Thursday, March 22, 2012

Cutting to the bone

When it comes to spending, we have to decide what we want and whether we still want it when we find out how much we'll have to pay for it. That should hold true for government spending too.

Our government and other governments around the world have made a huge mistake decoupling these. They have been aided by willing lenders, or the sheer ability to print money and pushed by constituencies to spend, spend, spend without raising taxes.

Now, I have to remember that a lot of the good things in my life are due to government spending. My paycheck is partially funded by government spending. My kids went to town-funded schools. I drive on public roads. I receive public water and sewer services. I don't fear foreign invasion or plague or bandits because of protections provided by the government. I have to give credit: my government has provided a safe environment for me.

It's important for me to remember this, because when we start cutting government spending, I'm not going to want to cut things that I depend on for my basic safety. I can forego the new highways and high-speed rail but I want some public entity to make sure the bridges don't collapse.

That brings me to the Ryan budget. I've  read that he'll shrink the discretionary spending to 3.75% of GDP from the current level of 12%. This includes military spending, we know the GOP is loathe to cut. This doesn't leave much money for purposes like FEMA, national weather services, FDA, FBI, customs, etc.

It's been hard to figure out whether what the cuts are going to be. According to one analysis (p. 17), Medicaid, SCHIP (children's coverage) and health exchanges support will be cut in half over time. But Ryan's own numbers (p.90) show it dropping just 23% compared to Medicare. The budget outline is also very lean on what discretionary spending is going to cut. It has none of the honesty of Ron Paul's budget where he declares 30% cut to this department and 70% of that department.

So I have no sense that the Ryan budget would preserve the programs I depend on for my safety. That worries me enough, and my health doesn't even depend on Medicaid.

 Not enough funding? -- Collapsed bridge in China

Extra: A conservative analysis (possibly libertarian) of the Ryan budget.


Anonymous said...


I don't recall if you've said you're married, but if you are you certainly must know that two people have enough trouble agreeing on how limited resources should be spent, and whether it is reasonable to borrow for anything in particular.

Now imagine that for a country of 300 million people, AND the influence of even more powerful corporate and other group interests. So reason is always secondary to politics. Hence, this is a battle between political parties and their surrogates to MARKET the concepts of government spending and influence in a way that acheive the greatest market share when it matters: election time.

But it's only then that the marketing matters. All other times, the interest is in getting the government to spend money -- preferably other peoples' -- on those preferences of those who get to decide. Hence, Ryan "budget" is just a marketing brochure, not a serious examination of our spending priorities or, much less, an accurate picture of what we are actually buying with government dollars from taxes, fees, bonds, etc. So don't expect much from it.

The latest gimmick it to tie various portions of the "budget" to GDP ratios, and the entire budget to some other percentage of GDP. But again, this does nothing to take into account the long-term impact of each annual spending plan. Borrow from your credit card to go a on a month-long vacation is stupid. Borrowing the same amount to replace your roof and insulate your attic is another question.

Ask 300 million Americans whether they should pay more taxes so YOU can count on Medicare coverage and the answer is always no. The GOP knows this and markets accordingly. Of course, ask 300 million Americans if they want Medicare with someone else paying the bill, and they all answer yes. The Dems know this and market accordingly. The Dems downplay the cost (in general) and the GOP downplays the benefits (in general). Flip it for Defense (Offense) spending and a few other things.

So you shouldn't be surprised that the cuts are unspecified since they could never happen for poltiical reasons. And Simpson-Bowles would never happen, also for political reasons because there would be tax increases.

The GOP is always angling for the Dems to commit political suicide by calling for tax increases. Obama and today's Dems hold out for only tax increases on the wealthy -- but the GOP doesn't give them credit for that restriction and spins as though ANY tax increase applies to everybody.

The Dems are always angling for the GOP to commit political suicide by calling for cuts to popular program like Social Security and Medicare. Ryan and today's GOP call for what might actually be modest cuts (although it's hard to say), but the Dems don't give them the benefit of the doubt.

On balance, the GOP created this game of chicken in 1994 -- if not before -- so I hold them responsible for irresponsibility, particularly since it really started in earnest under Reagan.

ModeratePoli said...


It's all too likely that I hold on to the vain hope that Americans will be rational in their voting and not fall for the focus-group-tested buzz words.

We can talk about who's to blame originally. Yes, Reagan started the bigger deficits, but it also happened in lots of other countries, so what does that mean? (A sincere question.) I think it's a pretty fruitless discussion, because if we have to hash out who caused it, instead of admitting that we all did, we are just that much further away from doing anything.

I just hope we can start reining in the budgets before we get too Grecian.

By the way, I'm married, rather blissfully, actually. We are modest in our wants, and lucky in our careers, so no combat over limited resources.

Anastasios said...


I guess the issue is what would constitute "rational" when it comes to voting. There are deep and honest conflicts in the electorate over that point. True, Washington is more divided than the public -- but not all that much more divided. The conflict and antipathy in the electorate is more real than we usually like to admit. I suspect that will not change any time soon. I also suspect that our political system, which is built for what is an unrealistic level of consensus by historical standards, will find it increasingly hard to adapt. We will manage, eventually, but it won't be pretty.

ModeratePoli said...


By "rational" I didn't mean what a partisan would find rational. I meant specifically considering at the clear math involved in Medicare expenses, especially in the future when they are expected to grow immensely. I was answering this point from Anon: "Of course, ask 300 million Americans if they want Medicare with someone else paying the bill, and they all answer yes."

When it comes to many issues, it's possible to rationally support either side of the question. But sometimes the math is indisputably against a position. That is what I'd call irrational.