The Truth About Spending

Those falling deficits are no sign that Washington is mending its ways, sequester or no sequester. JT Young looked at the numbers behind the headlines:

Once again, there is more to the story – or in the case of spending cuts: Less to it.

Quoting CBO: “Much of the drop in spending occurred because payments from government-sponsored enterprises Fannie Mae and Freddie Mac to the Treasury were $34 billion more than they were last year, for two reasons… a onetime payment to the Treasury of about $24 billion… [and] the companies were required to make quarterly payments to the Treasury…”

Again, the key word is “payment” and the key effect is that these payments offset other federal spending. As CBO goes on to explain: “Those payments are recorded in the budget as offsetting receipts – that is negative outlays.” Without those offsetting payments, federal spending only fell about 3.2%.

Thus far in 2014, the real ratio of decreased spending to increased revenues is actually $1-to-$1.8. Although narrowing the gap of $1-to-$4 from last year, taxes are still carrying the deficit reduction load.

Looking closer still at where the spending cuts came from, they are not coming from the entitlement spending driving Washington’s deficit and debt. According to CBO, FY 2014 Q1 spending has fallen $11 billion in defense, $7 billion in agriculture, $7 billion in reduced interest costs, and $7 billion in lower unemployment costs. Without their $32 billion in reduced spending, federal spending – greatly comprised of entitlement spending – increased.


That of course is before ♡bamaCare!!!’s complex subsidy scheme sets in.

Washington, you have a problem.


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