Free Markets, Free People


It is budget day in Washington DC

Today is the day President Obama’s budget is published.  It promises “cuts” and “savings”.  Before we venture too far in our analysis of the budget, let’s be clear on what those two words usually mean in Washington.  A “cut” in spending usually means that whoever is saying it is talking about not spending as much as originally planned.  And neither have a thing to do with debt reduction.   What they actually mean is they’re still going to spend buckets of money we don’t have – they’re just not going to spend “buckets and buckets” of it.

“Savings” is normally used in about the same way.  I call it wife math (my apologies to the ladies, but come on, admit it, you’ve used it).  Wife math announces, “I saw this scarf on sale for $75.  It is normally $100.  I "saved" $25.”   Of course what she really did was spend $75 that perhaps the family didn’t have or couldn’t afford.

So when you see or hear the words “cuts” and “savings” in discussions of the budget this year, please understand the context of the words when used in those discussions.  “Cuts” mean they don’t plan spending as much as they originally planned to spend.  In the case “cut”, not a single dollar has yet been spent, but they’re going to try to convince you that those “cuts” translate into “savings”.  For most of us “savings” means we have spent less money on necessities (by being frugal)  and the money we’ve saved (i.e. actual money in hand – not borrowed, but earned) can be applied to paying down something else– such as credit card debt or something.  Yeah, it’s real money we have in hand, not spending we “cut” from something we didn’t have the money for to begin with.

Not so with double talking Washington – “savings” in their jargon means not spending as much.  It is slightly different than “cut” in that “savings” are usually “realized” from a proposed program of spending while “cuts” usually come from an existing program of spending.   In the case of “savings” what is “saved” can’t be applied anywhere because we’re in a cycle of deficit spending.  It isn’t revenue they’re talking about that they can spend elsewhere to reduce the debt, it is borrowed money of which they don’t plan on borrowing as much.

This year alone we’re looking at a record deficit of 1.6 trillion dollars.  What they’re talking about “saving” over the next 10 years (1.1 trillion – or 110 billion a year – chicken feed in 3.x trillion dollar budgets) is simply proposed reductions on what they had planned to borrow.  Meanwhile the debt continues to climb.

Keep in mind that we’re looking a 4 years worth of budgets from the administration with over a trillion dollars in deficit spending.  What they’re trying to do is soften that with is 1.1 trillion in “cuts” and “savings” over 10 years that will help “reduce the deficit”.  I’m sure you’re able to do the math and realize total debt keeps climbing.  But also remember that “cuts” and “savings” are what are going to be trumpeted, not the truth:

An administration official, who spoke on condition of anonymity before the budget was released, said one-third of the $1.1 trillion in deficit reduction the administration is projecting over the next decade would come from additional revenue with the bulk of that reflecting the limitations on tax deductions by the wealthy.

So not only are they “cutting” money they don’t have or haven’t spent, they’re “saving” money that will trim the deficit (while the debt still goes up) by assuming revenue not in hand.

The point?  Well, when you see things like this from AP Economics Writer Martin Crutsinger …

“Two-thirds of [the budget's] savings [of $1.1 trillion over 10 years] would come from spending reductions including $400 billion in savings from a five year freeze on spending in many domestic government agencies. The other one-third of savings would come from tax increases. The biggest tax hike would come from a proposal to trim the deductions the wealthiest Americans can claim for charitable contributions, mortgage interest and state and local tax payments. The administration proposed this tax hike last year but it never advanced because of widespread congressional opposition."

… You’ll now know how to translate it. 

I mean where else would you find a line like “the other one-third of savings would come from tax increases” than in a Washington DC budget discussion?

Confused?

Well join the club … and it will get worse.

~McQ

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27 Responses to It is budget day in Washington DC

  • Among the changes we should impose…INSIST UPON…is GAAP type numbers.  No more of this blatant fraud!

    • … and how do you enforce it ??    These folks won’t even follow the Constitution.

      • Neo, you give legal standing to a broad spectrum of groups.  This is still a nation of law, despite that standard being considerably weakened by the last Congress and The Mad King Barack.

        • I always thought they should have the Secret Service take the offenders to the steps of the Capitol, in view of TV cameras, and … [fill in the blank]

          • I personally like the idea of prison stocks .. with lots of spoiled fruits and vegetables available.

          • Now you’re just indulging in wishful thinking.
            But if you throw in Mary Catherine Hamm holding the baskets of rotten…  Never mind…

  • On a slightly different subtopic of this, I’m wondering if the annual Kabuki Dance over veterans funding will be present this year.
    Back during the Clinton years, I was tipped off to a interest “trick of bookkeeping” in regard to the veterans budget.  It seemed that OMB (i.e. the White House) would deliberately underfund veterans in the budget submitted to Congress knowing full well that Congress would not let it stand.  This gave them the ability to pump up other less favorable items that might otherwise be lost, and blame Congress for pumping up the budget.

  • Two-thirds of [the budget's] savings [of $1.1 trillion over 10 years] would come from spending reductions including $400 billion in savings from a five year freeze on spending in many domestic government agencies. The other one-third of savings would come from tax increases.

    Once again, we see MiniTru acting as the unofficial propaganda organ for the federal government.  Ike warned against the military-industrial complex; too bad he didn’t warn about the media-government complex.  Implicit in the quote above is that the government is something that we simply MUST fund in ever-increasing amounts.  I’m not an anarchist; I understand that we must have a government to take care of certain vital matters such as defense, the treasury, foreign relations, etc.  But why in the hell have we got to bankrupt ourselves to pay for crap like the Department of Energy?  HUD?  ObamaCare?  And why is it that a significant fraction of our people – perhaps a MAJORITY – believe that doing this sort of thing is worth national bankruptcy?  Are people just too soft-headed to realize that the money will eventually run out?  Too ignorant?

    We are so screwed.

    • $1.1 trillion over 10 years   … why not $11 trillion over next century … it’s equally meaningless

      • Yep.  For decades, government-types have talked about reducing the deficit.  They never talk about the debt.  Never.  Always the deficit.  It is intended to trick people into thinking that we are making progress, when all we are doing is adding more and more to our debt.

        The person who earns $50,000 and spends $75,000 has a ‘deficit’ of $25,000.  If he earns $55,000 and spends $65,000 the following year, he can crow about how he cut his deficit by a whopping $15,000.  But now his debt is $35,000.  So he lays out a plan to “cut his deficit in half for the next ten years.”  Awesome!  Ten years later, his debt is now $85,000.  A non-politician would look at that and call it unworkable.  A politician looks at that and marvels at the fiscal restraint on display.

        • Technically if we balanced the budget, deficit payments included, we would start paying down the debt automatically. 

      • deficits will total $7.21 trillion over the next decade

  • The other one-third of savings would come from tax increases.
    W  T  F  ?!?!

  • Well yes Rags, we’re ‘saving’ money by not letting people keep what they earn.

    Simple, really.

     

    • I cannot express to my gratitude that I am TOTALLY unable to understand that line of “thinking”.
      It is a new low in Newspeak…

      • It is, at least, consistent with the progressive/liberal philosophy that our money (and, therefore, our labor and material) belongs to the GOVERNMENT, and they, generously I might add, allow us to keep some for our own personal use.

        Had they known they were fighting for creeping serfdom in the future, I wonder if the American subjects of King George the Third would have bothered suggesting an alternative in 1776.

      • Considering they think it appropriate to develop a tax and trade method for our exhalations, why are you even mildly surprised?  When by fiat, they declare they own all rights to administer the CO2 currently free, or sequestered within the confines of the jurisdiction of the States and Territories of the United States, all things are possible.

  • While the President is feeding us his line of garbage as to cutting spending, it came to my attention yesterday that the FED is considering a QE3 package as the 1.2 trillion dollars of worthless money they’ve already printed hasn’t done what they though it would. All of the cuts in the world are not going to offset the hyper inflation and the costs that come with printing worthless money. M1 has grown 15.2% in less than 3 months and all of that is unbacked paper!

  • For years I have been outraged that so-called fiscal conservatives allow the left and media (redundant, I know) to frame reductions in the (projected or otherwise) rates of increase as cuts.  Grow a pair elected representatives, and stand up to this kind of insidious propaganda.

    • Sometimes I wonder if they hesitate to do so, because it would eliminate their ability to use like methods when the time was (pun intended) right.

      • Yeah, that is a huge problem.  For far too long, out elected representatives have benefited from our inattentiveness.  I do think a corner has been turned however, where a good portion of the electorate can distinguish between Bob Dole and Jack Kemp, or John McCain and Chris Christie; and certainly a difference between Barack Obama and virtually any Republican (except Mike Huckabee).

  • TonusFor decades, government-types have talked about reducing the deficit.  They never talk about the debt.  Never.  Always the deficit.  It is intended to trick people into thinking that we are making progress, when all we are doing is adding more and more to our debt.

    And we can thank our fearless, unbiased, “the people have a right to know!” news media for allowing them to get away with it.  Oh, occasionally (usually when a Republican is in the White House) MiniTru will talk about the debt and even show the “clock” spinning at a mind-boggling rate, but the usual drill is to yap about the deficit and talk about how this “cut” is too big or that tax increase isn’t enough.

    lookerSometimes I wonder if [Republicans] hesitate to [talk honestly about cuts vs. mere reductions in the rate of increase], because it would eliminate their ability to use like methods when the time was (pun intended) right.

    I think you’ve hit the nail on the head.  Most of the GOP members of Congress, along with the prospective presidential candidates, really don’t have a problem with the size of the federal government / budget: they merely object to not being in charge of who gets how big a slice of the pie.