Government Spending

Boehner's Big Number Ain't Really That Big

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Here's Wash Post's Ezra Klein on John Boehner big fiscal sanity speech last night:

Boehner's got a big number, but it's not, over time, an impossible number. All of the major long-term budgets cut and raise more than $2 trillion over the next 10 years, so Boehner's demands, though impressive in the abstract, are actually in the center of deficit-reduction consensus. What's more questionable is his timetable. It's very unlikely that Congress will be able to cut a multi-trillion dollar deal on deficit reduction before early-August, when the Treasury runs out of financial gimmicks to delay a default. And if Boehner and the Republicans won't accept fiscal rules as a downpayment on deficit reduction, that leaves us with few options save for a series of hard-to-negotiate, short-term increases in the debt ceiling—which is to say, an extremely extended period of uncertainty for the market.

More here.

Klein's right that the $2 trillion figure that keeps getting trotted out by the House Speaker is more than a little like Dr. Evil's bathetic "$1 million!" reveal in Austin Powers. This is in keeping with the fact that budget promises over a 10-year (or even half that) span are worse than useless.

The immediate question regarding the budget is what Obama, House Republicans, and Senate Democrats (who still haven't filed their proposal despite it being due April 15!; the "gang of six" ate Kent Conrad's homework yet again!) are gonna spend next year. All the talk of 2021 is mostly fantasy (not all, but mostly). If Obama and most of the GOP essentially agree that we should spend $3.7 trillion in fiscal 2012 (and they do!), then write it up fellas and start processing the paperwork now. The only thing holding you back would be the president's own party (who haven't filed their budget proposal but are making partisans angry) and we all know that Obama is gonna need them less and less as he starts gunning for his second term.

And if anyone starts saying we're already at the edge of cutting back on essential services, please show them this tally of big-category spending increases over the past decade:

For more on that, including how to balance the budget over the next decade without raising taxes or making draconian cuts to anything (forgive me true small government types!) read "The 19 Percent Solution" by me and Veronique de Rugy.

As for the debt ceiling gambit, think about this: A few months back, Tim Geithner, whose credibility is less than zero, was sweating gumdrops about the "first default in history caused by fiscal insanity" and saying we had to raise the limit in anticipation of it being reached or ELSE! Now he's saying we've got until August, whew. In reality (meaning using the past as a guide) it's likely we've got even more time in two ways. First, during 1995-96, the limit was in force for six months without catastrophic results. So if we reach the limit say this month, that should provide much more time than August before we're in uncharted territory. Second, and more important, the feds have more than enough cash flow to pay interest on the debt for a long time, thereby averting default (the fiscal insanity is another matter; that's been unfolding for years).

For more on the debt ceiling, click below and read this too.

NEXT: Republicans Show Historic Support for Third Parties

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  1. Totally off topic, but why is Balko hanging around a Bikini Car wash in the Balkans? Well, duh. . .

  2. Hey, did you guys ever notice how fucking old this Constimatution thing is?

  3. If default is that bad, then isn’t it the Democrats duty to give in to the Republicans and cut spending even if the Republicans are insane? If someone had a knife to the throat of your six year old demanding your checkbook, you would give them your checkbook. The spending cuts have to be preferable to default right? And if they are really that bad, Democrats can campaign on them and get the voters to punish Republicans in 2012.

  4. the “gang of six” ate Kent Conrad’s homework yet again!

    Sounds like something out of Animal House. 8-(

    1. Reading that line I flashed on Kent in Real Genius instead.

  5. We collect far more in taxes than our debt servicing payments. If we default it will only because TIMMY chose to default.

    1. Ignore this inconvenient truth behind the curtain!

  6. The problem is the republicans are afraid to carry around anything more dangerous than one of those little plastic butter knives.

    1. True. It is not like the Republicans would ever really cut the government in a significant way. But are the Democrats really insane enough to default to avoid the insignificant cuts the Republicans would want?

      1. I wish the republicans would have had the balls to put them to the test to try and find out when they passed that budget for the rest of FY11, but Boehner is a worthless pussy.

        1. According to Grover Norquist writing in the Corner today, Boehner is brilliant. Here is what he says.

          “Second, and this is sheer genius, Boehner has put a sliding-scale price on debt-ceiling increases. Hey, Obama, you want to buy a debt ceiling increase of, say, $2 trillion that would take you past the next election? Fine, the going price is two trillion dollars in real spending cuts. Cannot afford that and hold your spending coaliton in place? Fine, you can buy a month of debt-ceiling relief, worth about $125 billion, for the reduced price of $125 billion in spending cuts. The price of the debt-ceiling hike is the the same amount ? or more ? of real spending cuts.”

          Not sure what to think of that.

          1. Either Norquist is pissing on us and telling us it’s raining, or he’s living in Fantasyland.

            Boehner didn’t have the guts to hold firm on a paltry $60 billion, so I don’t know what makes Norquist think he’ll hold firm on this “pledge”. He’s going to cave in again like he always does.

            1. Hey Mike- Serious Politicians (how have I had a computer this long and never figured out the trademark or copyright symbol shortcuts) fold like a house of cards.

              1. You mean, Like This??

                You can use the HTML entity “™”.

    2. Thats the only thing they can get by the TSA.

  7. You know who else had a big number that really wasn’t that big?

  8. You know who else had a big number that wasn’t really that big?

    1. Have you been talking to my wife?

    2. Bo Derek?

  9. So Boehner wants spending cuts equal to the debt limit increase, but isn’t really particular about how long we have to wait for those spending cuts to materialize. And we are taking this guy seriously, because?

    1. What do you mean he is not particular? And if he is not serious, why haven’t him and Obama come to a deal already?

      1. Particular in saying if these cuts have to be over the next year, over 5 years, over 20 years…

  10. Social Security’s increase is the closest to being accurate, assuming an annual inflation of 2.4%. Still way over, though.

  11. Confident prediction:

    Any cuts in exchange for the debt ceiling increase will be backloaded, which is to say, fictional.

    Our projected deficits over the next 10 years are, what, at least $10 trillion? And these guys have a stroke over cutting our deficit by, at most, 20% over 10 years?

    Doomed, I tells ya. Doomed. I may buy another roll of gold Eagles before this little correction in gold runs out.

  12. Here’s what they should look like for 2011:
    Nat’l Defense 505
    Non-Def Discr 541.1
    Other 661.4

    Medicare/Medicaid/Social Security should be funded based on payroll taxes ONLY. They should never have been added to the general budget, nor should what was collected through those payroll taxes be put in the general budget. They should fund themselves.

    But, let’s assume the same increase.

    Medicare 320.3
    Medicaid 194.8
    Soc Sec 646.2

    All of this is a 24% increase, based off the average yearly inflation rate of 2.4% between 2001 and 2010.

    Total – 2.8688 Trillion.

    2010 Totals 3.7 Trillion

    Savings- 831.2 Billion.

    But, we can do better!

  13. Scaring the public into supporting over-spending… Yeah, that’s a new strategy by the gov.

    http://www.intellectualtakeout…..-increases

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