Considering the Democrats control the Senate and the White House, I actually think the Republican leadership did a decent job in the debt negotiations. Of course, I had low expectations, but did anybody expect miracles with Obama in the White House?
As you might expect, this means the agreement is – at best – a tiny step on a long journey.
I’ve already looked at the revenue part of the deal, so let’s turn our attention to the spending side of the fiscal ledger. Specifically, the supposed spending cuts for the “discretionary” part of the budget.*
This chart shows you everything you need to understand about the budget deal. The top line (fuchsia, I’m told) is the “discretionary baseline,” which is an estimate of how fast spending would increase to keep pace with factors such as inflation. The next line shows how fast discretionary spending will grow under the budget agreement.
The good news is that discretionary spending does not grow as fast with the budget agreement. The bad news is that it still grows. In other words, the supposed “budget cuts” are based on Washington math, where a spending increase is called a spending cut simply because outlays didn’t rise even faster.
But the really bad news is that the burden of discretionary spending – over the entire 10-year period – will be more than twice as large as it was in 2000. In other words, the budget deal basically leaves unchallenged the entire Bush-Obama spending binge.
But, as the old saying goes, a journey of 14.3 trillion miles begins with a first step.
*By way of background, the federal budget has three types of spending. Entitlements, which are “permanently appropriated” and increase automatically. Net interest, which is the one part of the budget that truly is uncontrollable. And discretionary, which are the parts of the budget funded by annual appropriations bills.
[…] and behold, my skepticism was warranted. There are zero genuine cuts. Instead, spending increases by an average of 3.5 […]
[…] This dishonest approach also was used by the President’s Fiscal Commission and last year’s crummy debt limit deal was based on this form of fiscal prevarication. […]
[…] This dishonest approach also was used by the President’s Fiscal Commission and last year’s crummy debt limit deal was based on this form of fiscal prevarication. […]
[…] This dishonest approach also was used by the President’s Fiscal Commission and last year’s crummy debt limit deal was based on this form of fiscal prevarication. […]
[…] fights this year began with the “shutdown” battle, followed by the Ryan budget and then the debt limit. These fights have mostly led to uninspiring kiss-your-sister outcomes, which is hardly surprising […]
[…] fights this year began with the “shutdown” battle, followed by the Ryan budget and then the debt limit. These fights have mostly led to uninspiring kiss-your-sister outcomes, which is hardly surprising […]
Going by the chart in the article, alone, it looks to me like the rate of increase is less only for the years of 2012 to 2018, then the same (2018 to 2021). Those projections are based on no changes in future appropriations law. We see an enormous jump from approx 6 B to approx 1400 B in the first year (2012). This is the place to look for economies. However, we also must look at the entire range of Federal spending, not just the easy pickin’s of small, unadvocated government agencies. Let’s look for example at foreign grants for questionable purposes.
Also, if we continue to pay Americans for not working, who will work to pay this big bill?
And if we continue to punish businesses for being American businesses, what will we do for ‘revenue’ when they flee to more business-friendly countries? Most ships now are registered in Libya for just that reason. Where will it end?
Looks like Andrew was in the catnip. Neither of those comments made an ounce of sense.
As for the post, it’s the same ol, same ol. When they can lie so easily about a simple concept such as “cut”, there’s no hope for progress in reducing spending.
[…] are no spending cuts. The reported “cuts” are typical political math where spending grows every year, but a little less than previously […]
From your chart, it looks like the discretionary spending stays pretty flat through 2015 (of course, some reduction would have been much better). This is good since the 10 yr projections are meaningless propaganda anyway. All I’ve ever wanted to know is what effect there is on the budget controlled by THIS congress. In 2012 there will be a new congress and we’ll have another chance to change the trajectory.
[…] Comments « Where Are the Spending Cuts? […]
[…] party is over. The drama ended. So where are we? According to Dan Mitchell of the Cato Institute, only slightly better off than before this deal, but only if you consider how […]
I have a great way to reduce spending, fire all the Republicans.
Republican (aka stupid person) = “Let’s give all the wealth to the top 1% of society, and somehow the economy will continue to function.”
Science = “If 99% of America has no money to spend the economy will die.”
It is basic math: 1% of American’s are rich, and 99% of American’s are NOT rich. 1% is less than 99%. If 99% of Americans do not have any disposable income, or no income at all, 99% of the economy WILL FAIL because people who do not have any money to spend will not be able to spend any money. This is not hard for anyone with a functioning brain to understand.
If the economy fails the money/investments of rich people will become WORTHLESS because they only retain their value in a good economy.
You cannot have a successful economy or society based on only taking care of 1% of the population.
Isn’t “tax expenditures” a 4th type of federal budget spending? It is a form of discretionary spending, but it is not subject to annual review, in fact, a change requires a change in the tax law.
[…] Dan Mitchell’s blog at International Liberty tells another story visually. […]
This is all fuzzy math and logic to me. It is a result of Potomac fever that seems to control our “public servants” in the District of Columbia. With this level of controlled spending, this nation is not approaching the cliff’s edge, but in a free-fall, with no positive end in sight.
Slightly reducing the planned INCREASE in baseline budget projections over the next few years is nothing but an insult to the intelligence of rational Americans. Spending will still increase, making the situation worse by continuing to fund even more pervasive Keynesian stimulation that obviously has not worked as advertised. This is the fallacy of the proposed legislative agreement.
Does anyone really trust the congress to find further reductions in the entire federal debt, whose members are responsible for the problem in the first place, while still adhering to baseline budgeting formulas? Does anyone really trust the congress to seriously advance the discussion of a future Balanced Budget Amendment?
Believing that congress will bring spending under control does not require trust, but an act of faith, for clearly there are no tangible examples from which to draw further inspiration.
I threw up a little looking at the chart Dan…Even though I knew it woulb be what it is.
And so it goes. I don’t know whether to laugh or cry.
I’m given to understand the budget deal actually reduces spending in 2012 by a grand total of $7 billion, against a 2011 federal budget baseline of $3.8 trillion. That’s a whopping 0.2% cut! And all this in return for only $900 billion in initial new public debt. Why, that’s only $2,900 in new debt for each man, woman and child in the country. What a deal! If this be victory, God spare us.