"I enjoy your consistently perceptive comments on the budget goings-on, but I wish you had used to illustrate the problem that Obama's "grand bargain" to cut $4 trillion of spending over the next 10 years doesn't begin to address the deficit problem. Assuming the average savings is $0.4 trillion a year (it's not but so what) and that the savings turn out to be what they're forecast to be (they rarely do), we still have to fund an annual deficit of $1.1 trillion or so. The deficit is so large that elimination of the entire military budget wouldn't fix the problem (and I'm not suggesting that the military budget not be significantly cut). The $2.4 trillion package they're now trying to negotiate is even less effective."These statements are unfortunately true, and I don't disagree at all. In fact, my understanding is that the "$4 trillion dollar deficit reduction" is not actually a subtraction from the amounts of the current budget or future budgets, so that we would actually be spending less now or in the future than we are at present (in nominal terms), but is only a reduction in the anticipated increases in future budgets. Thus, if the future budget deficit is still $1.5 trillion, but it would have been $1.9 trillion without the "cut," that still counts as "$400 billion toward a ten-year total of $4 trillion." Joe Biden was apparently asked by one young GOPer at a recent meeting how much his "$2 trillion plan" would reduce actual federal spending next year, versus current expenditures, and his answer was "$2 billion." These are all just improvised acts in the Theater of the Absurd.
One must learn to speak the language of our slippery politicians. The problem that Congress faces in trying to find something, anywhere, that can actually be cut is that by the time they get around to the "appropriations process," about 67% of the budgeting has occurred automatically, because Congress deems it politically necessary to honor existing commitments to Social Security, Medicare/Medicaid, unemployment, food stamps and interest on the public fraction of the national debt. Thus, even the suggested changes to Social Security and Medicare speak in terms of future "means testing" or raising eligiblity ages, and these ideas tinker around the edges. As the population ages and the rolls of Social Security and Medicare/Medicaid continue to swell, all of the safety net problems are going to get worse.
Not that Congress or the President actually bothers with a "budget." We have not had an actual, signed budget since fiscal year 2009; they're literally making it up as they go along, which, when you think about it, makes sense under the circumstances. When your income is $2 trillion and your expenses are about $3.6 trillion (actually, the newest Monthly Treasury Statement just came out, if you want to take a look: http://www.fms.treas.gov/mts/index.html, and it's the usual horror story - the deficit is now at $1.7 trillion), does it actually make a lot of sense to talk about "allocating your resources?" They're just hanging on and faking it from month to month.
Let's face it, the "plan" all along was for the United States to grow its way out of this mess, and to resume the upward trend line as in previous recoveries; however, that's not happening, so we're stuck with the awful problem of exponential growth in debt matched with precisely no growth in actual wealth; thus, the "yahoos" in the Tea Party who are fighting the debt ceiling raise may be crazy, but it's possible they're crazy only because they're right for the wrong reason, if that makes any sense and I don't see how it does. So to rephrase: I think the real motivation of the Tea Party thinkers is simply an assault on certain aspects of central government of which they (or their financiers, such as the Koch brothers) disapprove, which is why they often cite as examples of runaway Big Government the "EPA," or the Departments of Education and Energy, or the tiny fraction of 1% of federal money that might find its way into sex education. There are, of course, problems with Big Government, but the places to look for them are in the Departments of Defense, Homeland Security, State, Agriculture and the other real money-suckers among the budgetary line items.
Anyway, we continue to drift toward D-Day (Default Day), and the propaganda from our squealing politicos is getting very shrill indeed. President Obama talks about suspending Social Security payments. The guy gets paid, what, 400 grand a year? This is symptomatic of our problems these days: gross incompetence. It so happens that Social Security is one of the federal programs where it's okay to sell debt to continue operating, even after the debt ceiling is hit. The reasons for this are a little technical, but should be well within the ken of a high elected official. Specifically, while it's true that the total of public debt (a little under $10 trillion) and intragovernmental debt (Social Security and Medicare, mainly, currently about $4.5 trillion) cannot exceed $14.3 trillion under the current ceiling, the Treasury can sell public bonds to redeem the intragovernmental bonds on a 1:1 basis; thus, as Column A goes up (public debt), Column B (intragov.) goes down, leaving the total the same, pressed tightly against the debt ceiling. The "redeemed" bonds would allow Social Security to remain solvent for a few years longer even with the existing ceiling. Yet I suppose that one of two things is possible: Obama simply doesn't know this (pathetic), or he doesn't want to mention it because it will reveal exactly what we're doing now to fund the shortfall in Social Security receipts vs. outlays (misleading). Either way, he's picked the worst possible example and has called again into question whether his vaunted "political instincts" are really all that impressive.
I'll leave for another day the obsolete idea of "growing our way" out of debt, another increasingly hopeless conceit of the Beltway and of the academic economists. Meanwhile, the canoe continues to drift toward Niagara, and the paddlers have thrown their oars overboard and decided to engage in fistfights instead. Hey, it's what we pay them for.