Government Spending

Obama: Never Learn Not to Spend or, Can We Cancel Sequester Again?


You've got to hand it to Barack Obama: He's never afraid to say stuff that is appalling. Especially when it's got to do with potentially cutting government spending. 

Back in August 2011, when faced with a debt-limit showdown, Obama cut the following deal: For a $2 trillion increase in the amount of money the government could borrow, the government would agree immediately to $900 billion in trims on expected spending over the next 10 years and it would work to come up with another $1.2 trillion in similar "cuts" by the end of 2011 (cuts is in quotes because the recissions aren't actual year-over-year reductions but minor trims on a decade's worth of spending equal to around $44 trillion). If Congress couldn't agree to $1.2 trillion in future cuts by the end of 2011, then automatic, across-the-board cuts of the same amount would go into effect in January 1, 2013, mostly on defense spending and other discretionary spending.

So what happened? Nothing, of course. The sequestration cuts were pushed back to March 1, 2013. With that new deadline approaching, Obama is now calling for yet another incomplete:

"If Congress can't act immediately on a bigger package, if they can't get a bigger package done by the time the sequester is scheduled to go into effect," Obama said in the White House briefing room, "then I believe that they should at least pass a smaller package of spending cuts and tax reforms that would delay the economically damaging effects of the sequester for a few more months until Congress finds a way to replace these cuts with a smarter solution."

This is ridiculous, to say the least. We have a federal government that hasn't been able to pass a budget in years—not because of ideological gridlock but because of bipartisan incompetence. And every time a trigger date comes around, all sides work like hell to figure out how to worm a way around it. By most counts, sequestration will take about $55 billion out of the Defense budget (whose 2012 baseline was around $535 billion, not counting other add-ons that bring national security spending to a grand total of $928 billion). Another $35 billion or $45 billion will come out of other discretionary programs. Sequestration is a blunt tool—everything gets cut, across-the-board—but that was the whole idea of using it as a threat: It's so bad that the government would of course come to some agreement to avoid it.

Well, they haven't and Obama's proactive punting is yet one more sign that the adults left Washington some time during the second Washington administration (indeed, Obama is already late with this year's budget proposal). If Obama wants to avoid the blunt force wounds inflicted by sequestration, he can put a few of his best and brightest on coming up with more surgical cuts to programs that nobody really needs.

The Republicans should do the same, but don't hold your breath. According to the Washington Post, here's Speaker of the House John Boehner's idiot wind: "The president's sequester should be replaced with spending cuts and reforms that will start us on the path to balancing the budget in 10 years." Thanks, Speaker, that's really helpful.

Suffice it to be said: The federal government is expected to spend $3.5 trillion dollars in fiscal year 2013 (which ends on September 30). Cutting $100 billion from that amount should not be difficult. Between 2001 and 2012, inflation-adjusted spending increased by around 55 percent (see table 1.3). If the government cannot find the courage to hit the deadlines it imposed on itself, it will be up to voters—75 percent of whom think the budget deficit is a major problem that needs to be addressed now—to force the issue.

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  1. The US debt is not a problem. The problem is that Americans are forced to pay for it and forced to use the same currency in which the debt is owed. I never agreed to be responsible for the government’s debt any more than I agreed to be responsible for my neighbor’s.

  2. “If the government cannot find the courage to hit the deadlines it imposed on itself, it will be up to voters – 75 percent of whom think the budget deficit is a major problem that needs to be addressed now – to force the issue.”

    As it has been so many times before right? I am sure the pols will get right on this, yes sir, riiiight on it! If not, maybe only 95% of the gerrymandered incumbents will go back to Congress, rather than 96%!

  3. Cut you, fuck spending.

    I think that’s right.

    1. Close enough for government work.

  4. It’s interesting that Reason-Rupe polls always seem to find support for exactly what Reason is in favor of. I’m sure it’s just a coincidence. Either that, or everyone in America is secretly a libertarian.

    1. Its an ongoing demonstration of the gulf between stated and revealed preference.

  5. Boehner’s hot pink tie definitely clashes with his orange face. Fashion DON’T, dude.

  6. Cancel Christmas.

  7. We have a federal government that hasn’t been able to pass a budget in years -not because of ideological gridlock but because of bipartisan incompetence.

    Excuse me. The GOP House has passed budgets. Dingy Harry won’t even let a budget get brought up in the Senate, and last I checked he was monopartisan.

    1. Strangely enough Harry Reid’s brain is monocellular.

  8. Since when is spending ever allocated in any “smart” way?
    The Congressional budget process is a balance of competing political interests. It is not a panel of technocratic experts who can identify with perfection exactly what the correct things to spend money on are.

    The reporters cblathering about how cross-the-board cuts are “stupid” and they should modify them are themselves the stupid ones.

    The point of sequestration is that it is FAIR. It fgorces all competing interests to shoulder an equal share of the burden. Yes, that does mean that cuts aren’t tailored in any intelligent way. However, attempting to tailor the cuts breaks the compromise between competing interests and invites all sides to immediately begin lobbying as hard as possible to avoid cuts to their own pet programs.

    Which is what, in the past and present, has ALWAYS prevented ANY cuts from ever happening. Every faction lobbies for his little piece of the pie, and the amount for each tiny faction is small so it becomes difficult to oppose, and yet, it all adds up. Everyone wants lower spending, but nobody wats THEIR favorite program to be cut.

    Well, the only way this is going to be politically feasible is if everyone sacrifices. And that’s what sequestration does. Everyone shares equal cuts. It may not be smart from some opbjective technocratic standpoint, but its the smart solution from a realistic, political standpoint.

  9. Ideally, the route the House should take is to repeal the debt ceiling and take back the power to explicitly issue debt for specific causes.

    As for everything else, they should issue a tiered budget that eliminates any uncertainty about what gets cut and when, and gives Congress more explicitly control over any government shutdown. The bottom tiers would still be a barebones budget for the “mandatory” stuff, but any increases or non-essential parts of those programs, or discretionary programs would get separated into higher tiers. Whenever revenues and explicit debt fell short of the total budget, everything in the least important tier would get cut. If it was still short, the next tier would get cut, etc. If the president tried to fuck with Congress on this or issue debt unilaterally, the Secret Service budget gets eliminated until the next election is over.

    1. I like this idea. Handing over borrowing authorization allows Congress to escape responsibility for what it is spending. If every spending bill had to be tied to an explicit debt issue, it would do a lot to make debates over what to spend money on more rational.

  10. Well government has to think over how to overcome this issue not to think of cuts.
    Certified Financial Advisor

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