Just How Little The Budget Deal Matters in the Scheme of Things, in 3 Figures


As Peter Suderman notes, there's a new deal about the federal budget that's been hammered out by Rep. Paul Ryan (R-Wis.) and Sen. Patty Murray (D-Wash.). It needs to be passed by the House and the Senate, which may present some difficulties. The deal is supposed to save the country from the dread threat of "sequestration," or a series of automatic, generally across-the-board cuts imposed by the last budget deal, passed in the summer of 2011.

The short version of the deal, which covers discretionary spending over the next two years? The feds will spend $45 billion more in 2014 than they would absent a deal and another $20 billion more in 2015. Various "fees" (not taxes, never taxes!) will go up too, allowing Ryan and Murray to tout this as a plan to save "$28 billion over ten years by requiring the President to sequester the same percentage of mandatory budgetary resources in 2022 and 2023 as will be sequestered in 2021 under current law."

Thus the following table, which shows increases in spending from current law:

Whew, that was a close call, wasn't it? The truly minuscule trims to mandatory spending are unaffected, meaning that all the problems with major entitlement programs still exist and will only get worse. But the important thing is that we've avoided the "dumb" cuts imposed by sequestration that would have truly devastated discretionary spending, right?

Here's a chart by Reason columnist and Mercatus Center economist Veronique de Rugy that reminds us just how draconian the cuts imposed by sequestration really were:

She's updated the chart to make projections through 2023. The growth rate of spending, based on Congressional Budget Office (CBO) figures, shows that the sequester wasn't a big deal at all.

That's true even when you focus just on the base defense budget, which is the issue that arguably pulled the GOP to the table in the first place. The effects are larger on defense spending but, hey, the defense budget has been on steroids for most of the 21st centuy due to long and not-quite-over wars in Afghanistan and Iraq, plus a neverending war on terror. If past was prologue, defense spending would drop much more significantly as we at least announce the official end of our efforts overseas. Not quite the case:

There's a real question as to whether this Ryan-Murray deal will get the votes needed to pass in Congress. But as a rough approximation of what the two major parties want out of a deal, it underscores that spending only goes down by accident. Remember that President Obama put sequestration into play precisely as a trigger to make sure that a bipartisan deal to spend more money would get done.

Real federal spending has indeed flattened over the past few years, partly because of the sort of gridlock that led to sequestration and partly because it had been jacked up for so long and then with a giant burst at the very end of the Bush presidency and the start of the Obama years. Here's a bonus chart, also courtesy of de Rugy, that shows the general trend over the past several decades:

If you care about shrinking the size, scope, and spending of government—and you should if you care about "Free Minds and Free Markets" both—there's not a lot of reason to cheer this latest deal and, even more sadly, what might eventually replace it. Because as the chart above shows, there doesn't seem to be a lot of ability to flatten spending, at least since World War II, for any length of time.

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