Tag Archives: deficit

Twelve Adults and the CBO: How many adults in the room?

The much ballyhooed Congressional Joint Select Committee on Deficit Reduction–aka the “supercommittee”–was supposed to hear a history of the debt crisis today.

You can imagine how well that was going to go over.  Partisans from both sides were prepared, I’m sure, to lay blame for the federal government’s fiscal problems at their opponents feet.

“It was Bush’s fault!”

“Was not. It’s Obama’s fault!”

“Nuh, uh!”

And so one. Fortunately, there was an adult in the room, and he was, contrary to oft-repeated and oft delusional grandeur of parental responsibility, not President Obama.

In fact, it wasn’t even a politician, per se. As NPR tells it

Doug Elmendorf, the man who runs the nonpartisan Congressional Budget Office (CBO), immediately dispensed with the question of blame and laid out the options for the supercommittee.

“Putting the federal budget on a sustainable path will require significant changes in spending policies, significant changes in tax policies, or both,” Elmendorf said.

That’s a bitter pill, no matter what party you belong to. Elmendorf laid out the work before the committee. You have three issues before it, he said (and I’m quoting NPR, here):

  1. How much money the government is going to save;
  2. How quickly it is going to do it; and
  3. What mix of spending reductions (GOP choice) or tax increases (Democrat choice) it is going to use.

And partisan meat ain’t gonna cut it, alone. When Republican Senator John Kyl of Arizona suggested it could be recouped by stopping Medicare fraud or selling public lands, Elmendorf shut it down.

Neither of those would make up a very large part of the $1.2 trillion that the supercommittee is tasked with saving. (But he’d be glad to discuss those ideas, he said…just not on their own).

His idea, then? Raise spending or cut taxes now, and then later, raise taxes or cut spending. But lock it in now, with legislation in order to prevent future Congresses from waffling when the pressure is off.

Interesting idea, if something of a pipe dream. Check out the story from NPR.

This isn’t the hope you were looking for…

Debt, debt, debt…

It seems debt is all the rage in Washington these days, and with good reason. The federal government only stays open on debt, and unless Congress and the President can agree soon, we’ll hit that limit and…well, who knows what will happen next.

Originally, negotiators were looking at a deal to cut deficits by about $2.5 trillion over 10 years.

But as the deadline approaches, Obama has raised the stakes. The goal he is now pushing for — as much as $4.5 trillion in deficit cuts over the coming decade — would require changes both in taxes and in the government’s basic safety-net programs.

“There’s going to be pain involved politically on all sides,” Obama told reporters after the White House meeting. Continue reading

Here are the facts: you decide what they mean.

From the Washington Post, a comparison of budget proposals and their effect on US debt.

From the Washington Post, a comparison of budget proposals and their effect on the US deficit.

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The answer to why Americans are OK with more spending

Yesterday, just before the State of the Union speech, I had an insightful conversation with a family member. This person is taking his first class in political science, something like a Polisci 101 class. He called me to ask some questions for an assignment he was working on.

“What does ‘non-security, discretionary spending’ mean,” he asked. “I guess the President is going to cut it, or freeze it, or something.” He paused. “It’s supposed to be in the speech tonight.” That would be the State of the Union, I mentally added.

“That phrase,” I said, “refers to items and projects in the federal budget that don’t relate to national security–like the military–and that can be adjusted from year to year, or that we have a choice about whether to spend money on them.”

“So what is non-discretionary,” he asked back.

“Things that must be in the budget, things that are fixed,” I said. “Things that Congress can’t really adjust because they are dependent on other factors, like how much Medicare or Social Security will cost that year.”

“Healthcare?” he asked.

“Yeah,” I said. The other side was quiet for a moment. Then he said thanks, and hung up. Two minutes later, my phone rang again, and he had another question.

“So,” he started. “How will cutting ‘non-security discretionary’ spending affect me?” I thought about his question. “Will it, like, lower my taxes?”

“Not much,” I said. “Most of the federal budget is spent on the non-discretionary things, so the discretionary non security items don’t account for much. And we spend more than we make.”

” More than we make? We pay for the budget with taxes, right?”

“Yeah, but the federal government has to borrow to pay for it, because it doesn’t collect enough taxes for everything.  So taxes pay for some of it, but not all of it,” I said, unsure where this was going.

“How much?” I wasn’t sure how much, but I was pretty sure it wasn’t all. In fact, I was positive.

“We don’t pay for most of it. We raise a lot of money in taxes, but we don’t pay off how much we borrow, ever. With only one exception (I think), we’ve run a debt since the early 1980s.”

“So we’re spending more than the taxes pay for?” He was incredulous, shocked.

“Yeah. A lot more.” I was surprised. Doesn’t everyone know this?

“No way,” he said. “That’s crazy.”

Yeah. It is crazy. But what struck me, and perhaps what is more crazy, is that it’s probably something that few people realize. The federal government spends more than it taxes. Further, it has done that for several decades, and it is projected to continue doing that for the foreseeable future.

And I doubt there are few Americans that realize it. The government is, largely, providing something for nothing and no one is paying for it. The next time you complain that the government owes you something, remember: it’s not paid for–it’s bought with a credit card. The federal credit card. And no one is paying that credit card off.

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