Right Thinking From The Left Coast
If everything seems under control, you're not going fast enough. - Mario Andretti

Thursday, April 14, 2011

Refereeing the Budget Bullshit Match

There are lot of numbers flying around about the various budget proposals.  Thankfully, we have the internet—a realm in which people are not so beholden to the political class and can therefore cut through the deceptions.

First, on the GOP’s $38.5 billion in cuts, which some sources are saying as low as $352 million:

There’s a difference between the amount of money an appropriations committee has to spend (their “budget authority”) and the amount of money they actually do spend (their “outlays”). The numbers you hear — $38.5 billion in cuts, if you’re measuring by what we spent in 2010, or $78.5 billion, if you’re measuring against the president’s 2011 budget request — are talking about “budget authority.” But some of that money wouldn’t have been used anyway. The Census Bureau, for instance, had $2 billion or so sitting around that it didn’t end up needing. That money got sucked back in this deal. But if it hadn’t gotten sucked back in this deal, it’s not like it would have gone to pizza parties. It probably just wouldn’t have been used. It’s like the philosophers always wondered: If a tree never grows in the forest, can it really be cut?

The authority/outlay distinction doesn’t get you down to $352 million, however. Rather, that’s what you get if you’re only looking at money saved by the end of this year. But a lot of the money will actually be saved next year, or in the years to come (the Pell Grant cuts, for instance, stack up over time). So the CBO took a longer view (pdf), too, and estimated that “federal outlays over the 2011-2021 period that are between $20 billion and $25 billion lower than the amount of outlays that would be expected from having 2011 appropriations set at the same level as 2010 appropriations.”

I haven’t delved into this as deeply as Ezra Klein has, but I would think that budget authority can be redirected in many circumstances.  I know, having worked for contractors who have unspent budget authority, that having it clawed back is a big deal.

But I’m afraid the GOP’s budget deception is nothing compared to the hokus pokus Barack Obama unveiled.  Hennessey:

OMB says the President’s February budget reduces the 2021 deficit to 3.1% of GDP. CBO said the same policies would result in a 4.9% deficit in that year. That’s a big gap, and the same will likely be true here. CBO is likely to say that the President’s specific policies don’t come close to hitting his stated deficit targets. If they’re right, the trigger would not be a failsafe and would kick in with big tax increases.

As for those failsafes?

The President’s proposal is similar to past triggers in that it exempts all discretionary spending, Social Security, and interest on the debt. While past triggers limited the amounts that Medicare and Medicaid could be cut, the President’s trigger appears to exempt them entirely. The White House fact sheet says the trigger “should not apply to Social Security, low-income programs, or Medicare benefits.” Elsewhere it says the trigger applies only to mandatory spending.

In other words, 90% of the budget is exempted from these automated cuts.  This is same bullshit politicians have been doing for thirty years.  I remember the days of Graham-Rudman-Hollings, which supposedly triggered “across the board” spending cuts.  It never did because Congress simply ignored the automatic spending cuts or over-rode them.  This is even worse.

What the failsafe really amount to is across-the-board automatic tax increases.  This is sort of the inverse of “starve the beast”—hope that tax hikes will scare Congress into controlling spending.  But if history is any guide, Congress will simply over-ride the automatic tax increases too (except maybe for “the rich").

But at least it cuts defense spending. Only it doesn’t. Under Obama’s plan, defense spending would increase more than it does under the Ryan plan.  But at least it cuts Medicare spending.  Only it doesn’t.  Peter Suderman has the details on Obama’s laughable plan to rein in Medicare spending with a really awesome committee board.

As I said last night, this isn’t a plan.  It’s less of an insult than his previous FY2012 budget and it at least acknowledges the elephant on its way off the Empire State Building.  But it is still a proposal built on budget bullshit.  As politics, it might be a winner.  As policy, it’s a loser.

We need a little bit more than that.

Posted by Hal_10000 on 04/14/11 at 07:35 PM in Politics   Law, & Economics  • (0) TrackbacksPermalink
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