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It IS Time For Draconian Budget Cuts!

February 21, 2011


President Obama has submitted his budget proposal, and unsurprisingly it calls for an even bigger deficit and more spending. Fortunately, the GOP-controlled House is sending the Administration a message reminiscent of Tip-O’Neill’s “dead on arrival” response to Reagan’s austere budgets.

Obama is calling for a 3.5 Trillion dollar budget. Of that, more than $1.5 Trillion is deficit spending, meaning that for every dollar we spend, nearly 43 cents is new debt. Borrowed money which future generations must pay back, with interest.

Said another way, wherever we can afford $57, we spend $100!

The President claims his budget will cut $1.1 Trillion over the next decade. Even if that were true (and there’s no evidence to suggest that it is) that is a cut of $110 Billion a year on a $3.5 Trillion budget with a $1.5 Trillion deficit. Correct me if I’m wrong, but that’s a reduction of the deficit by a factor of around 1/15!

Let’s apply that formula to something a little closer to home. Let’s suppose I’m spending $45,000 a year more than I make, and I’m half a million in debt.

Do you think my cutting $3000 a year from my spending habits would keep me from bankruptcy? Of course not! But the Keynesians STILL believe that they can spend themselves into prosperity!

Keynesian tax-and-spend economics, the mainstay of Progressive economic policy for nearly 100 years, has been attractive to Socialist Utopian Academics… because it fits their narrative and agenda. When tested in the laboratory of real life, however, their hypotheses fall flat time after time. The failed “Stimulus” of 2009 should have erased any vestige of doubt and put the final nail in the coffin of the Keynesian model. Keynes is to economics what the Flat Earthers were to Geo-Science.

The Left decries conservative proposals to cut the budget as “Draconian”… but pay attention to the numbers! Remember that a billion is 1000 million, and a trillion is a million million!

Our current deficit is 1.5 Trillion. Obama is willing to cut 110 Billion!! But he says he has to raise taxes to do it!!

Congressman Ryan recently complained about not having a “baseline” for budgeting. May I suggest using the FY 2006 Budget as a starting point?

This was the last budget passed by a GOP congress before Pelosi/Reid took the reins of Congress and began spending us into oblivion, tripling the deficit every 2 years and raising our debt from 6 Trillion to 14 Trillion in 4 short years. In 2006 our deficit was only around $120 Billion… it’s currently almost 15 times larger! Why don’t we start with a baseline that undoes Pelosi/Reid spending?

In the 4 years that Pelosi/Reid were in power, our debt more than doubled. They increased our debt by 8 trillion in 4 years! When President Bush took office, our debt was only 4 (four) trillion dollars! After 6 years, the debt was increased by 50% to 6 trillion, and Bush was roundly (and deservedly) criticized. In 2003 the deficit was around $420 Billion. This was after 9/11, the dot-com bubble burst, and the run-up and execution of the combat phase of 2 wars.

In 2003 Bush and the GOP Congress passed tax cuts, and consequently the deficit was reduced each of the following 3 years, so that when Pelosi/Reid took the reins, we were on track for a balanced budget in a year or two! When the GOP lost control of the House, they had reduced the deficit to 1/3 of the 2003 level – around $120 Billion.

It is now time to wake up and smell the coffee. We are $14 trillion in debt, so the interest on that debt has more than doubled in 4 years. We are in a hole we may never be able to climb out of… but certainly the first step must be to stop digging!

You will hear a lot of talk about “discretionary” spending. This encompasses our Military spending (both wartime operational expenses and the baseline expenses to maintain a standing military), as well as all other regulatory and operational costs of government. The sum total of our “discretionary” spending is around 1.2 or 1.3 Trillion dollars.

The remainder of our budget is the so-called “mandatory” spending. This is a misnomer. These expenses, with the exception of interest on the National Debt, are “entitlements.” Since the constitution neither mandates nor authorizes these “take from Peter to pay Paul” transfers of wealth, how can they be termed “Mandatory?” But I digress!

It is essential that we address the problem of entitlement spending. Congress must acknowledge that if we were to eliminate ALL discretionary spending and ONLY fund entitlements and interest on the debt, we’d still be left with a budget shortfall of around 250 Billion Dollars!! Without operating a government AT ALL except to transfer money, we’d STILL be a quarter of a Trillion dollars deeper in the hole every year!

Before we can climb out, we must stop digging! We must cut entitlements, significantly. Yes, there’s discretionary spending that can be trimmed. But again – cutting ALL discretionary spending won’t be enough to balance the budget. Entitlements MUST be addressed. It’s fiscal Armageddon if we don’t.

Copyright ©2011 Doug Edelman

 


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