Skip to comments.Spending Cuts Are Mostly Fiction (Why are spending hikes and tax hikes called spending “cuts.”?)
Posted on 01/15/2013 7:15:12 AM PST by SeekAndFind
Would you like to save $20,000 this year? Of course you would. Heres how: Plan a month-long vacation to Disneyland, and budget $20,000 for the trip. Then dont go. Presto! You just cut your family budget by 20 grand.
This sounds absurdbecause it is. Yet that is precisely how Washington operates.
A couple of weeks ago, President Obama claimed on national TV that I cut spending by over a trillion dollars in 2011. But as many people quickly pointed out, in fiscal 2011 federal spending rose from $3.4 trillion to $3.6 trillion. Nevertheless, the President repeated the claim on Jan. 2, insisting that last year we started reducing the deficit through $1 trillion in spending cuts.
What he meant was that in 2011 he agreed to cut spending in future years, in much the same way canceling a future vacation cuts your own budget. It is a fiction necessary to sustain the presidents pose that he wants a balanced approach to deficit reduction.
That is also nonsense. Take the midnight deal to avert the fiscal cliff, which the White House says will reduce the deficit $737 billion. Of that amount, $620 billion comes from raising taxes. Some balance.
The pretense of balance looks even worse when you pick apart other loaded language. In Washington, a balanced approach combines tax hikes and spending cuts in roughly equal measure. Pause and ask yourself: Whats missing from that analysis?
Exactly right: revenue. Why omit revenue? Because including it shows the deficit is caused by too much spending, rather than too little taxing. Take the Bush tax cuts. While they did lower government revenue temporarily and slightlyfrom $2 trillion in 2000 to $1.89 trillion in 2004revenue soon bounced back, and in 2007 reached a historic high of $2.6 trillion. In nominal terms, thats a 30 percent increasein seven yearsdespite the tax cuts.
Trouble is, during the same period spending grew even faster, from $1.8 trillion to $2.7 trillion (a 50 percent increase).
The recession kicked the stuffing out of government receipts, which were about $2.5 trillion last year. Yet federal revenue is expected to rise to $3.3 trillion by 2015 and $4.3 trillion by 2020. That is a nominal 72-percent increasein only eight years.
Spending, meanwhile, has continued to scream upward like a missile, rising from $1.8 trillion in 2000 to $3.8 trillion last year. Nevertheless, Democrats and progressives are trying to sell the fairy tale that spending cuts account for the bulk of recent deficit reduction. The Center for American Progress, for instance, claims nearly three-quarters of deficit reduction to date results from spending cuts.
But thats highly debatable. First, there has been no deficit reduction to date. The deficit reduction being discussed supposedly will take place over the next few years. More importantly: While certain federal programs have seen, or will see, small year-over-year reductions in appropriations and outlays, regarding the budget as a whole the cuts are cuts of the not-going-to-Disneyland sort: They merely reduce the rate of future projected spending growth.
To see how, consider what the budget for future years looked like in August of 2010, before all of the supposed cuts that have been agreed to, and what the budget looks like now, after the fiscal-cliff deal and all the other changes.
According to the Committee for a Responsible Federal Budget, using figures from the Congressional Budget Office, two years ago Washington expected to spend $4.26 trillion in 2015. Now the projections suggest Washington will spend $4.30 trillion in 2015. Either way, thats an increase from the current $3.8 trillion.
Its the same story for 2020. After everything Congress and the president have agreed to, spending in 2020 is still projected to be $5.1 trillionwhich is 34 percent more than we spent in 2012. So how can anyone claim to be cutting spending? Because two years ago, Washington had planned to spend $5.6 trillion in 2020. Since it now expects to spend less than that sum, that qualifies as a cut, at least in the no-trip-to-Disney sense.
Granted, these numbers dont account for inflation. But inflation is so low its not likely to change the real spending trajectory from upward to downward. The figures also assume the sequester cuts imposed by the Budget Control Act will never take place. Given what has just transpired, that assumption seems fairly safe.
The duplicity doesnt even end there. A few weeks ago Treasury Secretary Timothy Geithner claimed the administration had made $600 billion in spending cuts to entitlements. That claim was based on what the administration calls savings in mandatory programs. But as the AP notes, those savings included elements such as $60 billion in added revenue from a financial crisis responsibility fee and another $27 billion in increase[ed] employee contribution[s] to federal retirement programs.
In other words: tax hikes.
Only in Washington could you get away with referring to both spending hikes and tax hikes as spending cuts. Perhaps its time those inside the Beltway stopped getting away with it.
Yeh...I like the retirement downsizing farce......They save the $50,000 plus salary....but are still paying $50,000 plus in retirement benefits...........AND did not replace the non essential employee. What a savings!! Pay for no work !! What a concept.
The standard excuse is to blame the MSM but the only real explanation is that Obama is smarter, at least cleverer, than congressional Republicans are as he is always out there working the voters.
Even on this point I have seen ‘conservative’ House members on Sunday shows trying to argue against this, here is what they say:
“No we didn't cut spending” and thats it. No details.
I fail to see how pointing out all the Lies, Fraud and Deception on behalf of the Ruling Class will help anybody’s Self Esteem.