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government spending Archive

Sunday

10

April 2011

0

COMMENTS

Some More Perspective on Government Spending

Written by , Posted in Big Government

Following the deal to keep the government funded and avert a shutdown, politicians are unsurprisingly patting themselves on the backs. They came together to get responsible spending cuts, they say. But just how “responsible” have these so-called adults actually been?

For a little perspective, here‘s what government currently spends over various periods of time (graphic from AEI blog The American).

The $38.5 billion being cut from the rest of the year’s budget  amounts to 4.06 days worth of government spending. From another perspective: the debt increased by $54.1 billion in the 8 days preceding the deal.

How responsible can we take these politicians to be when getting them to cut even that puny amount is like pulling teeth?

Monday

21

March 2011

0

COMMENTS

Republicans Must Avoid the Tax Hike Trap

Written by , Posted in Big Government, Taxes

The Wall Street Journal reports on a “rift” among Republicans on whether or not tax hikes should be on the table:

Two decades after President George H.W. Bush abandoned his “read my lips” promise, some Republicans are chafing at their party’s stand against new taxes.

A few prominent GOP lawmakers believe they will have to raise some tax revenue if they are to bring Democrats along on a bipartisan compromise to address the U.S.’s long-term fiscal problems. Many Democrats want higher taxes to cover at least part of future budget gaps. That has led to clashes between Republican lawmakers and a Washington advocacy group, Americans for Tax Reform, the self-appointed keeper of the party’s anti-tax flame.

Grover Norquist, the group’s president, said he has “sent up a flare” against placing trust in Democrats, given how bipartisan agreements, including the one struck by then-President Bush in 1990, eventually unraveled. Those tax increases took effect as scheduled, but Democrats didn’t always deliver on promised spending cuts, Mr. Norquist said.

Tom Coburn (R., Okla.), one lawmaker targeted by Mr. Norquist’s group, is having none of it. “These fights … help raise money for interest groups, but they don’t do anything for solving problems,” he said.

I’d be interested to see the rest of Coburn’s quote in full, because he’s making no sense here. What is proven not to solve problems is giving more money to politicians. Grover Norquist is right: everytime Republicans show how ‘reasonable’ they are by bargaining with Democrats for a combination of tax hikes and spending cuts, the result is always more taxes and no cuts. How many times must Lucy pull the football out from under Charlie Brown before he learns his lesson?

This entire “rift” is a function of fundamentally misunderstanding the problem Washington faces. Too many Republicans are content to consider it a deficit or debt problem, but these are just symptoms of the disease that is federal spending. If closing the budget deficit entails placing greater burdens on the economy through higher taxes and larger government, it is a step in the wrong direction. Today’s federal government is simply too large, and must be shrunk. The only proven way to shrink government is to shrink government.

Handing politicians yet more tax dollars to spend not only won’t shrink government, it won’t even reduce the deficit. They will just spend it. It’s time for the Charlie Brown Republicans to stop falling into these big government traps.

Friday

7

January 2011

1

COMMENTS

What You Need to Know About CBO Scoring

Written by , Posted in Big Government, Health Care, Welfare & Entitlements, Taxes

Claims that Obamacare would reduce the deficit ought never to have passed the laugh test, but because the bill was written specifically to game the CBO score, many think repealing it will actually add to the deficit. This is wrong. To understand why, you need to know a little bit about how CBO operates.

First, CBO stands for the Congressional Budget Office. It is part of the legislative branch. It is not, therefore, independent of politics. Both chambers of Congress appoint the Director of the CBO, but he can be removed by a simple resolution of either chamber. In other words, he has a strong incentive to ensure that his organization produces research that pleases politicians. This means, among other things, a heavy bias toward tax and spend policies.

Here’s an example of a CBO double standard that favors big government. When it comes to tax rates, CBO uses a baseline known as current law. This means, for instance, that when the Bush tax rates were extended, CBO said this “cost” money because they were set to expire under existing law, even though the rates were not changed from what they were last year. But when it comes to government spending, CBO takes an entirely different approach. Rather than current law, they use current policy. If a spending program is set to expire under current law, CBO will go ahead and count it as being continued in the baseline because that is the current policy, thus ensuring that there is no “cost” to extending the program. CBO may be “non-partisan,” but that doesn’t prevent its methodology from being ideological.

Second, CBO is significantly constrained in what it can analyze by law. It must respond to requests and bills as they are presented by Congress. It doesn’t matter, for instance, if Congress tells CBO they will not pass some recurring expense down the road despite the fact that they always have in the past, CBO must take them at their word and score any current legislation in front of them accordingly. It is a garbage-in-garbage-out organization. As you can imagine, this can lead to analysis that is near useless in the real world where politicians routinely say one thing and do another.

Third, CBO’s analytical methodology is opaque and historically inaccurate. Despite the current level of unemployment, for instance, CBO has constantly claimed ridiculous job creation numbers as a result of Obama’s stimulus. These same models have failed to accurately predict the observed data.  CBO’s Director confessed that they used Keynesian models to score the stimulus, which guarantees the result merely based on the policy, and not from any observed data. It doesn’t matter what the real world data shows, CBO’s model will always show the stimulus as producing millions of jobs. Who are you going to believe, so to speak, their Keynesian models or your lying eyes?

Yet here we sit, with the faux-authority of the CBO being used to beat anyone over the head who understands that you can’t nationalize health care and expand coverage without significantly increasing costs. I’d suggest that CBO is in need of serious reform, but that’s been the case for decades and it hasn’t happened. Given the likelihood that it won’t happen in the decades ahead either, it’s probably best to just abolish the organization altogether. Between Congressional offices and non-profit think-tanks, there are more than enough outfits capable of analyzing the economic costs of legislation, and at least when these other organizations do it, there isn’t a false pretense that their numbers are beyond reproach. No numbers are beyond reproach and no is methodology above criticism, no matter how desperately the proponents of big government try to claim otherwise.

Tuesday

12

May 2009

0

COMMENTS

Higher And Higher

Written by , Posted in Big Government

Administration projects the deficit to be even higher:

The White House on Monday raised its forecast for this year’s U.S. budget deficit by $89 billion due to the recession, millions of new unemployment claims and corporate bailouts.

The new estimate predicted a deficit of $1.84 trillion, or 12.9 percent of gross domestic product, for the fiscal year ending September 30. It updated the White House’s February forecast of a $1.75 trillion deficit, or 12.3 percent of GDP.

No, it’s not because of the recession.  It’s because this administration is hell bent on vastly expanding the scope of government through corporate handouts, like the $80 billion pissed away at the auto industry, and new entitlement programs.

The White House’s projection for future years, that the deficit will return to 2.9% of GDP by 2013 (it’s at a frightening 12.9% at the moment) is not credible once you take into account the coming nationalization of health care, and the economically crippling legislation to pay back the unions (card check) and environmentalists (cap and trade).

With this spend-happy bunch in office, expect regular upward revisions to both spending and deficit projections.

Monday

26

June 2006

0

COMMENTS

Still Spending Like Crazy

Written by , Posted in Big Government

The National Taxpayers Union released a report confirming what we already knew: Republicans are continuing to act like Democrats and nobody’s acting like Republicans (that is to say, like the small government advocates Republicans claim to be).

Congress’s feverish voting habit for higher spending may have declined a fraction of a degree last year, but lawmakers have largely failed to pursue the aggressive treatments needed to cure Washington’s budget deficit, according to the latest VoteTally study from the nonpartisan National Taxpayers Union Foundation (NTUF). The one-of-a-kind analysis, which measures the dollar impact of all voting activity on the floor of the House and Senate, shows that the average Representative supported five cents in federal spending reductions for every dollar of increases, while the Senate’s ratio was just two cents on the dollar.

. . . The average Senator voted for a net $198.2 billion in additional annual federal spending last year, 31 percent less than the spending hike he or she supported during the 1st Session of the 108th Congress (2003). House Members backed, on average, a yearly expenditure boost of $172.9 billion ? 24 percent smaller compared to the same period in the previous Congress. These totals do not include lawmakers’ acquiescence to “mandatory” (such as entitlement) spending growth, which would add nearly $130 billion to the 2005 figures cited above.

However, this drop-off is attributable to a slightly slower pace of spending hikes, not a new-found interest in spending cuts. Both chambers put together considered amendments that would have trimmed annual outlays by a total of $5.0 billion, less than one-tenth of the $54.1 billion in savings that were debated in 2003.

. . .VoteTally totals were nearly indistinguishable between Democrats ($178.1 billion) and Republicans ($168.3 billion) in the House, although party differences were somewhat greater in the Senate ($217.0 billion for Democrats versus $183.0 billion for Republicans).