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The Budget Free-for-All

Dueling budgets released this week reveal an unbridgeable divide.

by
Rich Baehr

Bio

March 14, 2013 - 4:45 pm
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There are three separate divides in the current budget battle in Washington. The one that has garnered the most attention concerns the near-simultaneous release of the first budget from Senate Democrats in four years and a competing plan from Wisconsin Republican Congressman Paul Ryan, the House Budget Committee chair.

The two plans are a trillion dollars apart in terms of taxes, and four trillion apart in terms of spending and deficit reduction over the next ten years — the Grand Canyon would be easier to cross on a high-tension wire than bridging this gap.

Ryan has, in essence, reissued much of his earlier deficit-reduction plan, relying primarily on large reductions in the rate of growth of health care spending (still growing, but not as fast) in order to achieve savings of over $4 trillion in ten years on the way to a balanced budget. The Senate Democrats’ plan argues that it relies on an equal mix of tax increases and spending cuts, about 2 trillion in total over ten years, though over a quarter of the spending cuts are interest cost savings.

The Senate plan also includes $100 billion in new spending (sorry, “investments”), as well as about $700 billion in real cuts over ten years spread equally among health care, defense, and discretionary spending.

There is almost as much verbiage in the Senate budget attacking the GOP budget as there is explaining what they are offering.

There are two other divides that underlie the battles over any specific tax or spending changes in the new budget releases.  The biggest one concerns whether there is a need for deficit reduction at all. For close to two decades, the general Washington, D.C. consensus was that at least lip service needed to be paid to the concept of deficit reduction; that is no longer the case. Both parties maintain that their new plans meet the targets set by the Simpson- Bowles Commission, or the the $4 trillion in ten years total deficit-reduction target that some say will put the nation’s finances on a more stable path.

The Ryan plan targets this level of deficit reduction just with its new spending cuts. The Democrats argue that when you include already enacted deficit-reduction steps, their new budget changes will also hit the big deficit-reduction targets. The Democrats, of course, claim that their approach is a “balanced” deficit-reduction plan, making use of the poll-tested language that President Obama has used frequently.

The multi-trillion dollar distance between the two plans is really an argument over several distinct questions:

  1. Is government spending too high, or too low?
  2. Are deficits too large or too small?
  3. If deficits are not a problem now, will they be a bigger problem when the percentage of Americans who are over age 65 is much higher, and the health care and retirement costs for this much larger group of Americans gets a lot bigger?
  4. Is the real problem now the deficit and accumulated debt (the latter growing as a share of the national economy), or the slowly growing economy and high long-term unemployment?

There is a significant chorus today among left-wing members of the D.C. punditocracy who are now arguing that government spending is not high enough, and that current federal deficit levels are too small. The loudest megaphone in this group belongs to New York Times columnist Paul Krugman.

Krugman has much in common with another well-paid and respected Times columnist, Tom Friedman. The Times has been paying for two columns a week from these writers, presumably in the expectation that they would get some new content every now and then. In Friedman’s case, most of his columns seem to focus on two pet peeves:

  1. Jewish settlements in the West Bank. If these were removed, it would presumably be only a few days until every other problem in the Middle East would resolve itself peacefully and successfully.
  2. Global warming. If America established a carbon tax and spent more on alternative energy, the Earth would stop warming and be saved for future generations (until a big asteroid hit).

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All Comments   (5)
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This is what happens when everything is politicized and becomes a battle of partisan policical ideologies rather than a discussion and resolve around established best practice methodologies, given any paerticular circumstance(s).

This nation has been in very similiar ecxonomic circumstance before in our history and well survived each incident. Our nation has two classic approach examples from which to consider from our historical experiences. We also have classic examples of approach by foreign nations experiencing the same difficulties.

1. Implement austerity principals of cut and slash government and government spending.

2. In lay nterms, the principle of spending and investing your way out.

Both principals have real consequences! Now consider that our nations economic sustainability no longer is an isolated economy but now a globalized economy and monetary system for which we have no absolute direct controls of.

Its about time the 'people' demand their legislators put aside the petty self serving special interest political partisan idiocy and get focused on the real substance of the problems and principled soultions.

Is Obama's 'general' approach really one of a democrat philosophy OR a GOP philosophy? The answer can easily be found by reviewing the historical data of the approaches used in past similiar circumstances. Pay close comparison attention, too the charts when you arrive at the crisis during the 80s. Tax revenues to GDP, trade balance to GDP, spending to GDP, debt to GDP, consumer and government consumption to GDP and wealth disparity, etc.
1 year ago
1 year ago Link To Comment
Only a few measly trillions of dollars? Will those nasty woman hating, children hating, and of course racist Republicans "turn back the clock" for the sake of their billionaire friends, the ever present agents of darkness, the infamous, bloodthirsty Koch Brothers, who aren't at all benign like the loveable George Soros.
Yes, the only thing that keeps us breathing is Mother Government and the misunderstood heros in the Democrat Party. And of course the sainted Obama who has progressed to the 4th grade level in reading comprehension. What a guy!
1 year ago
1 year ago Link To Comment
The answers to your four questions are as follows:

1. Yes.
2. Yes.
3. Yes.
4. Yes.

Yes, yes, yes to everything. We should have more immigration - the more the merrier, and insist that new immigrants be from every continent, every country, every locale in the world - and from Mars, too, if it's true that at one time that spot in the galaxy could harbor lifeforms of some kind. Send them one and all to America, America, America - Oh, beautiful for spacious skies!

And I, personally wish that at least a good portion of the new immigrants be of different faiths and colors and races - all God's people - so that we can learn to live harmoniously together. Eternal bliss awaits us yet. It is not too late. For I know, as an individual, all good things will come to us - as long as I - I - ask for nothing for myself, but give of the sweat of my brow....

Oh, geez, somebody help me...I'm getting overloaded with all this blustering and pompous politispeak. Little if anything is going to change - we are on the downhill side of history avenue without any operable brakes on our runaway social and economic Prius.

1 year ago
1 year ago Link To Comment
Tell me if I'm wrong but isn't Paul Ryan's plan essentially just like the Democrats. It doesn't cut "real spending" but instead "supposedly" slows the growth rate of government spending. I say supposedly because it's pretty simple to pretend to, in the future, allocate money for some program, and then cut those funds that have not been allocated or spent, and presto, savings. So basically it increases spending, just less so than the Democrats' plan. Correct?
1 year ago
1 year ago Link To Comment
Essentially correct! The ONLY DIFFERENCE is, who should suffer the 'most' interim and long term consequences -- the upper class of wealth holders OR the middle, poor and poverty classes of wealth holders.

As for the tax rate debate, check out the historical tax revenue to GDP charts say from the 30s forward to determine the legitimacy of each sides debate on this issue. You might want to throw into the mix, the historical wealth disparity data from the 20s forward.
1 year ago
1 year ago Link To Comment
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