Daily Archives: March 18, 2011

When is $100 billion not enough?

When it’s non-security discretionary spending cuts from the budget. That’s when.

Then it’s just not solving the problem. It’s pandering for the press and for constituents.

The problem, and all the talk Washington, is the deficit and getting it back to a manageable level.  Republicans in an effort to keep campaign promises and reduce the deficit, are working on cutting $100 billion out of the budget. The problem is, what they are cutting is just non-security discretionary spending. The real cause of deficit growth–and the looming monster on the horizon–is entitlement spending (Social Security, Medicaid, and Medicare) and interest payments on the federal debt. See, those two items will grow, under the Congressional Budget Office‘s projections, dramatically over the next decade. By 2024, tax revenues will not be enough to pay for the costs of entitlements and net interest payments.

Check it:

But isn’t $100 billion in cuts a good start? Yes…but no. It won’t affect the growth of entitlement spending a bit. Nor will it increase tax revenues (except perhaps to depress them) to pay for the growth in spending. Derek Thompson of The Atlantic likens it to a dentist telling you that you need to brush more or your teeth are going to fall out.

So you buy a toothbrush and you brush one tooth really really really hard for six months but leave the others untouched. By the time you return to the dentist, your teeth are all rotting except for one tooth that is so overbrushed, you’ve worn out the enamel.

Instead of helping your whole mouth, you end up hurting it, including the place you were focused so much. I don’t agree that discretionary spending cuts will hurt as much as that (such as, why does the federal government need to fund cowboy poetry?), but I do think they distract from the real problem that needs addressing–the cost our entitlements will levy on our country in the coming decade.

So why not work on entitlements instead of non-security discretionary spending? Why not stop chopping at the leaves and take the ax right to the trunk?

Because it’s hard and politically dangerous. The largest recipients of entitlement spending also tend to be regular and frequent voters. They are those who are in need. While polls tend to show that almost everyone agrees that cuts must be made, they also show that no one really wants to cut what they benefit from nor do they want the alternative of paying higher taxes.  And what rational congressman wants to go back to his district and tell them that he cut benefits to the poor, the elderly, or the sick?

Yeah. That’ll go over like a lead balloon.

Enter the dragon. Or rather, enter Rep. Paul Ryan, a Republican from

Paul Ryan (politician)

Image via Wikipedia

Wisconsin, and his planning to bring the budget back under control. He acknowledges that what he proposes–throttling back entitlement spending– may not necessarily help Republicans in the short-term.

“Is this a political weapon we are handing our adversaries? Of course it is,” Ryan said Thursday. “I think everybody knows that we are walking into I guess what you would call a political trap that arguably we are setting for ourselves … but we can’t wait. This needs leadership.

“If you just follow the polls, you are nothing but a follower,” Ryan said.

His budget is likely to shift the discussion from cutting discretionary spending to entitlement reform, something that President Obama notably left out of his budget when he proposed it to Congress.

While what exactly Ryan will propose is still unclear, and will be until April, it is speculated that the proposal will call for shifting Medicaid to block grants so as to limit how much growth can happen in a single year, as well as potentially a voucher system for Medicare recipients. Social security, the least problematic of the three, will probably remain untouched, for now (though, IMO, it’s still a payment I make every month that I’ll never see).

As long as voters vote for the short-term, we will all pay in the long-term.

Of course, as Keynes put it, rather without vision, “in the long run, we are all dead.”

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