Washington's Budget Theater

Spending cuts and the debt


The debt ceiling fight has been long and exhausting, but it will have a big payoff. After it's finally resolved—with the Boehner plan or the Reid plan or something else—we will have confronted our budget crisis, made tough choices, and forced the federal government to live within its means.

That's right. And I'm Katy Perry.

We have heard a lot lately about plans to slash spending by trillions of dollars. Though these sound like deep cuts, they are not even shallow cuts. Under the plans being discussed in Washington, federal spending would rise, and so would the federal debt—not by a little, but by a lot.

Consider Speaker John Boehner's blueprint, which envisions savings of some $3 trillion over 10 years. The biggest chunk of savings comes from a cap on discretionary outlays, letting them grow as fast as inflation—meaning they would gobble up more dollars every year.

In real terms, they would remain just as high as they are now. Senate Majority Leader Harry Reid's version likewise allows federal departments to spend more each year to offset the effects of inflation.

All these "cuts" are modest reductions in the growth of outlays envisioned in President Obama's budget, which would boost annual spending by 57 percent over the next decade. Everyone is talking about cutting the overall budget, without actually doing it.

Our leaders are not even saying exactly which programs will be trimmed. Neither party wants to reveal which constituents will lose their spots at the federal trough.

The publicized changes are mere promises to reduce projected spending—by some formula that we don't know, because it has yet to be determined. For that matter, there is no guarantee the cuts will ever happen.

Up to now, the fiscal pit bulls on Capitol Hill have done a lot more barking than biting. Chris Edwards, a fiscal policy analyst at the libertarian Cato Institute in Washington, points out that since gaining control of the House of Representatives, Republicans have shown no interest in abolishing anything.

"John Boehner has been in Congress for 20 years," laments Edwards. "Hasn't he ever seen an agency or program that ought to be repealed?"

Whoever wins this battle, the government's sea of red ink will keep expanding. The publicly held debt now stands at about $11 trillion. Obama's budget would have pushed it up to around $20 trillion by 2021. Under either the Boehner plan or the Reid plan, it would exceed $17 trillion.

All this screaming and squabbling, and for what? For a huge increase in the amount of borrowed funds that you and your descendants will have to repay.

Freshmen Republicans in the House rallied behind the "cut, cap and balance" plan, but it amounts to yet another stack of alluring promises. The cuts, $111 billion next year, are not itemized. Neither are the programs that would take a hit from the caps.

The "balance" refers to a constitutional amendment to ban deficit spending. But such an amendment—even in the very unlikely event it could be passed—wouldn't balance the budget. It would merely commit Congress and the president to approve cuts in spending or increases in revenue that would eliminate the fiscal gap.

It's not a solution. It's a promise to come up with a solution, somehow, someday.

Why not just devise a remedy now? Because lots of voters will lose interest in fiscal discipline once they realize it means tangible sacrifice on their part. They might even exact vengeance at the polls. Getting voters to endorse frugality is easy. Taking money out of their hands is not.

Nor are our elected leaders addressing the real source of the problem, which lies in three federal entitlement programs—Social Security, Medicare, and Medicaid.

Even ostensible hardliners evade this reality. Judson Phillips, founder of Tea Party Nation, writes in The Washington Post that "Americans are tired of 'bridges to nowhere,' ferries to nowhere, neon light museums, cowboy poetry readings and cow flatulence studies."

But items like these make up a microscopic share of the budget. The big three entitlements, which Judson never mentions, account for 40 percent.

However the debt ceiling turns out, the essential decisions are off in the future. If the past is any guide, that's where they will stay.


NEXT: Short Timer

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      1. yes baby
        and I’m on top

        1. We are talking about a cheerleading pyramid, right?

  1. So what you are telling me is…The cuts in store for us will be like hitting a tank with a claw hammer… there will be some sparks and maybe a loud noise but no effect on the speed and path of the tank.

    1. Well the NYT hates it so it must not be all bad.

      1. But I suspect that’s just another part of the theater…the “progressive” squealing that ANY cuts will “gut society” or some such.

      2. outrage sells papers.

  2. Me doth thinks it will have no effect slowing the train. Cutting 3trill sounds great, but its over 10 years, and the US will incur that amount of new debt in 2013 (less than 2 yrs) It creates an unlawful “super congress” and does nothing to confront the spending glut. The only way we will survive as a counrty is to balance the budget. no other entity on earth can run a 41% deficit and contiue to exist. We sadly are not special in that respect. the debt will be our undoing.

    1. Ok, someone explain to me why the “superCongress” is unlawful. Last I heard, it couldn’t make laws. It could only create bills to send to the full Congress for an up-or-down vote.

        1. That article didn’t explain anything at all regarding the “super-congress”. It just stated that the “super-congress” was unconstitutional and then went on a wild rant touching various loosely related topics.

          Can anyone else explain to me why the “super-congress” is unconstituional?

          1. Because the House and Senate are to be seperate. We have a Bicameral System in the US. They have different duties and a bill must originate with only one house, depending on its purpose. By combining the 2 and making bills that can not be fillibuster, tabled or amened, it concentrates the power of both houses into a small comitee.

            1. But each house has the power to set its own rules. The Senate, for example, could vote to remove the filibuster on its own, without House input. Since this bill must pass both houses I don’t see how this isn’t the same as both houses re-writing their rules. In then end, a bill would still have to pass both full houses to become law. Also this super-Congress seems to only apply to this one case. It’s an extension of this one bill.

              I’ll agree with you that the super-Congress is a bad idea, but I still don’t see how it’s unconstitutional.

    2. The cuts should be 3 trillion/yr.

    3. I need someone to tell me if I’m understanding this right: The “cuts” in the debt deal, are only decreases in potential future spending. Is that how it is? As it stands now, no federal programs will have to undergo cuts due to this deal, but will just have to restrain spending in the future?

  3. Why Katy Perry? First thing that came to mind? Secret desire to be her? I would have chosen Wile E Coyote. Or Elvis.

    1. well, you might be able to see Chapman as a coyote or maybe dressed as elvis. but i do not think you will ever see him be compared to the beauty Perry. Thats why, its unbelivable. kinda like saying, slap my ass and call me sally, everyopne knows you are not sally.

  4. First thing to do, at least here on Reason and other likeminded sites: get rid of the word “entitlements” and consistently identify the problem as “redistribution programs”. At lease let’s be honest about what is going on.

    1. So you’re talking about welfare, food stamps and the like???

    2. …get rid of the word “entitlements” and consistently identify the problem as “redistribution programs” “welfare” or “the dole”.

      Fixed. “Redistribution programs” is a newspeak euphemism.

    3. “Social insurance for people that don’t understand that most people don’t get their money back from insurance”.

    4. Or, you know… a program that people have spent their working lives paying into on the assumption that when they needed them, those programs would be there. Hence, entitlements because people are entitled access to programs that they have already paid for.

  5. The attitude of Chapman’s article is great. I’d like to point out that 2 Trillion dollars divided by a 100 billion dollars equals 20. Hence, Washington DC just imposed a 100 billion dollar annual debt payment on the American poeple for 20 years. (simple interest/no present value) From the looks of satisfaction on the faces of the players in this sorted drama I can’t escape the feeling of someone pissing down my back and telling me it’s raining. Once again, Washington DC and its players win while America and its’ citizens loose.
    I’m out.

    1. was that a suicide note? don’t do it, man!

  6. Damn, I was really hoping everything would go tits up, but I guess we’ve kicked that can down the road a few more years. It’s like a game of hot potato.

  7. My poor republican friends. They’re gonna march to the poles again in November 2012 and try it again. And again. And again …

    “John Boehner and the Republicans are really standing up to Obama’s big government … hey, what’s slapping me in the ass?!”

    I may have zero ideological representation in Washington but at least I have more dignity than USED REPEATEDLY.

    1. march to the poles

      Yeah, that’s the ticket!

      1. lmao, polls

        1. I want to see a poll dance…

          1. It starts next year…

  8. My paycheck increased by only 4%, and I wanted a 7% raise!
    That means that my pay was cut by 3%!
    A 4% increase equals a 3% decrease because I didn’t get what I wanted!
    I want!
    I want!

    -government bureaucrat

    1. You need to join a union.

  9. The publicized changes are mere promises to reduce projected spending?by some formula that we don’t know, because it has yet to be determined. For that matter, there is no guarantee the cuts will ever happen.

    REALITY, n. The dream of a mad philosopher. That which would remain in the cupel if one should assay a phantom. The nucleus of a vacuum.

  10. Our leaders are not even saying exactly which programs will be trimmed.

    One of so many things about this theater that are … annoying. Our leaders say stuff like: We’ll take a hard look at programs important to my party; and Certainly there is some waste that can be trimmed from the defense budget. Spell out the specifics, or cuts don’t exist. Of course, as pointed out ad nauseum, they don’t exist anyway …

  11. From what I understand, anyone can put forward a budget for Congress to consider and vote on. Has anyone gone to the trouble of making a serious budget that is balanced, if not reducing the budget? I imagine it would be a rather time consuming exercise but surely there is someone out there who has made the effort.

  12. thats our bought and paid for politicians at work lol.

  13. These “cuts” are obviously bullshit, but the socialists have fucked up big time.

    Crying that non cuts will cause the end of the world, when in reality they won’t even be noticeable because they don’t exist, sets the stae for real cuts next year, and the year after that etc.

  14. Now we get to sit back, and listen to both sides tell us that they “won”.

    Democrats were able to prevail, by stopping the racist, baby eating tea party extremists from pushing grandma off the edge of a cliff. The Republicans were able to prevail, because they were able to stop the thieving, pinko leftists from further transforming the country into a European style welfare state.

    See, everyone wins – hooRAY! Or, maybe, just maybe, both sides loaded up their respective wish lists with items they didn’t really give two shits about, knowing they could later sacrifice them in the name of “compromise”.

    1. Really. You just know that those fuckers who pretend to hate each other are all getting together in DC bars afterward and laughing at how they scammed the rubes yet again.

  15. The publicly held debt now stands at about $11 trillion. Obama’s budget would have pushed it up to around $20 trillion by 2021. Under either the Boehner plan or the Reid plan, it would exceed $17 trillion.

    Facts that are oddly absent from the blizzard of media coverage.

    Best case scenario: We’ve slowed the accumulation of new debt by 15% or so.

    Likely scenario: this deal will make no appreciable difference in the accumulation of new debt.

    Fiscal FAIL.

  16. The important takeaway: $2.4T worth of QE3 = great time to buy gold and silver

  17. “The result would be the lowest level of annual domestic spending since Dwight Eisenhower was president ? but at a level that still allows us to make job-creating investments in things like education and research. We also made sure that these cuts wouldn’t happen so abruptly that they’d be a drag on a fragile economy.”

  18. [Voters] might even exact vengeance at the polls.

    I’ll take “Congressional term limits” for a bajillion.

    1. I’d prefer vengeance at the scaffold.

  19. All that has happened is that they have kicked the can down the road again.

    I am expecting a sell-off of US dollar assets over the next few years, but I don’t know how long it will take to build to a crisis.

  20. Let me get this straight. We are spending approximately $1.5 T more than we have EVERY YEAR and we are going to cut $2.5 T over the next 10 years.

    Some quick math: We will overspend $15 T over the next 10 years (1.5 x 10). From this we will subtract out the $2.5 T in spending “cuts”, leaving ONLY $12.5T of government OVERSPENDING in the next decade. We can then add this to the $14.3 T we are currently in debt and come up with $26.8 T we will be in debt in 2021.

    What did S&P say two days ago? Something to the effect that if they didn’t cut $4 T it would result in a downgrade? How could this possibly save the AAA rating?


    1. Not so much bluff. More a case of squeezed to backtrack their standards. Of course, the farce in all of this is that the government is largely playing a game of make-believe with the ratings as well. In the long run, regardless of whether our rating falls, our credit quality is clearly deteriorating.

  21. Even using the crazy optimistic CBO numbers, you get a slowdown in the increase of debt accrual of around 15% (I think).

    And, of course, little events like economic slowdowns, interest rate increases, and so forth will run up the tab. A lot.

  22. Sorry I am a realist and as much as I dislike taxes I know they are not going away. But how much could be generated by eliminating the ability to claim religious deductions. Churches would no longer be considered non-profits, since they are not. Either the money would be taxed properly or redistributed to other businesses to help the economy grow. If something must be taxed it sure as hell should be religion.

    1. i think we should tax people who stand in streams…

  23. thank you man

    thank you man

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  25. remain just as high as they are now. Senate Majority Leader

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