Tag: United States federal budget

Happy New Year! – and I told you so…

Well, 2012 will go down as the worst year of my life, not just because of Obama and what I see around me, but also because my personal life took a totally unexpected turn for the worse. Live & learn. I will spare you the details of my personal life, but I do want to point out that I am not feeling next year will be anything but more of the same political and economic bad too. And this brings me to my “I told you so” moment.

With both sides on the cusp of a fiscal cliff deal, President Barack Obama vowed Monday to seek additional revenue next year alongside spending cuts. In the process, he also angered several GOP senators who said he demeaned their efforts to reach a deal.

Obama said that a year-end deal to avert tax hikes for the middle class “is within sight, but it’s not done.”

The emerging deal, which sources have pegged at around $600 billion in new revenue, would include permanent extensions of current tax rates on individuals with income up to $400,000 and couples with income up to $450,000. But Obama made clear that he would demand additional revenue as part of any package next year.

Obama has sought a much higher revenue figure — $1.3 trillion — as part of a “grand bargain” in his failed negotiations with Speaker John A. Boehner, R-Ohio.

“My preference would have been to solve all of these problems … in a grand bargain,” Obama said. But “with this Congress, that was obviously a little too much to hope for.”

I doubt this deal happens still. And what I am certain of is that the taxes will be front loaded while there are no cuts. The same stupid people that usually think this sort of schadenfreude, wealth redistribution, soak the rich, politics amount to good fiscal policy, all cheered this crap. But they better rethink their giddiness, because they too will soon be in the line of fire.

Obama has already served notice that this was his first pass. He wants more money for government to spread around. A lot more! That $1.3 trillion – and remember this was to be collected over a decade – was his starting point. I bet he wants at least 10 times as much. The spending isn’t going to stop, and any cuts we ever get told will happen will basically amount to fiction. The rich can not cover what these people want to spend. So we are all going to end up paying more taxes. And that is over and above the massive hike Obamacare promises us will start on Jan 1st, 2013.

Enjoy it while it lasts. May 2013 not be the disaster it is shapping to become. Well wishes to all.

I Knew Bill Clinton. He Shagged My Maid. You, Sir, Are No Bill Clinton

Peter Suderman makes an excellent point about the Obama Administration’s mantra that “we just want to return to the Clinton-era tax rates; things were pretty good back then!”

Most of us can agree that the Clinton years, which saw growing median incomes as well as tiny deficits and steady economic growth, were economic good times, and we’d all like to see that sort of economic performance repeated. If that’s the case, then why should we limit ourselves to just replicating one tiny fragment of Clinton-era governance—higher tax rates on a fairly small number of earners? Why not replicate other aspects of Clinton’s policy mix as well?

Probably because that would entail mentioning something that Obama’s frequent invocations of the Clinton years always ignore: that Clinton’s spending levels were far, far lower than they have been for the last four years—or than President Obama has called for them to be in the years to come.

Government spending as a percentage of the economy fell during the Clinton presidency, starting at 21.4 percent and finishing up at about 18.2 percent of GDP in both 2000 and 2001. In 1993, Clinton’s first budget spent $1.4 trillion. The last budget he helped create spent $1.8 trillion. So far, President Obama has spent about $3.5 trillion every year, averaging more than 24 percent of GDP.

I think it’s important to note what Bill Clinton and the Republicans did not do in the 90’s to balance the budget. They did not slash spending left, right and center. They did not gut critical programs. In fact, spending grew in nominal terms. They also did not set vague goals and promise spending cuts in future years in exchange for tax cuts and stimulus spending today.

What they did was exercise restraint. What they did was keep government programs in check and in budget. Even Bill Clinton’s 1993 stimulus bill went down in flames thanks to Republican filibustering (the economy somehow recovered anyway). They did cut some spending significantly — welfare and military spending most notably. But, for the most part, they succeeded by simply not making things worse and letting the economy take care of the rest.

As several Reasonoids have pointed out, this kind of restraint could get our budget balanced within a decade, even without tax increases. Had that kind of restraint been exercised in the last decade, our budget would be hundreds of billions less than it is now. As it is in most of life, 90% of success is simply not fucking up.

That having been said, I think we face a very different challenge right now. The principle budget danger is not discretionary spending but entitlements. Every day we put off the reckoning makes it more difficult, with the ranks of the retired swelling with more and more Boomers. That requires statutory changes to the law and, thankfully, the Republicans appear to be holding out for that. Getting our entitlements under control would do more to get the budget under control than all the discretionary cuts and tax hikes in the world.

Clinton also inherited a much better situation. The economy was rebounding, the Cold War was over and Reagan-Bush I had a far better spending legacy than Bush II-Obama do. Like it or not, some spending is going to have be deep-sixed, preferably starting with corporate welfare. And I’m afraid that Stimulus V: The Search for More Weather-Stripping, is simply not on.

The general point stands: if Obama wants Clinton-era taxes, he needs to start showing Clinton-era spending restraint.

Starving the Budget

With the fiscal cliff looming, Republicans are indicating some flexibility on taxes, at least for the higher income brackets. Naturally, this is generating some opposition:

To start with, Kristol misunderstands the opponents of the tax increases on the rich, whose main goal is not to ensure that the rich get to keep more of their money. Their main goal is to prevent the federal government from obtaining a new source of revenue. Why might that be?

Tax increases can be immediate, but spending cuts must be spread over many years. That provides politicians with plenty of opportunities for change their minds on spending (i.e.: vote for me and I will increase funding for your program). Contemporary Western Europe provides a perfect example of this phenomenon. In the wake of the 2008 crisis, Western European countries have introduced substantial tax increases that, in my humble opinion, are the primary reason for Europe’s double-dip recession.

There is a reasonable point in this, which is that promised spending cuts often don’t happen. But that’s not a fundamental law of the universe. After the tax hikes of the late 80’s and early 90’s, we did get spending restraint. And we got it from the same people who control the purse strings right now … a Republican House of Representatives. If the GOP wants spending cuts to happen, they can make those spending cuts happen, as they did in the 90’s.

Moreover, the Grand Bargain that has to happen is on entitlement spending with Medicare and Social Security. That will involve statutory changes, not budget changes and those are extremely hard to undo. If Congress raises the retirement age or changes the COLA formula or institutes Medicare vouchers, that will be almost impossible to undo (as we’re now seeing with Obamacare).

To be frank, the argument that we should not give the government new revenue cross me as a rehash of one the most fiscally destructive ideas in the last thirty years: the so-called “Starve the Beast” theory.

Starve the Beast was the theory that if we cut taxes, it would force the government to cut spending because the resulting deficit would be unsustainable (this was before people decided that the Laffer Curve was, in fact, the Laffer Line and that all tax cuts paid for themselves). Starve the Beast sounded tempting, especially to faux conservatives who were big on tax cuts and not so big on cutting spending. But it ran aground on several rocks:

First, spending cuts don’t just fall from the sky. You have to actually cut spending at some point. And the people who had to cut spending were the same people trying to force themselves to cut spending. It was like trying to lose weight by eating a box of doughnuts hoping that will force you to go the gym.

Second, the lesson Congress learned from Starve the Beast wasn’t that they couldn’t tolerate big deficits. The lesson they learned was that they could. As a result, we’re now enjoying our fourth straight year of trillion dollar deficits.

Third, and this is a point I keep harping on, Starve the Beast made spending painless for the taxpayer. This was especially true in the Bush years when we started two wars and put in a prescription drug program while removing millions from the tax rolls. The impression given to the taxpayers was that wars and drug programs were free, or at least were paid for by somebody else (somebody rich). It has continued in the Obama years, with spending and taxes being manipulated so that Obamacare appears to decrease the deficit when it, in fact, does not and tax hikes only acceptable if they hit the dreaded rich.

I keep saying this and I am going to keep saying it: the most important aspect of any government budget is that spending should hurt. Spending should hurt either in cutting other services or in raising taxes. If you aren’t doing either of those things, you are giving people government on the cheap. And they will have no incentive, none whatsover, to support spending cuts.

Would you turn down services that are discounted 40-100%?

One of the problems we face in balancing the budget is that spending cuts are popular in general and unpopular in detail. When you ask people what spending they support cutting, the only thing that even gets 50% is foreign aide. But a big reason for that is that, for most Americans, government spending doesn’t hurt them. They can support all these wonderful things confident that the money for it will come out of somebody else’s pocket.

And that leads in to my real point: if we’re going to raise taxes to close the budget deficit, we have to raise them on everyone, not just the evil rich. The obsession the Democrats have with only raising taxes on the rich is a product of class warfare, not fiscal sanity. To balance the budget with taxes — hell, to balance them with any sensible mix of taxes and spending cuts — is going to mean raising taxes on everyone. Alex’s post made this point very well. Look at the breakdown of where the fiscal cliff taxes are coming from: over 80% are from people who are not rich.

If we just raises taxes on the rich that will, once again, give the American people the impression that the budget deficit is something other richer people will cover. It will make it almost impossible to cut spending in the future because, really, how is all that spending hurting 98% of the voters? But if we raise taxes now, raise them on everyone, then the popular support for spending restraint will come roaring back.

That’s not just ivory tower theorizing. We have a historical precedent. From the early 80’s to the early 90’s, Reagan, Bush and Clinton raised taxes eight times. The resultant backlash brought the Republicans into power in 1994 on a platform of fiscal discipline. And they delivered. And as much as the press tried to whine and cry and tell sob stories about how the budget cuts were destroying our country, the Republicans (and Clinton) got re-elected. Because people didn’t want more spending and they saw that, in many cases, the country was better off without it.

The only way to make spending cuts happen and make them stick is to make sure the American public feel it when we spend too much. And they’re not going to feel it because we eliminated a tax break on corporate jets.

There’s another reason to stop kicking the can down the road. Bruce Bartlett:

At the time the tax cuts were enacted, I recall arguing with my longtime friend Grover Norquist that temporary tax cuts were a really bad idea. Supply-side theory has always held that permanent tax changes are vastly more powerful than temporary changes, I told him. He didn’t disagree, but said the Bush tax cuts were de facto permanent because Democrats would never have the guts to permit them to expire; they would be renewed forever. People and businesses will know that, Mr. Norquist said.

That was a foolish position for political and economic reasons. People and businesses don’t make the sorts of changes in their behavior that would give the economy a supply-side boost unless they have confidence that today’s tax regime will be in place when the payoff from increased work, saving or investment is realized.

You know all that stuff we’ve been saying about regulatory uncertainty and how businesses are afraid to invest because they don’t know what the future will bring? Well, these temporary tax cuts, renewed every couple of years, are part of that. Bartlett specifically gets into the R&D tax credit and how its temporary status has created wonderful lobbying opportunities but little economic benefit. He argues that higher but more certain taxes would be better for our economy than lower but more uncertain taxes. And given that Bartlett basically invented supply-side economics, I’m inclined to agree with him.

Obviously, the best scenario would be to burn the entire tax code down and rebuild it, a la Simpson-Bowles. But that would take months, if it happens at all. If you want to create certainty, putting together a long-term budget deal with higher taxes is the way to go. And then, if we do get a tax overhaul, that will be an unexpected shot in the economy’s arm.

Yeah, I know. This is the dreaded compromise. But the idea that we’re going to cut spending 40% is ridiculous, not just in terms of the politics of the possible but in real terms. Cutting spending 40% means we can pay for Medicare, Social Security, the military and veterans. Everything else — from Medicaid for poor seniors to law enforcement to disaster relief would go. Oh, and every state would suddenly find a 30-50% hole blown in their budget.

Moreover, I’ve been thinking of something Ed Morrissey said the other day, in the context of a compromise on immigration:

The insistence on demanding nothing but the hard-line approach creates big problems for the nation and the GOP itself. First, the issue of border security has been left in limbo for more than 11 years after 9/11, and more than seven years after the 9/11 Commission rightly demanded better security on both borders, and the broken visa program that offers no follow-up on expired entries. If we continue to punt rather than compromise, we will be left waiting for at least four more years to get any kind of solution.

In two years, there will be another election. In four years, we will have a new President. If the Republicans have exercised some serious budget restraint by then and our deficit is falling, then we can reopen the issue of returning to Bush tax rates. Until then, however, we have to deal with the situation we have in front of us. And the situation we have is a big deficit that can not be closed by spending cuts alone and Democratic control of the White House and the Senate.

Keep in mind something else: taxes are already programmed to go up. The price of doing nothing is a gigantic half-trillion dollar tax increase on January 1. If we insist on taxes not going up, the result will inevitably be that they will.

Look, I hate taxation. I’m one of those who will get hit pretty hard if we return to Clinton-era rates or something approaching them. But there is something I hate more than taxes and that is debt. And I don’t see any practical way, outside of Fever Swamp La-la Land, to balance the budget without raising taxes.

Yes, the GOP needs to drive a hard bargain. Tom Coburn has identified tens of billions in wasteful defense spending that we should cut. Agriculture subsidies and ethanol subsidies should be on the table. The Ex-Im Bank should have been killed last year. Hell, maybe we could even taken Obama up on his “Department of Business” idea if it means we kill off Commerce, SBA, Ex-Im and some other budget functions. The hardest bargain, of course, has to be driven on entitlements.

But we can not stick to anti-tax orthodoxy. It’s not realistic. It’s not responsible. And, in my opinion, it’s not conservative.

Let me elaborate on that last point: low taxes are not a conservative value; small government is. Low taxes do not create small government, they are the result of keeping government small. Raise taxes to cover the bloated government we have now, hack at it like hell for four years and then we can talk about cutting taxes back.

Update: If you think you balance the budget without raising taxes, there are various budget simulators that can get you there.

Paying for Sandy

Back when he was still awesome, Rush Limbaugh use to say that the most dangerous place in America was between Chuck Schumer and a camera. And you just knew he was going to say something stupid about Hurricane Sandy:

Sen. Charles Schumer called the fallout from Hurricane Sandy a “national disaster” and called on a federal government to cover at least 90% of the costs.

“This is one of the biggest disasters to have ever struck this state and even this country,” Schumer said at an afternoon briefing with Gov. Cuomo. “The federal response has to measure that scope and be equal to that that scope.”

“We cannot cut corners. We cannot count nickels and dimes. This isn’t a New York disaster, a Connecticut disaster, a Jersey disaster. It is national disaster. It needs to be treated that way by every member of Congress, by all the members of the executive branch.”

But Mr. Schumer did say that any added money will be tacked onto the deficit, which already is expected to reach about $1 trillion in fiscal 2013. He rejected the suggestion that other programs should be cut in order to pay for any new budget needs, saying Democrats won that fight on previous emergency spending bills, too.

I have a very slight portion of agreement here in that the Feds should bear some of the pain for regional disasters that can overwhelm local and state governments. But the key word there is “some”. We are talking about some of the wealthier regions of the country. I don’t see why New York should not pick up the cost of, say, repairing the subway system or New Jersey should not pick up, say, the cost of fixing the electricity. There is not a part of this country that is not at risk of some natural disaster. Repairs, replacements, relief have to be part of the existing budget for state and local governments: a really rainy day fund. But … the Feds have picked up the tab for everything else and it would seem odd to suddenly change now.

That being said …

The idea that we should not cut other spending or raise taxes or make some kind budget room for disaster relief is ridiculous. This is precisely the kind of thinking that has gotten us $16 trillion in debt: never allowing for the inevitable “unexpected” expenses that find their way into the budget. Be it wars, “stimulus” or disaster relief, we just throw out the fiscal responsibility when the bill comes due. And then we wonder why we’re so far in debt.

Maybe you could do this if our finances were in good shape with the idea that we’d pay it off over the next year or two. But when we’re under a growing mountain of debt, every new expense has to be accommodated. That’s the whole idea behind PAYGO, no?

The research on bankruptcies has shown that most are the result of some catastrophe that hits a family: medical expense, job loss, etc. Bankruptcy is especially likely if the family has not squirreled away some money to anticipate a disaster. My wife and I only got our finances in order when we started to allow some budget room for unexpected expenses: car repairs, doctor bills, travel. I just found out a friend lost his job two months ago. But his family hasn’t suffered because they cut expenses and had a rainy day fund. I’m dubious of translating lessons about family budgets to the federal budget, but in this case I think it’s apt. Everyone has to budget for the unexpected.

Our federal budget does not, for obvious reasons, have a rainy day fund. But the reason we need to get the deficit under control is precisely to deal with unexpected huge expense that might hit us out of the blue (like a hurricane; or a war). And that means that, given the current budget situation, any disaster relief for Sandy has to be balanced by tax hikes or budgets cuts. We simply don’t have the flexibility, when we’re fighting over a few hundred million here and there, to say, “Oh yeah, here’s $50 billion. Don’t worry about it.” And we don’t have the leeway to keep thinking of the government as a bottomless piggy bank.

The Meltdown Continues

The Left wing anger at Paul Ryan continues to swell. You can amuse yourself with this latest bundle of idiocy from Maureen Dowd.

He’s the cutest package that cruelty ever came in. He has a winning air of sad cheerfulness. He’s affable, clean cut and really cut, with the Irish altar-boy widow’s peak and droopy, winsome blue eyes and unashamed sentimentality.

Who better to rain misery upon the heads of millions of Americans?

Is it just me, or does anyone else think Dowd wrote that column one-handed? I thought so.

You can read her screed for yourself, where she describes Ryan as the cute face of cruelty. I think the best response is to remind ourselves what that people like Modo believe constitutes “kindness”:

  • Creating a welfare system that deprives people of their dignity, their hope and their ambition.
  • Creating a healthcare system where care is rationed and controlled by government; where treatments are approved by political pull.
  • Creating an economy where Washington pulls the strings and all companies have to pay homage to the great Congress in order to survive (see what’s happening to Apple right now.)
  • Standing silent while their enlightened President fires off drones, detains prisoners and starts wars without Congressional approval.
  • Giving less to private charity than conservatives do; donating less blood; volunteering less — even when you account for differences in income and opportunity.
  • Slathering businesses in jungles of read tape and oceans of taxation and then wondering why there are no jobs.
  • Standing by a federal legal code that is so out of control, people can be jailed for things like collecting feathers.
  • The damning thing about Ryan — indeed a huge factor in the RyanRage — is that he cites Ayn Rand as an influence. Actually, they call him a “disciple” of Rand because to the collectivists — besotted as they are with centralized power and unthinking obedience — there is no middle ground between rejecting Rand and being her unquestioning apostle.

    But it is possible to be heavily influenced by someone and disagree with them. You know who influenced my political thinking as much as anyone? Karl Fucking Marx. I had opposed Marxism because it was tyrannical, because it was abusive, because it fought against human nature. But it wasn’t until I read Das Kapital that I realized that Marxism was fundamentally flawed; that it was built on a series of false premises; that’s Marx’s understanding of economics was child-like in its simplicity.

    There’s a lot on which I disagree with Rand: her atheism, her virtue of selfishness, her slagging of altruism; her belief in self-centered uncaring uber-geniuses. Rand’s philosophy is too cold, too certain and too dogmatic for me; I don’t believe human culture or human beings can work that way (as Rand herself could not). In her way, she was as dogmatic as the Marxists she hated. But no one has laid out such a clear and beautiful rejection of collectivism. No one has laid out such a rousing defense of individualism. Everyone should read Ayn Rand not because she was a prophet but because she was a heretic.

    And when we dig down, that’s what is informing the RyanRage: his heresy. Ryan’s budget plan has its flaws: it doesn’t balance the budget for a long time; it cuts taxes; it’s not specific about what tax expenditures it would get rid of. But the selection of Ryan and his prominence in the debate signals that the party is over. The religion of Big Government (a religion that has many adherent in the GOP) has reached its apogee and simply can not grow further. When Obama was elected, they really believed it would be New Deal II: a golden age where we finally grew our government to European proportions. Of course, the idea of a vast liberal superstate controlling all of our healthcare, our retirement, our schooling and our housing was dead thirty years ago. But as long as Democrats were out of power, they could pray to the relics and hope for a miracle.

    But after just two years of Obama, it became obvious that this wasn’t going to happen. And it’s dead for sure now. As I said before, we are no longer debating whether to cut government; we’re debating how to cut it. We’re not debating whether to cut Medicare; but how to. Ryan is a symbol of this. And thus, like all those who knock over pagan idols, he must be condemned for daring to broach the truth.

    The bill for our government’s spending is coming due. It bears repeating — over and over again — that the Right bears as much or more blame for this than the Left (and Ryan voted for a lot of it). But the Right does not have its heart bound up with Big Government; the Left does. And so now they are reducing to screaming at the writing on the wall.

    The Ryan Factor

    (I’m on vacation. I spent today in a pool throwing Sal 11000 Beta up in the air. So, this week, I will just have an occasional post when the family’s asleep and I haven’t had too much to drink yet.)

    I’ll give Team Romney credit for this: his VP pick sure has the Left shitting their pants. Today, some protesters tried to rush the stage. And the Democratic leadership, with Ms. Verbal Diarrhea in the lead, has been … to put it mildly … lying their asses off about him:

    It had the makings of a scandal: Paul Ryan traded banking stocks during the financial crisis the same day as a meeting with top Treasury Department officials, a Virginia blog wrote Monday. But the rumor, which spread rapidly across the Internet, doesn’t hold up to scrutiny.

    The meeting in question took place on Sept. 18, 2008, between Federal Reserve Chairman Ben Bernanke, then-Treasury Secretary Hank Paulson and congressional leaders including Nancy Pelosi, John Boehner and Harry Reid. The Richmonder, a progressive Virginia blog, noted on Monday that Ryan’s financial disclosure form from 2008 showed that he sold stock in Citigroup and JP Morgan, who were in crisis, the same day and bought stock in Goldman Sachs, which proved to be stronger. The blog claimed that Ryan also attended the meeting. The implication, they stated, was that he was using information gleaned from the briefing for personal profit.

    It was wrong. In fact, the meeting with Bernanke took place in the evening after trading hours, meaning Ryan wouldn’t have had time to execute the move if he wanted to.

    The Romney campaign said Ryan had nothing to do with the trades in the first place. They were part of a Russell 1000 index fund that automatically traded stocks as part of a pre-set formula. Ryan’s disclosure forms include several similar trade patterns at various points throughout the year.

    There have been other lies too. There has been what Politifact labelled as their Lie of 20011: that the Ryan Plan ends Medicare as we know it. The Democrats are leaving out the part where people over 55 will not be moved to vouchers and other can opt out. They also incorrectly claimed that the Federal Personhood bill he supported (which was bad enough) tried to outlaw abortion, which it did not. It simply called on the states to recognize that life begins at conception. And so on.

    Look, Ryan has a lot of controversial views. We can discuss them. But we don’t need to resort to making shit up, do we? No? No? OK. I don’t like his views on a number of issues, including abortion. But, as I said on Twitter, it’s unlikely abortion is going to be outlawed in the near future. It is likely — very likely — that we will go bankrupt or have a major fiscal crisis. And Ryan is one of the few people who has proposed doing something about it.

    I expect, that as time goes on, most attention will focus on Ryan’s budget plan. This is a good thing; we need to be discussing the budget. Ryan will take a lot of heat for his plan but … well, this is what he gets for actually having a plan (unlike Obama) and not trying to have every plan simultaneously (like Romney).

    The big problem is Ryan’s plan hits Medicare. You want to criticize him for it? Fine. But first you have to put out a plan that balances the budget without cutting Medicare (no, raising taxes on the rich won’t get us there).

    You can’t. It’s impossible. Because, without changes, Medicare is going to swell to gobble up an unrealistic section of our economy. No budget plan — no plan — works without reining in MedicareMedicare. As Ryan said in testimony to the House, Medicare as we know it is ending. That’s not up for debate. What we’re discussing is how it’s going to change. Both Simpson-Bowles and the President’s semi-plan incorporate cost controls to Medicare. Medicare changes are going to happen; the debate is over how we are going to fix the program.

    So all the people screaming about the Ryan plan need to shut up. Because what they are advocating is no plan. What they are advocating is bankruptcy.

    Fuzzy Math

    Jesus Tapdancing Christ. I have seen this now in several places and it needs to fucking stop:

    Almost everyone believes that Obama has presided over a massive increase in federal spending, an “inferno” of spending that threatens our jobs, our businesses and our children’s future. Even Democrats seem to think it’s true.

    But it didn’t happen. Although there was a big stimulus bill under Obama, federal spending is rising at the slowest pace since Dwight Eisenhower brought the Korean War to an end in the 1950s.

    Even hapless Herbert Hoover managed to increase spending more than Obama has.

    Stop right there. If you’ve been on this site, you know that the “Hoover cut spending” thing is a complete myth. Hoover increased spending massively and doubled the debt during his Presidency. Roosevelt called him out as a socialist. So this writer is already starting from ignorance. But carry on:

    • In the 2009 fiscal year — the last of George W. Bush’s presidency — federal spending rose by 17.9% from $2.98 trillion to $3.52 trillion. Check the official numbers at the Office of Management and Budget.

    • In fiscal 2010 — the first budget under Obama — spending fell 1.8% to $3.46 trillion.

    • In fiscal 2011, spending rose 4.3% to $3.60 trillion.

    • In fiscal 2012, spending is set to rise 0.7% to $3.63 trillion, according to the Congressional Budget Office’s estimate of the budget that was agreed to last August.

    • Finally in fiscal 2013 — the final budget of Obama’s term — spending is scheduled to fall 1.3% to $3.58 trillion. Read the CBO’s latest budget outlook.

    Over Obama’s four budget years, federal spending is on track to rise from $3.52 trillion to $3.58 trillion, an annualized increase of just 0.4%.

    You see what the problem is? FY2009 was not a Bush year. FY2009 was not a Bush year. FY 2009 was not a Bush year. The Democratic Congress did not pass a budget until March 12, 2009. Do you know who was President on March 12, 2009? It was not George W. Bush.

    FY2009 also included the stimulus which this analysis now considers part of the baseline — exactly as conservatives warned would happen. Do you know who passed the stimulus? It was not George W. Bush.

    You can blame Bush for TARP. But let’s remember that Obama voted for it, used it, expanded it. Two car companies got bailed out on that budget authority. Do you know who bailed those car companies out? It was not George W. Bush. Well, not the big bailout at least.

    Look, I’m prepared to bash Bush with the best of them. But this is bullshit. If you’re going to use a baseline for Barack Obama’s spending, maybe you can use $3.1 trillion Bush originally requested. But you can’t use the final budget figures as a comparison. That’s simply cheating.

    The author eventually, on page 2, gets around to this, admitting that, at minimum, Obama has increased spending 1.4% per year. But that too is deceptive since many of the Obama “tax cuts” were for people who don’t pay taxes. Moreover, we’ve been winding down two wars, which should have moved the budget closer to balance.

    (The New York Times tried this stunt too, gaming the figure so that it looks like Obama has cut spending. Even then, they have to credit him with state spending cuts. I find that ironic since the point of the stimulus was to prevent state spending cuts, but … let’s not interrupt the Times when they’re in the middle of Democratic propaganda.)

    Anyway, the idea that Obama has not increased spending is pure garbage. To the extent that he has controlled spending, it has been because of relentless pressure, faceoffs with the GOP and the winding down of two wars. His last two budget were rejected almost unanimously by Congress. He does deserve credit for winding down the wars. I’ll give that to him. But let’s not pretend he’s a model of fiscal restraint.

    A Tale of Two Taxes

    I just tweeted this thought but wanted to elaborate here. I’ve noticed a dichotomy in how the Left talks about tax cuts.

    With the Bush tax cuts, allowing them to end is simply “ending tax cuts for the wealthy”. It’s portrayed as the government ceasing to give something away. However, with the Obama payroll tax cut, allowing it to expire constitutes “raising taxes on the middle class” — i.e., taking something away. The policy is identical — a temporary tax cut is allowed to end. However, the rhetoric changes dramatically. Raising taxes on the wealthy is taking back what’s ours; raising them on the middle class is stealing what’s theirs.

    This is a big reason why I think the payroll tax cut should simply be allowed to expire. Otherwise, we will hear this shit every damned year until the taxes are permanently fixed below sustainability. The more people get used to payroll taxes that are too low to support Medicare and Social Security, the harder it will be to put them back at the level they need to be.

    Moreover, keeping the payroll tax low will hamstring efforts to cut entitlement spending. I have long argued that the “starve the beast” tactic exploded in our faces. The idea of Starve the Beast was that Congress should cut taxes first. Spending cuts would then magically appear because Congress wouldn’t allow the debt to explode. What we discovered, instead, was that Congress would allow the debt to explode, no problem. And spending cuts don’t just happen. They have to be implemented by … Congress. Starve the Beast was Congress trying to punt the ball to itself.

    But the more insidious effect of Starve the Beast is that it has sapped the public’s will to cut spending. Because we are only paying $0.60 or every dollar of government (and most of us are paying far less than that), government seems like a good deal. Huge oceans of spending cause us no pain whatsoever because taxes are never raised to cover them.

    If we keep the cut in payroll taxes, the public will feel less pressure to cut the entitlements those taxes supposedly pay for. End them.

    Supercommittee Fail

    It’s official. The supercommittee has failed.

    It wasn’t a bad idea really. The amount that the supercommittee was tasked with cutting — $1.2 trillion — was chosen quite specifically. It’s small enough to be doable. But big enough that you can’t do it with one policy. You can’t get $1.2 trillion just by raising taxes on the rich. You can’t get $1.2 trillion without hitting entitlements. You can’t get $1.2 trillion from cutting “waste”. Only a combined policy would match that number.

    Granted, the amount was tiny in comparison to our massive budget. As Nick Gillespie pointed out, the amount of money involved was like arguing about floor mats in a $20,000 car. But any deal would have been a microcosm of the larger grand bargain needed to fix our budget.

    Unfortunately, our political leadership were unable to complete even this simple and tiny task. Republicans didn’t want to raise taxes even a little and are, even now, trying to eviscerate the extremely modest cuts in defense spending. Democrats didn’t want to touch entitlements, even a little. And the idea of compromise is so alien to them that mixing policies was a non-starter, despite a tax-and-cut compromise polling in the 70’s among the public. Bainbridge:

    The Republican idea that we can solve the debt problem without raising additional revenue is just absurd. We’ll never be able to cut federal spending down to the 14% of GDP that currently comes in as federal revenue. But the Democrat idea that we can just keep doling out entitlement programs like candy is even more flawed. We’ve got to get the size of government back down to around 20% of GDP and entitlement cuts have to be a big part of doing so. After all, Willie Sutton robbed banks because that’s where the money is. Well, entitlement programs and defense are where the federal government has its money, so that’s where you’ve got to look for cuts.

    Ideally, all Americans would have skin in the game. Everybody ought to pay higher taxes and everybody ought to take a cut in benefits. We can sort out how progressive those changes ought to be, but everybody needs to have a stake in the success or failure of the American enterprise.

    But don’t expect DC to get us there.

    There are a few people crowing about this, but I can’t fathom why. All this does is kick the can down the road … again. Any serious deficit plan is going to have to be a compromise. Neither party has either the will or the power to get 100% of what they want while giving the other side 0%. We got into this with a combination of low revenues and high spending. And you can’t get out of it without addressing both. Nobody “won” by holding out. All the did was make the inevitable even more painful.

    Update: Just to give you the numbers. The SC was tasked with finding $1.2 trillion in cuts … out of $44 trillion in planned spending.

    Pull The Trigger

    You knew this was coming:

    The reason the [budget supercommittee] was to succeed where other bipartisan negotiations have failed was the “trigger.” The inability of the two sides to reach a deal would trigger $1 trillion in automatic cuts over the next 10 years. Half of that would come from domestic spending, although Social Security, Medicaid and a few other programs for low-income Americans would be protected. The other half would come from the Pentagon.

    But increasingly, no one fears the trigger. If it is activated, Republicans have spoken openly about undoing the defense cuts — and the White House and congressional Democrats would happily sign on. But the White House won’t allow the defense cuts to be lifted if the other side of the trigger — domestic cuts — isn’t also defused. So it’s simple to imagine the coalition that will disarm the trigger.

    The GOP and the Secretary of Defense are making the absurd claim that the Pentagon is on the brink of collapse because it’s funding has only doubled in the last decade, even excluding war spending. They are also promulgating the idea that a small slowing of growth in the next decade — several hundred billion out of more than ten trillion in planned defense spending — would cripple our defense.

    I feared this would happen when the debt deal was made. Republicans won’t raise taxes or cut spending; Democrats won’t cut spending or raise taxes on anyone other than “the rich”. And so we can look forward to even more spectacular explosions of debt.

    Food and ammo, guys.