Lots of speculation on how the numbers work out for the debt limit debate and how we got here. Maybe we can shed some light and lower the heat.
First, I don't see evidence that spending on new programs by the current administration is THE major cause. Even the spending on his major new policy - healthcare reform - is way down the list of contributors.
[Source - yeah I know it's the NYT, but show me better numbers and I'll correct it]
Furthermore, much of the Obama new spending was one time: stimulus spending to be exact. The Bush tax cuts and wars keep taking and taking ...
My point is the idea of runaway spending occurring since due to Obama's election is a misguided meme. He jumped on a truck as it headed over the cliff.
Perhaps a better illustration of where the deficit explosion came from:
I also think the President has offered a generous package of cuts and taxes, and has continued to offer more to avoid default. Of course, that effort is viewed as weakness by many opponents who really don't think default would be that bad (for them).
The infographic above shows that the president’s latest offer to House Speaker John Boehner (R-OH) is heavily titled toward spending cuts. In fact, the president’s offer contained about $1 trillion less revenue than the recent proposal from the so-called Gang of Six, a group that includes three Republican senators and three Democratic senators. It also represents significant movement from the president’s original debt reduction framework, which itself was already more conservative than the recommendations from the chairs of the debt commission (Erskine Bowles and Alan Simpson) last December. [More]This is the reason I feel that the push to default by TP members is not all about fiscal restraint - it's about Obama and political power. To add to my conviction, consider this revealing wording:
Here’s the two-step proposal Boehner is circulating. Note that the title isn’t “An approach to raising the debt ceiling,” or “An approach to reducing the deficit and cutting spending.” It’s the:Finally, some clarity about how much money the government will have to do what with after we really, really reach the ceiling.
Two-Step Approach to Hold President Obama Accountable
Lots of folks want to cut spending, and when it's pointed out that this would be painful, they retort that there's plenty of money for debt service, military payrolls, Social Security, Medicare, and Medicaid, and that therefore, people like me are just scaremongering about the consequences of refusal to raise the ceiling. I put up this graph last week, because I don't think people are really thinking this true. They've got this big "spending" basket in their head, but they're not focusing on the line items.
Let's say that we refuse to raise the ceiling. Does the prioritization listed above mean that we don't need to cut politically untouchable programs?
No. Let's think through what would happen if we tried to use this plan:
- You just cut the IRS and all the accountants at Treasury, which means that the actual revenue you have to spend is $0.
- The nation's nuclear arsenal is no longer being watched or maintained
- The doors of federal prisons have been thrown open, because none of the guards will work without being paid, and the vendors will not deliver food, medical supplies, electricity,etc.
- The border control stations are entirely unmanned, so anyone who can buy a plane ticket, or stroll across the Mexican border, is entering the country. All the illegal immigrants currently in detention are released, since we don't have the money to put them on a plane, and we cannot actually simply leave them in a cell without electricity, sanitation, or food to see what happens.
- All of our troops stationed abroad quickly run out of electricity or fuel. Many of them are sitting in a desert with billions worth of equipment, and no way to get themselves or their equipment back to the US.
- Our embassies are no longer operating, which will make things difficult for foreign travellers
- No federal emergency assistance, or help fighting things like wildfires or floods. Sorry, tornado people! Sorry, wildfire victims! Try to live in the northeast next time!
- Housing projects shut down, and Section 8 vouchers are not paid. Families hit the streets.
- The money your local school district was expecting at the October 1 commencement of the 2012 fiscal year does not materialize, making it unclear who's going to be teaching your kids without a special property tax assessment.
- The market for guaranteed student loans plunges into chaos. Hope your kid wasn't going to college this year!
- The mortgage market evaporates. Hope you didn't need to buy or sell a house!
- The FDIC and the PBGC suddenly don't have a government backstop for their funds, which has all sorts of interesting implications for your bank account.
- The TSA shuts down. Yay! But don't worry about terrorist attacks, you TSA-lovers, because air traffic control shut down too. Hope you don't have a vacation planned in August, much less any work travel.
- Unemployment money is no longer going to the states, which means that pretty soon, it won't be going to the unemployed people.These are just the very immediate, very theatrical outcomes. Obviously, over any longer term, you'd have issues from bankrupt vendors stopping work funded with federal highway money, forgone maintenance on things like levees and government buildings, and so forth. Averting any of these things would require at least small cuts in Social Security, Medicare/Medicaid spending, or military payrolls. [More]
I would prefer to avoid such an outcome.