Barack Obama

Washington's Phantom Austerity

Fiscal Cliff negotiators will means-test everything except government.

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Here's just how stubborn the growth of government is: Even after a Democratic president wins office by campaigning until Election Eve on a "net spending cut," even after he gives his first proposed budget the humblebragging title of "A New Era of Responsibility," even after both Barack Obama and Federal Reserve Chairman Ben Bernanke describe the country's long-term budget outlook as "unsustainable," even after a populist, anti-government backlash sweeps the land for a year and a half, culminating in the Republican re-taking of the House of Representatives and the rise of a new type of limited-government politician embodied by Rep. Justin Amash (R-Mich.) and Sen. Rand Paul (R-Ky.); even after those forces collide in a series of high-profile debt-ceiling showdowns…after all this stomach-churning sturm und drang over the size and scope of government, the federal bureaucracy still has yet to be cut. And no matter what anyone tells you, it won't be any time soon.

Former president Bill Clinton made a big splash at the Democratic National Convention by talking up the virtues of simple budget "arithmetic." (Less ballyhooed is that—virtually alone among speakers there—Clinton also warned that "We've got to deal with this big long-term debt problem or it will deal with us.") In that spirit, and particularly since many Democrats believe that their victory Nov. 6 was a validation of truth vs. lies, let's introduce a bit of simple fiscal-cliff math of our own:

In fiscal year 2000, Clinton's last as president, the federal government spent $1.77 trillion. Multiply that number by two, and you're almost to federal spending in FY 2010: $3.72 trillion in Obama's first wholly owned budget. If we had limited government's growth—not actually cut government, mind you, but limited its growth—at the rates of inflation and population-expansion, the 2010 federal budget would have been a much more affordable $2.50 trillion. Instead of "fiscal cliff" on Jan. 1, 2013, we'd be facing a federal budget surplus.

Faced with the overwhelming evidence that the debt and deficit problem is definitionally a spending problem, negotiators and commentators are talking about everything except cutting the size of government.

And yet no lawmaker in the fiscal cliff negotiations is actually talking about cutting government. The very sequestration "cuts" that Washington is freaking out about will not, it can't be stressed enough, lead to a net reduction in the size of government. Even the estimated $110 billion in trims currently slated for 2013 can and probably will be easily offset by war spending, post-Sandy relief, and whatever other goodies Congress hoses through the massive spending-cap loophole.

Lead dealmaker Timothy Geithner portrays the problem as finding "the revenue increases we need," a formulation that takes as axiomatic the federal government's requirement to gobble up at least $3.8 trillion a year. (Geithner, like many Keynesians, seems to forget that the master's advice was to eventually cut spending after the crisis of slack aggregate demand has been lifted.) What the few Democrats who signal a willingness to even talk about entitlement reform say in their next breath is that specific reforms should not be part of any fiscal cliff deal. Republicans don't have much in the way of entitlement-reform proposals to begin with, aside from the mild measure of means-testing Medicare for the rich. You can read many thousands of words about the negotiations without hearing even a hint about cutting a single government program, let alone agency or department.

So Republicans want to means-test entitlements and maybe some tax deductions, and Democrats want to effectively means-test taxes. Where does that leave those of us who would prefer instead to at long last means-test government?

Screwed, is the short answer. Americans of every income group will likely take home less of their pay, an arrangement that will probably be significant enough to push the fragile economy into a double-dip recession, but too small to meaningfully close the deficit. Washington's chronic short-term crisis-budgeting—with its annual "patches," squandered oversight, and studious entitlement-avoidance—will likely become a permanent feature of Obama's presidency.

The only long-term fix to this scenario has to begin at the ballot box. It will only be when enough voters express a desire to cut government, rather than simply cut taxes, that we can be sure that at least some of the negotiators on Capitol Hill will be willing to address the problems at hand.

Until then, the only grim consolation prize will be that more Americans will come to realize that the true cost of our current size of government is more stupid politics and protracted recession.

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52 responses to “Washington's Phantom Austerity

  1. Well, in anticipation of the PM Links…

    All you assholes who make retard jokes might be next.

    1. That’s fucking retarded.

      1. Officer! Arrest that man.

    2. “the threat … did not occur in the vicinity of a school … and the act did not occur in front of a police officer”

      Ha, ha, Delroy! All *our* jokes are done on *the Internet*!

      1. That just results in the charge being reduced to a minor misdemeanor. In that guy’s case, it meant he “only” got 29 days in jail.

    3. I know that retard’s to blame, and ain’t that a shame
      Bill Bailey, won’t you please come home?

  2. It will only be when enough voters express a desire to cut government, rather than simply cut taxes

    So, Matt, who are you going to disenfranchise?

  3. DOOOOOOOOOOOOOOOOM

  4. “The Simpsons: Thursdays with Abie (#21.9)” (2010)

    Mr. Burns: …And that’s how you win an opium war.
    Homer Simpson: Oh, great stuff. And the life lesson is?
    Mr. Burns: The Yangtze River swallows all secrets.
    Homer Simpson: Hmm. I’m just gonna put ”Haste makes waste”.
    Mr. Burns: Yes, although, these days, I can make neither haste nor waste.

  5. We’re DOOOOMED.

  6. (Geithner, like many Keynesians, seems to forget that the master’s advice was to eventually cut spending after the crisis of slack aggregate demand has been lifted.)

    I firmly believe the overwhelming majority of the so-called “infrastructure gap” I keep hearing about is complete and utter bullshit, BUT- at least road and bridge projects have a defined life span (beginning, middle, and END). Our alleged need for MOAR TEECHURZ and cops, and firemen) is intended to last into perpetuity.

    1. Teachers are already obsolete. Just create some robots connected to some libraries of disciplines and the interwebs. Just don’t program any ideaology into them and we have a win/win. Government jobs are welfare programs for the otherwise unemployable. Just give them a fucking check and keep them away from the childins.

  7. The federal government will never spend less or be less powerful than it is right now.

    1. Yes they will, as soon as they run out of other peoples money. I do, however, concede that they will never willingly spend less or be less of their own free will.

      1. Certainly, the current crop in Washington isn’t ever going to willingly cut spending.

      2. Well let me be clearer: It will continue to grow and grow until suddenly it gets much much much smaller.

        1. It’s that latter part that all of us here are patiently waiting on. I don’t see any other way unless some states band together in rebellion against the feds.

          We could honestly split into 2 or more countries. I don’t know how the sane among us can continue to live with these proglodyes. It’s almost like they are a different species, and not a very intelligent one.

      3. Yes they will, as soon as they run out of other peoples money

        That’s when they turn the guns on us.

        1. Too bad for them – there are 350 million privately owned guns in this country.

          1. Which is not to say that they couldn’t win; just that those private gun owners could make the whole ordeal very messy and not worthwhile.

  8. after both Barack Obama and Ben Bernanke describe the country’s long-term budget outlook as “unsustainable”

    When they say unsustainable, that means unsustainable for you, not for them. So bend over and get ready to pay much more taxes and to get much less for it. That is what austerity means to them, austerity for you, not for them. For them, it is MOAR, MOAR, MOAR!

  9. “The only long-term fix to this scenario has to begin at the ballot box.”

    Since there are more parasite voters out there than voter hosts, that would mean there’s no fix at all–but there is another fix!

    The fix isn’t gonna come from government or the ballot box, however. The fix comes when the world’s creditors stop buying our debt at reasonable prices and/or inflation rears its ugly head.

    Greece is balancing their budget like that–involuntarily. We will too.

    Our politicians get more power by spending more, and they would lose power by cutting spending. So, there is no political solution to overspending as our politicians are presently situated.

    But inflation will come eventually. Our creditors will cut us off at current rates eventually. Our budget will be slashed–have no fear it’ll never happen. There’s no avoiding it! It’s just that when it happens, it’ll be extremely painful for everybody. …including retirees, Medicare and Medicaid recipients, college kids, people on food stamps, taxpayers–it’s gonna be extremely painful for everybody.

    …because our politicians won’t slash spending before the levee breaks, the flood’s gonna hit us all at once.

    1. it’ll be extremely painful for everybody

      Except for our elitist masters. That’s why they don’t give a fuck. It will get painful for them eventually, but not until long after the rest of us suffer enough.

      1. Yeah, exactly.

        I mean, given our parasitic voter base, many of them would lose power without spending anyway.

        It’s just a question of whether they want to lose power now or later. And for all we know? Later might not happen for another 10 years.

        It might happen in three months, too, but you’re definitely going to lose if you vote to cut spending.

        But they’re not there to make the smart choices for the economy and their constituent voters. They’re there to get themselves reelected.

  10. I predict the “New Era of Responsibility” will turn out like the “New Era of Transparency.”

    1. Or the foreign policy of a Nobel Peace Prize winner?

  11. “Geithner, like many Keynesians, seems to forget that the master’s advice was to eventually cut spending after the crisis of slack aggregate demand has been lifted.”

    On the one hand, the master said we can safely expect the government to spend every penny they get; on the other hand, he thought the government would give the money back.

    Yet another example of the fact that most people on the left don’t have or care about the reasons they support things: they believe in Keynes and Obama for the same reason fundamentalists believe life on earth was created 6,000 years ago.

  12. No, fuck you, cut spending.

  13. The only long-term fix to this scenario has to begin at the ballot box.

    Bull. Q3 plus infinity is a last gasp. The government cannot do anything more and when the markets finally turn against it the problem will fix itself.

    My guess is it will happen during the next inevitable recession…2 to 3 years.

    1. Nope,

      It will last another 5-10 years.

      The end point will happen when the world has had enough of the dollar as reserve currency and be punctuated by a military defeat / disaster.

  14. Should be interesting to see how that all turns out.

    http://www.IP-Faker.tk

  15. Means testing old age benefits, either Medicare (per Matt, as advocated by some in GOP) or SS (as advocated by Nick Gillespie) is an awful idea. That would discourage work and savings. And encourage asset hiding.

  16. politicians are like those kids who get in playground fights, but as soon as it looks like they dont have the upper hand start yelling, “ow! that hurts! stop hitting me! oh god the pain!” so a teacher will run and break it up before they actually even get touched

    they writhe and moan now about how ‘draconian’ budget cuts would be, when all anyones even proposed is cosmetic to begin with

  17. I have a modest proposal:
    No representation without taxation.
    Simple: Receive more Fed money than you paid in tax? Lost your vote in Federal elections.
    Receive more in state money than you paid in tax? Forget voting in state elections.
    Yes, cities too. And yes, this removes all gov’t employees from the electorate, since they are in an obvious conflict-of-interest condition.
    If you value your vote, don’t work for the gov’t. Your choice.

    1. I like your proposal Sevo. Those living off the government shouldn’t get a vote in how the government runs. Those not living off the government can vote.

      That was kind of the idea of poll tax, which the statists hate.

  18. Today I heard Pelosi bragging that the Dems have already done the cuts, a trillion and a half worth. Really? What did they cut?

    They probably just scaled back the projected increases in spending. Which they’ll put back as soon as nobody’s looking, anyway.

  19. Not yet hopelessly hope that the Government will be able to improve.

  20. Suppose Gary Johnson won the 2012 election. Immediatly he put an open borders libertarian program into place. Taxes went down, imperialism stopped, and all of the world was welcomed enter to our country. Just how many people would immigrate? Look at puerto rico, which has free immigration. 25% of the nation immigrated until we bribed them with welfare to stay home. Doubtless many people from the third world would want to immigrate. What effect would these immigrants have on our country? Unemployment would increase dramatically. Economic growth resulting from libertarian policies would create some jobs, but not enough for the massive onslought of immigrants. How many times can a lawn be mowed? With welfare cut and unemployment high, millions would crowd into homeless shelters. They would get food and shelter, but little else. Many native-born minority Americans would also be hit hard as wages decline to third world levels Meanwhile, I would still have a house, a car, a good job, and intelligent children, and a big tax cut. Do you think that the poor unemployed immigrants, many of whom would not have very high opinions of white Americans like me, would put up with this. Crime would undoubtetly increase. The homeless shelters would be fertile grounds for socialist politics. The Islamic immigrants, unable to be a part of the American dream, would hold on to the views of the old country. A nation of thrid worlders would look like the third world. How hard is that to understand?

    1. Cool story bro.

      Are you proglodytes building your libertarian strawmen already?

    2. Gary Johnson didn’t run on an open borders program, but even if he had, in the absence of a welfare state, immigrants would either obtain jobs and thrive or fail to find jobs and leave (or not come in the first place. Contrary to what you suggest, packing up everything and moving across the world is not easy nor is it cheap). In other words, things would be pretty much the exact same as they were up until the 1920’s when our immigration policy was essentially as you describe, and yet failed to produce the disaster scenario you predict. Markets are the best way to allocate resources, including labor. How hard is that to understand?

      Go back to jacking off to your Thomas Malthus and leave the thinking to grown ups.

      1. “fail to find jobs and leave”
        Ever been to Nigeria? It’s a shithole. The worst ghetto, the worst prison, the worst homeless shelter, cannot compare to that place. How much would it cost to outfit an old cargo ship to take human cargo from nigeria to America? Not a lot. Millions of Nigerians would immigrate, and if they couldn’t find jobs they would commit crimes, when caught, they would enjoy three meals a day and air conditioning.

        1. I’m proud to be an American/Where those Messicans can’t get me/And there ain’t no doubt I love this land/Except for those fucking goddamn Mexicans and Nigerians, GODDAMMIT I HATE THEM SO MUCH!

          By the way, Murrican, why is it that every group you worry about immigrating here is brown or black? Why don’t you worry about poor white people coming here from Serbia?

          1. Also, how the hell are these poor Nigerians going to come here? Walk? Nigerian GDP is $1500 per person. A ticket for a plane flight from Nigeria to the US is about $500 according to Google. That’s a third of yearly GDP per person. Do you think a Nigerian can save up for a ticket without starving to death? Because most can’t.

            So again, how is this swarm of Nigerians supposed to wash up on the shores of America and steal all our jobs?

            1. how the hell are these poor Nigerians going to come here? Walk? Nigerian GDP is $1500 per person. A ticket for a plane flight from Nigeria to the US is about $500 according to Google. That’s a third of yearly GDP per person. Do you think a Nigerian can save up for a ticket without starving to death? Because most can’t.

              Which was going to be my reply. I would guess that any Nigerian resourceful and determined enough to save half his life to buy that plane ticket is probably not that likely to be coming to America for the wonderful accommodations at hotel Supermax.

              Also, the standard of living in Nigeria today is actually higher than significant portions of the now-developing world were when America had open immigration and no welfare state, and here again, no hordes of plundering criminals from backwater shitholes arrived to commit crimes and luxuriate in the splendor of the American penal system.

              The only thing that makes relatively open immigration (criminal and disease screening should still be a component, IMO, although I know many libertarians would seem to disagree) impracticable in modern America is the welfare state. In the Johnson-led Libertopia American describes, the only problem open immigration would cause would be trying to build houses, restaurants, hospitals, and Wal Mart super centers fast enough to keep up with the demand. That’s a pretty good problem to have.

    3. Re: American,

      What effect would these immigrants have on our country? Unemployment would increase dramatically.

      Just like it happened during the 80’s and 90’s….

      Oooops!!!

      Many native-born minority Americans would also be hit hard as wages decline to third world levels[…]

      Just like it happened during the mass migrations from Europe, Central America and Asia – during the late 19th Century. Yeah, a veritable hell-hole, right? You know, when wages were actually rising….

      …. Oooops!!!

      History simply refuses to agree with you, bud!

  21. If anyone wants to donate money to a Charter School without actually having to donate money, then please save your Boxtops for Education and Labels for Education. You usually find these on a number of products from Campbell’s soup to General Mills. These will be going to a charter school in Euless, Texas. Email me at rushingfn on yahoo for details or questions. Thank you fellow Libertarians.

  22. “they’ll find a solution
    Of that I’m sure
    They’ll drop a bomb
    Start a fucking war”

    Sometimes old British anarcho-punk is dead on.

    1. I think the Keynesians are already sucked into the subconscious tractor beam of the next Big One.

      On the employment end, there’s jobz! At bomb factories! On the safety net end, there are thousands more who’ll pay into soc security that will never live to collect. Everything else can be centrally planned and rationed. It’s win, win, win.

  23. “The only long-term fix to this scenario has to begin at the ballot box. It will only be when enough voters express a desire to cut government”

    And both the RINOs and Demodisasters provided presidential candidates who’s positions were to grow government, screwing us before we voted. I voted for Johnson. Romney only said he wanted to reduce the size of government (but not in his term if elected per his budget) lying like many RINOs did to get elected in 2010, who then turned their back on their supporters by voting to continue the spending.

    I do have to agree with Welch that the only long term fix is what he says. If the dollar collapses, the patient is dead, and who knows what kind of country will arise. Given voters these days, it’s likely to be worse. No wonder Jim Rogers has moved to China.

  24. How about a dollar crisis and massive inflation? Then we see wage and price freezes etc then hyperinflation.

  25. Austerity is good for government and us.

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