly not all) people’s work.

          Shit, I don’t even like for most of them to drive, lol

          1. Realistically, most people over 70 aren’t going to be working. One of the problems is that we are extending lifespan faster than we are extending healthy lifespan.

  11. According to the 2008 census there are 2,518,101 people employed by federal government and 3,818,577 people employed by state and local governments. There are approximately 307,000,000 people living in the united states. That means that almost 20 percent of the people employed in the U.S. work for the government.

    According to taxfoundation.org 32 percent of tax returns filed for 2008 in 2009 reported zero or negative tax liability.

    Prviate sector employement is shrinking and government sector employement is growing. Governments do not produce anything and are completely funded by the private sector.

    All of these people that work for the government are allowed to vote and I’m willing to bet that the vast marjority of them are going to vote for the guys that keep giving them money. All of the people that are not paying taxes can also vote and I’m willing to be that those on government assistance or going to vote to keep it.

    If government and government programs keep expanding, it won’t be much longer before the people that directly benefit from the government will outnumber the people that actually pay for the government.

    I predict that the more the balance of private sector vs public sector empolyees tips in favor of the public sector the worse the economy will become.

    Can the government just start laying off employees? If they do they’ll get bad press for putting more people out of work in a bad economy, but if they don’t they’ll be deemed financially irrisponsible for not cutting their spending.

    1. Sure, but it won’t slow down the trend. The MSM will continue to surround Government with a Warm Fuzzy Aura, right to the bitter end.

  12. One important thing to remember is the real issue should not be the deficit in absolute dollars, but the deficit in relation to GDP.

    For example, a $100,000 deficit would be a financial crisis for me, but not for Bill Gates.

    1. This is true, although I would argue that the only time deficts should be acceptable are for war, or long term infrastrucutre projects that generate long term value.

      For anything else it’s really not fair to ask future generations to pay for it.

    2. if you’re making it, please provide support for the proposition that the cost of government should grow at the same rate as does net wealth (insofar as GDP measures it). It seems to me that an increase in wealth would argue for a reduction in government services, not an increase.

      1. o, I see you were referring to the budget deficit. I see the proposition I was referring to all the time, so I jumped the gun. Nevermind…

        1. I actually wonder though, say in 100 years, we have robots that can do almost everything for us, thus no labor is needed for almost anything.

          What then will most of humanity do?

          Welfare checks combined with REALLY good drugs is what I’m hoping for 🙂

          1. Most of us will be dirt poor, paying everything we earn to the few “entreprenuers” who have managed to stick their blood funnel down the throat of whatever corporation is building the robots.

  13. Obama’s plan for this portion of the budget is pitifully modest. But it’s clearly better to cap it than enlarge it, which is what has been done in the recent past.

    But the fun thing is that the cap isn’t really a cap. It’s a cap of the new budget authority, but a bunch of stimulus money sloshes over to get spent in 2010, 2011, and beyond.

    Obama appears to be doing the same thing with discretionary spending as Bush did with defense spending: cap it in the budget, but add emergency supplementals like the stimulus.

  14. As far as the GOP goes, I would like to remind you that it was Ronald Reagan
    (whom so many eejits now proclaim as some kind of hero) that took this nation from being the largest creditor nation, to being the largest debtor nation- Sheesh!

  15. There’s plenty to gripe about in the federal budget, but are you really faulting them for paying interest on the debt?

    Sure, fault them for running the debt up and causing future interest, but let’s be reasonable here.

  16. Here is an incredibly great graphic of the proposed budget. Hell, I think being able to reproduce reasonable approximation of this should be required before you set foot in a ballot box.

    http://www.nytimes.com/interac…..et.html?hp

    So, you dogged fiscal conservatives…you need to whack 30% off this over the long run to balance the budget going forward. What parts do you prefer to hack? Notice that to get 30%, you have to hack the big boxes, and not the teenyweenie things down in the right corner.

  17. Oh, to be a trial lawyer with the ability to sue the executive branch.

    Doctors Emanuel, Axelrod, and Obama – after identifying that the patient has late stage lung cancer – have just prescribed two more packs of cigarettes a day. A $3.8 trillion budget? If it is not fiscal malpractice, will someone please tell us what is?

    Frankly, after acting like Democrats for at least four years this past decade, Republicans share some of this blame. But, liberal tinkering has been the norm since 1932, so if the President is going to continue to blame the past he should look back a little farther than Bush. Johnson, Kennedy, Ike, Truman, Carter, Nixon, and Roosevelt all share culpability. And what was the one condition they all shared during their presidencies: the cancer of near perpetual majorities in the legislature by the Democrats since 1932. One thing is clear from this budget; hope and change mean governing like it is 1937.

    Lazy Jack

    http://thanksforthelaughs.word…..n-edifice/

  18. My only point is that if you take the Bible straight, as I’m sure many of Reasons readers do, you will see a lot of the Old Testament stuff as absolutely insane. Even some cursory knowledge of Hebrew and doing some mathematics and logic will tell you that you really won’t get the full deal by just doing regular skill english reading for those books. In other words, there’s more to the books of the Bible than most will ever grasp. I’m not concerned that Mr. Crumb will go to hell or anything crazy like that! It’s just that he, like many types of religionists, seems to take it literally, take it straight…the Bible’s books were not written by straight laced divinity students in 3 piece suits who white wash religious beliefs as if God made them with clothes on…the Bible’s books were written by people with very different mindsets…in order to really get the Books of the Bible, you have to cultivate such a mindset, it’s literally a labyrinth, that’s no joke.

  19. auto repair Reported by that 08 census you will discover A COUPLE OF, 518, INFO men and women utilized by govt in addition to SEVERAL, 818, 577 men and women utilized by state in addition to local government authorities. You will discover around 307, 000, 000 men and women moving into the united states. wolves gray That means which practically 30 pct in the men and women employed in that OUGHOUT. AZINES. work with the government.

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