Another strike against bipartisanship

posted at 6:36 pm on August 1, 2012 by Dustin Siggins

Last week did not offer much good news for America’s fiscal or economic futures. On Friday, the White House announced its expectation that the Fiscal Year 2012 deficit will be $1.2 trillion, the fourth fiscal year in a row with a deficit of at least one trillion dollars. Also on Friday, it was announced that the second quarter’s preliminary Gross Domestic Product growth was a tiny 1.5 percent. Meanwhile, House Republicans and Senate Democrats played chicken on the Bush tax policies. This all comes shortly after Senate Majority Leader Harry Reid’s (D-NV) unlawful decision to not pass a federal budget for the fourth fiscal year in a row.

But in times of trouble, one can always count on Congress to pretend it’s doing something to fix the problem. Erika blogged about this yesterday, but on Thursday Politico reported that the House and Senate leaderships are planning on introducing a bipartisan bill that would avoid the spending part of the so-called “fiscal cliff” that will arrive on January 1, 2013. The solution? To put forth a six-month budget bill that keeps spending at levels dictated by last year’s debt ceiling deal, AKA the Budget Control Act (BCA). This deal, which “cut” $2.1 trillion from federal spending over the next ten years, never actually attempts to diminish spending, however – it merely will slow the growth of spending.

In Washington, this is a big deal, and many pundits will spend months talking about how harmful, good, or otherwise large the BCA’s spending reductions are. As we hit two months from the end of the 2012 fiscal year, some perspective:

1. The BCA will “cut” a whole 4.77% from the Congressional Budget Office’s (CBO) 2012 baseline budget estimate over the next ten years. Compared to the Census-estimated median American income in 2010 of $49,445, this is a “cut” of $2,358.52 when overspending annually by over $16,000.

2. The federal budget has gone up by nearly 60% between the actual 2000 and the estimated 2013 budgets and, according to CBO, is expected to grow by another nearly 55% over the next decade. Which means the rise in spending will be over 11 times as much as the “cuts.”

3. The Congressional Budget Office’s estimate for economic growth in 2011 was optimistic by about one percent of GDP, and the President’s estimates were off by even more. If this is true for the next ten years, using the CBO’s estimates, revenues for the next ten years will be down by nearly 2.172 trillion over that time, or 5.3%. In other words, for Americans looking at their own incomes, this is the same as earning $2,620.59 less per year.

Related, if the CBO is wrong by one percent over the next ten years, this loss of revenue will mean the BCA’s “cuts” actually reduce zero dollars over ten years, as its spending reductions are about the same as this loss of tax revenue.

The Budget Control Act is a fiscal joke, yet it could cause a great deal of harm to worthwhile federal programs. It should be eliminated and real reforms in spending and taxes instituted quickly and aggressively. Perhaps yesterday’s victory by Ted Cruz in Texas is another sign that the people of this country are ready for the tough decisions ahead.

 


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The Budget Control Act is a fiscal joke, yet it could cause a great deal of harm to worthwhile federal programs

The last ‘bullet’ for the Romney campaign to fire at the Obama run for term two.

socalcon on August 1, 2012 at 6:40 PM

The people as you call us, are ready and have been for quite
some time.

The liberals and rinos, progressives who like to spend, spend,
spend are the problem.

One by one they are being replaced.

Amjean on August 1, 2012 at 6:43 PM

ONE TRILLION DOLLARS

faraway on August 1, 2012 at 6:51 PM

Amjean,

I think a lot of people are ready, but I think many people are also somewhat unwilling to cut/reform (which really are the same thing, by and large) Social Security, Medicare, and defense, which are about 55% of the budget. Add in interest payments, and that’s just shy of 70% of the budget off the table. With all of those except defense set to skyrocket in the next few years, we’re in serious trouble if we don’t reform them now.

You could cut all other spending besides those four areas from next year’s budget, and you’d almost certainly still have a deficit.

Dustin Siggins on August 1, 2012 at 6:53 PM

So when is Holder planning on taking Reid to task for violation of federal law?

GarandFan on August 1, 2012 at 6:53 PM

Obama: the day after the election

faraway on August 1, 2012 at 6:54 PM

BUT THERE is NO BUDGET for the fiscal year that begins October 1st, Obama submitted his, it FAILED in the House and the Senate.

Both.

There is no budget from October 1 until the republicans regain control of fiscal discipline.

Shut it down.

And when we gain control, we can take the essential services out of these dramatic efforts. The National Parks will close? An endowment. The Smithsonian will close. Create a fiscally sound Board of directors, that fund raise and don’t waste money. People should not be threatened ever again.

And make sure those pink slips go out where the sequester is stopping employment in the defense areas. Make the president come out and say what he wants to cut and what he wants to fund. Why should anyone re elect him this time without a God’s honest answer.

Fleuries on August 1, 2012 at 7:22 PM

On Friday, the White House announced its expectation that the Fiscal Year 2012 deficit will be $1.2 trillion, the fourth fiscal year in a row with a deficit of at least one trillion dollars

…what!…but…but JugEars was going to cut the deficit in half!

This all comes shortly after Senate Majority Leader Harry Reid’s (D-NV) unlawful decision to not pass a federal budget for the fourth fiscal year in a row

…no way!…I’m sure Eric Holder has had press conferences on this, and wants to make an example of the Senate for the States and private business, so that they don’t think his office is ONLY a political arm of the Democrap party!!

KOOLAID2 on August 1, 2012 at 7:44 PM

Say, this sounds like a great idea!

When you get Harry Reid to agree, give us a call, mmmkay?

Adjoran on August 1, 2012 at 7:47 PM

Profiles in courage — not.

rbj on August 1, 2012 at 7:53 PM

You could cut all other spending besides those four areas from next year’s budget, and you’d almost certainly still have a deficit.

Dustin Siggins on August 1, 2012 at 6:53 PM

Please, don’t buy into that liberal mantra…that’s ridiculous…all of those cuts would come, and on top of that other cuts, which would change the reflection of our economy, as each cut in gov. is created, and the reduction in taxes and regulation that goes along, our economy increases and our productivity increases which creates more income, income for everyone, and more taxes than are paid by everyone.

The burden of our debt does not come from defense % of GDP is less than it was in the 50′s…It’s less than 5% of GDP (in 1956 it was nearly 10%). SS 6% of GDP…

If we increase the GDP, which should be our focus, get the gov. out of the way, we will have enough to pay down all of our debt, taxes, and maintain our SS and defense easily.

It drive me crazy that supposedly conservatives, buy into what they have been fed by the media for decades…but it fits, it is so easy to warp a simple mind. Congrats, you are just part of the masses that have been fed at the trough of misinformation.

Yes, you can come up with figures to back up your claim…of course, you have been well trained…

right2bright on August 1, 2012 at 8:19 PM

“The Budget Control Act is a fiscal joke, yet it could cause a great deal of harm to worthwhile federal programs”

This is one of our worst problems, the word “worthwhile” should never be used when evaluating a federal program, they are either constitutional, or they are not.

DMartin on August 1, 2012 at 9:24 PM

“Ready for the tough decisions ahead”? What did you think the TEA party was all about?

tngmv on August 1, 2012 at 11:06 PM

DMartin, something can be constitutional and not worthwhile.

Dustin Siggins on August 2, 2012 at 12:25 AM

so what are the consequences of the Senate failing to obey the law and pass a budget? Apparently there are none… which tells me that our constitutional system is fundamentally broken at this point. This is much more problematic that BO’s bad policies because it indicates that we are operating in a post-constitutional regime, regardless of who is president. When the SCOTUS fail to find unconstitutional a law that is blatantly unconstitutional, and the Senate fails to pass a budget, which is also unconstitutional, and the President makes recess appointments when Congress is not in recess — also unconstitutional, we delude ourselves if we think that a single election will “fix” the system.

theblackcommenter on August 2, 2012 at 5:17 AM

DMartin, something can be constitutional and not worthwhile.

Dustin Siggins on August 2, 2012 at 12:25 AM

I suppose, but that’s neither here nor there. My point was that if we had a Constitutionally based government this post would be moot as there would be no deficits to worry about. The federal government should limit its self to Constitutionally authorized activities and leave the “worthwhile” legislation to the states where it belongs.

DMartin on August 2, 2012 at 8:22 AM

If we increase the GDP, which should be our focus, get the gov. out of the way, we will have enough to pay down all of our debt, taxes, and maintain our SS and defense easily.

right2bright on August 1, 2012 at 8:19 PM

Come on, you’re not that naive.

If we increase GDP and more money starts flooding into the fed coffers they’ll ramp up (read accelerate) their spending. Neither party has shown any kind of fiscal discipline when they had the chance to make a difference. Neither. In decades. Why do you think it will happen in the future?

And even if the republicans can be somehow magically held to this promise (have they actually promised such a thing?), what’s to stop the leftists from ramping it right back up once they regain power (and they always do)?

runawayyyy on August 2, 2012 at 4:49 PM