What Spending Restraint Looks Like

In case you think government spending is out of control and the GOP RINOs and sellouts have given spendthrift Obama everything he wants, here’s some more data to chew on: over the last five years, we have spent $2.5 trillion less than Obama was projecting in 2009, including $697 billion less in 2015 alone. That’s the equivalent of having cancelled Medicaid. And, of course, those savings become baked into future projections, which means unfunded liabilities are down by trillions as well.

Is it perfect? No. It is a huge improvement? Absolutely. If the GOP had shown this kind of spending restraint while Bush was President, we would currently be running a $400-800 billion dollar surplus right now and the national debt would be about $8 trillion smaller. And that’s with the Obama stimulus included. Without, the numbers would be even further in the black.

Spending restraint. It works.

The Deficit Bomb Looms Again

Over the last few years, flat spending has cut the deficit down from $1.4 trillion to $400 billion. That’s OK. But it’s not a permanent fix. And after the recent budget deal, the Committee for a Responsible Budget here to remind us that we are in temporary lull:

CBO now projects deficits more than tripling, from $439 billion in 2015 to $1.37 trillion by 2026, with trillion dollar deficits returning by 2022 – three years earlier than prior projections.

Debt held by the public, meanwhile, will grow by over $10 trillion from $13.1 trillion at the end of 2015 to $23.8 trillion by 2026. As a share of Gross Domestic Product (GDP), debt will grow from 74 percent of GDP in 2015 – already twice its pre-recession levels – to 86 percent of GDP in 2026. By comparison, August projections showed debt on track to reach roughly 77 percent of GDP, or $21 trillion, by 2025….

The largest driver of this difference is legislation changes, especially the $855 billion tax extenders and omnibus spending package. Total legislative changes appear somewhat lower, driven by gimmicks and baseline quirks surrounding the $70 billion highway bill and the Bipartisan Budget Act. The remaining difference is from a combination of economic and technical factors, especially driven by lower projected economic growth….

CBO shows a worse debt picture than before both because of lawmakers’ own doing and other factors. It is clear now that deficits will no longer be in decline as they have been for the past five years, and debt will continue to increase from near-record high levels. The complacency that lawmakers have shown about debt over the past few years must end so they can address the troublesome trajectory of deficits and debt.

Now, to be fair, the CBO projects from baseline budgeting. And the worsening of the debt picture is mainly because the budget deal made tax breaks permanent rather than pretend they would expire every year. Still, that’s a grim picture.

The good news is that it is not an unsolvable problem. Returning to the flat spending levels we had for five years would dramatically cut into that debt — each new dollar spent is compounded by baseline budgeting that grows that dollar into two within a decade. A 1986-style tax overhaul that increased revenue will cutting the deadweight loss of the tax system would also help. Obamacare is driving some of the deficit — the system was designed to “balance” over the first ten years but start steering into a ditch very soon (a really a very big ditch). The main priority, of course, has to be entitlement reform.

So surely our two parties are addressing this problem, right?

Well …

Party A is now experiencing a huge surge at the polls from a man who wants to add trillions in new healthcare spending, hundreds of billions in “free” college and hundreds of billions in “jobs spending”. His opponent, now panicking because her second inevitable coronation is threatened, is rapidly moving left, promising even MORE spending. The debate among the Democrats is not about whether the federal government should provide “free” college. It’s about whether rich kids should or should not be included in that largesse.

Party B, however, is not much better. They are talking about big tax cuts combined with huge increases in military spending. Rand Paul, at one of the debates, called the other Republican candidates out on their deficit-busting tax-cut-and-spend plans. He’s now polling too low to even be invited to the debates. Their frontrunner … well, who knows what the hell Trump is saying this week.

This is one of the biggest reasons to be dubious of electing a Republican President while the GOP has Congress. Or, contrarily, the biggest reason to maintain a Republican Congress if a Democrat takes the White House*. Historically, the only way we’ve kept spending under control is to have the first two branches of government in different hands. With another budget apocalypse looming, can we trust the GOP with total control of the pursestrings again?**

(*There are other reasons to want a Republican in the White House: foreign policy, SCOTUS appointments etc.)

(**And before we get into “BUT DEMOCRATS!”, here are the annual budget increases for the last five combinations of President and Congress:

Clinton and Republicans (1995-2001): 3% per year
Bush and Republicans (2002-2007): 7% per year
Bush and Democrats (2008-2009): 9% per year
Obama and Democrats (2010-2011): 5% per year
Obama and Republicans (2011-present) : 0% per year

That last one will go up with the 2016 budget. But not by much.)

The New Order

During the debate earlier this week, Congress quietly issued an omnibus budget bill. It just passed both houses today. There is some stuff in the bill to like but a lot to dislike.

Dislikes first:

  • Provisions do tighten immigration and refugee procedures were dropped, although the visa waiver program will be tightened.
  • The bill increases overall spending.
  • The bill increased the budget deficit, albeit mostly through extending tax provisions.
  • The bill includes surveillance provisions that violate civil liberties, essentially passing CISA through the back door.

There are a few provisions I don’t have a strong opinion about at this point. The bill increases the number of H2-B visas dramatically, which is opposed in many quarters. It also drops the effort to defund Planned Parenthood. Personally, I would prefer that we drop all non-budget riders from the bill.

There’s another provision that’s kind of difficult to get a grasp on. The bill makes some tweaks to Obamacare: delaying the Cadillac tax, dropping the medical device tax and maintaining the caps on the “risk corridors”. The tax delays cost money but make Obamacare more palatable to some opponents. The risk corridors could result in insurance companies leaving the system. But the willingness of Democrats to negotiate away parts of Obamacare may portend an uncertain future for the program and an eventual overhaul. So we’ll have to see where this goes.

Now the good:

  • It lifts the crude oil export ban.
  • It make a number of tax breaks permanent or long-term, rather than having them renewed every year. This at least will mean more honest accounting. Indeed, much of the deficit increase is on paper because we’ve stopped pretending we’re going to let those tax breaks expire.
  • It replaces the sequester with more targeted spending cuts.
  • It avoids a government shutdown.

That last bit is probably the most important. The budget deal is a step toward renewing the normal budget process rather than budgeting through a series of self-created crises. It is a worrying step toward both parties agreeing to ignore the deficit. That will have to be addressed. But if we’re getting back to a normal budget process, it should at least be easier to tell what the hell Congress is doing.

Republicans Compromise With Themselves

I’m old enough to remember when a budget deal meant that Democrats got tax hikes and Republicans got spending cuts. But, apparently, a budget deal now means both sides get spending hikes:

The measure under discussion would suspend the current $18.1 trillion debt limit through March 2017.

The budget side of the deal is aimed at undoing automatic spending cuts which are a byproduct of a 2011 budget and debt deal and the failure of Washington to subsequently tackle the government’s fiscal woes. GOP defense hawks are a driving force, intent on reversing the automatic cuts and getting more money for the military.

The focus is on setting a new overall spending limit for agencies whose operating budgets are set by Congress each year. It will be up to the House and Senate Appropriations committees to produce a detailed omnibus spending bill by the Dec. 11 deadline.

The tentative pact anticipates designating further increases for the Pentagon as emergency war funds that can be made exempt from budget caps. Offsetting spending cuts that would pay for domestic spending increases included curbs on certain Medicare payments for outpatient services provided by hospitals and an extension of a 2-percentage-point cut in Medicare payments to doctors through the end of a 10-year budget.

There’s also a drawdown from the Strategic Petroleum Reserve, reforms to crop insurance, and savings reaped from a Justice Department funds for crime victims and involving assets seized from criminals.

Negotiators looked to address two other key issues as well: a shortfall looming next year in Social Security payments to the disabled and a large increase for many retirees in Medicare premiums and deductibles for doctors’ visits and other outpatient care.

There’s a few good things here: putting the debt limit past the election and cutting farm subsidies. But it also contains some head-scratchers: increases in defense spending, increases in domestic spending and drawing down the strategic petroleum reserve at a time when oil is incredibly cheap.

Paul Ryan has made some noises against it, but this sounds more like he wants to get us back onto a normal budget process as opposed to the “budget by crisis” method we’ve been using for the last few years. Ted Cruz and Rand Paul have hinted at a filibuster but that’s not going to happen with a budget bill. Absent a massive revolt, it looks like this is what we’ve got.

Update: Looks like the deal passed the house, with mostly Democratic support.

Thursday Roundup

A few stories that have been cluttering my tabs:

One subject that came up at the debate was the support Bernie Sanders (and, in fact, most Democrats) gave to a bill that immunized gun manufacturers from lawsuits. You can check out Walter Olson and David Freddoso on why this law was absolute necessary and correct. The law does not protect them from being sued if they produce defective products or break the law. What it protects them from is the “legislation through litigation” tactics Democrats were using to bypass the political process. The idea was that, unable to get what they wanted through the legislature, they would sue and sue and sue and sue the gun makers until the gun makers capitulated to Democratic demands.

There are a lot of Democrats who think that politicians with unlimited resources suing businesses into compliance with their demands is legitimate. A friend described this as “business and government working together for the common good”. I ask them to imagine how they’d react if Republican Governor’s started suing abortion clinics.



Two investigators have determined that the shooting of Tamir Rice was justified. Leon Neyfakh walks through the logic that is being in these analyses, which basically ignore any of the circumstances and require juries to engage in what Ta-Nehisi calls “an act of telepathy” to judge the officer’s thoughts in that moment. Basically, you’re supposed to ignore the decision to roll up right next to him in a car and jump out waving a gun. You’re supposed to ignore that they left him bleeding to death for many minutes. All you’re supposed to consider is what they thought in the precise moment they pulled the trigger. Under that logic, it’s hard to think of a situation where a shooting wouldn’t be justified.

Keep in mind, ordinary citizens are not usually given this benefit of a doubt. If you wake up to find someone smashing down your door and fire a gun, you can be be prosecuted for attempted murder.

Also keep in mind that these were both prosecution-picked experts who have a history of deferring to law enforcement on these matters. Kimberly Crawford is a name that should ring some bells. She was the investigator who concluded that the sniper shot that killed Vicki Weaver — an unarmed woman standing in the door of her own home carrying a 10-month old baby — was justified. That conclusion was so egregious even if the FBI rejected it. You don’t ask someone like Crawford their opinion unless you already have the answer in mind.



The worst answer Hillary Clinton gave the other night was about her enemies. Among those she listed were the pharmaceutical and insurance industries. But these are actually her biggest backers.

This is why I like Sanders better than Clinton. At least he’s an honest socialist. Clinton is a lying crony capitalist.



There is a quiet budget battle going on. As far as I can tell, the fight is between Republicans who want to increase spending and Democrats who want to increase spending.

For all the grief the sequester gets, it has cut our deficit to the lowest level, as a percent of GDP, since Clinton was in office. And I have yet to see the country descend into chaos and anarchy. I see no reason to end the sequester now.