Tuesday, July 5, 2011

The Daily Snark 7/5

From Reuters:
In talks led by Vice President Joe Biden, negotiators had tentatively agreed to reduce discretionary spending, which covers everything from space exploration to pollution control, by between $900 billion and $1.3 trillion over 10 years, according to aides from both parties.
I think this debt limit deadlock is a bigger problem than the media has let on. As I've pointed out, no, if a deal if not reached by August 2nd the United States will not go into default as we have enough money coming in from taxes to cover all incoming debt obligations. What we don't have is money to cover much else. That kind of shock could be catastrophic on our weak economy (no, not on the "recovery" that doesn't exist).

But here's the problem. Biden's deal offers Republicans and libertarians a $90-130 billion cut per year. That would be a 2.5-3.6% cut of all Federal spending. Now, this same Administration has raised Federal spending by over 30% over the last two years, not including the upcoming spending on ObamaCare. That's not even remotely good enough. We have a $1.5 trillion deficit for this year alone; those proposed cuts would equal about 1/15th of that deficit. Also, most of those cuts come in the future, which is assuming future Congresses will be more likely to take political damage for cutting spending programs for specific constituents than our current Congress is. This agreement cannot actually bind Congress in 2019 from not following it.

In effect, Democrats are offering us cuts "in the future" without any assurance that those cuts will in fact be made. And those cuts are not enough. Republicans should continue to press for more cuts in the immediate future; Democrats can either accept that or deal with the very sudden 44% cut in spending come August. I'm not certain a deal is going to be forthcoming; I actually have to hope not if this is the best defenders of liberty and property rights can get out of the statists.

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