Tag Archives: spending cuts

Let Me Be Clear

Here’s a letter I sent to Politico:

Editor, Politico:

Jonathan Allen’s November 28 article, “Mandatory budget cuts after supercommittee failure will trigger pain for some,” is misleading. A cut is when spending goes down. Federal spending will go up every year for at least the next ten years, even with the supercommittee’s failure to reach a bipartisan agreement.

According to the Congressional Budget Office, defense spending is projected to increase by 18 percent between 2013 and 2021. Discretionary spending is set to increase by 12 percent over the same period. These increases are lower than previous projections. But they are still increases. And an increase is not a cut. Not even in Washington.

Ryan Young

See also the chart below that the Mercatus Center’s Veronique De Rugy put together using CBO data. I can’t put it more plainly: there are no supercommittee-related budget cuts. Stop saying that there are.

Did Spending Cuts Cause the UK Riots?

Here’s a letter I recently sent to The New York Times:

TO THE EDITOR:

 Richard Sennett and Saskia Sassen worry in their August 11 op-ed that government spending cuts may be causing the UK riots. They also hint at what that could imply for the U.S.

A problem with their argument is that government spending in the UK has gone up sharply over the last decade. Government spending there is currently about 45 percent of GDP. In 2000, it was only 34 percent. There were no riots then.

A similar story has played out in America. When President Clinton left office, federal spending was 18 percent of GDP. Now it is 24 percent.

If spending cuts cause riots, then we should have nothing to worry about. The fact that we do means something else must be behind the looting.

RYAN YOUNG
Washington, D.C. Aug. 11, 2011
The writer is a fellow at the Competitive Enterprise Institute.

They Aren’t Math Majors

Eleven people were arrested for staging a sit-in today inside the U.S. Capitol. They were protesting budget cuts. They must not have known that spending is set to increase every year for at least the next decade, even under the Boehner plan.

Take a look at this handy discretionary spending chart that Cato’s Chris Edwards put together:

The Spending Cut that Isn’t

Congress is debating a $2 trillion spending cut right now. Or at least that’s what they’re calling it. Ten years from now, even with the cut in place, spending is projected to be $1.8 trillion higher than it is today. This video explains why in one short minute:

Much Ado about Nothing: Budget Cut Edition

Democrats want the federal budget to be about  $3,730,000,000,000. Republicans want it to be about $3,630,000,000,000. As with many other issues, the difference between the two parties is less than three percent. Even so, it nearly led to a federal government shutdown.

The deal that the two parties recently struck to avoid a government shutdown meets somewhere in the between. It is advertised as cutting $38.5 billion of spending. But on closer inspection, it would actually cut $14.7 billion. That would cut total federal spending by 0.39 percent.

I have a hunch that even those small cuts may not actually happen. This blog post I wrote in 2005 explains why.

The rules of the game in Washington are severely stacked in favor of spending increases. Presidents Bush and Obama grew the federal government by about 100 percent in only a decade with little political pain. And it apparently takes the specter of a government shutdown to reduce spending by 0.39 percent.

If anyone is looking for a reason for fundamental institutional reform, that would be a big one.

Fuzzy Math on Foreign Aid Shows Why Spending Cuts Are Difficult

According to a new poll, the average American thinks that 25 percent of the federal budget is spent on foreign aid (or, more accurately, government-to-government transfers). They would like it cut to about 10 percent.

The actual figure is under 1 percent.

As Aid Watch’s Laura Freschi points out, that means most Americans want to increase government-to-government transfers ten-fold from current levels while also cutting them in half.

That most people think like this is a major reason why cutting the federal government’s $3.5 trillion budget is so difficult. The issues that people get worked up about tend to be small potatoes, in budgetary terms.

Besides transfer payments to other governments, earmarks are another lightning-rod issue. But even if earmarks were abolished entirely, that’s only about 2 percent of the budget. It would put the smallest of dents in spending.

Entitlement spending is the single largest driver of current and future deficits. That’s where the battle is. Aid spending and earmarks are not threatening to bankrupt the country. Social Security and Medicare are. And those programs are extremely popular. No politician with an eye on 2012 would be willing to cut them.

The government has made promises it can’t possibly keep. But most people refuse to believe that. So they don’t. As a guarding mechanism, they instead make grand assumptions about how much things like transfer payments to other governments and earmarks cost.

The Washington Version of Spending Cuts

Here’s a letter I sent to Politico:

Editor, Politico:

The title of your November 10 article, “Panel leaders propose Social Security cuts,” is inaccurate. A cut is when spending goes down. Social Security spending will go up if Erskine Bowles and Alan Simpson’s recommendations are enacted. They would increase spending at a slower rate than under current policy. But it would still increase.

An increase is not a cut. Not even in Washington.

Ryan Young
Fellow in Regulatory Studies
Competitive Enterprise Institute

Making a Difference – A Very Small Difference

The House passed a budget enforcement resolution yesterday. It sets 2011’s discretionary spending $7 billion below what President Obama has requested.

Next year’s discretionary spending target is $1.12 trillion for next year. The $7 billion difference represents savings of 0.625 percent. Barely a rounding error. If total spending (including mandatory and defense spending) ends up at $3.5 trillion next year, the savings becomes 0.2 percent.

Of course, 2010 discretionary spending was $1.39 trillion. 2011 spending will very likely end up much closer to that than the targeted $1.12 trillion. The appropriations process is not kind to non-binding resolutions, however well-intentioned. Especially when the resolution “doesn’t detail how Congress should reach that [deficit reduction] goal.”

Congress lacks the will to cut $270 billion of spending. The interests benefitting from that spending will scream bloody murder the second their programs are put on the chopping block. In an election year when incumbents are more fearful than usual, no politician worth his salt wants to cause an uproar.

Congress need not worry too much, though. Even in anti-incumbent years, re-election are almost always above 90 percent. The vast majority of congressional turnover happens through retirement, running for other office, or death.

The pattern is holding this year, so far. The University of Virginia’s Larry Sabato recently pointed out that 5 incumbents have lost their state primary elections this year, while 240 were re-nominated. That’s a 98 percent success rate. There will be a few more casualties, especially in the November general elections.

Most members are safe. They can, and should, rock the boat by cutting unnecessary spending. If anything, the most aggressive cutters might become folk heroes like Chris Christie in New Jersey. They just don’t have the guts.

I will be more than happy if Congress proves me wrong. We’ll find out over the next few months.

Legislative Inertia

Senator Tom Coburn offered several amendments to an appropriations bill yesterday. The most notable of these would have saved $454 million by cutting two dubious pork projects in Alaska. The fury Coburn aroused in his colleagues bordered on the absurd. Senator Patty Murray of Washington made threats to Coburn and anyone who voted with him. Senator Ted Stevens of Alaska actually threatened to resign on the Senate floor.

Keep in mind that, from the current $2.5 trillion federal budget, you need four decimal places before that $454 million even shows up.

The amendment failed by 15-82, a margin of 67 votes. The Senate can’t even bear to cut 0.02% of the federal budget without someone threatening to resign. Is it really that hard?

Grow up, children.

Excellent coverage of the whole fiasco is at The Club for Growth, The Daily Kos, and at National Journal.