Thursday, July 28, 2011

Some Budget Options

Congressional negotiators are trying to reach a deal on spending cuts to get $1, $2, or $4 trillion dollars in spending cuts (relative to "the baseline") over the next ten years. That is intended to enable them to get agreement on raising the debt ceiling to allow continuation of the current obscene spending rates. That $1, $2, or $4 trillion dollars in spending cuts translates to an average of $100, $200, or $400 billion less spending per year, probably back-loaded to the later part of the ten year period. (That sounds to me a lot like "I'll gladly pay you Tuesday for a hamburger today.") Being delayed like that most likely means that — most likely — the debt ceiling and debt would quickly go up but the spending cuts would probably never actually occur.

But the bigger problem is that, even if the spending cuts do occur, they won't get us out of the current unconscionably large budget deficits. The cuts need to be bigger.

So here are a couple of budget cutting suggestions that will do a lot better:

- We are told a large number of current laws have built in escalator clauses that will increase their spending levels by a total of more than $9 trillion dollars over the next ten years. Put a freeze on those escalators and we've saved $9 trillion over those same years.

- Government spending has increased by more than $1 trillion a year since President Barack Obama took office. Get rid of that increased spending and we've saved more than $10 trillion over ten years.

These may be oversimplified, but it seems to me either one of these would do a lot better at cutting bloated government spending than anything being discussed in Congress.

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