7/28/2011

How Much Spending Will Congress Really Cut? Around Zero?

The current debt ceiling debate centers on one honorable goal: For every dollar of debt ceiling raised, they must also cut one dollar of spending. The problems are three-fold:
  1. The cuts are total dollars over ten years, while the spending increases are made this year. In other words, they are really cutting spending an average of 1/10 or 10 cents for every dollar spent.
  2. The specific cuts aren't actually agreed to. When real programs go on the chopping block, the outcry by affected workers, unions and special interest groups will be like nothing we have seen before. It is difficult to imagine any cuts at all. Whatever does get cut is very likely to be much less than the original plan.
  3. Much of the spending cuts are further out in time. In one plan, barely a billion dollars will be cut in the first year for 850 billion of spending increase in the same first year.
What that means is the current bitter debate is for 99.9 percent spending in the first year for every 0.1% cutting. In subsequent years, the deeper cuts that should take place could easily go the other way with no cuts or pushed out cuts, as rancor rules the day.

Congress is certainly acting seriously, as if government programs really are at stake, that cuts could actually happen. But this is a years long, unpopular process. Congressmen are much comfortable bringing more money to their constituents. The cuts could get derailed every step of the way. One does not get the feeling this is going to work. Congressmen, keep at it with every year another pitched battle, until it starts to happen.

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