Monday, August 8, 2011

The phony "cuts" of the debt deal

The President and the corrupt blockheads in congress constantly reaffirm their commitment to “cutting the deficit” and dealing with the debt problem. They assure us that the deal passed to raise the debt ceiling cuts nearly two trillion dollars off of the national debt over ten years, and they call the deal a “significant step in the right direction.” The problem is that these so-called cuts aren't even cuts at all. If the deficit were cut, we would actually spend less money after ten years than we spend now. If we were serious about paying off the debt, we would make cuts deep enough to have a budget surplus in the near future.

But in Washington, they apparently don't calculate cuts in spending the way we do in the rest of the world. In Washington, two trillion dollars in cuts means that, over ten years, we will spend two trillion dollars less than we had previously intended to spend. This means that in ten years, our budget deficit will be 5.3 trillion dollars per year, instead of 5.5 trillion dollars per year.

This chart (from the CATO institute) shows that, what the spineless politicians call cuts, are really not cuts at all. The blue line shows the money that the Congressional Budget Office believed we would have spent over the next ten years. The red line shows the revised spending trajectory, after “saving” two trillion dollars. See how it still goes up? See how the up trajectory is almost the same as it would have with a "clean" debt ceiling increase? That is not a savings at all. That is the rough equivalent of buying a $98,000 Mercedes Benz instead of a $100,000 Mercedes Benz, when you cannot afford to buy any car at all, and calling it a "savings."

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