Did you ever wonder why when the government decides to increase spending it happens next week but when they talk about reducing spending it’s always in budget cycles five to ten years out? Does that really make any sense?
I really only care about what they will cut in their next budget and the one after that because there is some likelihood those same elected officials will still be around to be held accountable.
The Super Committee is agonizing about reducing spending somewhere in the neighborhood of $1.2 trillion over ten years. Considering the fact that federal spending increases 8% per year and that is considered a “no growth” budget. So what are they cutting the $1.2 trillion from?
Where else in the world could that happen?
If the budget is $2.4 trillion per year in 2011, then a no growth (8%more compounded) budget for 2012 would be about $2.6 trillion; $2.81trillion for 2013, $3.02 trillion for 2014 and on up to a total of about $37 trillion over the next ten years.
Remember, that is how much cash the federal government will spend over the next ten years when they consider an 8% increase in spending a no growth budget. They say they are trying to reduce spending by $1.2 trillion during that ten year period which amounts to about 3.2% of the $37 trillion. And they are agonizing?
I’d settle for a no growth budget being a zero percent increase year over year and no cuts. If they just capped spending at $2.4 trillion per year then over ten years we would only spend $24 trillion instead of $37 trillion.
Then if you consider that the government only takes in $1.8 trillion per year at the current level and that is not subject to the 8% growth rate. Generally a revenue growth rate of 3-4% is considered good and 5% is great. Let’s assume for this simple analysis a growth in revenue of 3.5% per year over the next ten years. Revenue received totals only $21.8 trillion when compounded.
Our current national debt is about $14 trillion and without reducing spending but actually increasing spending 8% year over year and experiencing 3.5% growth in revenue each year our national debt increases by another $15 trillion to about $29 trillion.
And the Super Committee is agonizing about cutting $1.2 trillion. There is also word that they are trying to make a “really big deal” and cut $4 trillion over ten years or slightly more than 10% of the $37 trillion total.
Could this discussion be any more absurd?
We need real spending cuts not a slowing of the growth rate.
If that weren’t bad enough, consider how you react when you are elected to Congress in 2016 and someone trots out this agreement to cut spending in some future budget cycle. Do you feel obligated to cut spending or kick the can to the next guy?
What happens if no future Congresses agree to make the cuts promised in 2011? What obligation does a future Congress have to honor agreements made by the Super Committee?
In a word; NONE.
It would be a good start to adopt a budget because that would indicate that the Senate finally came to the table. It would be better if we capped spending. It would be great if we could actually reduce spending.
I’m thinking I hear a kicking sound!
No Loss for Words 
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