Thursday, January 21, 2010

The phony deficit outrage...

Suddenly we're all about the federal deficit and how to get our national budget under control.

Yeah - right.

Obviously, folks have not been paying attention to how we got here and even more to what it will take to get back to even mild deficits.  It feels too good to be angry and believe in funny arithmetic. In fact, getting mad is now seen as more "real" than offering solutions other than nonsense quick fixes.

Consider Gov. Tim Pawlenty, stealth candidate for President.
The centerpiece of Pawlenty’s “plan” is this:
Balancing the budget will require some tough decisions. Congress must reduce discretionary spending in real terms, with exceptions for key programs such as military, veterans, and public safety. The Congress must also reject costly new spending initiatives, like new health care entitlements.
Collender writes that “Someone needs to tell Pawlenty that discretionary spending except for ‘military, veterans, and public safety’ is less than $400 billion a year.” On January 4, the Wall Street Journal reported that “The federal government’s budget deficit reached $389 billion through the first three months of fiscal 2010, the non-partisan Congressional Budget Office said Thursday [...] The deficit reached a record high of $1.4 trillion in fiscal 2009, more than triple the previous high set just the previous year.”
Try running the math on that. [More]

In a feeble attempt at fairness, this delusion is widely held.  All of us have things we hate in the federal budget and want to see cut to balance the budget.  It's just that this list is too short and too tiny.

Recalling what really is driving our deficits is more uncomfortable.


Deficit concern will vanish like a bad dream if your slice of the budget is up for the axe. Will farmers support cuts in ag spending?

No, seriously.  Won't they be more likely to point our what a drop in the bucket our ~$20B is? So if we assume anybody with say, a budget claim of less than $20B can use the same excuse, what can we cut? [Late link to ag budget post]

This is what sooner or later will have to be recognized by even the loudest critic. And as conservative Bruce Bartlett pointed out, thinking we're going to cut much from the federal budget is wishful thinking - regardless of how much political power either party has.
Every time I try to explain why our fiscal problems are so deep that higher revenues must be considered, some nitwit always says to me, “Why don’t we just cut spending?” It’s as if the choice between raising taxes and cutting spending is no more difficult than the choice to buy melon or cantaloupe for breakfast. What these nitwits implicitly assume is that we live in some kind of dictatorship where Ron Paul has Stalin-like power and spending can be cut with the wave of a hand, where no one has to worry about getting the votes in Congress for politically painful legislation, where the budget largely consists entirely of foreign aid, where there are no entitlement programs or interest on the debt to pay, and where the primary beneficiaries of spending (the elderly) aren’t the largest and fastest growing voting bloc in America. [More]
I don't know what economic conditions will exist when Americans get serious about cutting their own entitlements and raising their own taxes, but that is who will have to make the decision. More frustrating to me, I'm not really clear at all on how I can even create modest defenses for my welfare and wealth during such conditions.

We simply have devised too many ways for too few people to bring legislative efforts to a halt, allowing the status quo to continue into those dangerous places.


Anonymous said...

John, can you find how much of the ag budget goes to farmers and how much to things like EBT cards? I recently followed a lady through the grocery check out. Her bill came to $205. Then the cashier told her after her EBT card, she had to pay $20. Electronic Benefits Transfer, replaced food stamps.

John Phipps said...


Check this post:

If you can't read it (too small) follow the source link.

Basically it's about 63/15 food/ag. But the interesting part is how farmers insist on keeping it that way.

Anonymous said...

I keep getting, "page not found"
Does 63/15 food /ag mean that is the percentage going to welfare vs. producers?

John Phipps said...


Please see the added link.

Yes, the 63/15 is the food aid/ag payments split in that order.

If we complain about the USDA being more about food why not lobby to move food stamps to HHS and we can have our very department?

Also consider food stamps go to about 37M people. Almost all the farm payments to fewer than 1M. If you were a politician which way would you tilt?

The reason is ag subsidies are a barnacle on the freighter of food aid. The odds of getting a farm bill through the House - where most members have few farmers in their district - is problematic.

So my thinking we should not be surprised it's getting tougher to have it both ways.

Anonymous said...

Read the added link. It explains a lot. What politition would not want to vote for more for the "farm program"? I would love to see our gov't end the farm subsidies, along with subsidies for banks, car companies, railroads, etc.

Anonymous said...

It took me a while to figure out what was so stupid about this chart, other than the fact that it is obviously biased against the previous administration. It is really annoying because it is put together with the assumption that these six spending items are the only things that are causing our exploding budget deficit. It totally ignores the huge honking proverbial iceberg below the surface called the total budget. The WHOLE budget causes these 6 especially controversial subjects to "stick up" above the surface. You could cut anywhere in the budget and get the whole thing below the surface, figuratively speaking.

And yes, where to cut.....that is the question...

One thing to remember is that never is government spending and tax cutting a zero sum game. i.e. A dollar given in a tax cut, doesn't necessarily, mean a dollar added to the deficit.

It is funny how the tax and spend segment can be all for dollars given in the name of a "stimulus" but never for a tax cut, which for all practical purposes does the same thing. (Puts OUR money back in OUR pockets, and not in the federal coffers)


Jake in OH said...

Well, Brandon, while I agree that the chart is ignoring other areas that could be addressed, I do not buy your direct correlation between tax cuts and stimulus.

A stimulus is a one time payment. It only shows up on the books one year and is a short term boost. If there is anything that chart does show is the lasting effects of tax cuts. Talk about future generations paying for our actions to see a little bigger tax refund.

The other difference of stimulus vs. tax cuts is the political difficulty of rescinding those tax cuts in times of fiscal difficulty. Who politically would say "to help balance the budget, we are increasing income by getting rid of some of those tax cuts" that made someone popular years ago? Not too many....

Brandon E. said...

A stimulus is a one time tax cut essentially. And a tax cut looks to me like a multiple year stimulus. What is the difference between the two? Other than how long they last?